Gifts / Sports & Toys

The euro was once placed on great hopes by the outside world, and was not only considered to be a powerful driving force for promoting economic integration within the EU, but was once considered the currency most likely to challenge the hegemony of the US dollar.

Compared with the frequent "spam" of the US dollar, the euro should have a more reliable international reputation and the potential as a hegemonic currency. But the reality is that since the advent of the euro, after a decade-long appreciation process, it has begun to depreciate continuously.

This year, Russia and Ukraine went to war, and the United States was behind, but it was the European Union that suffered the most. On July 12, the euro-dollar exchange rate fell below 1:1, the lowest level in 20 years.

In July last year, 1 euro could be exchanged for 1.18 US dollars, which depreciated by 18% in one year. A weaker euro means EU countries now have to spend more to import essential goods from around the world, which also worsens the economies of those already suffering from inflation.

But for the United States, the fall in the exchange rate of the euro has made assets and services in European countries cheaper, and Americans can buy more things with less money when traveling and spending in Europe.

With the recent rapid depreciation of the euro and the exchange rate against the US dollar falling below the 1:1 mark, foreign trade companies on both ends of the Eurasian continent have felt a lot of shock. As a major global foreign trade center, many foreign trade companies in Dongguan are also involved.

As a market subject most directly affected by exchange rate changes, Dongguan's foreign trade enterprises have experienced many uncertainties. Heads of several enterprises told reporters that due to multiple factors such as the depreciation of the euro and the weak economic growth in Europe, the number of foreign trade orders of enterprises has dropped significantly recently. picture

In addition, under the combined influence of unstable and uncertain shipping prices and logistics conditions, weak consumer markets in Europe and the United States, and diversion of orders from Southeast Asia and other countries, "stabilizing orders" has become the primary challenge for foreign trade companies in Dongguan.

Faced with the current situation of poor export, Dongguan's foreign trade enterprises have accelerated their transformation and upgrading, further optimized and improved the high added value of their products, so as to develop new customers and focus on stabilizing production. In addition, many companies began to increase efforts to expand domestic sales.

With the continuous optimization of Dongguan's foreign trade structure, a series of new formats and new kinetic energy have also given Dongguan's foreign trade new endogenous power.

A person in charge of a company in Dongguan said that the current foreign trade business of the company is basically settled in US dollars. Now the depreciation of the euro against the US dollar means that customers have to spend more to pay for each order, so they will naturally be more cautious. Words are not good.

It is understood that since the beginning of this year, affected by the repeated epidemics, the conflict between Russia and Ukraine, and the shortage of energy, the European market has suffered a serious shortage of consumption. Since the beginning of the year, a group of Dongguan foreign trade enterprises' orders to Europe have begun to decline.

The number of export orders to Europe has declined this year. The important reason is that the international situation is turbulent, the consumer market is weak, and the ability of customers to place orders is not strong. Generally, since May and June, orders have been reduced a bit.

The recent depreciation of the euro has undoubtedly accelerated this trend. "The depreciation of the euro has made importers unable to afford price increases, and many European customers have requested price reductions after placing orders."

Recently, the euro has changed rapidly, and the orders received by the company in the early stage will have some losses. "The depreciation of the euro has dropped by nearly 5 points. Based on the order we have received of 2 million euros, if the delivery is settled at the current exchange rate, the loss will probably be around 100,000 euros, which is a huge loss for us."

As a leading toy company in Dongguan, Longchang Toys also showed signs of decreasing overseas orders this year. Liang Zhongming, general manager of Longchang Toys, told reporters from Southern Finance and Economics that the European and American markets are affected by inflation, trade expectations have weakened, and spending power has declined. Longchang Toys' orders from Europe and the United States have declined recently.

And this round of depreciation of the euro has had an even more adverse impact on European customers. "Old customers are more conservative in placing orders, and we are also actively seeking new orders. The short-term impact is obvious."

Compared with the depreciation of the euro, Dongguan's foreign trade companies have recently felt the impact of fluctuations caused by the off-season summer and the instability of shipping.

July and August entered the off-season, which also had a certain impact on our orders. We have some German customers who recently notified us that this year's shipments will be delayed until early next year, which also affects our revenue this year. The person in charge of a hardware foreign trade company said.

A number of industry insiders revealed that compared with the off-season summer in previous years, this summer is more "unfriendly" to foreign trade companies. In addition to the lack of consumption in the European and American markets, the turbulent international situation has led to instability in shipping, which also affects the orders and profits of foreign trade companies.

Recently, the international shipping price has been affected by the supply and demand market and the rise in oil prices. The price has been fluctuating and uncertain, and the phenomenon of cargo ships staying in port still exists. Abnormal fluctuations in energy and logistics prices are still squeezing the profit margins of foreign trade small and medium-sized enterprises.

However, it is worth noting that the main reason for the decline in shipping prices is not the return of the global logistics supply chain to normal levels, but the decline in freight demand.

At the same time, compared to before the epidemic, sea freight prices are still at a high level. Many practitioners said that the market is most worried about the issue of freight volume. Under the condition that the transportation capacity remains stable, the relative shortage of cargo volume has led to an obvious reduction in ocean freight rates.

"The freight rate for sea freight has dropped a little compared to the peak period, but it is also slowly decreasing now. Even in the first month or two, there was a slight increase due to the situation in Europe. For us, this cost is difficult to estimate, and it will cause serious damage to the production of enterprises. Very troublesome."

Although Dongguan's import and export volume to the EU increased by 9.7% in May, observers pointed out that the foreign trade situation in the second half of the year is still not optimistic. Under the circumstance of high global inflation, multiple factors have affected consumer confidence and demand in Europe, and the volume of foreign trade freight will be reduced, which presents a test for Dongguan's foreign trade enterprises.

Whether it is the intensification of Sino-US trade frictions, the escalation of international geopolitical conflicts, or the frantic expansion and production of many domestic industries, they will eventually lead to meager profits and difficult survival for companies.