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How much loss has been caused by low-price export competition?
Exports compete at low prices, and domestic resources flow out in large quantities.

Zhao Danyang is a special researcher, international business engineer and senior economist of Beijing Dajun Economic Observation and Research Center.

9 June 2004 10

E-mail :danyzhao2003@yahoo.com.cn

: hello! I majored in foreign trade in the 78th session and was assigned to a state-owned foreign trade company after graduation. At the beginning of my work, I was deeply saddened to see that many state-owned foreign trade professional companies exported at low prices in order to complete their export tasks, and then I became numb. Eight years ago, the CPC Central Committee proposed a change in the mode of growth. I excitedly wrote "Exploring the Source of Low-priced Export Sales" and submitted it to a publication, but the result is still out of fashion. Earning foreign exchange through export and pursuing the essence of export scale are the sequela of planned economy thinking. Adam Smith, the father of market economics, denied "mercantilism" 200 years ago. American economists say that it is not good for the United States to print dollars in exchange for and enjoy cheap Asian goods. I usually pay attention to domestic economic and trade articles, and no article has put forward this idea in the past 20 years. See your "China wants goods or dollars?" ? I am deeply excited about this article. I wrote this article eight years ago. Some phenomena have changed, but the idea of earning foreign exchange through domestic exports has not changed. If you think this article is still valuable, please post it.

It is a common phenomenon that a few export enterprises disturb the order of export operation. Let me start with the prices of China goods in foreign markets. Take textiles and clothing for example, this is the first kind of goods I export. 1993, when I was in Chinatown, I saw a silk coat for 16 to $20, about RMB 140 yuan, which was equivalent to the domestic retail price at that time. According to the survey, the price of silk products in China is only equivalent to110 of Italian products, while that in South Korea is less than 1/2. The price of China clothes in the Australian market is incredibly low. 10 Australian dollars can buy 4 T-shirts in China. Some importers cut off the origin label and put on the Australian origin label, and the price can be doubled. Footwear, China's second largest export commodity, is even more worrying. Ten years ago, the export price of brand-name plastic slippers was more than one dollar, but now it has dropped to 60 cents. The Ma Xie price in European market is110 of Spanish similar products. Because the price of sports shoes is too low, it has been restricted by high anti-dumping in New Zealand, Mexico, Argentina and other countries, as well as anti-dumping prosecutions in Europe, Brazil and Chile.

The price of export commodities is declining year by year. The growth of the total value of my export commodities depends on the expansion of quantity and scale. China's share in the US footwear market is about 60%, and the monthly share of toys exceeds 70%. The market share of Japanese clothing is about 60%. Australian knitwear market accounts for about 50%, and household textiles account for about 40%. Low price and high occupancy rate deepen the conflict of interest between real estate developers and China exporters, and are also excuses for imposing restrictions on China products. The high market share and anti-dumping show that the capacity of China products in the international market is close to the limit.

At home, competitive export at low prices has caused great waste of national financial and material resources, which has aggravated the tension of transportation and energy. 1996, China's foreign exchange cost fluctuates around the bank exchange rate, and 1 USD foreign exchange needs the cost of 8.3 yuan RMB. Export enterprises have no profit at all, so it is better to deposit their funds in the bank to earn interest. The market economy cannot explain it. At the same time, the state finance needs to give export enterprises thousands of RMB tax rebates every year. This is a great burden on the national finance. Do China's export commodities need tax rebate to be competitive? For many labor-intensive export products, the price of China is far lower than that of other competitors. Therefore, the tax rebate is meaningless to the competition between China and other countries, and will only intensify the low-price competition of domestic export enterprises. China's annual tax rebate of hundreds of billions is equivalent to subsidizing foreign importers and consumers.

Many self-employed and profiteers in China are in Russia and Eastern Europe, and they don't want any tax refund from the state. They sold China products in the most primitive trade way, earned billions of dollars and deposited them in the Moscow branch and Hungarian branch of the Bank of China. Its benefits far exceed those of state-owned foreign trade export enterprises with modern communication equipment, a large number of professionals, state funding and tax refund support. As far as I know, there is no tax refund in the United States. The price of American cars in Japan is higher than that in China. Only agricultural products are subsidized because of overproduction. Western Europe has implemented export tax rebates for foreigners in the retail sector, and the total amount and scale of tax rebates are very limited.

Some people think that our products can't compete with foreign products in the international market without low-price sales and export tax rebates. This should be viewed from two aspects. First, there is little or no foreign competition for the goods that I have a monopoly position in the international market. The price also fell again and again. For example, China's raw silk exports account for about 85% of the world trade volume, which can completely influence the silk price in the international market. However, since 1990, the average unit price of men's and women's silk shirts, which account for more than 50% of China's silk clothing exports, has been declining year by year. According to customs statistics, the average unit price of silk men's shirts at 1 1 USD, 1993 USD 6.40 and 1994 USD is below USD 5.50. The average unit price of silk blouses in 1990 was $9.40, that in 1993 was $6.40, and that in 1994 fell below $5.90. It is also reported that in 1993, I exported 96.96 million silk woven blouses to the United States, one for every American woman. The unit price is only110 of the European price and12 of the Korean price.

1In the second half of 1993, the United States imposed quota restrictions on China's silk products. The American Business Daily once published a signed article saying: "The import quota of silk clothing in the United States will actually benefit China, because China has been plagued by the decline of clothing in overseas markets and the disorderly competition of domestic silk producers." It can be seen that I have the ability to sell well, and the low price is entirely caused by our internal competition. There is no need to give tax rebate subsidies for this commodity I lead. Tax rebates can only encourage low-priced and cheap sales. Second, even if the goods are highly competitive in the international market, most products are still competitive because of my low labor cost and no tax refund. For example, in Australia, the quality of our home textile products such as towels and bath towels is better than that of India and Pakistan, and the price is only 3/4 of theirs.

Why do foreign trade export enterprises strive for the lowest price? Why do they violate the profit law of market economy that human society has been following since its own commodity economy, selling at low prices and operating at a loss? For more than a decade, export figures and the completion of export plans have been almost regarded as the only criteria to measure the performance of state-owned export enterprises. Whether the export benefits of enterprises are mentioned or not, it is usually said that the export volume is the hero. In the early days, the state was responsible for its own profits and losses. Later, local accounts were all around an export center. This cramped and cost-intensive extensive management has achieved the goal of expanding export scale for a period of time. With the increase of foreign trade enterprises, customers and markets are getting narrower and narrower. In order to complete the export task, every state-owned foreign trade enterprise has to retain customers at low prices. Cause you to sell ten dollars, I sell eight dollars; You have a small profit, I have no profit, and he even takes orders at a loss. The national average exchange cost follows the bank exchange rate. In some regions and provinces, the exchange cost greatly exceeds the bank exchange rate, which cannot be said to be caused by a few low-price competitions. There are reasons for local policies.

Although the state canceled the export plan to local governments, the local governments changed it into guiding plans and issued them to export companies and enterprises, but it also stressed that it must be completed. The ideology and guiding ideology have not changed. In dealing with the relationship between export scale and benefit, we have always placed scale in the main position for more than ten years, and benefit has not been paid due attention. Now China is moving towards a market economy, and China has promised to be in line with the international market economy. It is true that enterprises export by themselves. Self-export by enterprises in Taiwan Province Province, South Korea and Japan is more common. Foreign trade liberalization is also in line with international practice. There is no blind competition among tens of thousands of trading companies in Hong Kong. The gross profit of Hong Kong foreign firms is generally around 20%, and businesses with a profit below 10% will not be done, but the profit of 5% on our order is unreasonable.

The key is to standardize China's economic and trade system in accordance with the laws of the market economy, so that foreign trade enterprises can be self-financing and compete fairly. Only in this way can we fundamentally solve the phenomenon of low-price competition and be accommodated by the international economy. The export quantity-oriented model violates the principle of comparative advantage in international trade. Foreign trade is mainly to save social labor and exchange our strong goods for each other's strong goods. If the concept stays on earning foreign exchange, there will be a strange phenomenon, that is, the goods we export turn around and are imported back. It is cheaper to buy China-made goods abroad than at home. Some export exchange costs are high, so it is better to directly pull a wagon of RMB to Hong Kong to exchange foreign exchange, saving people and money.

In the process of foreign trade enterprises' transition to market economy, Chinese companies in Hong Kong and some export companies in Guangdong have made a good start, and they no longer emphasize the export quantity unilaterally, so low-price competition naturally disappears. Obviously, the solution to low-price competition should start from the macro level, and it is difficult for administrative management to achieve the goal of curing the problem from the micro level.

Low-price distribution and blind pursuit of export figures have led many export enterprises to make harsh promises to each other in order to win the trust of customers, and to give their export commodities to foreign investors in vain without guarantee of foreign exchange collection. According to the Hong Kong Ta Kung Pao1May 24, 1995, "during the period from 199 1 994, the accumulated overdue foreign exchange of foreign-related enterprises in China reached 8.9 billion US dollars, of which 60% was due to intentional fraud."

Finally, calculate an account. If foreign trade exports turn to benefit as the center, export profits will inevitably move from zero to normal. According to the actual situation in China, the profit rate of 10% is ideal. If the average export tax rebate of 7% is no longer implemented, the total export price can be increased by about 17%. The price increase of 1/6 has not reached the highest level of our export price in the past, nor has it exceeded the price of similar export commodities in other countries, so our export commodities are still competitive. However, the price increase of 1/5 can bring a series of positive effects, and the country removes tens of billions of tax refund burden every year. Based on1export in 1996 1000 billion, the income can be increased by more than 20 billion dollars, or the export materials can be reduced by about 1000 billion dollars.

After the reform of China's foreign exchange system, foreign exchange reserves have increased substantially. At the same time, the comprehensive development of China's national economy and the increasing abundance of imported foreign exchange have created favorable conditions for the comprehensive transformation of China's foreign trade into a market economy. On the contrary, the state should mainly control the quantity and quality of foreign trade exports through macro means such as exchange rate, tariffs and taxes. China's foreign trade is in the forefront of the international economy, so it should take the lead in entering the international market economy.