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Pricing strategies help minimize currency losses
Posted : June 27, 2008

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Women's shorts
  Jiangsu Botai of mainland China offers city shorts at $5 to $13 per pair. In 50x50/116x70 yarn-dyed cotton, model IMG-4061 has a tailored fit and a 23cm inseam.
Makers are cutting down on the validity periods of export quotes and adopting euros or the yen in lieu of US dollars.

Suppliers of women's city shorts in mainland China and Hong Kong are implementing measures aimed to prevent foreign exchange losses resulting from a stronger yuan.

Since the currency was allowed to appreciate in July 2005, the yuan has increased almost 19 percent against the US dollar. The daily fluctuation in the exchange rate often translates to a 2 or 3 percent reduction in profits by the time the garments are exported to buyers.

To prevent further losses, many companies have decided to reduce the validity of their export quotes. From as long as one year, makers are issuing prices that are now good for just three months. Some have even cut the effectivity of quotes to just 10 to 15 days.

The shorter validity period applies generally to new clients only. Even long-term buyers understand the situation, however, and are open to the arrangement.

There are also a number of companies that do not set a fixed time frame for their export prices. They typically adjust quotes once the yuan gains 3 percentage points.

In addition, a number of companies are quoting export prices in currencies other than the US dollar. This applies mainly to clients based outside the US, including the EU and Japan. For these buyers, suppliers are finalizing orders in euros, pounds or the yen.

Between the two options, however, reducing validity periods for export quotes is more commonly implemented. Buyers are more willing to accept the shorter effectivity of prices rather than to pay in a different currency.

Regardless of which measure is adopted, most makers have raised export quotes in the past year and may adjust them further in the months ahead. This comes not only as a result of the stronger yuan but also because of higher costs and the reduced export tax rebate.

The US economic slowdown is affecting exports at some suppliers as well. Among the mainland makers in this report, Hangzhou Ouqi Co. Ltd exports mostly to the US. Orders have decreased 25 percent as a result of slow retail sales in the country. The company is exploring export markets in Europe on the off chance that it could recoup losses from reduced US sales.

Hangzhou Ouqi is also looking for factories in inland provinces such as Anhui where it can subcontract some production to cut down on costs.

The company's city shorts are currently priced at about $6 per pair. Tailored models come mostly in pure cotton yarn-dyed fabric in a range of specifications, including 21x21s/90x60.

Designs with slim-fit legs are often made of 98 percent 32x32s or 40x40s cotton with 2 percent 40d spandex in 185x80 or 180x88 satin. They may also adopt 98 percent 20x16s cotton with 2 percent 70d spandex in 128x58 twill, 98:2 cotton-spandex corduroy or two-way stretch nylon with 30 percent cotton and 5 percent spandex.

Most styles have five belt loops andpockets, a 26cm front rise, and a 37 to 38cm back rise.

Pinghu Haomai Industry Ltd is likewise exploring opportunities in the European market. City shorts are typically tailored designs in 55:45 linen-cotton or 63:32:5 polyester-cotton-spandex. Priced from $6 to $15, models usually come with matching fabric or PU leather belts.

City shorts at Jiangsu Botai Group Co. Ltd are between $5 and $13 per pair. These are often made of pure cotton, 60:40 linen-cotton or 65:32:3 polyester-rayon-spandex. Weighing 230 to 300gsm, they are woven using 50x50 or 60x60 yarn in 116x70 or 220x156 specifications. Designs have a tailored or slim fit and a 23 to 43cm inseam.

Wuxi Skyrun Group Co. Ltd commonly adopts polyester-rayon blends, but also uses pure polyester or a mix of 65:30:5 polyester-cotton-spandex in its city shorts. Priced from $3 to $8, tailored and slim-fit models weigh 230 to 300gsm and may feature yarn-dyed stripes. Most come with a matching genuine, PU or PVC leather belt.

In Hong Kong, J-tex Co. Ltd offers city shorts in cotton poplin, twill or canvas. Most models have a spandex blend. Versions in wool and polyester satin are available as well.

At $5 or $6 per pair, designs at Parkash Impex Ltd adopt cotton canvas, twill and corduroy. Some styles come with printed, checkered or embroidered inner waistbands.

Most city shorts at Jivan Industries Ltd are made of yarn- or dope-dyed cotton twill or corduroy. The latest releases have yarn-dyed checks, embroidered patterns, crisscrossed belt loops or embellished back pockets.

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.
 
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