The Business Impact of the Appreciation of the Chinese Yuan (RMB) Against the US Dollar

Desmond York, Cheng Li

Abstract


The aim of the research is to examine the effect of appreciation and depreciation of the Chinese Yuan (RMB) against the US Dollar on the Chinese furniture exports market. Data was collected from 100 furniture exporters in Shanghai and Guangzhou. The results confirm the existing view that export companies are most susceptible to fluctuation in US dollar. The analysis shows that the furniture industry is equally affected by changes in currency market to the extent that it suffers from appreciation and depreciation in the value of the Yuan against the US dollar in the form of reduced prices and customers. They also benefit from increased sales resulting from the decline in value of the Yuan. The results also indicated that it is not all the time that this benefits is accrued but sometimes  a decline in the value of the RMB against the dollar does not necessarily lead to it an increased in sales as was experienced during the global economic crisis. In essence and in response  to the second research question to examine the nature of risk faced by furniture manufacturing companies, it is possible to argue that the major risk are loss of sales and customers  to other  competitors in other countries where the customers feel they can get cheaper sources of products. The research has also identified some management practices used by Chinese furniture companies to reduce the impact of these challenges on their operations


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