By the end of 2025, the RMB exchange rate against the US dollar continued to strengthen, approaching the 7.0 mark. The cumulative appreciation of over 0.7% in October and November has once again brought global textile buyers directly to the forefront of the impact of exchange rate fluctuations. As the core of the global textile supply chain, the unilateral appreciation of the Chinese exchange rate presents both direct cost pressures and hidden structural opportunities for supply chain optimization for foreign buyers reliant on the Chinese supply chain. This article, combining the latest industry trends and practical cases, analyzes the specific impacts of RMB appreciation and provides actionable coping strategies.

I. Three Core Impacts of RMB Appreciation on Foreign Textile Buyers

The textile industry's average profit margin of 5%-8% amplifies the impact of RMB appreciation, comprehensively reshaping procurement logic from procurement costs to order negotiations and supply chain selection.

1. Rigid Increase in Procurement Costs, Directly Squeezing Profit Margins

The most direct impact of RMB appreciation is the surge in foreign currency procurement prices. Taking a batch of polyester yarn worth 1 million RMB as an example, the purchase cost in US dollars was approximately US$137,000 when the exchange rate was 7.3. After the exchange rate rose to 7.0, the cost increased to US$142,900, a direct increase of 4.2% in expenditure. For low-value-added products such as clothing and home textiles, every 1% appreciation of the RMB can potentially erode nearly one-fifth of profits, with some small and medium-sized buyers even facing the predicament of "loss upon receiving an order." More seriously, the timeframe for quotations from Chinese suppliers has been compressed from 30 days to 15 days, and prices may be adjusted at any time based on the latest exchange rate before the contract is signed, further increasing the difficulty of cost accounting.

2. Increased Negotiation and Competition in Orders, Testing the Stability of Cooperation

The appreciation of the exchange rate has shifted the focus of procurement contract negotiations from "quality and delivery time" to "price sharing." On the one hand, to maintain profits, Chinese suppliers will pass on some of the appreciation costs to buyers. Industry data shows that about half of the RMB appreciation will be passed on to overseas buyers through price increases. On the other hand, if buyers refuse to raise prices, they may face the risk of suppliers reducing production capacity and delaying delivery, especially given the rising prices of domestic yarn, where suppliers tend to prioritize domestic sales orders. For long-term framework agreements, exchange rate fluctuations may also trigger renegotiations, disrupting the previously stable cooperation rhythm.

3. Supply Chain Diversion Pressure Emerges, Alternative Choices Have Both Advantages and Disadvantages

Faced with continued appreciation, some buyers have begun to shift orders to Southeast Asian countries such as Vietnam and India. Cotton yarn from these regions, whose raw materials are mainly imported, has become more competitive during the RMB appreciation cycle. However, alternative supply chains are not perfect: Southeast Asian production capacity is concentrated in low-to-mid-end products, while high-end functional fabrics still heavily rely on Chinese supplies; moreover, the stability and delivery efficiency of local supply chains differ from those in China, and large-scale order shifts may lead to quality fluctuations and delivery delays. Furthermore, after the mutual tariff reductions between China and the US, China's export orders for cotton products to Europe and the US are expected to improve, further enhancing the bargaining power of high-quality suppliers, significantly increasing the opportunity cost for buyers to shift orders. II. Four Practical Strategies for Coping with RMB Appreciation

Faced with a one-sided appreciation trend in the RMB exchange rate, foreign textile buyers need to build a protective system from four dimensions: contract terms, financial instruments, procurement models, and depth of cooperation, turning risks into opportunities to optimize the supply chain.

1. Optimize Contract Terms to Build the First Line of Defense Against Risk

Contracts are the core tool for coping with exchange rate fluctuations. The key is to clarify the dual mechanism of "pricing + adjustment." It is recommended to prioritize RMB pricing to directly transfer exchange rate risk to suppliers. If foreign currency settlement is necessary, an "exchange rate adjustment clause" should be included, stipulating a fluctuation threshold of ±3%. If this threshold is exceeded, the price will be recalculated based on the actual exchange rate. For long-term orders, the "average exchange rate of the past three months" can be used to lock in the contract price to avoid the impact of short-term fluctuations. At the same time, a "delivery guarantee clause" should be clearly stated in the contract to prevent suppliers from delaying delivery due to exchange rate pressure, ensuring supply chain stability.

2. Utilize Financial Instruments to Professionally Hedging Exchange Rate Risk

Exchange rate hedging has changed from an "optional" to a "mandatory" issue. Buyers can flexibly choose tools based on the order size. For large orders, forward exchange contracts can be processed through banks to lock in the settlement exchange rate in advance, ensuring the exchange rate is set at the agreed price regardless of future fluctuations. If exchange rate trends are uncertain, foreign exchange options can be chosen, paying a small option premium to gain flexible trading rights, controlling risk while retaining profit potential. It is worth noting that China has launched low-cost services such as "exchange rate hedging insurance," lowering the hedging threshold for small and micro enterprises through online guarantee agreements. Buyers can collaborate with suppliers to utilize these tools and share hedging costs.

3. Adjusting the Procurement Structure to Balance Costs and Supply Stability

During a period of currency appreciation, blindly shifting orders is less effective than optimizing the procurement portfolio. On the one hand, the proportion of high-value-added, functional textiles can be increased. These products have high profit margins, less pressure on suppliers to raise prices, and China's technological advantages in high-end fabrics are difficult to replace. On the other hand, taking advantage of the RMB appreciation reducing import costs, inventory levels can be moderately increased, but inventory turnover must be controlled to avoid the risk of stockpiling. Simultaneously, a dual-track system of "core Chinese suppliers + alternative Southeast Asian suppliers" is established. Core orders rely on China to ensure quality and delivery time, while mid-to-low-end orders can be diverted to Southeast Asia, balancing costs and risks.

4. Deepen cooperative relationships to achieve shared risks and win-win results

Establishing deep partnerships with high-quality Chinese suppliers is a long-term strategy to cope with exchange rate fluctuations. Annual framework agreements can be signed with suppliers to lock in basic prices and exchange rate sharing rules, reducing the costs of frequent price negotiations. For buyers with large annual purchase volumes, a "profit-sharing and risk-sharing" mechanism can be negotiated. When the RMB appreciates, suppliers can moderately control price increases, while buyers can place orders first during periods of stable exchange rates, achieving mutual benefit. Furthermore, sharing exchange rate information with suppliers and jointly using hedging tools can be explored. Some large buyers have even offered "moderate concessions" in exchange for suppliers locking in prices long-term, ensuring the sustainability of the supply chain.

III. Conclusion

The appreciation of the RMB is an inevitable result of the adjustment of the global economic landscape. For foreign textile buyers, rather than passively bearing cost pressures, it is better to proactively adapt to the trend and optimize strategies. In the short term, hedging risks through contractual terms and financial instruments; in the medium term, adjusting procurement structures to balance costs and supply; and in the long term, deepening cooperation and binding high-quality supply chains are essential to maintaining a foothold amidst exchange rate fluctuations.

The core competitiveness of Chinese textiles has long surpassed "price advantage." Its advantages in supply chain integrity, technological innovation, and delivery stability are irreplaceable. Faced with RMB appreciation, the core issue for buyers is not "whether to leave the Chinese supply chain," but rather "how to better integrate into the Chinese supply chain," achieving long-term stable profitability through scientific risk management and in-depth cooperation.