Retailers, consumers and prices
Check out what retailers are thinking about China’s revaluation of the yuan.
Western retailers may pay more for goods they import from China as the yuan appreciates, but the flip side is that the move may create significant selling opportunities by putting more money in the pockets of consumers in the world’s biggest market.
Executives at the Reuters Consumer and Retail Summit took solace in the idea that any appreciation following China’s weekend statement it would let the yuan appreciate against the dollar would likely be gradual.
They also see room to move more manufacturing out of China and into other countries with lower labor and other costs.
“I don’t think that there is any sense that there is going to be any immediate impact … The open question is how quickly and how far they’ll actually let the currency revalue,” said Matthew Shay, president and CEO of the U.S. National Retail Federation, a retail trade group.
Some retailers will see margins hit because their goods manufactured in China will be more expensive in dollars or euros. Retail stocks dropped more than the broad market on Monday in the wake of the yuan announcement.
Beyond the retail industry, the yuan’s move is expected to help companies that supply commodities or heavy equipment to China’s fast-growing economy, like Caterpillar, and other foreign brands that source and sell goods locally, such as fast-food operator Yum Brands, the parent of KFC.
Also in China, a new strike at an auto supplier plant forced Toyota to suspend production at its Chinese assembly plant, the latest in a string of labor-related disruptions at foreign-owned manufacturers across the country.