Why We Charge You Exchange Rate Commission?
Release date:2018-05-09

Why ERC* instead of price change?

Some of our customers complain about the ERC listed in our PIs. Here is some explain and alternatives.

Since all our transaction happens in China, so all should be officially priced in RMB(CNY). Our internal accounting is based on RMB. If our cost is 3.00RMB and we quote USD price based on 10% margin, when RMB goes strong by 10%, our profit becomes 0%.

Today 1USD = 6.30CNY. 6 months ago, 1usd=6.95RMB; The drop is 10%.

USD is international settlement currency, all our business are based on USD, but WE DO PUT SEPECIAL TERM IN OUR PI AND QUOTATION, THAT OUR PRICES ARE BASED ON RMB.
Advantage of ERC is that we can keep a stable price list in a form that everybody is familiar with.
When USD vs RMB is stable, say vibration less than 5%, we will absorb the difference. When the vibration goes beyond 5%, we start the ERC to keep pricing fair;

From early 2018 the exchange rate drop from 6.95 to 6.50, we started to charge ERC again, as we have lost over 6.9% from the exchange changes.

*ERC = Exchange Rate Commission