40 the overvaluation is between 30 and 35

October 19, 2011 12:00 AM
40 the overvaluation is between 30 and 35

The Europeans spoke very against unfair competition imposed by the undervaluation of the Chinese yuan to Chinese Prime Minister Wen Jiabao.

For years, the ECB does not want to understand that the real problem for Europeans is the overvaluation of the euro against the US dollar. When the exchange rate is 1.40, the overvaluation is between 30 and 35. The Americans have done to maintain a low exchange rate and thus help their industry export. The comments and actions of the Fed demonstrated repeatedly in recent years. Unfortunately, Europeans do nothing to combat it and the comments of the ECB have always been very effective but to the US dollar.

Since the month of June, the Chinese currency won 2.15 against the dollar, they have held promise even if the Americans would have liked a greater appreciation. At the same time, the yuan lost 10.5 against the euro. Could not fault the Chinese if the euro won 12.65 per cent against the dollar. for the Chinese is the dollar which is determinative.

If the European currency is penalized against the dollar, it is necessarily also to the Chinese currency. This over-valuation is undoubtedly the main reason the source of the industrial relocation in recent years and the impoverishment that followed.

The Chinese are not troubled unduly by the European events in this regard. They are aware of our strength unequal against the dollar. I can't help but think that the Europeans are very naive on this point.

L'Occitane manufactures and sells cosmetics and we are a good example of international development. We export our products anywhere in the world and our sales are divided about 50 per cent in Asia with China growing, 25 in Europe and 25 in America, the Canada and the Brazil. Transportation costs are insignificant and do not exceed 5, on the other hand the penalisation of the goodwill of the euro is unbearable. In different countries, our competitors are local or multinational companies which produce on-site and we cannot change the public price with the fluctuation of currencies.

One of the reasons for our success is our roots, Provence. We have the expertise and credibility in France recognized around the world. Our introduction to the stock exchange of Hong Kong has been successful. Our investors are international and we have raised approximately 600 million euros. Some of this money is allocated to increase the capacity of production in France, because "L'Occitane en Provence" signed products can be manufactured elsewhere. Another part of these funds will be used to finance external growth. Our network of international subsidiaries could manage tomorrow to three additional markings. To this end, we seek to acquire cosmetics companies but that only produce in Asia or America. Yet, another French brand or little this European international development would be more obvious, but we are now too penalized with a euro-zone manufacturing.

The currency volatility is undesirable, but a healthy society can bear a more negative exchange rate a year. The strength of a currency for consecutive years has naturally resulted in flee industrial projects outside the euro area and impoverished our countries in the long term. If the euro decreased by 30 against the dollar, which would be a logical exchange rate, we also baisserions 30 against the Chinese yuan. If we want to be effective, first is the fight that he needed.