This is part of the knowledge I earn from this company. My company is a semiconductor manufacturer.
Let’s start with the product’s production cost. Company A won a bid in manufacturing handphone chipset for Company B from Japan, and the stated production cost is RM0.0235 per unit, comparing to self-production cost of RM0.0245 after the currency conversion.
The currency exchange rate obviously plays a role here, where Company A might lose the business after a result of a 7 per cent decline in exchange rates for Yen, the cost will go down to RM0.0225 with Company B to go for self-production. Which means a better rate compared to outsourcing to Company A. From there, Company B might decide to cut down the production volume outsourced to Company A.
Same concept when we want to sell a product at ebay or amazon, when RM currency exchnage rate increases againt USD, people will need more USD to purchase the same product. If the product is considered more expensive after currency exchange, do u think people in US will still buy from Malaysia?
Actually for companies that are liaising with overseas market, currency exchange rate effect might be in considerations to attract more business.
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