China Factory already quoted me the prices, but now I am ready to place orders and they said the prices have to be increased due to exchange rate. What does that mean?
In China, exporting factories have all their costs in RMB (the official currency in China). When they quote you FOB China pricing, they convert the pricing to US$ so you can pay in US dollars. You can not buy in RMB as all exports must have foreign currency remitted back to China. So, say, the exchange rate is 1:6.62 (US$ : RMB) today and they quote you US$1.00 per piece, which is RMB 6.62. In two weeks, the exchange becomes 1:6.5, which means they will have to get US$ 1.018 in order to get the same RMB 6.62.
