Wang Shengpei runs a factory in southern China that churns out leather boots, high heels and trainers for consumers in the United States, Europe and Southeast Asia. And he is worried.
Wang is one of thousands of manufacturers across China bracing for a change in the nation's exchange rate policy, which he fears could squeeze his already razor-thin profit margins and make it harder to compete in overseas markets.
"I hope it will not rise too fast if it has to appreciate," said Wang.
"If the yuan rises by 1%, our profit margin will fall by 0.5% because the prices have already been set (with customers). There will be quite a big impact on the overall industry's profit margins."
Speculation is growing that Beijing may soon let the yuan appreciate, which will make Chinese shipments of electronics, clothes and shoes more expensive, but help boost consumer spending by reducing the cost of imported products.
Export-driven China has effectively pegged the yuan to around 6.8 to the dollar since July 2008 to support manufacturers battered by the financial crisis and preserve jobs in a sector that employs tens of millions of people.
But critics say it has given Chinese manufacturers an unfair advantage by making their exports cheaper and U.S. lawmakers have been pushing for China to be labelled a "currency manipulator" -- opening the door to possible sanctions.
U.S. President Barack Obama pushed Chinese President Hu Jintao on the issue during their recent talks in Washington, saying the yuan was "undervalued", but Beijing has repeatedly said it will not bow to foreign pressure.
The impact of a stronger currency on China's exporters has weighed heavily on policymakers who have signalled in recent weeks that a change in policy could be in the offing.
The Asian nation overtook Germany in 2009 to become the world's biggest exporter after overseas shipments reached $1.2 trillion.
China, has reportedly been testing the potential impact of a strong yuan on its labour-intensive manufacturing sector.
Faced with the threat of smaller profit margins, exporters will need to raise prices and hold wages steady to cope with the stronger currency, said Wang.
