If the Chinese currency rose to 6.28 per dollar, some 5.9 percent above current levels, respondents said they would face heightened pressure to raise the prices of goods to bolster margins.
Since China depegged the yuan in mid-June, allowing it to rise around 2.6 percent against the dollar, 83 percent of manufacturers say their exports have suffered, according to the poll of 102 small-and medium-sized firms at China's largest trade event, the Canton Fair.
"It's not fair for us," said Li Lei, a manager of Photo USA Electronic Graphic which was running a booth at the fair.
"Our margins are very thin in the first place ... by pressuring our currency, they're hurting us," he added referring to U.S. calls for China to ramp up the yuan ahead of mid-term Congressional elections and a G20 leaders meeting in November.
Speculation of a possible deal on currencies between Beijing and Washington was fuelled when China's central bank surprised markets by raising interest rates for the first time in nearly three years, boosting the dollar.
One in Five Optimistic
Despite frustration at a stronger currency compounding a troubling year of wage and raw material cost rises, only two percent of exporters said business was becoming unsustainable while 22 percent were optimistic about their prospects next year, versus 20 percent saying they were pessimistic.
This chimes in with China's latest export data in September that showed slowing but still robust 24.1 percent growth from a year earlier.
With Wen Jiabao and other Chinese leaders wary of a stronger yuan appreciation stoking social tensions and hurting exporters, the poll results suggests factories may be more resilient than thought, partly given a tendency to understate profit margins.
An earlier poll by Reuters at the same fair in April suggested firms could only withstand a mild appreciation to 6.5 yuan to the dollar. The yuan now stands at around 6.65.
The consensus view from the market is that the yuan will appreciate only moderately by year end, while one-year NDFs imply 12-month yuan appreciation of around 3 percent.
Fewer Cheap Goods?
The biannual Canton Fair is considered a barometer for Chinese trade and is a magnet for tens of thousands of foreign buyers sourcing all manner of Chinese goods from lawn mowers to tractors and plastic Christmas trees.
While 55 percent of exporters polled said the impact of another 3 percent appreciation would be severe, others said they were also learning to cope by tweaking strategies, making higher-value goods, entering new markets and hiking prices.
"We have made a deal with our buyers to bear half the extra costs," said Chen Nanwu, a rechargeable battery maker from Zhejiang in eastern China. "But that's only for old clients."
A surge in workers wages over the summer amid labour shortages in factory hubs like the Pearl River Delta, along with rising raw material costs, have also eroded margins. Some 47 percent of firms said production costs had risen more than 10 percent this year.
"Last year it was of course cheaper. This year it's a problem," said Uwe Von Briel, director of Maratec, a German farm equipment maker sourcing machinery at the fair. "Now I can buy cheaper stainless steel tubes and fittings in Europe and Turkey."
But others said that, with few alternatives to China as a haven for cheap goods, its competitiveness would only slide to an extent.
"A ten to fifteen percent increase (in prices) is still resistible because we have no other choice," said Shahzad Khaliq, the COO of Tajir China, a Pakistani trading firm buying around $300,000 of electronics and audio-visual goods at the fair.
"India is not producing the same things as China and other countries like Korea are too expensive."
The poll spanned five s
