Exporters are worried a further appreciation of the Chinese yuan, which gained about 3% against the dollar last year, will impair already slim profit margins, The Wall Street Journal reported in its online edition.

The yuan has appreciated about 6% against the U.S. dollar since Beijing loosened its tight trading band to the greenback in July 2005.

A spokesman for Shanghai-based Zhenhua Port Machinery Co. said the higher yuan is reducing profits on its massive shipping-container cranes when they are sold in dollars. The company has raised prices and sought additional efficiency enhancements to help cushion against the effects of currency appreciation, The Journal reported.

The yuan "revaluation obviously hit us," The Journal reported Wang Jue, board secretary of the company, as saying.

Other companies are moving toward more expensive product lines in an attempt to protect against further erosion of profit margins. Beverage container-maker Zhejiang Dongyang Haisen Trading Co. is introducing a higher quality and pricier product line in a bid to remain profitable, The Journal said. The company, based in eastern China, said the yuan's recent appreciation has erased its entire its 2% or 3% profit margin on basic products, according to the report.

"What we hope is that the appreciation (of the yuan) could slow down a bit," The Journal reported company sales manager Zhang Shengquan as saying.

Further appreciation of the yuan will leave exporters little choice but to raise export prices as manufacturers already face a cost squeeze from higher material and labor prices, The Journal cited Edward Leung, chief economist of the Hong Kong Trade Development Council, as saying.

U.S. firms operating in China are also feeling the impact on profits, according to the report. Instrument maker Management Specialties Inc. said in a regulatory filing in November the yuan's rise has "resulted in lower margins since a large portion of our products is manufactured in our China facility," according to The Journal.