Lucy Liang, a sales manager for Jiangsu Zhongxin Toys Co., disappointed potential clients from the U.S. and Europe inspecting the pink and yellow teddy bears crowding the toymaker's stall at China's biggest trade fair. 'My boss orders us to turn down all the orders for the good of the company' because China's yuan may rise, crimping profit margins, said Liang as she sipped tea in a corner of her stand. 'Even first-class economists can't predict whether the yuan will appreciate or by how much. How could we?' The country's toymakers accept profit margins of as narrow as 3 percent to stay competitive. The low profitability, coupled with payment periods of three months or more, means they are particularly vulnerable to currency fluctuations, said Lin Songli, an analyst with Guosen Securities in Beijing. The yuan has gained 6.3 percent against the euro and 2.1 percent against the dollar so far this year. 'If the yuan rises to 6 to the dollar, we're doomed,' said Simon Pan, general manager of closely held Zhejiang Huangyan Hongfan Toys Factory. It's raising prices by 3 percent to 5 percent to offset the Chinese currency's gains, and further increases would mean losing customers, he said in an interview at his booth, which was filled with educational toys and metal brainteasers destined for the U.S. Adding to the companies' concerns, Asian leaders meeting in Hanoi this week may discuss calls for China to accelerate yuan gains after the Group of 20 finance chiefs agreed Oct. 23 in South Korea to refrain from weakening currencies to boost exports. China has capped the yuan's rise to about 2 percent since a June pledge to introduce more flexibility, leading to criticism that it provides an unfair advantage to its exporters. Premier Wen Jiabao has said a rapid climb for the currency would cause social and economic turmoil, hobbling the world's fastest- growing major economy. Some manufacturers say they've already been affected by the currency's gains as clients from the U.S., Europe and Japan continue to expect cheap prices when buying in China. 'Since the government re-valued the yuan, we have been declining long-term orders _ anything beyond six months _ because we might even lose money by then,' said Lin Ying, a sales manager at closely held, Guangdong-based Shantou Meichang Plastic Factory, which makes plastic blocks and beach toys. 'If the yuan keeps rising, life would certainly be even harder for us,' she said. Customers expect the same prices as last year, said Susie Ying, general manager for Shanghai Master Plastic Products. The maker of inflatable hot tubs and beach toys had to raise prices by about 15 percent, even as 'most of our customers can only accept a 7 percent to 8 percent rise,' Ying said. Her company is trying to focus on more expensive items because their margins tend to be better. 'From the purchase orders we received, high-value toys have taken the lead on demand,' said Karson Choi, executive director of Early Light International, a closely held Hong Kong-based toymaker whose clients include Mattel. The company didn't attend the Canton Fair. Still, Dalian Ponytoy Co., which sells rideable toy horses and zebras at a wholesale price of $200, said it's also hurt by gains in the Chinese currency. 'Two months ago, the dollar-yuan exchange rate was 6.8, now it's 6.65,' said Tony Nie, general manager of the closely held Dalian-based company. 'This has a huge impact on us. A few years ago, the exchange rate was 8 yuan to the dollar.' U.S. Treasury Secretary Timothy Geithner said during the G20 meetings that he expects China will allow the yuan to strengthen because officials understand it's in the interest both of domestic growth and global economic stability. Almost 70 percent of exporters project a decrease in orders if the yuan strengthens by another 2 percent against the U.S. dollar, according to a survey of 239 Chinese suppliers by Global Sources. 'Many companies, particularly those in labor-intensive industries, are running on paper-thin margins and have no room to absorb currency-exchange losses,' Craig Pepples, Global Sources' chief operating officer, said in an e-mailed statement. In contrast, Mattel, the world's largest toymaker, posted a profit margin of 9.7 percent last year, while No. 2 Hasbro had 9.2 percent, according to data compiled by Bloomberg. Zhejiang Sunny Import & Export Co., which sells wooden blocks that can be rearranged to resemble vehicles and robots, tried to hedge against currency losses. It billed in euros, then lost money when the currency dropped against the yuan, officially known as the renminbi, said manager Liam Zhu. 'We changed back to the U.S. dollar, but now the U.S. dollar is fluctuating and the renminbi is still appreciating,' said Zhu. 