The effects of Europe's debt crisis are starting to filter down to Chinese exporters. Many are already noticing a decline in orders from Europe.

Now experts are warning companies to brace for a longer term impact. The Higher Bus Company in Jiangsu province is China's major passenger vehicle exporter. But because of the drop in the euro, it's having to negotiate.

Ma Rentao, Overseas Sales GM, Higer Bus, said, "The decline in the euro directly affects our orders. Those who want to buy our products may delay their orders."

Compared to large export firms, small and medium companies face more pressure. The changing currency exchange rate can dramatically cut their profits.

Wen Bin Director, Int'l Financial Research, BOC, said, "The Euro has declined by over 16 percent against the US dollar. Companies export profits are usually about 5 percent. So that means they will lose more than 10 percent."

Analysts say Europe's debt crisis could affect Chinese companies through until the third quarter, especially in labor intensive industries like textiles, mechanical and electrical. Companies should prepare for further exchange rate risks.