The Foreign Exchange Risk And Control Measures Of International Logistic Enterprises

Since a series of reforms of exchange rate system starting from July 2005, China has started to adopt the genuine floating exchange rate system. Especially in the recent two years, Renminbi ("RMB") has been appreciating faster and faster, consequently the export-oriented enterprises in China are facing new challenges and new issues on the development of the same under such situation have arisen. The academics have extensive studies to such new issues, however, such studies mostly focus on how foreign trade companies avoid foreign exchange risks ("FER"), and the study of international logistics enterprises ("ILE") is still blank. The author of this article, a financial account of an ILE, has complete awareness of the great impact of the appreciation of RMB to the competitiveness, stability of finance and risk management of a company. How to avoid and control FER arisen from the gradual integration of Chinese foreign exchange financial market and the market worldwide, also leads to an important direction of the theory and practice of international logistics industry. Therefore, the study of this article has both theoretical and practical significance.The preface of this article introduces the significance of the topic and the methodology of the studies. Chapter One firstly introduces the definition and the reason of formation of FER, and it further elaborates the classification and the formality of FER, finally it illustrates the important impact of FER on operational strategies of enterprises. Chapter Two analyses the characteristics of ILE using full and accurate data and information, and accordingly, illustrates why ILE generate FER more easily. Meanwhile it also discusses in depth the particulars of different kinds of FER generated by ILE, and emphasizes the sensitiveness of ILE to FER. Chapter Three proposes that FER management should be an important composition of operational management of enterprises. To accomplish such strategic target, ILE should establish management principles of FER initially, followed by making operational strategies to FER based on the management principles. Chapter Four crystallizes the positive operational strategies which satisfy the current need of ILE to avoid risks, and disserts that ILE may avoid FER effectively only through internal management control and using external financial tools. This article emphasizes the study of internal management control measures, and induces the risk management under balance sheet and the risk management under income statement, which is also an innovation of this article. Moreover, although the financial tools in China are still limited, this article studies the financial tools available for ILE in both domestic and overseas financial markets, and their operational methods, some related cases studies also are provided in this article, which make the article more practical and operable.