Research On Vertical And Horizontal Exchange Rate Risks Of China's Shipbuilding Enterprises

As the one of industrial sectors with high export rate and the rate of equipment imports, China's shipbuilding industry participates in international competition earlier. With the level of participation of China's shipbuilding enterprises in the international shipbuilding market deepening, the exchange rate risk is increasingly becoming one of their unavoidable business risks. Standing on the international shipbuilding market, this papers researches the exchange rate risk of China's shipbuilding enterprises vertically and horizontally.On the basis of a general introduction for the exchange rate risk of China's shipbuilding enterprises, this papers raises concepts of vertical and horizontal exchange rate risks with the comparison between them. As of the vertical exchange rate risk, this papers researches it from the point of the location of China's shipbuilding enterprises in the industrial chain of international shipbuilding market, using Copula-VAR-based Monte Carlo simulation analysis method to study exchange rate risks of China's shipbuilding enterprises that come from upstream and downstream of the production-consumption chain——from foreign shipbuilding supporting enterprises to China's shipbuilding enterprises, then to foreign owners. The result of this section is the meaning and early warning of profits fluctuation VAR of China's shipbuilding enterprises coming from exchange rate changes. As of the horizontal exchange rate risk, this papers researches it from the point of the competitive relationship of China's shipbuilding enterprises in the international shipbuilding market, using scenario analysis to study how the fluctuation of exchange rate changes of won and RMB affects the order-taking competitiveness of China's shipbuilding enterprises in the international shipbuilding market's quadrupole competition, namely South Korea, Japan, Europe, and China, especially in competition with South Korean.Because the horizontal exchange rate risks play a role before taking orders, while the vertical exchange rate risks do after it, this papers chronologically carried out research from horizontal risks to vertical ones. After two-way exchange rate risks, in order to ensure the integrity of this papers in structure and content and provid executable programs, this papers finally summarized avoidance means of exchange rate risks for China's shipbuilding enterprises, then appropriately improved existing early-warning system of shipbuilding enterprises exchange rate risks integrated with this papers.The conclusion of this papers is also divided into two parts of horizontal and vertical exchange rate risk. About horizontal exchange rate risk, following conclusions can be drawn: When won exchange rate is above the equilibrium value, despite of the low ship price, the order-taking possibility of South Korean shipyard is relatively high due to its competitive edge over Chinese counterpart; when won exchange rate is below the equilibrium value, without considering other factors, the order-taking possibility of South Korean shipyard is therefore low. About vertical exchange rate risk, such conclusions can be drawn that this kind of post-order-taking risks in China's shipbuilding enterprises intensively embody in the profit fluctuation VARs of single vessel or the measured values of vertical risks that result from these risks themselves. Then, the corresponding economic implications and early-warning signals can be determined depending on the symbol of measured VAR, which is positive, or negative, or zero exactly.