TNCs Foreign Exchange Risk Management

In 1995 World Investment Report, multinational corporations' definition was those economic entities who established branch offices in two or the more nations (mainly referred to branch company and subsidiary company), carried on the effective control and the overall plan decision-making by parent company, was engaged in transnational production and management. The foreign exchange exposure calls "the exchange rate risk" or "the foreign exchange exposition", which generally refers an organization,the economic entity,or individual in the international economy,the trade,the financial activity, their property and debt counted by foreign currency suffer loses or obtain income because of the exchange rate change. Said to the foreign exchange possessors, the foreign exchange exposure possibly has two results:: perhaps suffers the loss; perhaps obtains the income. As far as I'm concerned, since multinational corporations carry on the management by many kinds of currencies, multinational corporations' foreign exchange exposure refers to the indetermination of possible loss and income as a result of the various currencies' exchange rate fluctuation.The foreign exchange exposure management is not only an aspect of multinational corporations financial control, but also it passes through the multinational corporations' financing and investing management,transporting business fund management and tax administration each aspect. Unify PPP,IFE,and IRP theory, use the market forecasting measurement,the fundamental factor analyzing method,the technical analyzing method and so on to separately carry forecasts and surveys for the three kind of types of multinational corporations' foreign exchange exposure——economic exposure,translation exposure,transaction exposure. After that, introduce the interior and exterior managing methods of multinational corporations' foreign exchange exposure, mainly are realized through the group interior strategy adjustment and exterior risk-evadable tools. To be specific is, to change selling price, to adjust the order,to change the price currency,to change property and debt structure,to lead the receipts and to lag the disbursements and so on, as well as the forward exchange transaction,the forward exchange futures transaction,the foreign exchange option transaction,the foreign exchange swap transaction and so on.In our country those companies who have transnational business, their foreign exchange exposure management mainly presents two situations: one is that the foreign exchange exposure mainly takes the form of the transaction exposure and the economic exposure; the other one is that the function of foreign exchange market has not been brought into full play. In our country those companies who have transnational business, their foreign exchange exposure management mainly has barriers of two aspects: one is the unique system restraint: the other one is the lack of the consciousness and management system of foreign exchange exposure. In view of the above questions, put forward some proposals for those companies who have transnational business in our country, including government and company two aspects. Finally, give two successful cases of Nokia and Zhang Ze electric power in managing foreign exchange exposure, in the hope that they will do some help to our company who has transnational business.