Professional Foreign Trade Companies, Business Risk Analysis

The article is written out of author's working experience in international trade in combined with theoretical knowledge from the graduate study.Through his everyday work as an agent working in a foreign trade company, the author realized that there is a common lack of idea of risk prevention in most of our country's foreign trade companies. Traditionally, most of these companies are State-owned and operated under planned economy. The monopoly of state-owned companies cultivated an arrogance feeling and slack management style, and the problem of operation mechanism is especially prominent. As the development of our foreign-trade business, the competition in the international market will become even severer. When there is no support of government policy, we could not win the competition with foreign traders if we don't establish a strong idea of risk management. Therefore, it is very important for us foreign trade companies to strengthen our idea of risk management, to thoroughlyanalyze various risks in our work, and to minimize the possibility of their happening. That is also the aim of the article..The article combines theoretical study and practical cases.Firstly, the concept of risk and risk management is elaborated. Then, a number of risks related to foreign trade are named and analyzed one by one. This part deals with the examples of common risks our companies are currently facing. The cases are very representative and have strong practical implications.Next, two theoretical methods of risk prevention are discussed: cash flow analysis, options and futures. The two methods currently are seldom used by our foreign trade companies, but are widely used by abroad large companies and transnational corporations. To establish modern enterprise system and participate in the sharper and sharper competition of international market, we need to learn and use these methods.Through observation in his work, the author brings out in the article the problem of risk analysis which is now not being paid enough attention to. Through the introduction of cases, the author hopes to draw special attention of our managers in foreign tradecompanies to the problem of risk management, and explain the theoretical methods and practical applications of risk analysis.After looking back upon our more then ten years' development of foreign trade, we can say that the lack of risk prevention and faulty decisions are our major sources of failures. Only if we directly face difficulties and risks of foreign trading, and make brave renovations and scientific decisions, can we walk out of our current dilemma.That is the author's ultimate goal.