On The Risk Of Exchange Rate And Its Aversion Of Small Commodity Trade Enterprises

As a most important source of suppliers of small commodities in the world,China has been concerning export condition for long time.In recent years,small commodity international trade enterprises have been facing the crisis in both operation and competition fields as a result of the constant increase in value of Chinese currency.Thereby,how can they mitigate the risk brought about by exchange rate has become the priority of priorities.This essay analyzes the obstacles that resulted from the currency fluctuation of RenMinBi which small commodity export enterprises have encountered,as well as provides potential approaches from improvement according to the nature of foreign trade enterprises.In the first place,it systematically analyzes the current situation and issues of small commodity trade under the market economy structure of China.At present,China's industrial structure is labor intensive,and equipped with the lower cost of raw material,which effectively boom up the small commodity expert industry.However,it can be severely impaired in the situation of where the fluctuation of the exchange rate occurs.Furthermore,the essay also goes through the environment of currency exchange market and concludes the profound influence may render to the profitability of commodity enterprise,reduce in expert revenue and competition in world market,and suggests they should be addressed by means such as establishing the risk control system,ascertaining the risk management organization structure and applying financial derivatives.In the last,the essay takes a state owned enterprise LH as a case study to analyze and comment on the risk given rise by exchange rate,and referring to the approaches that adopted in mitigating risks rendered by currency exchange in the world,it proposes ideas on how to enhance profitability and control cost in the situation where the Chinese currency rate fluctuates sharply.