Research On Exchange Risk Management Of Chinese MNCs In The Background Of The Belt And The Road

Foreign exchange risk management is not only an important part in the operation of MNCs.After Chairman Xi Jinping proposed the initiative of "the Belt & the Road”(B&R),this great idea has become one of national strategies of China.More and more Chinese enterprises started to go abroad to seek new growth points in the B&R countries with huge economic potential development.However,the currencies of these countries are basically non-convertible currencies.As a result,these enterprises recently have suffered serious exchange losses.The paper uses a case-analysis method by using communications equipment manufacturer Z Company as an example.The first part introduces the research background,significance and framework of the paper.In the literature review,we mainly review the past research of Chinese and foreign scholars from the aspects of recognition,measurement and management of foreign exchange risk.The second part mainly introduces the situation of exchange rate risk in emerging market countries,expounds the future trend forecast of exchange rate in emerging market countries and the difficulty of exchange rate risk management.In the third part of the paper,it mainly discusses how Chinese multinationals operating in the B&R countries should guard against foreign exchange risks.This part introduces Z Company’s actual case.By describing the current situation and problems of foreign exchange risk management of Z Company,this paper finds that foreign exchange risk management system of Z Company cannot adapt to the new situation of foreign exchange market.Target ambiguity,decentralized organizational structure,low level of professionalism of foreign exchange risk managers and few hedge methods are responsible for these problems.This paper puts forward an improvement plan for Z Company’s current foreign exchange risk management from four aspects,including determining foreign exchange risk management objectives,changing the organizational structure of foreign exchange risk management,improving the quality of professional personnel and using more hedging methods flexibly.The fourth part is the conclusion of this paper.It suggests that the Chinese MNCs Chinese-funded multinational companies should be based on their own business characteristics to establish a flexible foreign exchange risk management system with operating mainly hedge,hedge financial supplement to resist foreign exchange risk.The innovation of this paper lies in the study of Chinese-funded MNCs operating mainly in developing countries.Since the exchange rate problem of developing countries is relatively more complicated and changeable,financial hedging strategy is limited in these areas.They need to use more operating hedging methods based on their business.Thus this paper has enriched the operating hedging strategy content.Also the paper gives some useful suggestions for other companies invested in the B&R areas.