The Research Of Chinese OFDI Enterprises Foreign Exchange Risk Management

In 2017,China's OFDI(outward foreign direct investment)flows ranked third in the world.However,while Chinese OFDI enterprises continue to expand their investment breadth and depth in the international market,they also suffer huge exchange losses due to the lack of foreign exchange risk management.81 domestic listed companies were selected as our research object from top 100 Chinese OFDI corporate list.We analyzed the financial statements and company announcements of those companies from 2015 to 2017,and found the following problems exist:(1)more than one-quarter of Chinese OFDI enterprises were exposed to significant foreign exchange risks,(2)35.8%OFDI enterprises in China used foreign exchange derivatives as foreign exchange risk management tool,but this proportion was still lower than that of other countries in the world.(3)foreign exchange risk management tools used by Chinese OFDI enterprises were relatively lack of variety,(4)most Chinese OFDI enterprises have no clear plans and management systems for foreign exchange risk management.Therefore,the construction of foreign exchange risk management system still needs to be strengthened.Taking Haier's acquisition of GE Appliance as an example,we summarized the experience from Haier's decision making process of choosing the optimal foreign exchange risk management tool and the construction of foreign exchange risk management system.Aiming at the problems we previously proposed that existed in the foreign exchange risk management of China's OFDI enterprises,firstly we introduced the foreign exchange risk management tools closely related to the OFDI activities as to provide the reference for foreign exchange risk management tools selection.Then we explored alternative foreign exchange risk management strategies from the prospective of capital investment,income carry-over and business operation.Finally,we provided suggestions on how to improve the foreign exchange risk management system to help enterprises enhance their foreign exchange risk management capability and revenue stability.