Study On The Out-of-Control Of Foreign Exchange Risk In Export-Oriented Private Manufacturing Enterprises

As an important part of China's economic development,export trade has always been called the "troika" of promoting China's economic development with investment and consumption,and has made outstanding contributions to promoting China's social and economic growth and increasing employment.From the point of view of the main body of export trade,our country's private enterprises have a large number and have a wide range of foreign-related business,which is the main force of export trade.However,with the two major reform of the exchange rate regime carried out by the central bank in 2005 and 2015,the RMB exchange rate was no longer pegged to the single dollar and moved to a managed floating exchange rate regime based on market supply and demand,with reference to a basket of currencies.Since then,the two-way fluctuation trend and the fluctuation range of RMB have significantly increased,which has undoubtedly brought great foreign exchange risk to many foreign-related enterprises in China,especially those private enterprises which lack experience in foreign exchange risk management.Trade disputes between China and the United States have intensified,the economic environment has become volatile,the exchange rate of the RMB has become more volatile in both directions,and foreign exchange risks faced by foreign-related enterprises have also escalated.Therefore,how to measure and control the foreign exchange risk of foreign-related enterprises is of great significance to the development of China's export economy.This paper takes Zhejiang Yongqiang Company as an example,which is influenced by the foreign exchange changes and leads to the sharp fluctuation of the company's performance,in order to explore the shortcomings in the foreign exchange risk management of export-oriented private manufacturing enterprises.And summed up targeted foreign exchange risk prevention and control recommendations.In the process of research,this paper uses literature analysis method,case study method,qualitative and quantitative combination method,in combing the domestic and foreign scholars about the definition of foreign exchange risk,influencing factors,On the basis of related theoretical research such as measurement method and prevention and control countermeasure,combined with Zhejiang Yongqiang's industry background and company characteristics,this paper analyzes the case of Zhejiang Yongqiang with four steps:(1)the analysis of the changes of exchange gains and losses and profits ofthe company;(2)the analysis of the methods of foreign exchange risk management;(3)the analysis of the effect of foreign exchange risk management,that is measuring the exposure of foreign exchange risk of the company through 2 models to test the effectiveness of the foreign exchange risk management measures taken by the company in the previous step;(4)the analysis of the causes of foreign exchange risk out of control.Finally,through quantitative and qualitative analysis,the conclusions are as follows: from 2010 to 2015,the cash flow and stock price of Yongqiang are not significantly affected by exchange rate fluctuations,and the foreign exchange risk management is generally effective;but from 2016 to 2018,the cash flow and stock price are significantly affected by exchange rate fluctuations,and the foreign exchange risk management is invalid as a whole.The direct reason that Zhejiang Yongqiang's foreign exchange got out of control is that the enterprise maintains the simple and rough foreign exchange risk management method for a long time,which can not resist the threat brought by the new exchange rate environment to the enterprise,in addition to some deep reasons.In view of the problems found,some suggestions on how to improve foreign exchange risk management are put forward in the last part of the paper..