Analysis And Strategy Selection Of Foreign Exchange Risks For Small And Media Sized Export Enterprises

Small and medium-sized enterprises have played an important role in thecountry’s financial and economic development. In China, most of exportingenterprises constitute the main part of industrial sections. According to the statistics,exporting enterprises held around60%of the total volume of exports which is uniquein the economic development, employment increasing, innovation of science andtechnology. However, the advantage of the raw material for the exporting of the SMEhas gone in terms of the enhancement of the instability of the international financialmarket, the intensification of the exchange rate fluctuation and the appreciation ofRMB. As a result, quite a few exporting SME’s profits have diminished along with therising risk and outcome of the deficit.This essay has made the analysis based upon the appreciation of the exchangerate of the RMB against the SME exchange rate. It has firstly elaborated the purposeand background of the research, internal and external situation. In addition, it has putmore effort on the study of the types of the exchange rate risks which could haveaffected the SME. Moreover, it has analyzed the exchange rate difficulties andproblems of the SME in light of the national economic environment. At the moment,the Chinese SME has positioned adversely in the foreign export resulting in theincapable of the facing exchange rate risk. In order to verify the lower decision rightsin the foreign export, this article has investigated the U.S. importing prices, exchangerate between U.S. Dollar and RMB, importing process for the exporting commoditiesthrough the VAR Model. It has found the following conclusions: the fluctuation of theRMB exchange rate is not the key point for the U.S. importing prices, the decisionrights for Chinese SME is not strong enough by use of the Grainger Causality test andCo integration test. It has also discussed the cause according to the realistic analysis.In the end, this article has pointed the measures for the SME exchange rate from alldifferent kinds of perspectives. This article has proposed the ways, in particular, industrial upgrading,optimization of the SME exchange rate risk management system, earning of thecompetitive advantage by use of the financial derivatives, in terms of simplicity of therisk aversion, lack of the risk management system, processing export for most of theSME, price competition. Actually, the above means mentioned has set up theirreplaceable role for the SME so as to gain the international competence.