Case Study On Foreign Exchange Risk Management Of HUAWEI Company

Since China adopted a managed floating exchange rate in 2005,RMB exchange rate volatility has been more market-oriented.On August 11,2015,the people's bank of China further improved the RMB exchange rate formation mechanism which formed the yuan central parity rate against the dollar price mechanism of “closing rate + a basket of currencies exchange rate changes”.After the exchange rate reform,the long-term trend of the RMB unilateral appreciation against the U.S.dollar is over,and the trend of two-way fluctuation is getting more clear.In this context,the probability of loss from exchange rate volatility of businesses is getting bigger,and exchange rate not only exerts a direct impact on multinational businesses,but enterprises which don't have overseas transaction.This requires domestic enterprises to enhance risk preparedness,pay attention to the changes in the foreign exchange market and strengthen their ability to resist foreign exchange risks.This paper takes HUAWEI as an example and analyzes the foreign exchange risk management of the company.On the one hand,HUAWEI has expanded overseas business in recent years which brings greater foreign exchange risk and increases the possibility of companies affected by the loss of foreign exchange risk.On the other hand,HUAWEI grows from a small communication equipment sales agent to the well-known multinational business around the world,the development mode and the overseas expansion strategy has a strong representation in the enterprises of our country,and with the expansion of its overseas business,HUAWEI will focus on how to further exchange risk management.Above all,this paper chooses HUAWEI as object.This paper introduces the present foreign exchange market,and then it introduces the basic situation of the company.On the basis of introduction of the management situation of the company,this paper introduces the current situation of foreign exchange risk management of HUAWEI,and analyzes it from two aspects: the internal structure of the company and the specific management measures.And then this paper analyze the overall foreign exchange risk from the perspective of the company's business firstly,and then choose the appropriate methods to measure the risk in three ways: transaction risk,accounting risk and economic risk.HUAWEI is one of the world's leading information andcommunication solutions provider,its business involves more than 170 countries and regions.As the company's overseas business expands in recent years,HUAWEI foreign exchange exposure expands too.In the context of the exchange rate fluctuations are getting more frequent,the company has constantly improved their ability to guard against foreign exchange risk in recent years.However,the company still have shorts in foreign risk management.In the end,this paper puts forward suggestions on the deficiency of the company's foreign exchange risk management,which contributes to the improvement of the risk management system and prevention of foreign exchange risks of the company.It also provides reference for other enterprises to carry out foreign exchange risk management.