Research On Exchange Rate Risk Management Of Chinese Enterprises’ Foreign Investment

Since the establishment of the statistical system of foreign direct investment in 2002,the flow of foreign direct investment in China has continuously increased,entering a stage of rapid development,and the number of enterprises choosing to invest abroad in China has also been increasing.With the increasing scale and number of Chinese enterprises’ foreign investment,enterprises are also facing higher exchange rate risk.Based on the above,this paper mainly analyses the development characteristics and current situation of China’s outward FDI in recent years,and finds that China’s outward FDI grew rapidly from 2002 to 2016,and the outward FDI flow of Chinese enterprises declined in 2017.However,it optimizes the industry structure of outward FDI,which makes China’s outward FDI show a more stable and healthy development trend,thus reducing the risk of China’s outward FDI.But at the same time,because of the increase of RMB fluctuation,the exchange rate risk faced by Chinese enterprises participating in foreign investment is also increasing,so at present,Chinese enterprises are in a period of high exchange rate risk.This paper also summarizes the shortcomings of Chinese enterprises in the face of exchange rate risk and the direction of improvement,and summarizes some effective methods of exchange rate risk management,such as using financial derivatives such as forward foreign exchange trading,foreign exchange swaps,foreign exchange options to manage exchange rate risk,and compares various methods to find suitable exchange rate risk management for different enterprises and different environments and suggest enterprises how to choose.Finally,through the case analysis of Haier Group’s acquisition of GE’s household appliances business,we learn from the experience.Some suggestions are given,such as improving the exchange rate risk management system,flexibly using various exchange rate risk management tools and measurement models,and increasing the training of exchange rate risk management personnel.