Case Study Of Exchange Rate Risk Management Of ZTE

Today's world economic development has two sides.On the one hand,driven by the cyclical recovery of trade and manufacturing and the steady development of global financial markets,emerging economies have gradually become an important force in the recovery of the world economy.On the other hand,monetary policies in developed countries have changed frequently.The rise of trade protectionism has caused a serious threat to the recovery of the world economy.Economic imbalances have led to a series of problems,such as the intervention of major powers in hotspots,and geopolitical conflicts,which have further aggravated the vulnerability of the global economy.China is a powerful force for the recovery of the world economy.Facing the complicated economic environment,it is worthwhile to study the ability of Chinese multinationals to improve exchange rate risk management to reduce the losses caused by exchange rate risks.More and more important research topics.Therefore,the purpose of this study is to conduct a case study on the exchange rate risk management of a representative multinational company such as ZTE,and propose to help ZTE to reduce exchange losses,improve the exchange rate risk management system,and realize the preservation and appreciation of assets.At the same time,it provides a reference for other multinational companies how to conduct effective exchange rate risk management in an increasingly complex and volatile foreign exchange environment.First of all,this paper introduces the basic situation of ZTE,its current exchange rate risk,and current status of exchange rate risk management.Then,this paper sets the net cash flow value and ZTE's stock return rate as the dependent variable,and sets the volatility of the US dollar,euro,and RMB exchange rate indices as independent variables,to establish tow models to quantify the effect of ZTE's exchange rate risk management through regression analysis.The empirical analysis shows that ZTE's net cash flow and stock return are significantly affected by exchange rate fluctuations.By analyzing the size and significance of the regression coefficient,this paper finds out the main problems of ZTE's exchange rate risk management,including the excessive exposure of the euro exchange rate in the cash flow of operating activities,the insufficient use of foreign exchange derivatives,and the exchange rate faced by financing activities.The risk exposure is too large and the time structure management of foreign currency accounts receivable is limited.Finally,this paper believes that ZTE can decentralize the exchange rate risk in its business activities through the way such as using of additional provisions,using a variety of financial derivatives,adopting positive foreign currency debt repayment measures,and advancing or postponing the receipt of foreign exchange to improve the time structure of accounts receivable.Finally,the paper summarizes the experience of ZTE's exchange rate risk management,and hopes to help other multinational companies improve their risk management ability.