Research On Foreign Exchange Risk Management Of Fuyao Group

The major reform of the "811" RMB exchange rate system in 2015 is a major milestone for the opening up of the RMB.With the gradual deregulation of foreign exchange control and the impact of the complicated global international situation,the trend of exchange rate fluctuations has become increasingly uncertain.At the same time,with the continuous expansion of China’s economic scale,Chinese enterprises have become more and more involved in international trade and international investment and financing,and have gradually matured in the increasingly competitive international community.However,while extensive international exchanges and foreign-related trade activities have created a lot of business opportunities for enterprises,they have also brought greater challenges to Chinese enterprises,including foreign exchange risk management.Although China’s foreign exchange market has been booming in recent years,a series of foreign exchange derivatives have been launched,and banks and other financial institutions have also provided increasingly rich foreign exchange risk management services.In contrast,Chinese enterprises have changed their perception of foreign exchange risk management from There are also big differences in actual management.In particular,the unilateral depreciation expectation of the RMB exchange rate has been broken since 2017,and the two-way floating of the RMB exchange rate has really been achieved.This has led to the effect of the foreign exchange risk management measures adopted by most enterprises not reaching expectations.Adaptation results in huge losses.Therefore,how to strengthen enterprise foreign exchange risk management has become a research topic that the theoretical and practical circles pay close attention to,which has very important theoretical and practical significance for improving corporate value.This article uses a case study method,and the selected case company is Fuyao Glass Industry Group Co.,Ltd.(hereinafter referred to as Fuyao Group).Fuyao Group specializes in various automotive glass and float glass.It is an A + H listed company.Fuyao Group is a leading company in the industry,with market shares of more than 60% and 25% in the domestic and foreign automotive glass markets,respectively.The Group’s export revenue has increased year by year,and currently accounts for about 40%,and foreign exchange risk exposure is relatively obvious.Furthermore,Fuyao Group’s foreign exchange risk management plan has been implemented for several years and has achieved certain results.Therefore,studying the foreign exchange risk management plan of Fuyao Group is of great reference value for enterprises facing foreign exchange risk.On the basis of reading a lot of literature,this article supplements the definition of foreign exchange risk: foreign exchange risk is the company’s cash flow or value is affected by unexpected fluctuations in exchange rates.Then,this article analyzes the complete market hypothesis,MM irrelevant theory,and asset portfolio theory as the theoretical basis for foreign exchange risk management.This article studies along the train of thoughts of finding problems,analyzing problems,and solving problems.Through sensitivity analysis and hypothesis analysis,it was found that Fuyao Group faces greater foreign exchange transaction risk and foreign exchange economic risk exposure.Then this article studies the causes of Fuyao’s foreign exchange risks from both internal and external perspectives.This article finds that the causes of Fuyao Group ’s foreign exchange risk include: exchange rate fluctuations,interest rate fluctuations,fierce market competition,increased export revenues due to income cost mismatches,cost fluctuations caused by global material purchases settled in foreign currencies,and large-scale foreign currencies Receivables and payables.Based on the causes of foreign exchange risk and the company’s own situation,this article conducts a comprehensive study of the group’s foreign exchange risk management program.First,this article demonstrates the financial hedging and business hedging solutions adopted by Fuyao Group,including the use of foreign exchange derivatives,the use of multiple currencies,flexible procurement of materials,the establishment of overseas production plants,and centralized foreign exchange management models.Secondly,this article analyzes the foreign exchange risk management plan implemented in the overall management and decision-making of the Group’s production and operation from three perspectives: foreign exchange management model,foreign exchange risk management in daily business activities,and foreign exchange risk management in strategic expansion.Finally,this article studies and analyzes the progress and implementation of Fuyao Group’s foreign exchange risk management plan in detail,including: establishing a corresponding internal control system and standardizing the implementation process to ensure the effective implementation of the plan;gradually implementing overseas construction according to its own business layout strategy The strategy of the factory is to build a factory in Russia first,and then in the United States.From the perspective of information disclosure,foreign exchange risk is the focus of the group,and it is also a breakthrough point,driving comprehensive risk management of enterprises.Fuyao Group’s foreign exchange risk management program has achieved good results after several years of implementation.In the past few years when conducting foreign exchange risk management,Fuyao Group’s financial data has become more and more beautiful.The continuous improvement of risk management and internal control systems has laid the foundation for the long-term development of enterprises.At the same time,corporate information disclosure on risk has become more and more complete.