Research On Exchange Rate Risk Management Strategies And Effects Of Haier Smart Home

In the management of an enterprise,exchange rate risk have become one of the main risks.The "811 Exchange Reform" kicked off a new round of reform of the RMB exchange rate formation mechanism,and the exchange rate of the RMB against the US dollar changed from a continuous appreciation to a period of depreciation.How does the fluctuation of the RMB exchange rate affect Chinese companies? What are the exchange rate risk hedging methods of enterprises? How are the effects? These issues are of great significance for a deep understanding of the impact mechanism of RMB exchange rate fluctuations,analysis of its impact on China’s import,export and economic development,and improvement of exchange rate risk management of Chinese multinational companies.Against this background,this study examines the RMB exchange rate risk of Haier Smart Home and its hedging effects.Firstly,this study gives a brief introduction to the exchange rate environment of Chinese enterprises and Haier’s operations.Secondly,it mainly describes the exchange rate risks faced by Haier from three aspects: transaction risk,economic risk,and conversion risk,and then makes qualitative and quantitative analysis on the causes of Haier’s exchange rate risk and the magnitude of exchange rate risk.Thirdly,it studies Haier’s exchange rate risk management strategies,and analyzes whether the exchange rate risk management strategies have a significant impact on the company’s operating performance from both short and long term.Finally,from the financial and empirical perspectives,the paper further analyzes the effects of Haier’s exchange rate risk management.This paper studies the exchange rate risk management strategies adopted by Haier.It not only analyzes the effect from the financial aspect,but also uses the stock return model and cash flow model to evaluate the implementation effects.The study finds that,from a financial perspective,Haier’s foreign exchange derivatives have achieved good hedging effects;from the empirical results,the risk exposure of Haier’s cash flow from operating activities,investment activities,financing activities,and overall cash flow and stock return are not significant in descriptive statistics and regression analysis.Further analysis shows that the application of financial hedging and transnational operations has greatly reduced the risk of RMB exchange rate fluctuations.Therefore,it shows that effective foreign exchange risk management can reduce exchange rate risk exposures,so that the remaining exposures are difficult to find by macro-level and industry-level empirical research based on overall statistics.Future research on the impact of RMB exchange rate fluctuations must consider the impact of the effects of exchange risk management based on financial hedging and operating hedging at the company level.This study explains the reasons for the inconsistency of many empirical research conclusions about the impact of RMB exchange rate fluctuations in China.It has important reference value for understanding the impact mechanism of exchange rate risk at the company level and improving the effects of exchange rate risk management of Chinese multinational companies.And it also provides ideas and directions for future empirical research on large sample of companies.