Experiences and implications of foreign enterprises' exchange rate risk management strategies for China
Year: 2025
Type: article
Abstract: Against the dual drivers of deep global economic interconnection and the digital technology revolution, the complexity and uncertainty of international trade and capital flows have significantly intensified. Since China's reform of the exchange rate formation mechanism in 2005, the marketization of the RMB exchange rate has progressed steadily, leading to a significant increase in exchange rate flexibility. However, the problem of enterprises' exchange rate risk management capabilities lagging behind market development has become increasingly prominent. This paper focuses on the exchange rate risk management practices of two multinational enterprises, Apple and Toyota. Through case analysis and literature research, it systematically sorts out their four core strategies: supply chain regionalization, portfolio hedging with financial instruments, tax coordination, and digital-driven approaches. The study finds that Apple reduces its reliance on foreign currencies through global supply chain layout and dynamic hedging tools, while Toyota diversifies risks by relying on regional closed-loop production and multi-source supply networks. Both have achieved a reduction of over 85% in the impact of exchange rate fluctuations on their profits. The research conclusions indicate that Chinese enterprises need to make breakthroughs in four aspectsstrengthening supply chain resilience, applying derivative portfolios, integrating cross-border cash pools, and enhancing intelligent risk controlto promote the transformation of risk management from passive response to proactive prevention and control. This paper provides a reusable framework for foreign-related enterprises to address exchange rate fluctuations and holds important reference value for optimizing the risk management system under the "dual circulation" pattern.
Author: Xiangyu Xu
Institution: Shandong University of Finance and Economics
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4413700697