As a hub for global gift trading, Hong Kong's local gift enterprises have long been recognized by buyers from around the world. From April 27 to 30, the 33rd "Hong Kong Gifts & Premium Fair," organized by the Hong Kong Trade Development Council and co-organized by the Hong Kong Exporters' Association, was successfully held at the Hong Kong Convention and Exhibition Centre in Wan Chai.
In recent years, with frequent fluctuations in international exchange rates and the deepening of international trade activities, "multi-currency settlement and foreign exchange risk management" has become a topic of particular concern to businesses. Taking this opportunity, the Hong Kong Trade Development Council organized a seminar titled "Risk Management Strategies for Exporters," specially inviting KVB Kunlun International, as an expert in the field of foreign exchange risk management, to share its experience with large, medium, and small import and export enterprises in Hong Kong. The seminar explored how to use financial instruments for foreign exchange risk management, ultimately achieving the goals of protecting corporate profits and improving the efficiency of capital utilization.
When Exchange Rates "Shiver," Corporate Profits "Tremble"
According to KVB statistics, as the internationalization of the RMB accelerates, the volatility of the RMB exchange rate against major international currencies is continuously increasing. Among them, from 2016 to 2017, the USD's fluctuation range reached a maximum of 5,100 points, depreciating about 8% against the RMB over the two years; the EUR's fluctuation range reached a maximum of 9,900 points, depreciating about 14.7% against the RMB; and the GBP's fluctuation range reached a maximum of 15,800 points, appreciating about 18.7% against the RMB.
This shows that, even when the timing and direction (appreciation or depreciation) of international exchange rate fluctuations are difficult to predict, one thing is beyond doubt: the two-way volatility risk of the RMB exchange rate against major international currencies is continuously increasing. Facing such a financial environment, if corporate managers are unable to adopt active and effective risk management measures, then when a "black swan" event strikes (such as the Swiss franc event, the 2016 U.S. presidential election, or the brewing China-U.S. trade war), the enterprise will face the risk of profit losses, and in more serious cases, may even suffer catastrophic consequences.
Clarify the Corporate Currency Structure and Effectively Manage Multi-Currency Assets
Zheng Xiaorong, Global Trading Director of KVB Kunlun International, believes that the international exchange rate volatility risk triggered by "black swan" events facing enterprises has always existed. Therefore, enterprises need to have a clear understanding of their own currency structure and foreign exchange risk exposure, and need to know how to implement appropriate exchange rate risk hedging measures at the right time.
Take Youkeshu Group, a long-term partner client of KVB Kunlun International, as an example. As currently China's largest B2B cross-border e-commerce enterprise, Youkeshu Group's annual import and export sales have reached RMB 4 billion, maintaining a growth rate of over 100% each year. For annual sales of RMB 4 billion, if no reasonable foreign exchange risk hedging is carried out, then calculated at an annual RMB-to-USD fluctuation range of about 5%, a trading volume of RMB 4 billion could generate an exchange loss of RMB 200 million.
For "high-growth, high-risk" enterprises like Youkeshu, KVB Kunlun International has established a complete foreign exchange treasury management system. The first step in establishing the system is achieving multi-currency payment and settlement — through KVB's 24-hour electronic trading platform, helping enterprises achieve payment and settlement in 129 global currencies and complete T+0 transaction payments across multiple countries and different currencies. The second step is cash flow management — by integrating information from corporate fund accounts, helping them establish a complete fund supervision system and achieve automated management of bank transactions, making all cash flow data, including foreign exchange and local currency, clear at a glance. The third step is formulating a foreign exchange hedging plan — helping enterprises clarify their currency and cash flow structures, and on this basis formulating a corresponding foreign exchange hedging plan to hedge against uncertain factors in the information market and control exchange rate volatility risk.
"With over 3,000 employees, more than 200,000 transaction orders per day, 160,000 square meters of domestic and overseas warehousing, and coverage of more than 200 countries�" For rapidly developing cross-border e-commerce enterprises like Youkeshu, cross-border financial management is becoming an increasingly important part of their operations. KVB Kunlun International hopes to leverage its professional capabilities in the foreign exchange field to help enterprises guard against foreign exchange risks and achieve controllable management of exchange rate risk. This is the development direction of the foreign exchange industry, and it is also the mission of KVB Kunlun International!
