浙江匪酝广告传媒有限公司

In cross-border procurement, how much does exchange rate fluctuations affect the business?

in theCross-border procurementin the operation,The exchange rateVolatility is a regular problem that can have adverse effects on the business.

Assuming that a Chinese company plans to purchase raw materials from the United States, the purchase contract stipulates the purchase amount of $100,000, and when the contract is signed, the exchange rate of the RMB to the US dollar is $1 = $6.8, then the purchase cost is $680,000.

However, as a result of fluctuations in exchange rates, the exchange rate of the RMB to the US dollar may change when the contract is executed. Assuming that the exchange rate changed to $1 = $7.2 before the purchase of goods arrived in China, then the purchase cost of $100,000 would turn to $720,000, an increase of $40,000 compared to the original cost.

In this case, Chinese companies will need to pay higher purchasing costs, which will have a negative impact on their profitability.In addition, if the company does not manage exchange rate risk or does not have sufficient funds ready to cope with exchange rate fluctuations, changes in exchange rates may also lead to problems such as funds tension or failure to pay purchased amounts on time, further affecting business development.

Therefore, in transnational procurement business, it is important to understand and manage exchange rate risk. Enterprises can take a number of measures to reduce the impact of exchange rate fluctuations on business, such as buying exchange rate futures contracts, using expired currencies and other financial instruments. In addition, enterprises can also consider negotiating prices with suppliers and negotiating as stable exchange rates as possible in contracts to reduce exchange rate risks.

Choosing the right supplier is the primary part of supplier management
? Previous 11 April 2023
The impact of rising cotton prices on the textile industry: Cotton spinning companies are facing challenges and market demand is weakening
Next ? 11 April 2023
克山县| 屏南县| 孝义市| 鄂托克前旗| 襄汾县| 高淳县| 图木舒克市| 长海县| 凤凰县| 肥乡县| 延川县| 宜宾县| 内丘县| 利川市| 温泉县| 繁峙县| 新营市| 宾川县| 新和县| 彰化县| 中牟县| 怀来县| 泸水县| 富川| 虹口区| 汉寿县| 宁蒗| 将乐县| 鸡西市| 宜章县| 玛多县| 五华县| 开阳县| 石阡县| 玉山县| 德庆县| 昆明市| 海口市| 溧阳市| 兴化市| 樟树市|