Exchange Risk Management of Multinational Enterprises under the China-US Trade War: Case of Yutong Packaging

Abstract

After the outbreak of the China-US trade war in 2018, tariffs and exchange rate fluctuations increased the uncertainty of transaction costs for multinational enterprises, making foreign exchange risk management a critical issue for companies to cope with the impact. Yutong Packaging Technology is one of the world's largest producers of premium paper packaging. As its customers are spread all over the world, the China-US trade war is certain to expose the company to exchange risk. This paper uses Yutong Packaging as a case study and finds that under the environment of the China-US trade war, Yutong Packaging effectively avoided exchange rate risk through foreign exchange hedging operations, buffered the impact of foreign exchange losses on profits, and ensured the stability of profits from overseas businesses. This study enriches the practical application of risk management and financial strategy theories and provides feasible foreign exchange risk management approaches for export-oriented multinational enterprises.