How do small, medium and micro foreign trade companies move forward through the waves

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As an important force in stabilizing foreign trade, small, medium and micro foreign trade enterprises have also played an important role. Relevant data shows that in the first 10 months of this year, 154,000 foreign trade operators have been newly registered, and most of them are small, medium and micro foreign trade enterprises.

Deng Guobiao said, “Most foreign trade companies will incorporate exchange rate fluctuations into their daily operations and financial decisions to minimize the negative impact of exchange rate fluctuations on export business and corporate finance.”

In the face of exchange losses caused by exchange rate fluctuations, foreign trade companies can use financial tools for control, and foreign exchange lock tools are one of them. According to Deng Guobiao, XTransfer’s foreign exchange lock product is called “Yihuibao”, and XTransfer purchases forward foreign exchange contracts from banks on behalf of foreign trade companies. Foreign trade companies need to determine the approximate time and amount of foreign exchange to the account, and choose to purchase a foreign exchange lock contract corresponding to the amount and time limit of the foreign exchange. The advantage is that foreign trade companies will not suffer losses due to exchange rate fluctuations when executing the contract. In addition, if the real exchange rate drops and foreign exchange is settled at the locked exchange rate, it can help companies realize some of the benefits.

In addition to foreign exchange lock-in, setting a quotation validity period is also an effective way to avoid exchange rate risks. Deng Guobiao said that the exchange rate changes in real time, and fixed quotes pose exchange risks for foreign trade companies. In order to avoid losses caused by exchange rate changes, the quotation must have an “validity period.” The use of RMB for settlement is also one of the ways to deal with exchange rate fluctuations.

Since the beginning of this year, relevant departments in many places have also made a fuss about the “exchange rate”, helping small, medium and micro foreign trade companies to avoid risks, and have achieved a lot of practical results. For example, on October 15th, Chengdu introduced two policies to support exchange rate hedging for small, medium and micro foreign trade enterprises, namely, “free of deposit and guarantee fee for forward foreign exchange settlement and sale” and “funding support for performance of foreign exchange derivatives”. On the same day, China Merchants Bank Yuzhong Sub-branch also handled the first “Huibaotong” exchange rate hedging business for Chongqing Weinaco Trading Co., Ltd., marking the first nationwide development of the “Huibaotong” exchange rate hedging service for small and medium-sized foreign trade companies in Yuzhong District, Chongqing. The new insurance model was successfully implemented. Also in October, Bank of China Ningbo Branch successfully implemented the province’s first small and micro enterprise exchange rate hedging “bank and political responsibility” innovative business, realizing an innovative foreign exchange value-preserving transaction model guaranteed by banks and third parties, saving companies’ funds The cost also avoids the risk of exchange rate market fluctuations.

Breakthrough with digital means

Although the current global epidemic is still fluctuating, the economic recovery has become more divergent, the risks of rising commodity prices, energy shortages, tight capacity, and policy adjustment spillovers of advanced economies are intertwined, but the fundamentals of my country’s long-term economic improvement have not changed. This is undoubtedly good news for small, medium and micro foreign trade companies.

Deng Guobiao said that through the XTransfer export leading index and small and medium-sized foreign trade enterprise competitiveness index research, we found that foreign trade companies, especially small, medium and micro foreign trade companies, have continued to increase their resilience and vitality. The development of new business formats and new models, and the development of digital transformation is the only way to go.

In addition, a large number of small, medium and micro enterprises have begun to seek breakthroughs through digital means in response to problems such as weak anti-risk capabilities and low resource utilization efficiency. Deng Guobiao believes that the digital upgrade service market for small, medium and micro enterprises also has a lot of room for improvement. With the help of digital tools, small, medium and micro enterprises can achieve flexibility and improve their ability to resist risks. The CRM customer relationship management application previously released by XTransfer aims to help small, medium and micro foreign trade companies realize the digital management of the entire business chain, making the company’s resource use more efficient. The result of this is that the company’s resilience is enhanced, and it can better resist fluctuations in the external market.

In fact, not only small, medium and micro enterprises, but for all foreign trade companies in my country, digital transformation is a common issue that needs to be faced during the “14th Five-Year Plan” period. The “Fourteenth Five-Year Plan for High-Quality Development of Foreign Trade” issued by the Ministry of Commerce recently mentioned that to promote the digital transformation of trading entities, specific measures include: supporting production-oriented foreign trade enterprises to carry out digital transformation of the entire value chain such as product research and development. Encourage trade-oriented enterprises to improve their digital service levels and provide smart, convenient and efficient services. Guide foreign trade companies to improve their informatization and intelligence level. Support trade digitalization service providers to provide foreign trade enterprises with high-quality digital transformation services, coordinate to promote the digital transformation of foreign trade enterprises, and enhance the comprehensive competitiveness of enterprises.

2021-12-27


Post time: Jan-05-2022

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