1. Background：
Recently, global economic instability has been increasing, and exchange rate fluctuations have become one of the important factors affecting the operation of foreign trade enterprises. The multiple interest rate hikes in the US dollar have led to an increase in the exchange rate between the US dollar and multiple currencies, making it inevitable for customers to view the exchange rate as high and adopt a wait-and-see attitude towards imports. In order to address the impact of exchange rate fluctuations on corporate profits, our company has decided to issue an exchange rate subsidy policy to support trade activities between our company and customers. We proactively provide exchange rate subsidies to some customers to benefit them and grow together with them.
2.The impact of the rise in the US dollar exchange rate：
Firstly, let's understand the impact of exchange rate fluctuations. The impact of the rise in the US dollar exchange rate is mainly twofold. On the one hand, it affects us (the seller). The rise in the US dollar exchange rate leads to an increase in the value of goods, indirectly increasing profits; On the other hand, for customers (buyers), exchanging US dollars requires more money and increases procurement costs.
Exchange rate is the ratio between currencies, and its volatility can affect the actual income and costs of import and export enterprises. When the domestic currency appreciates, the price of exported products increases relatively, while the price of imported products decreases relatively, which is a disadvantageous factor for exporters; However, when the domestic currency depreciates, the prices of exported products are relatively lower and the prices of imported products are relatively higher, which is a positive factor for exporters. The impact of exchange rate fluctuations on business operations is often unpredictable and uncontrollable, which creates uncertainty for the profitability and competitiveness of foreign trade enterprises.
Given the risk of exchange rate fluctuations, our company has decided to provide certain economic support to customers who have established business partnerships with us by issuing exchange rate subsidy policies. Our goal is to reduce the impact of exchange rate fluctuations on customers and improve the stability and sustainability of business cooperation through this policy.
3.Activity purpose：
(1) A win-win situation for both buying and selling. Taking the January quotation as an example, even with a 5% exchange rate subsidy given to the customer, at the current rate increase, our final profit is still higher than the quoted profit, and the customer has also received a better purchase price at the current exchange rate.
(2) Stimulate customers to place orders
(3) There will be no large-scale promotional activities in the short term, and performance will be improved through exchange rate subsidies, laying a solid foundation for the third quarter.
(4) At the same time, it is also for us to win orders (to gain an advantage in peer competition, without making changes, we may not have an advantage).
4.Measures:
The company produces an official exchange rate subsidy notice, and the salesperson communicates the company's exchange rate subsidy dividends to customers through targeted invitations.
Specifically, our company will provide a certain proportion of subsidies based on the actual purchase amount and exchange rate changes of customers.
The official notice is as follows:
The official exchange rate subsidy period of the company is July 17-23, 2023, with a 5% exchange rate subsidy. Due to the continuous increase in raw material prices, exchange rate subsidies are limited to this period, and the company's product prices may increase subsequently. When the salesperson conveys the exchange rate subsidy dividend policy to specific customers, if they encounter customers requesting more subsidies, they need to apply to their superiors before making a separate decision.
5.Summary：
We are also aware of the risks and challenges associated with exchange rate subsidy policies. Firstly, the exchange rate subsidy policy requires us to bear certain financial risks to ensure that we can continue to provide this subsidy. Secondly, the implementation of policies requires a large amount of manpower and resources, which is also a challenge for us. However, we believe that through this policy, we can better serve customers in a fiercely competitive environment while enhancing our own competitiveness.
In summary, our company has decided to issue an exchange rate subsidy policy to address the impact of exchange rate fluctuations on corporate operations. The purpose of this policy is to support trade activities with customers, mitigate the impact of exchange rate fluctuations on customers, and enhance the stability and sustainability of cooperation. We believe that through this policy, we can better serve customers while enhancing our own competitiveness.
