Industry Situation Is Grim &Nbsp; Domestic Textile Enterprises Need To Break Through With Adversity (2)

First, business pairs.

Second, the restriction of the current company system.

In our long-term contact with spot enterprises, we find that the existing company system restricts the possibility of enterprises' participation in hedging.

According to the nature and scale of the company, enterprises can be generally divided into three categories: state-owned enterprises, large shareholding listed companies, and small private enterprises or private enterprises.

As far as state-owned enterprises are concerned, the complicated and time-consuming process of examination and approval is likely to make the futures hedging plan disappear. Even if approved, there will be cumbersome decision-making procedures when participating in futures trading.

Because the head of the futures trading department of a state-owned enterprise has no decision power. Before buying or selling, it must report its trading plan and wait for the approval of the person in charge and other leaders. After that, the order can be placed, but the futures market is changing rapidly, which often delays the best trading opportunity.

Large scale joint-stock private enterprises also have the same problems.

At the same time, when the hedging loss occurs, the problem of responsibility will become a problem. If there is no problem in the future profit, if the loss is made, the person in charge of the enterprise will be under great pressure.

This is why state-owned enterprises and joint-stock enterprises are generally reluctant to participate in futures hedging.

Smaller private enterprises are more efficient, and they do not need to examine and approve layers in hedging operations.

Moreover, because such enterprises are of personal nature, the person in charge of the enterprise will not worry about personal performance due to participation in futures hedging.

Third, the shortage of funds makes it impossible to participate in hedging.

Generally speaking, enterprises need a large amount of capital to run in production and operation. It is very unrealistic for enterprises to take out a sum of funds to hedge.

Therefore, some enterprises have abandoned the risk of increasing the price of raw materials by participating in futures hedging.

Solving the problem of enterprises participating in the hedging problem

The above three "mountains" that restrict textile companies from participating in futures hedging are not insurmountable.

First, carry out comprehensive futures knowledge training for textile enterprises.

It is not difficult for enterprises to fully understand the hedging function of futures market. It can not only be difficult to get in touch with Futures Company with better quality and larger scale, but also enable them to conduct training in futures basic knowledge and real trading, so as to help the relevant personnel understand more about the benefits of futures and hedging to enterprises, no longer have fear and resistance to futures market, and change the wrong view of hedging.

In June 2008,

As the new cotton market has been reported in 2009, the reduction of planting area has led to the expected reduction in cotton production. A large textile enterprise in Hebei is worried that cotton prices will rise sharply in the future. After consulting the Futures Company, it decided to hedge the cotton price increase to bring pressure to the enterprises through futures hedging.

The company opened its 100 hand cotton futures contract in October 22, 2009, and the paction price was 15030 yuan / ton.

As the company expects, cotton prices are rising all the way from the revival and demand of the downstream textile industry.

By March 5th this year, the price of grade 328 cotton was 15200 yuan / ton, up 1327 yuan / ton.

At this point, the company received a large number of orders, decided to buy a large number of spot production.

In order to return the funds, the company sells all 100 hand cotton futures contracts held by them, the price is 16755 yuan / ton.

On the same day, the purchase of 500 tons of cotton in the spot market increased by 663500 yuan, but the company made a total profit of 862500 yuan in the futures market.

On the whole, the enterprise not only did not pay much money when buying spot, but also earned 199000 yuan.

From these two examples, we can see that

Secondly, we should establish effective internal control mechanism, standardize trading behavior and guard against risks.

In view of the existing corporate system restricting the participation of futures hedging, we believe that whether state-owned enterprises or joint-stock private enterprises can set up an effective internal control mechanism in accordance with the following modes to guard against irregularities and risks in business operations, and do not need to be reported at all levels. This greatly improves the work efficiency and effectively prevents risks.

In 2009, the mid term Research Institute helped a large scale textile enterprise design a perfect internal control mode, and got the high and low praise from the enterprise. Until now, the process system is still in good operation, which has brought better hedging benefits to the enterprise.

This mechanism is mainly composed of three parts: the front desk (futures business department), the backstage (Finance Department) and the middle stage (risk monitoring department).

The front desk is mainly responsible for the paction, although the trading strategy and facilities are regularly reported to the central and the stage, but the rights of the paction decision and implementation will not delay the paction time.

As a backstage, the financial department only accepts the instructions of the funds pferer to carry out the futures margin pfer and accounting treatment, is responsible for the paction review and reconciliation, confirms the sales and entrustment, and deals with all kinds of financial affairs and tracks pactions. At the same time, it independently supervises the front office pactions and the back-end settlement according to the regulations, and assists the front desk traders to make profit and loss reports at any time, so as to conduct the paction risk assessment.

The central stage is the most important part of the system, playing the role of risk monitoring, and supervising all business operations at the front desk and back stage.

Once the potential risks are discovered, the relevant personnel will be verified in time and report to the futures business leading group.

In this system, the three departments are closely linked, collaborate and restrict each other. They can not only seize the best trading opportunity, but also play a positive role in risk control and supervision.

Thirdly, combine hedging with piecewise and component strategies.

The solution to the need for enterprises to participate in hedging is not complicated.

If we can not raise enough funds to achieve full hedging, we can take some hedging strategies according to the price changes of raw materials.

For example, a textile enterprise needs to purchase 500 tons of cotton spot in November, and it can completely maintain its value of 500 tons of cotton according to its own cash flow.

Although this method can not fully realize risk hedging, it can reduce the risk brought by spot price fluctuation to a certain extent.

At the same time, enterprises can also maintain value in different periods.

When the cash flow of enterprises is more abundant in a certain period and the spot price fluctuates, enterprises can hedge their futures value.

It should be noted that when the spot price is relatively stable, enterprises do not need to hedge.

In this way, combined with the strategy of piecewise and component preservation, textile enterprises not only solve the problem of hedge capital, but also avoid a certain degree of risk avoidance of raw material price fluctuation.

Of course, as China's economic development and reform deepens, the financial market will gradually become more standardized, stable and open. I believe that in the near future, enterprises can use bank loans to hedge.

In the current complex economic situation, textile enterprises, if they want to maintain steady development in the increasingly competitive industry, should formulate long-term business strategy and take the initiative to attack.

First of all, we need to accelerate the pace of enterprise pformation and gradually achieve the development goals of high efficiency, high quality, innovation and brand internationalization.

Secondly, we should establish a more perfect risk management system and use the futures market hedging function to save raw material procurement costs and lock in product profits.

To sum up, only when the ability to fight risks is really promoted, the production and operation of textile enterprises will be more stable and sustainable, so that they can continue to grow bigger and stronger and become invincible in the industry.