In the first quarter of 2026, the appreciation of the RMB has caused the A-share financial reporting season to frequently “increase revenue but not profit”, and exchange gains and losses have become a high-frequency word.
However, under the same two-way fluctuation of the U.S. dollar, the fate of different export industries can be described as ice and fire: some industries have exchange losses eating up their annual profits, while others benefit from U.S. dollar liabilities.
The differentiation behind this is far more intense than imagined.
From the perspective of export manufacturing, highly sensitive industries are being “peeled” by the exchange rate.
Highly export-oriented industries such as consumer electronics and textiles will suffer the most direct damage.
The most extreme case is BYD. In the first quarter, exchange gains of about 1.9 billion yuan in the same period last year turned into losses of about 2.1 billion yuan. This alone caused a profit drag of about 4 billion yuan, and exchange losses accounted for more than 100% of net profit.
The financial expenses of Xinyisheng, the leader in optical modules, surged by 1,678% in the first quarter, and profits shrank significantly.
This is due to a structural triple mismatch:
- Settlement mismatch: US dollar settlement accounts for more than 80% of consumer electronics. When the RMB appreciates 4%, revenue conversion losses can account for 35-40% of foreign gross profits.
- Cost mismatch: core raw materials are imported (priced in US dollars), while manpower is domestic (priced in RMB), and there is no natural hedge.
- Weakness in bargaining: Facing large customers such as Google and Amazon, it is extremely difficult to pass on price increases.
From the perspective of bulk and heavy assets, exchange rate fluctuations are like “drizzle”.
Since crude oil imports and product exports are both priced in US dollars, the petrochemical industry has achieved a complete natural hedging, and the impact of exchange rates has been basically offset.
What is even more counter-intuitive is the aviation and paper industries. Since they hold a large amount of US dollar liabilities (aircraft leasing, equipment procurement), the appreciation of the RMB has significantly reduced the cost of debt conversion.
China Airlines’ financial expenses decreased by 34.64% year-on-year in the first quarter, which was precisely due to net exchange gains.
On one side, the profits from hard-earned sales are being swallowed up, while on the other side, the profits are enjoyed due to the debt structure. The opposition is extremely clear.
From the perspective of risk control and management, having tools does not necessarily mean managing well, the key lies in governance.
The hedging rate of large enterprises with more than 10 billion yuan reached 77%, while that of small and micro enterprises with less than 1 billion yuan was only 34.5%.
The differences between industries are also wide: the non-ferrous metals and home appliance industries have hedging rates of 64.8% and 63.1% respectively, while the hedging rates of communications and light manufacturing are extremely low, and foreign exchange governance is weak.
But having tools doesn’t necessarily mean you’re safe.
Data show that “naturally exposed” companies have the highest exchange rate friction (median 0.68%), while “economic hedging” companies still have high friction (P75 reaches 1.17%). Only “mature governance” companies can reduce friction to 0.39%.
If you buy a tool but don’t manage it well, air leakage will still occur.
Exchange rate hedging is a required course. How should we set up a risk control system?
The State Administration of Foreign Exchange has clearly guided enterprises to establish a “risk neutral” concept and aim to maintain value rather than increase value.
Enterprises must build differentiated systems according to their own scale:
- Small and micro enterprises focus on low cost and lightweight.
For example, a merchant in Yiwu paid a RMB 1 option fee to purchase a put option and successfully avoided a loss of RMB 11,700; through the bank’s “white list” discount, Lingo Home Hedging covered more than 90% of the exposure, reducing hedging costs by 30%. - Medium-sized enterprises establish systematic processes.
Wanma Technology has set up a hedging quota of 11 million yuan, with the financial director as the first person in charge, and the delivery period strictly matches the payment period. - Large companies use a complex combination of tools and non-financial measures.
A chemical company in Wenzhou uses dual-currency options, and the income is significantly higher than ordinary forward exchange settlement; at the same time, it actively promotes RMB cross-border settlement or direct exchange of small currencies. For example, ICBC Jiaxing Branch helps companies handle small-currency exchange locks, and exchange losses in a single quarter are directly reduced to zero.
The differentiation of exchange costs is superficially the result of exchange rate fluctuations, but is essentially a touchstone of asset-liability matching and governance capabilities.
Severely damaged industries are often highly dependent on the U.S. dollar on the revenue side, trapped in the RMB on the cost side, and lack mature risk control hedging.
For foreign trade companies, not betting on the direction of the exchange rate and using systems and tools to lock in uncertainty is the only correct way to get through the cycle.
In today’s world where two-way fluctuations are normalized, whoever establishes mature foreign exchange governance first will have more confidence when accepting orders.
