Browsing by Author "XU LINHAI"

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    The Effect of Devaluation of Birr on Selected Chinese Companies
    (Mekelle University, 2025-12-28) XU LINHAI
    This study examines the effects of the Ethiopian Birr devaluation on the operational and financial performance of selected Chinese manufacturing and construction companies operating in Ethiopia between 2021 and 2025. Motivated by the significant currency volatility following Ethiopia’s exchange rate liberalization, the research aims to analyze how depreciation Birr impacts imported input costs, profit margins, pricing strategies, export volumes, and strategic risk management practices. Through a mixed-methods approach combining quantitative data from structured questionnaires with qualitative insights from interviews of 15 Chinese firms, the study captures both measurable economic effects and managerial responses to currency fluctuations. Findings reveal that firms with high import dependency experienced severe increases in input costs leading to significant profit margin compression, while firms with moderate or low import reliance reported milder impacts. Most companies adjusted their selling prices upward, although pricing strategies were moderated by competitive pressures and regulatory constraints. Export volume responses to devaluation were heterogeneous, consistent with the J-curve effect, with some firms reporting modest gains and others facing volume declines due to infrastructural and contractual limitations. Risk management practices, including formal currency hedging, supply chain diversification, and operational efficiencies, were selectively adopted, with effectiveness influenced by firm size, resource availability, and institutional factors. External challenges such as foreign exchange shortages, bureaucratic delays, political risks, and infrastructural deficits amplified firms’ vulnerability and constrained its adaptive capacity. The study concludes that Birr devaluation poses significant financial challenges for Chinese firms, especially those highly reliant on imports, while export benefits remain uneven. Sustainable foreign direct investment growth requires both firm-level risk mitigation and macroeconomic reforms to improve forex market efficiency, regulatory transparency, political stability, and infrastructure. These findings contribute to understanding multinational enterprise behavior amid currency volatility in emerging economies and provide actionable insights for business strategy and policy formulation in the Ethiopian context