Hartalega and the U.S.–China Trade War – Managing Foreign Exchange Risk
As U.S. Section 301 tariffs reshape global glove supply chains, how can Hartalega navigate sudden currency shifts to protect its export margins?
At a glance
Country
Malaysia
Industry
Medical Device & Rubber Glove Manufacturing
Exchange Rate Anchor
1 USD = 4.24 MYR
(as of Sep 18, 2024)
Case Focus
Currency Risk Management, Tariff Trade Diversion
Abstract
In 2024, escalating trade tensions between the United States and China created unexpected opportunities for glove manufacturers outside China. For Hartalega Holdings Berhad, one of the world's leading nitrile glove producers, the prospect of increased exports to the U.S. market promised significant revenue growth. However, the opportunity came with a challenge familiar to many multinational firms: foreign exchange risk.
The case study follows Hartalega as it evaluates a US$73 million export receivable at a time of uncertainty in currency markets. Management must decide whether to leave the exposure unhedged or implement a foreign exchange risk management strategy using financial and operational hedging techniques. As exchange rate movements can significantly affect profitability, the decision requires balancing risk reduction, cost considerations, and market expectations.
Set against the backdrop of the U.S.-China trade war and shifting global supply chains, the case introduces students to key concepts in international finance, including transaction exposure, forward exchange contracts, interest rate parity, and currency hedging strategies. More broadly, it explores how geopolitical developments can influence corporate financial decisions and how multinational companies can protect earnings while pursuing growth opportunities in a volatile global environment.
This case is suitable for courses in International Finance, Corporate Finance, Treasury Management, Risk Management, and International Business.
Key Topics: Foreign Exchange Risk Management, Currency Hedging and Forward Contracts, International Finance Case Study, Treasury Management and FX Exposure, U.S.-China Trade War Business Impact, Transaction Exposure Management, Exchange Rate Risk in Multinational Companies, Corporate Financial Risk Management, Global Supply Chain and Trade Diversion, International Business and Geopolitical Risk
Cover Photo: Cover Image designed using assets by Chaiwiwat Duangjinda from Getty Images and Lazy_Bear from Getty Images via Canva
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Disclaimers:
(1) Regarding Case Study Content: This case study is based mainly on secondary data and analysis of publicly available information unless otherwise stated, and is intended solely for educational purposes. Any opinions expressed by the author(s) are designed to facilitate learning discussion and do not serve to illustrate the effectiveness of the company. Additionally, banner images and logos used in the case study are intended for visualization in an educational setting and it is not used to represent or brand the company. For any dispute regarding the content and usage of images and logos, please contact the team.
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