《113-2 IB603》Dr. Vernon Hsu explained Inventory as a Financial Instrument: Evidence from China’s Metal Industries

On February 27, 2025, the Global Supply Chain Management class, instructed by Prof, Yang, Yu-Cheng from the IBMBA programs at NSYSU, had the pleasure of inviting Dr.Vernon Hsu, a Choh-Ming Li Chair Professor in the CUHK Business School, The Chinese University of Hong Kong, to deliver the brilliant lecture about the viewpoint of considering inventory as a financial instrument from the financial perspective. 

Prof. Hsu’s research explored how firms use inventory to navigate financial markets with strict capital controls. Using data from China Customs’ metal imports and firm-level inventory in metal processing industries, he demonstrated how companies can leverage imported inventory to access lower-cost capital and achieve better financial returns. He explained that at the country level, higher levels of imported metals often align with financial arbitrage opportunities. At the firm level, businesses expecting higher arbitrage returns tend to increase their inventory through short-term borrowing. To support his findings, he discussed a regulatory policy shift that provided further evidence for this relationship.

Beyond the technical details, Dr. Hsu also shared insights from his broader research on supply chain management, international finance, and operations strategy. With extensive experience at universities in Australia, the U.S., and Hong Kong, his work has appeared in leading journals such as Management Science and Operations Research.

With the Dr. Hsu’s professional intelligence and teaching experience, the lecture sparked engaging discussions among students, who appreciated the real-world implications of Dr. Hsu’s research. His visit provided a fresh perspective on the intersection of finance and supply chain management, offering attendees a new way to think about the role of inventory in global markets.

Written by Fiona Tsai (Provided by IBMBA)