31.

Segment reporting

The accounting policies of the product sectors are the same as those described in the summary of significant accounting policies except that the disaggregated financial results for the product sectors have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting them in making internal operating decisions. Generally, the Company evaluates performance based on stand-alone product sector operating income and accounts for inter segment sales and transfers as if the sales or transfers were to third parties, at current market prices.

As of September 30, 2017, the Company had 11 product sectors, five of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu and Hubei Henglong), and one holding company (Genesis). The other six sectors were engaged in the production and sale of sensor modular (USAI), automobile steering columns (Jielong), provision of after sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), and manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie). Since the revenues, net income and net assets of these six sectors collectively are less than 10% of consolidated revenues, net income and net assets, respectively, in the condensed unaudited consolidated financial statements, the Company incorporated these six sectors into “Other Sectors.”

As of September 30, 2016, the Company had eleven product sectors, five of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu and Hubei Henglong), and one holding company (Genesis). The other six sectors were engaged in the production and sale of sensor modular (USAI), automobile steering columns (Jielong), provision of after sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), and manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie). Since the revenues, net income and net assets of these seven sectors collectively are less than 10% of consolidated revenues, net income and net assets, respectively, in the condensed unaudited consolidated financial statements, the Company incorporated these six sectors into “Other Sectors.”

The Company’s product sector information for the three months and nine months ended September 30, 2017 and 2016, is as follows (figures are in thousands of USD):

	Net Product Sales				Net Income (Loss)
	Three Months Ended				Three Months Ended
	September 30				September 30
	2017		2016		2017		2016
Henglong	$	55,790	$	57,530	$	689	$	3,771
Jiulong		26,067		17,787		478		1,083
Shenyang		10,103		8,239		486		457
Wuhu		6,503		5,088		118		21
Hubei Henglong		24,812		13,912		2,680		735
Other Sectors		14,961		11,588		777		(269)
Total Segments		138,236		114,144		5,228		5,798
Corporate		-		-		317		808
Eliminations		(19,871)		(19,518)		(317)		(747)
Total	$	118,365	$	94,626	$	5,228	$	5,859

	Net Product Sales				Net Income (Loss)
	Nine Months Ended				Nine Months Ended
	September 30				September 30
	2017		2016		2017		2016
Henglong	$	191,093	$	195,940	$	6,300	$	13,389
Jiulong		75,525		54,976		3,739		2,219
Shenyang		28,777		24,898		1,271		995
Wuhu		18,254		15,897		215		96
Hubei Henglong		66,855		42,815		5,518		2,286
Other Sectors		40,821		29,558		1,341		162
Total Segments		421,325		364,084		18,384		19,147
Corporate		-		-		3,367		(1,317)
Eliminations		(65,992)		(51,587)		(1,704)		(911)
Total	$	355,333	$	312,497	$	20,047	$	16,919