CONCENTRATION RISK

6 Months Ended

Jun. 30, 2013

CONCENTRATION RISK [Text Block]

NOTE 16    CONCENTRATION RISK

(a)    Concentration of credit risk

As of June 30, 2013 and December 31, 2012, almost all of the Company’s cash included cash on hand and deposits in accounts maintained within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover bank deposits in the event of bank failure. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

1) For the six months ended June 30, 2013 and for the year ended December 31,2012, all of the Company’s sales arose in the PRC. In addition, all accounts receivable as of June 30, 2013 and December 31, 2012 also arose in the PRC.

The following individual customer accounted for 10% or more of the Company’s revenues for the three and six months ended June 30, 2013 and 2012:

	For the Three Months		For the Six Months
	Ended June 30,		Ended June 30,
	2013	2012	2013	2012
Lai En Century Co. Ltd	22.1%	31.5%	27.0%	28.6%

Individual customer amounts receivable that represented 10% or more of total accounts receivable as of June 30, 2013 and as of December 31, 2012 were as follows:

	Percentage of accounts receivable as of
	June 30,	December 31,
	2013	2012
Great Northern Wilderness Grain and Oil Warehouse Market	53.1%	59.3%
Tianjin Guang Feng Pharmacy	18.5%	-%
Hong Yun Commodity Trading Houses	16.7%	-%
Gongda Group Property Management Company (Zhong Yang Hong Supermarket)	11.7%	12.7%
Harbin Te Anna Pharmaceutical Companies, Jilin Branch	-%	12.2%
Shandong Jinan Qing Jie Company	-%	15.8%

2) For the six months ended June 30, 2013 and for the year ended 2012, all of the Company’s purchases arose in the PRC. In addition, all accounts payable as of June 30, 2013 and December 31, 2012 also arose in the PRC.

The following suppliers accounted for 10% or more of the Company’s procurement for the three and six months ended June 30, 2013 and 2012:

	For the Three Months		For the Six Months
	Ended June 30,		Ended June 30,
	2013	2012	2013	2012
Heilongjiang Xianfeng Agricultural Materials Trading Co., Ltd	23.3%	26.0%	26.6%	27.2%
Harbin Reservation During The Oil Co., Ltd.	17.8%	10.8%	22.1%	20.4%
Zhangjiagang NongNong Drinking and Food Ltd Co.Ltd	32.4%	-%	19.9%	-%
Foshan GuangLiang Drinking and Food Ltd Co.Ltd	17.4%	-%	10.7%	-%

No any individual supplier accounted for 10% or more of total accounts payable as of June 30, 2013 and as of December 31, 2012.

(b)    Concentration of operating risk

Substantially all of the Company’s operations are conducted in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.