CONCENTRATION RISK

6 Months Ended

Jun. 30, 2014

CONCENTRATION RISK [Text Block]

NOTE 16 CONCENTRATION RISK

a ) Concentration of credit risk

As of June 30, 2014 and December 31, 2013, approximately 99.8% and 99.8%, respectively of the Company’s cash including cash on hand and deposits in accounts are maintained with one financial institution within the PRC where there is currently no rule or regulation in place for obligatory insurance to cover such bank deposits in the event of bank failure. However, the Company has not experienced any losses in this financial institution and monitors the soundness and the credit ratings of this financial institution on a periodic basis, thus believes it is currently not exposed to any material risks on its bank deposits in bank accounts with this financial institution.

For the six months ended June 30, 2014 and 2013, all of the Company’s sales arose in the PRC. In addition, all accounts receivable as of June 30, 2014 and December 31, 2013also arose in the PRC.

The following individual customer accounted for 10% or more of the Group’s revenues for the three and six months ended June 30, 2014 and 2013:

	For the Three Months		For the Six Months
	Ended June 30,		Ended June 30,
	2014	2013	2014	2013
Lai En Century Co. Ltd	32.5%	22.1%	27.9%	27.0%

Individual customer accounts receivable that represented 10% or more of total accounts receivable as of June 30, 2014 and as of December 31, 2013were as follows:

	Percentage of accounts receivable as of
	June 30, 2014	December 31, 2013
Great Northern Wilderness Grain and Oil Warehouse Market	52.7%	30.0%
Shenzhen South Ocean Gift Trade Co., Ltd	17.6%	-
Dalian Exalts Trade Co., Ltd	15.1%	-
Shandong Jinan Qing Jie Company	14.5%	23.8%

For the six months ended June 30, 2014 and2013, all of the Company’s purchases arose in the PRC. In addition, all accounts payable as of June 30,2014 and December 31, 2013also arose in the PRC.

The following suppliers accounted for 10% or more of the Group’s procurement for the three and six months ended June 30,2014 and 2013:

	For the Three Months		For the Six Months
	Ended June 30,		Ended June 30,
	2014	2013	2014	2013
Heilongjiang Xianfeng Agricultural Materials Trading Co., Ltd	41.7%	23.3%	25.8%	26.6%
Zhangjiagang NongNong Drinking and Food Ltd Co. Ltd	-	32.4%	24.1%	19.9%
Harbin Reservation During The Oil Co., Ltd.	31.3%	17.8%	20.8%	22.1%

No other individual supplier accounted for 10% or more of total accounts payable as of June 30, 2014 and as of December 31, 2013.

(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.