Note 24 - Concentration of Risk

9 Months Ended

Sep. 30, 2015

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

24. Concentration of risk

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables and prepayments and deposits to suppliers. As of September 30, 2015 and December 31, 2014, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in Mainland China, which management believes are of high credit quality.

Risk arising from operations in foreign countries

All of the Company’s operations are conducted within the PRC. The Company’s operations in the PRC are subject to various political, economic, and other risks and uncertainties inherent in the PRC. Among other risks, the Company’s operations in the PRC are subject to the risks of restrictions on transfer of funds, changing taxation policies, foreign exchange restrictions; and political conditions and governmental regulations.

Currency convertibility risk

Significant part of the Company’s businesses is transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. These exchange control measures imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiary and VIEs to transfer its net assets, which to the Company through loans, advances or cash dividends.

Concentration of customers

For the nine months ended September 30, 2015, two customers individually accounted for 15% and 13% of the Company’s sales, respectively. For the three months ended September 30, 2015, one of the two customers individually accounted for 11% of the Company’s sales. Except for the aforementioned customers, there was no other single customer who accounted for more than 10% of the Company’s sales for the nine or three months ended September 30, 2015.

For the nine months ended September 30, 2014, two customers individually accounted for 29% and 17% of the Company’s sales, respectively. For the three months ended September 30, 2014, the same two customers individually accounted for 42% and 15% of the Company’s sales, respectively. Except for the aforementioned customer, there was no other single customer who accounted for more than 10% of the Company’s sales for the nine or three months ended September 30, 2014.

As of September 30, 2015, two customers individually accounted for 20% and 17% of the Company’s accounts receivable, respectively. As of December 31, 2014, two customers individually accounted for 19% and 18% of the Company’s accounts receivable, respectively. Except for the afore-mentioned, there was no other single customer who accounted for more than 10% of the Company’s accounts receivable as of September 30, 2015 or December 31, 2014.

Concentration of suppliers

For the nine months ended September 30, 2015, two suppliers individually accounted for 43% and 39% of the Company’s cost of sales, respectively. For the three months ended September 30, 2015, the same two suppliers individually accounted for 31% and 50% of the Company’s cost of sales, respectively. Except for the afore-mentioned, there was no other single supplier who accounted for more than 10% of the Company’s cost of sales for the nine or three months ended September 30, 2015.

For the nine months ended September 30, 2014, two suppliers individually accounted for 69% and 20% of the Company’s cost of sales, respectively. For the three months ended September 30, 2014, the same two suppliers individually accounted for 75% and 17% of the Company’s cost of sales, respectively. Except for the afore-mentioned, there was no other single supplier who accounted for more than 10% of the Company’s cost of sales for the nine or three months ended September 30, 2014.