Note 10 - Long-term Investments

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

10. Long-term investments

	As of December 31,
	2016			2015
	US$(’000)			US$(’000)
Equity method investments:
Investment in equity method investees		709			778
Advance to equity method investees		75			80
Impairment on equity method investments		(784	)		(838	)
Total equity method investments		-			20
Cost method investments:
Investment in cost method investees		1,492			1,113
Impairment on cost method investments		(152	)		-
Total long-term investments		1,340			1,133

Equity method investments

As of

December

31,

2016

and

2015,

the Company beneficially owned

23.18%

and

25.5%

equity interest in Shenzhen Mingshan and Zhao Shang Ke Hubei, respectively. The Company accounts for its investments in these companies under equity method of accounting. Based on the facts of the significant decline in level of business activities from

2015,

insufficient amount of working capital and the lack of commitment from majority shareholders, these

two

investment affiliates had become dormant and the possibility of the business recovery is remote. As a result, the Company reduced the carrying value of these investments to

zero

as of

December

31,

2015.

In

2015,

the Company co-incorporated ChinaNet Korea with

three

unaffiliated individuals and obtained

40%

of the equity interest in ChinaNet Korea. During the

first

fiscal quarter of

2016,

the Company and other investors of ChinaNet Korea deregistered the entity and re-incorporated it with a new investor involved. The Company invested

US$7,500

and obtained

15%

of the equity interest in ChinaNet Korea through the re-incorporation, which is now accounted for under cost method of accounting (See table below).

Cost method investments

As of

December

31,

2016,

the Company beneficially owned a

19%

equity interest in ChinaNet Chuang Tou and Guohua Shiji, respectively, and a

10%

equity interest in Chuangshi Meiwei and Beijing Saturday, respectively. The Company accounts for its investments in these companies under cost method of accounting. The following table summarizes the movement of the investments in cost method investees for the

two

years then ended

December

31,

2016:

	ChinaNet Korea			Beijing Saturday			Chuangshi Meiwei			Guohua Shiji			ChinaNet Chuang Tou			Total
	US$(’000)			US$(’000)			US$(’000)			US$(’000)			US$(’000)			US$(’000)
Balance as of December 31, 2014		-			18			-			-			-			18
Investment during the year		-			-			154			3			939			1,096
Exchange translation adjustment		-			(1	)		-			-			-			(1	)
Balance as of December 31, 2015		-			17			154			3			939			1,113
Investment during the year		8			-			-			25			418			451
Impairment on cost method investments		(8	)		-			(144	)		-			-			(152	)
Exchange translation adjustment		-			(1	)		(10	)		(1	)		(60	)		(72	)
Balance as of December 31, 2016		-			16			-			27			1,297			1,340

The Company invested in ChinaNet Korea and Chuangshi Meiwei to provide franchise consulting services for Korean food and beverage brands introduced to China. As the business plan of these

two

companies were not implemented smoothly and based on the facts of the significant decline in level of business activities, insufficient amount of working capital and the lack of commitment from majority shareholders, the possibility of the business recovery of these

two

companies is remote. As a result, the Company reduced the carrying value of these investments to

zero

as of

December

31,

2016,

with an approximately

US$0.16

million other-than temporary impairment loss recorded for the year ended

December

31,

2016.

The Company assessed the fair value of its remaining cost method investments and determined no additional other-than temporary impairment exist as of

December

31

2016,

or

2015.