CERTAIN RISKS AND CONCENTRATION

12 Months Ended

Dec. 31, 2011

CERTAIN RISKS AND CONCENTRATION

NOTE 21 CERTAIN RISKS AND CONCENTRATION

Credit risk and major customers

As of December 31, 2011 and 2010, substantially all of the Company’s cash including cash on hand and deposits in accounts were 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 a bank’s failure. However, the Company has not experienced any such losses and believes it is not exposed to any significant risks on its cash in bank accounts.

For the year ended December 31, 2011 and 2010, all of the Company’s sales arose in the PRC.  In addition, all accounts receivable as of December 31, 2011 and 2010 were due from customers located in the PRC.

There were two customers who accounted for 25.32% and 10.64% of the Company’s revenue for the year ended December 31, 2011, respectively, There were two customers who accounted for 12.7% and 11.4% of the Company’s revenue for the year ended December 31, 2010, respectively, There was no other single customer who accounted for more than 10% of the Company’s revenue for the years ended December 31, 2011, 2010 or 2009.

There was one customer who accounted for 33.6% of total accounts receivable of the Company as of December 31, 2011. There were two customers who accounted for 20.5% and 15.2%, respectively, of total accounts receivable of the Company as of December 31, 2010. There was no other customer who accounted for 10% or more of the Company’s accounts receivable as of December 31, 2011 or 2010.

Risk arising from operations in foreign countries

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.