Note 3 – Accounts Receivable, Net

	June 30,						December 31,
	2011			2011			2010
	USD’000			RMB’000			RMB’000
Accounts receivable		132,024			853,337			755,203
Less: allowance for doubtful accounts		(11,238	)		(72,635	)		(73,292	)
Accounts receivable, net		120,786			780,702			681,911

An analysis of the allowance for doubtful accounts is as follows:

	Three Months ended June 30,						Six Months ended June 30,
	2011			2010			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000
Beginning Balance		72,892			73,306			73,292			73,306
Addition charged to allowance for doubtful accounts		18			324			18			324
Write back on allowance for doubtful accounts		(275	)		(322	)		(675	)		(322	)
Ending Balance		72,635			73,308			72,635			73,308

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.

The Group records the transfers of accounts receivable pursuant to the factoring agreement as sales when it is considered to have surrendered control of such receivables under the provisions of ASC 860, Transfers and Servicing. For the three months and six months ended June 30, 2011, the Group received proceeds from the sale of accounts receivable amounting to RMB306,370 thousand (USD47,400 thousand) and RMB367,773 thousand (USD56,900 thousand), respectively. For the three months and six months ended June 30, 2010, the Group received proceeds from the sale of accounts receivable amounting to RMB148,944 thousand. In addition, the Group recorded interest expense amounting to RMB1,514 thousand (USD234 thousand) and RMB1,759 thousand (USD272 thousand), respectively, in respect of the factored accounts receivable for the three months and six months ended June 30, 2011. The Group recorded interest expense amounting to RMB195 thousand in respect of the factored accounts receivable for the three months and six months ended June 30, 2010. As of June 30, 2011 and December 31, 2010, the Group has derecognized factored accounts receivable amounting to RMB311,545 thousand (USD48,201 thousand) and RMB188,042 thousand, respectively, in accordance with ASC 860. As of June 30, 2011 and December 31, 2010, the Group has not accrued a recourse liability since the estimated fair value of the recourse obligation was immaterial.