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OPERATING RISK
12 Months Ended
Dec. 31, 2011
OPERATING RISK

NOTE 17 – OPERATING RISK

 

(a) Country risk

 

Currently, the Company’s revenues are primarily derived from the sale of a line of disinfectant products to customers in the PRC. The Company hopes to expand its operations to countries outside the PRC; however, such expansion has not commenced and there are no assurances that the Company will be able to achieve such an expansion successfully. Therefore, a downturn or stagnation in the economic environment of the PRC could have a material adverse effect on the Company’s financial condition.

 

(b) Products risk

 

In addition to competing with other domestic manufacturers of disinfectant products, the Company competes with larger U.S. companies who have greater funds available for expansion, marketing, research and development and the ability to attract more qualified personnel. These U.S. companies may be able to offer products at a lower price. There can be no assurance that the Company will remain competitive should this occur.

 

(c) Exchange risk

 

The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods. This is because a fluctuating exchange rate may post a higher or lower profit depending on exchange rate of Renminbi converted to US dollars on that day. The exchange rate could fluctuate depending on changes in the political and economic environments without notice.

 

(d) Political risk

 

Currently, the PRC is in a period of growth and is openly promoting business development in order to bring more business into the country. Additionally, the PRC currently allows a Chinese corporation to be owned by a United States corporation. If the PRC government changes laws or regulations relating to the ownership of a Chinese corporation, then the Company’s ability to operate its PRC subsidiaries could be affected.