I、 Risk Factors
1、Business Operating Risk
While supplying the raw materials, manufacturing and selling, maybe we will meet unexpectable external factors, and at the same time, every elements in original manufacture & operation need to break-in. All above can influence the stability of enterprise management.
2、Market Risk
（1）Product Overstock Risk
There will be a certain period after products are put into market before they are accepted by customers. So facing the impetition with traditional pipe fittings, there will appear the product overstock in a short time for Yong'an.
（2） Product Depreciation Risk
In order to occupy the market quickly, maybe Yong'an will apply price means which can influence the sales income and profit.
（3） Product Counterfeited Risk
The great benefit is obvious as long as products of Yong'an come into the market. Though postiches will not appear in a short time, it is possible to be counterfeited for Yong'an products in a long term.
3、Financial Risk
Yong'an has no debts at present but with the fast development of the company in the future, funds will be a very important factor which restricts the company's development. It is unavoidable to operate in debt which will make the company face the pressure of repaying the debt in short time. With the extending of sales scale, a certain amount of account receivable will appear, which will make the company face funds turnover pressure .
4、Management Risk
With the acceptance for Yong'an products by the market, we expect that there will be fulminant purchasing power one year later, which demands to extend management scale and the management will correspondingly lag as a result. With the management scale extending continuously, management team needs to be extended and updated which may result in management out of line.
5、Technical Risks
The company will face the problems of the consummation and extending of existing technology, as well as the challenge from other new pipelines coupling technology.
6、Staff Risk
Aiming at large-scale, internationalization and listed company, the company will always face a series of human resources problems such as how to absorb, retain, and bring up talents. It will be more outstanding especially when the company develops very fast.
7、Capital Operation Risk
Low cost extending by capital operation has been regarded as the development stratagem of the company.There are some annex & purchase risks because of some uncertain reasons when annexing & purchasing. If we want to join in the capital market, we will probably meet some unsuccessfully listed risks.
8、Risks of Foreign Trade
（1）Commercial Credit Risk
Because of national and regional differences between foreign customers and agents, there will be some commercial credit risks on export business during Yong'an products are exported.
（2）Exchange Rate Risk
With the development of Chinese market economy, it will be inevitable for RMB to exchange with foreigh exchanges. Because moveable-joint pipe fittings of Yong'an mainly meet the requirement of the world market, the fluctuation of exchange rate will have a pretty big effect on the management achievement.
II、Countermeasures Against Risk Factors
Aiming at the risks above, Yong'an will take the following countermeasures:
1、Precautions Against Business Operating Risk
The company will retain experts on technology & marketing to demonstrate the operation plan adequately, and complete the management system on plenty of investigation and real evidence. And we will collect information and feedback in time while producing, adjust managementn strategies according to practical conditions in order to realize the production with lowest stock index and maximum reducing product cost.
2、Precautions Against Market Risks
（1）Precautions Against Product Overstock Risk
We have made long-term drumbeating and communication with big construction units ,main administrant departments of city pipeline network, charge departments in following trades: fire fighting projects, heating, gas, air conditioning, water supply, liquefied petroleum gas etc. We have been highly regarded by lots of customers (expecially foreign customers) by example projects, products' capability tests, sales fairs, large-scale business fairs and commodities fairs. We will also cooperate with agents from all over the world, estabilsh own commercial network and sales group and adopt various effective sales promotion. So, we think that product overstock is just temporary and it won't be a great risk.
（2）Precautions Against Product Depreciation Risk
The company will set up the self-discipline trade association which can strengthen the mutual restriction and intendance, standardize the market and keep the market price uniform and steady.
（3）Precautions Against Product Counterfeited Risk
Though Yong'an estimates that there won't be large-scale counterfeits in five years, we will establish an information center, an integrative information network of technology and market. We will alao retain expers on laws and arrange special employees to watch the market pulse strictly and apperceive the counterfeits in time, then adopt any effective methods (including but not limited to technical, lawful and economic methods,etc) to block counterfeits from appearing and spreading.
3、Precautions Against Financial Risk
We will take the following methods to reduce risks and quicken funds turnover.
Firstly, to develop world market, adopt international letter of credit trade, strengthen international balance control. As to business with balance risks, we will use export credit assurance to avoid risks.
Secondly, in domestic market, we will use bank acceptance balance if possible, choose dealers with good credit and strong power, administer the customers with credit levels.
Thirdly, to strengthen the financial management, establish an effective financial prewarning system, payback control system and lawful recovery system.
4、Precautions Against Management Risk
The compay will adopt dynamic management and institutional management, namely to adjust and consummate the managing rules with the changes of external environment. At the same time, we will pay attention to retaining and training excellent managers, strengthening group-building and culture-building, creating a perfect management group and establishing excellent compony culture.
5、Precautions Against Technical Risk
We will set up a research institute and try to make it the unique and national-level research & test center on pipelines coupling technology. We will organize a high-grade technical experts and products development group, in order to hold the leading advantage in this trade by continuous development and innovation on pipeline coupling technology. Using ERP management mode in factories, we adopt award system, consummating technical methods on prodution and processing to assure the high quality of the products.
6、Precautions Against Staff Risk
The company will apply open and fair competition system to choose outstanding talents for each position. We will constantly educate empolyees on professional moral, technology and skill, abiding by laws and bylaws of the company. We will consummate the inspirit & inhibit system, which can connect the personal value of employees with the company's value. By establishing study-type organization, we will increase the staff's re-study ability and creativity. To strengthen the group building, breed excellent company culture which can make the staff have the sense of ownership, increase the coacervation of the company and improve the stability and loyalty.
7、Precautions Against Capital Operation Risk
Yong'an will retain investment bankers to join in the capital operation and reduce annex & purchase risks to the lowest according to the demand of company development tactics. If the compony wants to be listed, we will choose an appropriate stock market in the world. During this process, we will choose stock traders and agency organizations with strong power, outstanding achievement and powerful abilities so as to avoid detours or failure.
8、 Precautions Against Risks of Foreign Trade
（1） Precautions Against Trade Credit Risk
We will make adequate international credit investigation, stabilize customers and agents with good credit, confirm sales methods in the world market, deal with international balance business with banks who have good credit.
（2） Precautions Against Exchange Rate Risk
Yong'an will adjust the structure of RMB & foreign currency in balance currency, confirm the balance method and time limit, so as to reduce the risk caused by exchange rate fluctuation. We will also use the Hongkong subsidiary company as a window to follow the trends of world market, maintain value and exchange currency in time.
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