Meet my company: China Ting Group
- Hope Lauritsen
- Mar 22, 2020
- 4 min read
Hello fellow bloggers,
The company I was allocated for this assignment was China Ting Group. Please find below my draft of background information and KCQs as required for this assignment. I look forward to receiving any feedback.
Background information:
China Ting Group Holdings Ltd has been in business for twenty-eight years as it was founded in 1992 (China Ting Group, 2014). This company is a garment manufacturer, exporter and retailer with offices located in New York, Paris, Hong Kong and Shanghai (China Ting Group, 2014).
In terms of export value and volume China Ting Group Holdings Ltd is regarded as one of the largest silk groups in China (China Ting Group, 2014). The headquarters is located in Hong Kong.
The Group is mainly involved in three core areas including:
1. Total garment manufacturing
2. Retailing in China
3. Home textile product manufacturing
(China Ting Group, 2014)
To watch the company’s corporate video, please search the following link:
Key Concepts and Questions:
The latest annual report released for the company was for the year ended 31 December 2018. The chairman’s statement released within this report stated that the global economy was full of challenges throughout the 2018 financial year (China Ting Group, 2019, p. 13). The company faced concern and pressure in relation to the trade war between China and the US, which also resulted in a rise of cost in the companies manufacturing sectors (China Ting Group, 2019, p. 13). In addition the global economic growth was lower than expected and the financial market experienced continual fluctuations, with international trade risk remaining high (China Ting Group, 2019, p. 13). The US remained the groups dominant market, which resulted in a turnover decrease of 3.8% in the 2018 financial year (China Ting Group, 2019, p. 16).
The financial review section of the 2018 Annual Report highlighted that the Group’s revenue also resulted in a decrease of 2.6% compared to the 2017 financial year (China Ting Group, 2019, p. 17). In addition the gross profit for the year ended 31 December 2018 also represented a decrease of 15.3% compared to 2017 (China Ting Group, 2019, p. 17). Reading through the annual report it was evident that this company was facing challenges.
Profit Warning & Key Challenges:
The Group released a profit warning for the year ended 31 December 2019, which stated that the board wished to advise the shareholders and potential investors of the company that the group anticipated to report a loss for the year ended 31 December 2019 (China Ting Group Holdings Limited, 2020, p. 1).
The key reasons for the loss included the following:
1. Gross profit of the Group for the 2019 financial year was scheduled to decrease by roughly 33.5%. This reduction was due to the rising price pressure on the garment products that were supplied and produced by the group (China Ting Group Holdings Limited, 2020, p. 2)
2. The trade tension continued in the 2019 financial year, which seen a decrease in the amount of sales revenue of the original equipment manufacturing business of the Group by roughly 19.00% (China Ting Group Holdings Limited, 2020, p. 2).
3. Stagnant retail markets and reduced number of retail shops, resulted in a decrease in the amount of sales revenue of the Group of approximately 9.4% (China Ting Group Holdings Limited, 2020, p. 2).
To view profit warning announcement please search the following link:
Reading through the 2018 Annual Report and the Profit warning announcement notice for the 2019 financial year highlights the challenges this Group has faced which includes coping with market competition, loosing market share, the trade war, decreased turnover, the decrease in number of retail shops and the sluggish retail markets. Reduced income and market share can also result in the loss of jobs.
This also raises some concern for the 2020 Financial year, as our world is currently going through a pandemic this raises concerns for me as this will obviously have major affects to economies worldwide. This makes me question if the Group will survive during this period? Will the trade war continue and will it worsen? Does the group have a plan in place to gain market share and to address other challenges?
How the Group appears to be meeting these challenges:
The 2018 Annual Report has a section to discuss corporate risk management and internal control. This section identifies the Groups risk and informs readers of the risk control measures in place. The first risk identified in this section was the China-US trade friction, which was mentioned throughout the annual report and the profit-warning announcement (China Ting Group, 2019, p. 47). The risk measure in place for this risk was for the group to keep a close eye on the release of international and domestic governments, and adjust the company’s operational strategy timely (China Ting Group, 2019, p. 47). In addition to minimise the dependency on the US market, the company will need to develop domestic and global customers (China Ting Group, 2019, p. 47). This was only one of the identified risks outlined within the Annual Report. This section of the Annual Report gave me some hope, as it was good to read that the group had risk measures in place, especially after reading about their decreases in turnover, revenue and gross profit.
Reference List:
China Ting Group. (2019). Annnual Report 2018 . Irasia.
China Ting Group. (2014). China Ting Group Holdings Ltd. Retrieved March 2020, from Company Profile: www.chinating.com.hk/company_profile.html
China Ting Group Holdings Limited. (2020). Profit warning for the year ended 31 December 2019 . China: Irasia.
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