Huafu Fashion Subsidiary Is Listed In The Entity List By The United States. Experts Recommend Five Aspects Of Crisis Management.

As the only supplier and manufacturer of colored spun yarn in eastern China, Xinjiang and Vietnam, the only one in the coloured spinning industry is three. Huafu fashion Limited by Share Ltd (hereinafter referred to as "Hua Fu fashion") In May 24th, it announced that the company's wholly owned subsidiary, Akesu Huafu color spinning Co., Ltd. (hereinafter referred to as "Akesu Huafu") The United States Department of Commerce was included in the entity list in May 22nd.

For a time, the announcement of Huafu fashion brushing up the circle of friends of textile people, people can not help wondering. What does the list of entities in the US mean? What will be the inclusion of its subsidiaries in Huafu fashion? How should we deal with Huafu fashion?

List of entities listed

Trade opportunities in the US are stripped.

In regard to the entity list of the United States, someone has jokingly said: "as a Chinese enterprise, if it did not enter the list", CEO would be embarrassed to say hello to people when they went out, because the entry into the list was equivalent to the official strength from the US.

The "entity list" is used by the US Department of Commerce and Industry Safety Bureau (BIS) for export restrictions on specific objects. All the entities falling into the list become the target of BIS restricting exports. 。 The "entity list" is an export control ordinance established by the United States to safeguard its national security interests. Before obtaining a permit, the exporters of the United States shall not help the enterprises on these lists to obtain any items governed by this Ordinance. To put it simply, "Entity list" is a "blacklist". Once entering the list, it actually deprives the related enterprises of their trade opportunities in the US.

Companies that are listed on the list are unable to obtain the technology or products exported by US companies, and foreign companies' technology or products can not be exported to the list entities as long as they are identified as more than 25% of them originate from the United States.

For example, when HUAWEI was listed as an entity list in May last year, it was theoretically impossible to import components from chips, integrated circuits companies such as Intel, Qualcomm, Sai Ling Tong and other American chips and integrated circuits companies. Nor could it use the Android and windows operating systems of Google, Microsoft, and the United States. For Akesu Huafu, being included in the physical inventory also means that it is not possible to obtain raw materials from the United States, such as the United States cotton.

Avoid sources of beauty products

Daily operation is not affected by substance.

Regarding the fact that Akesu Huafu was included in the entity list by the US Department of Commerce in May 22nd, The decision of the US Department of commerce is irresponsible and irresponsible. The company is against politicizing the industry. Since its foundation, Huafu, Akesu, is committed to not only being an enterprise but also a good company. It has faithfully fulfilled its social responsibilities, adhered to the concept of sustainable development, adhered to relevant laws and regulations, adhered to commercial codes of conduct, and fully respected the rights of employees.

Huafu fashion said that the company is one of the largest new yarn businesses in the world, investing in Xinjiang based on superior resources such as high quality cotton, energy prices, industrial workers, and the future opportunities for development along the way. The company invested and invested in Akesu Huafu, creating many jobs and contributing to the local economic and social development. Akesu Huafu's raw materials, equipment and technology can circumvent products originating in the United States. Being included in the entity list will not have a substantive impact on the daily operation of the company.

Huafu fashion Since 2006, it has invested in Xinjiang, with a total investment of 5 billion yuan, 160 million yuan per year, and 14700 employees. Currently, there are 80 thousand acres of cotton fields, more than 30 cotton ginning plants, 20 million tons of cotton processing capacity, 3 production plants, 30 thousand tons of production capacity, 10 spinning factories, 670 thousand spindles and 10 tons of production capacity. Flag Akesu Huafu Located in Akesu textile industrial city, Xinjiang, founded in December 14, 2010, its main business is manufacturing and marketing of textiles and textile equipment, training in textile technology, export of textiles and clothing of the enterprise, raw materials, machinery, equipment and accessories required by importers, and acquisition and sale of cotton and hemp. 。

Weaker external demand

The leading position of colored spinning is not changed.

The annual report shows that In 2019, the total assets of Huafu fashion were 3 billion 875 million yuan, operating income of 1 billion 821 million yuan, and net profit of 187 million yuan.

Industry analysts believe that In 2019, the proportion of overseas income of Huafu fashion to total revenue was 15%, and the external income of yarn business income accounted for 33%, while there was indirect export situation. Since 2019, Huafu's fashion performance has been under pressure, mainly due to external environmental impact. The Sino US trade friction in the reporting period has led to a decline in the industry boom, and all sectors of the industry chain are expected to be pessimistic and shrink in stock.

and Since 2020, the external demand has been greatly affected by the epidemic situation at home and abroad. It is estimated that the two quarter pressure is greater than the first quarter. 。 If foreign epidemic prevention and control are effective, the impact of external demand being suppressed is expected to gradually weaken.

In the case of overall difficulties in the textile industry, experts believe that As a leading enterprise, Huafu fashion has strong anti risk ability and customer bargaining power. It is expected to enhance market share after the outbreak. 。 In 2020, Huafu fashion continued to promote the front end network chain while accelerating the development of the domestic market, accelerating the development of the back-end network chain, and continuing to make efforts in the fields of cotton, cloth and yarns.

Crisis management

Building a comprehensive trade compliance system

For domestic enterprises listed in the entity list of the United States, the experts suggest that we should take relevant measures to deal with the following five aspects:

First, we should do well in crisis management, and employ professional institutions to minimize the impact of being included in the list through communication and information disclosure with the media and government regulators. 。 Employing law firms in China and the United States to deal with investigations involving extraterritorial jurisdiction over export control and provide a legal solution to the two way combination.

The two is to set up a comprehensive and efficient trade compliance system to identify the risks of export control in foreign trade and take timely measures to ensure that export decisions can be made consistently and prospectively in the future. 。 Specifically, an effective export compliance internal control management system runs through the whole process of R & D, design, procurement, production and sales, which can enable enterprises to obtain the following strategic advantages: effectively prevent export control violations; establish export credit compliance, acquire strategic advantages in the process of purchasing high-tech products in the United States; identify items and transactions quickly; and take compliance as a prerequisite. The substantial business of coke helps enterprises manage export compliance risks, and proves that enterprises continue to follow the applicable export compliance requirements.

Three, we should strengthen the supply chain management, actively expand the sources of international supply channels, promote the diversification of import sources of important components, and optimize the supply chain structure of enterprises. 。 Especially for those enterprises whose key technologies are not mature, they should strive to cooperate with suppliers from many countries, enrich the supply chain channels of enterprises, establish multiple supply relationship channels, and share the risks of trade cooperation.

The four is to carry out the license management of us control items in a timely manner. First, we sort out all items of American origin and items containing the United States, record the process of calculation and judgement, keep the documents, and design alternatives to American control items. For example, changing chips, replacing components, adjusting business strategies, etc.

Five, it is suggested that enterprises should actively respond to the law enforcement activities of the US law enforcement agencies, and submit a written request to the end-users' Review Committee to apply for delisting. 。 Generally speaking, the main points of defense that enterprises can put forward include: the company actively adopts compliance measures, such as establishing a highly effective export control and economic sanctions compliance system, and continuously training employees and senior managers for export control and economic sanctions. The company actively cooperate with the Ministry of Commerce, the Ministry of Finance or other government departments to initiate investigations, and actively and voluntarily disclose related matters. Real materials; the company takes timely remedial measures and corrective actions.