Please enable JavaScript.
Coggle requires JavaScript to display documents.
MINDMAP CASE 4: HONGWEI HOLDINGS BERHAD - Coggle Diagram
MINDMAP CASE 4: HONGWEI HOLDINGS BERHAD
COMPANY'S MILESTONE
:
1993: Producing rubber shoe soles
1995: Production of thermoplastic rubber
1999: Jinjiang Shoe Material took over the entire business of developing, manufacturing and selling shoe soles.
2000: HONGWEI developed in-house production of TPR compound pellets to improve quality control of raw materials
2003: The began of production for new ethylene vinyl acetate model (EVA 1) shoe soles, TPR and RB.
2006: EVA MD2 shoes were produced.
2009: HONGWEI was finally listed on Bursa Malaysia.
VISION AND MISSION
Through its internet and social media platforms, Hongwei aspires to become a leading name in the shoe industry in China
CURRENT ISSUES
Fines were imposed to directors (Gary Menon & Jasmine Kaur) for corporate governance issues.
Another fines imposed on both of them because their refusal to communicate with either the regulators and new boards.
These issues indicated the existence of material uncertainty and causing doubts to group and company's abilitites.
Unable to confirm either going concern assumption appropriate or not.
Auditors could not obtain sufficient evidence from its subsidiaries, determine significant events occuring after reporting period and obtain appropariate assurance leads to incomplete audit works.
No commitment given by the management.
Issues with the ownership of the inventories.
Internal control problem.
Some limitations because of legal cases against Jinjiang Shoes Ltd.
Delayed issuance of 2015 Annual Report.
Failed to meet the new deadlines given by Bursa Malaysia Securities
Share's price started to fluctuate each year
No proper functioning board with all non-executive directors and CFO resigning.
2 out of 5 board members left without prior notice.
There are 10 lawsuits but the infromation regarding parties involved in the lawsuits were not available.
Company received information from the government of People’s Republic of China that stated there were no litigation case involving Jinjiang Shoes and the company could not confirm the information.
OBJECTIVE
• To increase the footwear industry's competitiveness in Malaysia.
• To guarantee the footwear sector's long-term expansion and viability.
• To increase both domestic and international markets for Malaysian footwear brands.
• to improve the quality of footwear made in Malaysia.
APPOINTMENT OF NEW DIRECTORS
Their appointment were acting without a functioning organization
Newly appointed board of directors had taken steps to comply with the best practices of principles of good corporate governance
Newly appointed directors had not been able to establish control over the operations of the group
New directors reported their findings to the shareholders in the manner of application of the principles
The appointment is to safeguard the interest of shareholders and ensure proper governance in Hongwei
New directors were appointed since the condition of Hongwei worsened by the day
ACTIVITIES
Organizing trade missions to overseas exhibitions, trade fairs and factory visits.
Maintaining an annual dialog with MITI for issues concerning the footware industry.
Organizing a footwear design competition in Malaysia to inspire young designers to work in the field and actively participate in international shoe fairs
Engaging in yearly conferences that include representatives from nations including Hong Kong, China, India, Indonesia, Korea, Japan, Taiwan, Thailand, USA, Vietnam, and the Philippines in order to maintain excellent ties with other footwear associations throughout the world.
STRATEGIC REVIEW
Share price keeps dropping.
Employees are sending in their resignation letter.
CURRENT GLOBAL TRENDS IN THE FOOTWEAR INDUSTRY
Driven by a number of factors
Growth of the fashion industry
Increasing demand for new designs of footwear
Awareness about a healthy and active lifestyle
Factors in the growing demand
The increase in today's population
Tendency of people to spend more
Diversified across different geographic regions such as in Europe, Asia Pacific, North America and Latin America
Main factor that contributes to the decline is the rising price of raw materials
Many footwear companies today face difficulties in getting raw materials at cheaper prices
They do not have any choice but to increase their selling price to cover the increasing cost per pair of shoes
Companies with no choice but to switch to cheaper grade materials and low quality production
Factors contributed to the slow growth of the footwear industry
rising cost of local labour
increase of environmental concerns
the price war
fierce global competition
Enhance the demand of footwear in coming years
Changes in customers' lifestyle and fashion trends
The emerging role of e-commerce
The increasing new brands in the mar
FINANCIAL POSITION OF HONGWEI HOLDINGS BERHAD AND ITS GROUP
Hongwei had been making losses for a few years since 2013.
Even though the group was making profits, the company itself was continuously making losses.
PRODUCTS MANUFACTURED BY HONGWEI HOLDINGS BERHAD
Rubber (RB) shoe soles
MD1 shoe soles
Thermoplastic rubber (TPR) shoe soles
MD2 shoe soles
ORGANIZATIONAL STRUCTURE
COMPANY'S BACKGROUND
HONGWEI was established in 1993.
Located in Seri Kembangan Industrial Area, Selangor.
Engaged in footwear production (shoe soles).
Started as a humble family-run business.
5 SUBSIDIARIES
Red Shoe Material Ltd
Wholesale distribution of footwear and making private-label shoes
Jinjiang Shoe Material Ltd
Designs and manufactures footwear
Evidoma Ltd
Property investment for rental purposes, hotel operations and investment
Greenate Investment Ltd
Investment in agriculture, wholesale, manufacturing, retail trade construction and transportation
Zente Trading Ltd
Wholesale and retail of textile, garments, shoes, hats, toys, sporting goods, daily necessities, handicrafts, electrical products, metal products, machinery and equipment, building materials and chemical products (exclude dangerous chemicals)
