HTC 2008 Annual Report Download - page 59

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8. Anticipated benefits and risks posed by HTC plant
expansion work, and response measures:
Responding to global market demand for mobile
smart phone devices, in addition to continuously
reviewing and improving production processes to
enhance capacity, quality and cost savings, HTC
invested in an existing production plant at
Kangqiao, near Shanghai, China, which began
filling orders before the end of 2008. Current HTC
capacity addresses the need for expansion while
adding flexibility to manufacturing scheduling,
which has enhanced overall competitiveness. The
Shanghai facility is also a beachhead for HTC in
the Mainland Chinese 3G mobile phone market,
on the eve of that market's liberalization. HTC has
also carefully selected a number of outsourcing
partners to help produce components and
products for orders that HTC's current capacity
would otherwise be unable to fill. This practice has
infused additional flexibility into HTC's production
capacity.
9. Concentration risks associated with purchases
and sales, and response measures:
a. Purchases
The technology of materials / components
suppliers in the mobile phone sector is
increasingly mature and stable, giving HTC the
potential for alternative suppliers when designing
new products and avoiding risks associated with
sourcing from one supplier. Also, benefiting from
economy of scale production and a market in
2009 characterized by supplies outstripping
demand, HTC is working aggressively to reduce
costs of component / part purchases in order to
optimize cost structures.
b. Sales
Markets for HTC products are distributed across
Europe, the Americas and Asia. Local telecom
service providers and HTC brand retailer partners
are the two principal sales channels used by the
corporation. The imminent arrival of 3.5G to the
mainstream of mobile telecommunications is
expected to enhance steadily the influence of
telecom service providers in the mobile phone
market, which can be expected to benefit HTC
products significantly. Apart from working with
current customers to expand markets and
strengthening strategic cooperative partnerships,
HTC regularly communicates with the world's
leading IT and telecom companies with regard to
cooperative projects. Such also facilitates HTC's
understanding of and insight into market trends.
Reflecting the increasing importance of the HTC
brand in the corporation's portfolio, HTC will step
up measures to strengthen supervision of channel
retailers as well as to further cement strong and
positive mutual working relations in order to
reduce business and sales concentration risks.
10 .Effect upon and risk to the company in the event a
major quantity of shares belonging to a director,
supervisor, or shareholder holding greater than a
10 percent stake in the company has been
transferred or has otherwise changed hands, and
mitigation measures being or to be taken:
As of the printing date of this annual report, no
transfer or change of hands of a significant portion
of HTC share rights has occurred with respect to
any director, supervisor, or major shareholder
holding more than a 10 percent stake in the
company.
11 .Effect upon and risk to company associated with
any change in governance personnel or top
management, and mitigation measures being or to
be taken:
There was no change in HTC managerial control
in the 2008 fiscal year.
12 . Lawsuits and other legal proceedings. This
category should include all lawsuits and other
non-litigation legal proceedings related to the
corporation; its directors, supervisors, president,
senior executives; major shareholders owning
greater than 10% of outstanding shares; and
corporate subsidiaries, the results of which could
significantly affect shareholder rights and / or
share prices. Statements should be provided with
regard to the issue(s) under dispute, the value of
the object of litigation, date of lawsuit submission,
principals involved and developments in the legal
matter as of the printing date of this annual report.
(1) Major lawsuits, non-litigious legal proceedings or
administrative litigations currently involving HTC,
the results of which could significantly affect
shareholder rights and / or share prices: None
(2) HTC has made appropriate financial provisions for
all general lawsuits subject to court hearings in
which the corporation is currently involved. None
pose a threat of impacting significantly on
corporate finances or operations.
13 . Other important risks and mitigation measures
being or to be taken:
None
14 . Risk Management Organizational Structure
2OO 8 HTC AN N UAL REPO RT VI. FIN AN CIAL STATUS, O PERATIN G RESULTS AN D RISK MAN AGEM EN T
Responsible/Implementation Unit Items to be Implemented Implementation Tasks
Legal Department Contractual and legal risks Evaluation of the company's overall contractual risks
Finance and Accounting Division Risks associated with operational Capital allocation and management, investment plans,
decisions and financial management client credit control, operations analysis, and cost analysis
Internal Audit Internal control risks Evaluation of internal control system soundness and effectiveness
Product Marketing Division Risks associated with product trends Future product development trends and customer demand
Design Quality & Engineering Risks associated with product Ensure quality design of software/hardware in HTC products and
Service Division design and quality product safety
Manufacturing Operation Center Risks associated with quality control Enhance the quality of product manufacturing
in production
Global Service and Quality Risks associated with product quality Provide after-sales service and improve its quality
Assurance Division
7. OTHER IMPORTANT MATTERS
(1) Relevant Certification Status of Financial Transparency Personnel as Required by the Competent
Authority
Division Name Relevant Training and Certification
Finance and Accounting Division Clement Lin Training certification associated with the competent authority's 2008 implementation of
laws related to the expensing of employee profit sharing contributions, response
strategies for accounting treatment and practice, accounting treatment and disclosure
and presentation of financial instruments (Statement of Financial Accounting
Standards No. 34 and No. 36).
Mingyi Wu Certified Financial Analyst (CFA), Financial Risk Manager (FRM)
Jerry Chen Internal auditor, Certified Public Accountant(CPA)
Sally Wang Certified Public Accountant(CPA)
Internal Audit Division Vincent Tseng Approaches to internal control self-assessment (CSA) (2008)
Seminar on the revised FASC Statement of Financial Accounting Standards No. 10,
"Accounting For Inventory" (2008)
Mico Yu Information Security Management Audit
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