Nantex’s “Counterfeiting Gate” reflects the hidden worries about the survival of export textile enterprises

Fake profits of 344 million yuan for five consecutive years, and was warned and punished by the China Securities Regulatory Commission
Due to financial fraud for five consecutive years from 2006 to 2010, with fictitious profits of 344 million yuan, Nanjing Textile Import and Export Co., Ltd. (hereinafter referred to as Nanjing Textile Co., Ltd.) was recently given a warning by the China Securities Regulatory Commission and fined 500,000 yuan. Therefore, it has been called by the outside world “the first fake stock of a state-owned listed company in the past 10 years.”
Nanfang Co., Ltd. announced on May 17 that the company received the “Investigation Notice” issued by the China Securities Regulatory Commission on March 23, 2012, and received the “Administrative Notice” issued by the China Securities Regulatory Commission on May 15, 2014. Penalty Decision Letter”. The China Securities Regulatory Commission determined that Nanfang Co., Ltd. had illegal facts and pointed out that it had fabricated profits for five consecutive years from 2006 to 2010.
Among them, the profit disclosed in the 2006 annual report of Nanfang Co., Ltd. was 24.405 million yuan (this was adjusted to 19.0244 million yuan in the 2007 annual report). After investigation, it was found that the fictitious profit was 31.0915 million yuan. Excluding the fictitious profits, Nanfang’s profit in 2006 was -6.6865 million yuan. Fictitious profits accounted for 127.39% of its disclosed profits.
The profit disclosed in the 2007 annual report was 27.9274 million yuan. After investigation, it was found that the fictitious profit was 42.2333 million yuan. Excluding fictitious profits, its profit in 2007 was -14.3059 million yuan. Fictitious profits accounted for 151.22% of its disclosed profits.
The profit disclosed in the 2008 annual report was 15.7936 million yuan. After investigation, it was found that the fictitious profit was 151.9983 million yuan. Excluding fictitious profits, its profit in 2008 was -136.2047 million yuan. Fictitious profits accounted for 962.40% of its disclosed profits.
The profit disclosed in the 2009 annual report was 15.8278 million yuan. After investigation, it was found that the fictitious profit was 60.5318 million yuan. Excluding fictitious profits, its profit in 2009 was -44.704 million yuan. Fictitious profits accounted for 382.43% of its disclosed profits.
The profit disclosed in the 2010 annual report was -1.0489 million yuan. After investigation, it was found that the fictitious profit was 58.6412 million yuan. Excluding fictitious profits, its profit in 2010 was -59.6901 million yuan. Fictitious profits accounted for 5590.73% of its disclosed profits.
Based on this calculation, the total fictitious profit of Nanfang Co., Ltd. in the past five years was 344 million yuan. The China Securities Regulatory Commission pointed out that “Nantex Co., Ltd.’s act of fictitious profits violated Article 63 of the Securities Law, which stipulates that the information disclosed by listed companies in accordance with the law must be true, accurate, and complete, and must not contain false records, misleading statements, or major omissions. This constitutes the illegal conduct of false records, misleading statements or major omissions in reports submitted by listed companies as mentioned in Article 193 of the Securities Law.”
Therefore, in accordance with Article 193 of the Securities Law and Article 27 of the Administrative Punishment Law, the China Securities Regulatory Commission gave Nanfang a warning and a fine of 500,000 yuan; the former chairman Shan Xiaozhong was given a warning and a fine of 300,000 yuan. Fines; Ding Jie, the former director, deputy general manager and financial director, and Liu Shengning, the former deputy general manager, were given warnings and fined 200,000 yuan each; other relevant responsible persons Yang Jingcheng, Han Yong, and Zhao Wanlong were given warnings and fined 50,000 yuan each. Fines: Guo Suqiang, Wang Chunfu, Xu Kangning, Yang Zhong, Wang Kaitian and Qiu Bin were given warnings and fined 30,000 yuan each. The responsibilities of Hu Haige, Zhou Faliang, Chen Shan, Wang Yuetang, and Huang Weizhong have expired, and according to the relevant provisions of the Administrative Penalty Law, they will no longer be subject to administrative penalties.
This news caused an uproar as soon as it came out. Market commentary believes that “Nantex’s fraud can be said to have reached an unbelievable level”, but the result of the punishment is “heavy lifting and falling gently.” There are even market opinions favoring that Nanfang shares should be delisted.
“Shanghai Securities News” issued an article stating: “The market’s doubts about Nanfang shares mainly focus on several points: First, after deducting the fictitious profits, its profits in the past five years have all turned from profits to losses. If the performance in 2011 is considered, it has actually been If it has suffered losses for six consecutive years, should it be delisted while additional penalties are imposed according to the retroactive mechanism? Second, the punishment for the listed company and relevant responsible persons is too light. Should the main responsible person bear criminal liability and be transferred to the judicial authorities? Third, interests How to deal with civil compensation for injured investors? The prerequisites for the court to accept it are already in place.”
Yang Zhaoquan, a lawyer at Beijing Weinuo Law Firm, said in an interview that even if the problem of inflated profits has been covered up for many years, as long as it is discovered and the company has suffered losses for four consecutive years, it will meet the delisting conditions.
The “Shanghai Securities News” even issued an article from the perspective of improving the “Securities Law” and pointed out that “Nantex Co., Ltd.’s fraud to maintain its listing qualifications is almost a mockery of the delisting system, and it has once again made everyone see that the law has a negative impact on securities violations.” The punishment is too light, which is tantamount to the indulgence of those illegal enterprises. It is precisely because of the lack of restraint on listed companies that they lack basic respect for the law and repeatedly violate the law. This will not fundamentally change because of an insignificant administrative penalty. Revision The Securities Law is urgently needed.”
According to the latest development of the situation, on May 20, the Shanghai Stock Exchange has issued a letter of inquiry to the company, requiring the company to verify the retrospective adjustment and information disclosure of accounting errors from 2006 to 2010; verify whether there are any lawsuits such as shareholder claims, and evaluate possible future litigation Analysis of litigation risks.
On May 21, Nanfang Co., Ltd. responded to the announcement saying, “So far, the company has completed all retroactive adjustment matters, and there are no other matters that should be adjusted but have not been adjusted.” At the same time, the reply stated, “After verification, the company has not yet received any documents related to the claim sent by the court.Risk prevention has had a significant impact.
Huamao Co., Ltd. also pointed out that the current internal and external situation faced by the textile industry is still complex and severe. 2013 was an extremely difficult and complicated year for Chinese textile enterprises. The problem of huge gap between domestic and foreign cotton prices still exists, rising pressure on comprehensive costs of production factors and other factors is prominent, environmental pressure on energy conservation and emission reduction is increasing, the textile market is sluggish, costs High prices, global demand for textiles is not strong, and the survival and development of textile companies face severe challenges.
​To break through adversity, transformation and upgrading must be accelerated
Under the “external worries and internal difficulties”, this type of textile enterprises must accelerate their transformation and upgrading.
In this regard, Nanfang Co., Ltd. stated that the company is still in the adjustment period of deleveraging and risk reduction. The asset-liability ratio is still high and the capital turnover pressure is high. At the same time, the main business is in a period of transformation. On the basis of strictly controlling business risks, the company is accelerating business transformation and upgrading. The company will actively implement the main business development strategy of “stabilizing import and export and developing bulk business”, rely on existing resources, deeply tap and integrate, implement comprehensive budget management of the three main business segments, dynamically track main business data, and actively Adjust business strategies and strengthen business risk control.
Huamao Co., Ltd. has established the concept of promoting structural adjustment and promoting industrial upgrading. Through joint ventures, cooperation, share swaps, etc., it has established its own cotton base, cooperated with advantageous enterprises in Italy, Germany, Switzerland, Japan and other countries and regions, and introduced It has established international high-end printing and dyeing enterprises, from cotton to yarn to clothing retail, to build a complete industrial chain value system for the main textile industry, and gradually realize the international value trend of “less input, more output, and high-end”. The company stated that it should speed up the adjustment of industrial structure, accelerate scientific and technological progress, strengthen corporate brand building, adhere to management innovation, and promote corporate transformation and upgrading.
Jiangsu Sunshine Group’s response measures are divided into five aspects: first, to increase recruitment efforts, further improve employee benefits and benefits, and focus on the cultivation of corporate culture; second, to avoid labor difficulties through technological transformation and enhance the company’s automation procedures; third, to increase Big Tech’s R&D efforts promote technological innovation, increase product added value, and improve product competitiveness; fourth, in response to the risk of raw material price fluctuations, we adopt advance payments and establish long-term and stable cooperative relationships with suppliers to reduce risks; fifth, we adjust our own structure and Make good use of export tax rebate policies and exchange rate policies to improve capital utilization to reduce the adverse effects of RMB exchange rate fluctuations.
In addition, another prominent phenomenon in recent years is that under the background of poor profitability in the main textile industry, such enterprises have set foot in non-related diversified industries, such as biomedicine, new energy, financial investment and other diverse fields, in order to pursue Multiple new profit points.
This is understandable, but the prospects for these diverse fields are not bright. Industries such as real estate and finance are all greatly affected by policies. If you are not careful, not only will you not be able to increase income and profits, but it will drag down your main business, so you should be careful.