Sun Art Retail Group Limited - TodayIR.com

RISK FACTORS
• the competition that we face from incumbent and new players in the region; and
• any government development plans around our planned sites, such as construction, which could
have an impact on the external traffic flow to our hypermarkets and the timely implementation of
such changes.
Some of these factors are not entirely within our control. If our new hypermarkets do not break even or
achieve our expected level of profitability within our expected timeframe, or at all, our expansion plans
and our results of operations, financial condition and profitability may be materially and adversely affected.
We may fail to anticipate and provide the appropriate mix of merchandise to satisfy customer tastes
and demands.
We maintain a comprehensive selection of merchandise targeting a broad range of customers. The
success of our business depends on our ability to maintain a comprehensive product selection and, at the
same time, anticipate and respond in a timely manner to changing customer demands and preferences.
Some of the products we offer, such as home electronics and electrical appliances, may be characterised
by frequent introductions of new models and technology. Consumer demands and fashion trends in the
PRC are changing at a rapid pace and customer acceptance of new products is affected by a number
of factors, including prevailing economic conditions, disposable income, global lifestyle trends, price,
functionality, technology, appearance and many other factors. The success of our operations depends
on our continued ability to select products from suppliers that satisfy customer demand. If we fail to
accurately foresee or quickly adjust to general trends in consumer demands and preferences, our
business, financial condition and results of operations may be materially and adversely affected.
Real or perceived quality or health issues with the products offered at our hypermarket complexes
could have a material and adverse effect on our results of operations.
Concerns regarding the safety of products offered at our hypermarket complexes or the safety and
quality of our supply chain could cause shoppers to avoid purchasing certain products from us, or to
seek alternative sources, even if the basis for the concern is outside of our control. Adverse publicity
about these concerns, whether or not ultimately based on fact, and whether or not involving products
sold at our hypermarket complexes, could discourage consumers from buying our products and have a
material and adverse effect on our turnover and results of operations.
RISKS RELATING TO THE INDUSTRY IN THE PRC
The outbreak of any severe infectious disease in the PRC may materially and adversely affect our
results of operations.
The outbreak of any severe infectious disease in the PRC could have a material adverse effect on the
overall business sentiment and environment in the PRC. This in turn may have a material and adverse
impact on domestic consumption and, possibly, the overall GDP growth of the PRC. In April 2009, a H1N1
influenza broke out in Mexico and spread globally, resulting in the loss of lives and widespread fear.
In addition, certain areas of China have been subject to epidemics, such as severe acute respiratory
syndrome (SARS) or swine or avian influenza. As all of our turnover is derived from our PRC operations,
any contraction or slowdown in the growth of domestic consumption or slowdown in the GDP growth of
the PRC as a result of the outbreak of any severe communicable disease may materially and adversely
affect our financial condition, results of operations and future growth. In addition, if the outbreak of
Sun Art Retail Group Limited
Annual Report 2012
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