China Hongxing wrote off debts incurred by many customers

A Chinese sportswear firm listed here has had to write off debts racked up by the bulk of its customers.

China Hongxing Sports said 33 of 37 customers who had contributed about 95 per cent of the company's revenues in the first nine months of this year had unpaid debt stretching over six months that had to be written off.

The firm, which makes sports shoes and apparel, also told the Singapore Exchange late on Thursday that it had negotiated for longer credit periods from several suppliers. Its response followed an SGX query about its third-quarter earnings.

The bourse asked for the names of companies with debts of more than six months that had been written off by China Hongxing.

The company declined to reveal the names, but said that 33 of its 37 customers as at Sept 30 had some portion of their debts written off "for accounting prudence reasons".

China Hongxing said it continues to trade with these customers, otherwise there would be no possibility of recovering the amounts owed.

"The company will continue to chase for the payment and there is hope that they will pay, but much later," China Hongxing said.

The SGX also asked why trade payables had increased when revenue was down. China Hongxing replied that it had negotiated with several raw material suppliers for longer credit periods, and that settlement would be due by the end of this year.

China Hongxing shares are suspended from trading.

A version of this article appeared in the print edition of The Straits Times on November 25, 2017, with the headline 'China Hongxing wrote off debts incurred by many customers'. Print Edition | Subscribe