Risk management
| Risk item |
Change of government policy and regulations
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| Risk factor |
As the company is a channel business with strong logistics capabilities, the risk of product R&D focuses solely on suppliers or customers. At present, the industrial policies of the governments of each country in which the company is located tend to encourage the development of high valueadded logistics operations, especially in Taiwan and the China. Thus, the risk of change of government policies and regulations is limited at present.
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| Impact on the company in 2021 |
There are no major changes in government policies and regulations. |
| Response measures |
The Company will continue to observe and analyze the future direction of government policies and regulations in order to facilitate immediate response |
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Risk item
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Change of technology |
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Risk factor
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The company's product range is mostly high-tech products; thus, sales change triggered by change of technology will result in operational risk, for example, unable to become an agent for innovative products.
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Impact on the company in 2021
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The company's product distribution rights have both increased and decreased.
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| Response measures |
The Company operates on its policy of “multi-brand, multiproducts.” The products that the Company distributes include wellknown global brands. In general, most major brands have good control over their technological advantages; thus, the Group's operational risk is effectively reduced. |
| Risk item |
Change of corporate image
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| Risk factor |
As the end-user of the company's IT and Telecom products are consumers, corporate image is very important to the company's operation.
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| Impact on the company in 2021 |
The corporate image of the company remains positive and there is no event that significantly damaged the company's image.
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| Response measures |
1.Strengthen the service skills of the customer service department, and fully utilize the functions of customer feedback and consumer complaint mailbox.
2.In case of major consumer disputes, an inter-departmental team shall be formed to keep the situation from worsening.
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Risk item
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Mergers and acquisitions |
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Risk factor
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Mergers and acquisitions can facilitate the expansion of product distribution and range while expanding market share. However, there are risks of overpricing, under-valuing liability, and failure in integration.
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Impact on the company in 2021
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The company did not participate in any mergers and acquisitions.
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| Response measures |
N/A. |
| Risk item |
Expansion of plants
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| Risk factor |
Synnex's core competitive advantage is effective and quality back office logistics operation that enhances value added services, expands market share, and enhances overall performance. However, there exists risks of poor cash flow resulting from over-expansion, low utilization, or idleness.
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| Impact on the company in 2021 |
The cost of establishment or expansion of logistics centers was approximately NT$403 million.
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| Response measures |
Before expansion: Careful evaluation of investment effectiveness and cost.
After expansion: Introduce successful operational experience and management to develop its effectiveness.
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Risk item
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Centralized purchasing or sales |
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Risk factor
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The risk of centralized purchasing is the impact to the company's performance when distribution rights or when the represented product has lost its competitiveness. The risk of centralized sales is the significant impact to the company's performance when loosing a customer.
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Impact on the company in 2021
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The company does not have over centralized purchasing and sales issues. See the statistics of the "Group's list of key clients and amounts in the past two years"
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| Response measures |
The Company operates on its policy of “multi-brand, multiproducts” and “open channel management to establish dense reseller network” to develop markets, which can also effectively avoid risk of centralized purchasing and sales.
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| Risk item |
Mass transfer or change of shares of directors, supervisors, or shareholders holding more than 10% interest
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| Risk factor |
May have significant impact to shareholder rights and Synnex's share price. |
| Impact on the company in 2021 |
No significant equity transfer or change. |
| Response measures |
The company has established reporting mechanism to effectively manage relevant situations and the disclosure of information. |
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Risk item
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Change in management rights |
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Risk factor
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May have significant impact to shareholder rights and Synnex's share price. |
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Impact on the company in 2021
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There is no change in management rights. |
| Response measures |
The company will promptly publish major information shall there be any change in management rights. |
| Risk item |
Information security
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| Risk factor |
Information security risk refers to the threat that may affect the assets, processes, and operating environment of the entire enterprise organization. The business operations of the company are highly dependent on the establishment and development of information systems. Thus, the control of information security is very important to avoid losses due to information confidentiality, integrity, or availability
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| Impact on the company in 2021 |
The Company has no major deficiencies in information securityrelated audits and has no major information security incidents resulting in leakage of customer information and fines.
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| Response measures |
1. The Company introduced the ISMS information security management system in 2016, and has regularly obtained ISO27001 certification. The current certificate is valid from August 2019 to August 2022. 2. Monthly security and antivirus updates for the IT environment's software and hardware, and strengthen colleagues’ security awareness and promote implementation through push notifications. 3. Continue to track the latest security information and threats in the market, and immediately assess the scope of impact and formulate countermeasures to ensure that the Company's information environment is synchronized with changes in security. 4. Evaluate the Company's risk events each year, establish a risk event database, control the risk events and levels that may exist in the enterprise, and continue to track improvement. 5. Strengthen the Company's IT environment backup mechanism and implement BCP drills to ensure that the Company's operations can continue uninterrupted when natural disasters and manmade disasters occur.
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Risk item
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Litigation or non-litigation events |
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Risk factor
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Major litigation and non-litigation events of the Company and the Company's Directors, Supervisors, President, actual owner, major shareholders with over 10% of shareholding, and subsidiaries will damage the Company's image, shareholder rights, and Synnex's share price
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Impact on the company in 2021
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Description below |
| Response measures |
With the established reporting system, the Company will minimize the damage through honest, fast, and open process. |
The concluded or pending litigious, non-litigious, or administrative litigation event as of the date of report is described as follows: 1. Kunhao (Kunshan) Electronics Co., Ltd. brought up a suit against Syntech Asia Ltd. (SAL) at the High Court of Hong Kong on November 24, 2015, claiming that SAL violated its verbal sales commitment with Kunhao and requesting compensation of US$2,964 thousand from SAL found the claim having no ground thus raised a plea against it, asking the High Court of Hong Kong to dismiss the suit on February 1, 2016. The case was settled for US$850 thousand on May 31, 2021, and the settlement was paid on June 7, 2021. The case is now closed. 2. On November 13, 2017, the Suzhou Xiangcheng District People's Court in Jiangsu Province accepted the suit brought by Ziguang Digital (Suzhou) Group Co., Ltd. against Synnex Distributions (China) Ltd. for a dispute over a sale and purchase contract. Ziguang believed that the goods they received were not the target of the contract and requested a refund. The court dismissed the case on January 22, 2018 since it believed that the Public Security Bureau was investigating the case. In August 2020, on the grounds that the Public Security Bureau canceled the criminal investigation, lawsuits were successively renewed for RMB 28,926 thousand, RMB 17,401 thousand, RMB5,593 thousand, and liquidated damages. In March 2022, the Suzhou Xiangcheng People's Court in Jiangsu Province ruled against the Company in the aforementioned cases. The Company has already estimated and accounted for possible loss, and has adopted such relief measures as retrial.