Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 68

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 4
Chunk 68
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 COVID-19 is expected
to be mitigated gradually as supported by systematic normalization of economic and logistics activities and the resumption of normal manufacturing
schedule throughout the supply chain.

Cost Structure Analysis

Labor
Cost. During 2016 to 2021, the labor cost in the manufacturing industry in the PRC increased steadily. In particular, the
average monthly wage of professional technician has increased from RMB6,212.4 to RMB9,800.9 during 2016 to 2021, representing a CAGR of
approximately 9.5%. The increasing labor cost is attributable to increasing demand of skillful labor equipped with skills such as knowledge
on computerized management system, modelling analytical skills and proficiency in foreign languages.

Going
forward, the average monthly wage of employed persons in manufacturing industry, including production and equipment operator, professional
technician and managerial staff, are expected to grow at a slower trend at a CAGR of 7.1%, 7.7% and 6.6% respectively, owing to the increasing
amount of labor entrants, resulting in a stable growth of wage.

Raw
Materials. The prices of key raw materials and component in hair styling tool manufacturing during 2016 to 2026, which
include integrated circuit, printed circuit board, plastics, lithium battery. In general, majority of materials and components used in
hair styling tool production in the PRC have been sourced domestically. The fast-growing market demand for raw materials worldwide has
resulted in a general increase in prices for such materials. With the sustained development of the electronic product and hair styling
tool manufacturing industry, the raw material prices are expected to grow moderately in the forecasted period.

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Competitive Landscape

Overview. The industry is relatively fragmented and is highly competitive and there were approximately 1,000 market participants principally
engaged as hair styling tool OEM service providers in the PRC in 2021. The OEM service providers tend to place their focus on several
specific product categories to gain industry recognition and competitive advantages. Business relationships and track records establish
long- term relationships with customers and suppliers are the key factors of competition among the hair styling tool ODM services providers.

Barriers to Entry.

R& D
Capabilities. R& D capabilities are the technical abilities to discover, develop, or scale marketable solutions. Strong
R& D capabilities allow existing market participants to have an improved type of business process, lower marginal costs or increase
marginal productivity.