Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 67

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 4
Chunk 67
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 labor costs, alleviating
operational risk, and enhancing inventory management. Predictive maintenance technology coupled with Enterprise Resources Planning (ERP)
systems are introduced by manufacturers to monitor the state of equipment, inventory level and utilization rate. Further, the rise of
business-to-business online marketplace transactions are expected to lower procurement and logistics costs between upstream suppliers
and downstream brand owners with information transparency. As such, the integration of automation and informalization into the supply
chain is expected to alleviate the cost burden on manual efforts to achieve a greater allocation of manpower resources.

Market Threats and Risk
Analysis

Rising
labor and Raw Material Co sts. Labor and raw material are the two major cost components. According to the to the Ministry
of Industry and Information Technology of the PRC, the profitability of enterprises in the electronics industry has declined from 9.1%
in 2018 to 5.9% in 2021. The decline was attributable to the rising labor costs, as well as a surge in price of component such as printed
circuit board, which is expected to put additional cost burden on industry participants.

Shortage
of Experienced Labor. In view of the advancement in technology and increasing demand for solution customizations, professionals
that are capable of designing, implementing, and overseeing throughout the product development stage, are able to accommodate the demand
are an essential resource. However, there is a lack of domestic training for qualified personnel to participate in high-end design and
development services. As such, the shortage of professionals may hinder the development of the industry.

Impact
and the Outbreak of COVID-19. Outlined by leading companies in the components chips industry, the global component shortage
has been prolonging since 2019 during the events of U. S. China trade war, outbreak of the COVID-19 and various severe weather incidents.
The average lead delivery time of chips has increased from 12.7 weeks in January 2020 to 15.0 weeks in January 2021, and subsequently
further escalated to 26.2 weeks in January 2022. The COVID-19 pandemic caused temporary disruption to demand and supply of raw material
of hair styling tool. Temporary suspension of non-essential workplace activities as part of the containment measures for COVID-19 delayed
raw material supply from the upstream, shipment of semi-finished or finished products to overseas customers and increased operational
risk in relation to currencies, logistics costs and delayed scheduling. In the medium-to-long run, the impact of