Company: FEBO
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001641172-25-010075
Chunk: 70

Company: Fenbo Holdings Ltd
Filing Date: 2025-05-14
Form: 20-F
Item: Item 4
Chunk 70
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. From time to time,
our engineering and design department develops innovative product designs and features around the core parameters of creativity, reliability,
safety and commercial viability. Our research and development activities also include (i) development and standardization of production
techniques and procedures; (ii) working with customers to resolve specific problems with customers’ designs and requirements; and
(iii) experiment on project bases for calibration and optimization of production processes in order to achieve a higher yield on production.
We believe that successful research process improvement and refinement is critical to our ability to stay competitive in the industry
in which we operate.

  42  

Manufacturing

The Group’s production facilities
(“ SZ Factory”) are located in Bao’an District, Shenzhen City, Guangdong Province, the PRC. The SZ Factory is comprised
of one block of a four-story building consisting of approximately 11,000 sq. meters.

Raw materials. The principal raw materials sourced by the Group in its production, which constitute the basic core components of its products, include
plastics, motors, power cords, switches, heating elements and thermostats.

The Group sources plastics, motors,
power cords, switches, heating elements and thermostats mainly from Hong Kong and the PRC. The Group does not have long term purchase
contracts with its suppliers but only purchases via orders. Management negotiates purchase prices by taking into account price trends
of the particular commodity and volume discounts.

During the years ended December
31, 2022, 2023 and 2024, certain major raw materials experienced a general upward price trend. The prices of raw materials were, to a
certain extent, volatile over the periods. Factors affecting the supply and prices of raw materials include fluctuations in the price
of oil and in commodity prices (including metals and plastics) and the variation in the global economy as a whole. The Company has had
business relationships with its major suppliers for over 17 years. Some of them are public companies or subsidiaries of public companies
listed on the Shanghai, Shenzhen or Hong Kong Stock Exchanges and the supplies and availabilities of our raw materials have never been
an issue in the past. Also, all of our primary raw materials are general commercial commodities. Management believes that the Group has
maintained good business relationships with its suppliers and has a stable material supply chain. Other than the Group’s existing
suppliers, there are alternative sources of supply available for the raw materials that the Group requires. Therefore, even if