With regard to the policy aspect, in order to regulate the assurance business while promoting the growth of this industry, relating governmental bodies have enacted a series of laws, regulations and policies such as the "Small to Medium Enterprises Promotion Law", the "Interim Administrative Rules Guiding the Risk Control Work of Small to Medium Enterprises Engaged in the Assurance Business", the "Notice Regarding the Establishment of Credit Assurance System for Small to Medium Enterprises ", the "Administrative Rules for Small-Sum Guaranteed Loan for Unemployed Persons", the "Trial Methods for Undertaking Housing Credit Insurance Business", the "Certain Trial Rules for the Introduction of Construction Contract Guarantee in Real Estate Developing Projects" and the “Trail Rules for the Financing Guarantee Company”. All such rules and regulations have on one hand described the common practices of the assurance industry, strengthened the management of risk control, and on the other hand improved the industrial environment of the assurance business, thus have expanded the assurance business scope and boosted the growth of this industry.
Sales commission - increase by $2,409,209 compare with none in 2010 on the business in application of bank guarantee. The business model was changed during the year and we commenced to pay sales commission to the referral agents to get more business. The sales commission was paid to an independent third party and in normal course of business, mutually agreed terms and in payment basis. Due to the low profit margin result and after the discussion of the management, this business model will be phase out in 2012.
For the year ended December 31, 2011, cash used in investing activities amounted to $8,112,495 compared to $1,722,022 for the fiscal year ended December 31, 2010. The use of funds was for the purchase of marketable securities, plant and equipment and advances for loans receivable, which partially offset by the change in restricted cash, net of customer collateral and the repayment from loan receivable.
estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
To comply with the PRC laws and regulations, the Company currently conducts substantially all of its businesses through CCG, which is considered as a VIE.
Under the PRC Law, full-time employees of the Company’s subsidiary and VIE in the PRC, are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. It is required to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions made for such employee benefits were $150,771 and $100,785 for the years ended December 31, 2011 and 2010, respectively.
As of December 31, 2011, the Company has 709 surety and tendering guarantees outstanding. If the Company’s customers fail to complete their performance obligation in a timely manner so that the Company is obligated to pay on its guarantees, the Company would have the maximum potential amount of future payments of approximately $256,213,528 (RMB1,627,545,197) in total.