On Dec.28,Dongguan Taishen Furniture Co.,Ltd(Hereinafter referred to as "Dongguan Taisheng") announced that due to tighter environmental regulation, sharply falling orders , declining business and serious losses, the company had to make decision that the factory in Dongguan would be stopped.from February 1, 2018".

The Dongguan furniture factory that will be stopped was built in 1995,mainly engaged in in the manufacturing and sales of furniture, was the indirect and wholly owned affiliated company of the listed company Hongkong Shuncheng Holdings Ltd (0531.HK).But in te meeting of stockholders on November 6th, shareholders voted unanimously agreed to separate Dongguan Taisheng for the mother company.. Shun Cheng holdings one one hand is preparing the disposal of bad assets, on the other hand is taking up the acquisition of well-known furniture brands.

Maybe the destiny of Dongguan Taisheng has been decided in the early time.It is reported that Dongguan Taisheng mainly is mainly engaged in OEM furniture business and Shuncheng Holdings purchases the manufacture service and furniture products.But since the economy crisis in 2008,the order of Dongguan Taisheng declined sharply.In the past three years, Dongguan Taisheng produced 200 containers each month ,but if it produce at its full capacity, each month, 600 containers of furniture can be produced,so the it is seriously overcapacity.

Under the the situation of order declining,owing to the increasing of labor cost and material, the disadvantages of Dongguan Taisheng who does OEM business, were more obvious and has fallen into a loss for 6 consecutive years.According to the data published by Shuncheng,2015 saw a loss of 30.04 million RMB ,in 2016 was 48.562 million RMB.Shuncheng Holdings has prepared to give up Dongguan Taisheng long time ago.Staring from 2012,Shuncheng Holdings began to transfer the production order to LCZJ factory,which was found in 2002 in Zhejiang province.Its product category is same as Dongguan Taisheng,but the square meter is 2.7 times of Dongguan Taisheng with more advanced worshop and equipment.At present, each month can produce 1200 containers of furniture withe the capacity usage rate 70%.

Shuncheng Holdings believes after the sale of Dongguan Taisheng and order transferring to LCZJ,LCZJ factory has ability to deal with the production and is able to promote the usage rate of production capacity ,at the same time, the fixed cost arising from Dongguan Taisheng can be reduced.

According the the announcement in Sep.1 of this year,’The board is pleased to account that from Sep.1 of 2017,the seller agree to sell all the share of the indirect wholly owned affiliated company with the total price 4.8 billion RMB.And the share transfer agreement is voted unanimously.

Although before the sale,the asset value accounted for 7.6 percent of the Shuncheng Group(including Shuncheng Holdings and its subsidiary),Shuncheng Group thought Dongguan Taisheng did not contribute anything to the Group.At current time,the OEV furniture enterprises can not gain any advantages.

Besides LCZJ factory, Shuncheng Group has other four furniture factories,two of them produced sofa in USA and one produces furniture parts in Indonesia and one is located in Bangladesh producing chairs.Shuncheng Group emphasized that except LCZJ,other factories didn’t operate by the mode of OEM

Shuncheng Group is one of the biggest distributors in USA ,mainly selling products to Europe, USA with 9 furniture brands.In May of 2016,Shuncheng Group purchased on hotel furniture manufacturer Grand Manor Furniture Inc., and in Feb of 2017,Shuncheng Group bought Baker Interiors Group,Ltd and its subsidiary company BLG,by which Shuncheng collected three global luxury furniture brands.