NewWorld Development Company Limited
RISK FACTORS
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D. MAJOR RISK FACTOR ON SUBSIDIARIES
New World China Land Limited (“NWCL”)
1. NWCL’s property development business is highly susceptible to the prevailing condition and performance of
the PRC property market which is heavily regulated by the PRC central and local governments. In response
to the domestic and international market volatility, the PRC Government will, from time to time adjust its
monetary and economic policies to monitoring the rate of growth of the PRC economy and economies of local
areas within the PRC. Such policies and regulations would have significant impact on the PRC property market
where NWCL operates.
2. Economic conditions in the PRC are sensitive to global economic conditions, and it is impossible to predict
how the PRC economy will develop in the future and whether it might slow down due to the global crisis
or experience a financial crisis in a manner and scale similar to that in the United States and the European
countries. As the real estate industry is sensitive to macroeconomic trends, real estate prices tend to fluctuate
along with the change of macroeconomic conditions.
3. These and other issues resulting from the global economic slowdown and financial market turmoil have
adversely affected, and may continue adversely affecting, the Chinese market and consumption capacity in
this market, which may lead to a decline in the general demand for NWCL’s products and erosion of their sale
prices. In addition, any further tightening of liquidity in the global financial markets and in China may negatively
affect our liquidity. Therefore, if the global economic slowdown and turmoil in the financial markets crisis
continue, our business, financial condition and results of operations may be adversely affected.
4. NWCL’s property development operations face competition from both international and local property
developers with respect to factors such as location, facilities and supporting infrastructure, services and
pricing. NWCL competes with both local and international companies in capturing new business opportunities
in the PRC. In addition, some local companies have extensive local knowledge and business relationships and/
or a longer operational track record in the relevant local markets than NWCL while international companies
are able to capitalise on their overseas experience to compete in the PRC markets. Intensified competition
between property developers may result in increased costs for land acquisition and an over-supply of
properties, both of which may adversely affect NWCL’s business and financial conditions.
5. Property development companies in the PRC, including some of NWCL’s PRC subsidiaries, are subject
to extensive governmental regulation in most aspects of their operations, including those relating to the
acquisition of land use rights, resettlement and clearance of land, the approval of property development
proposals and pre-sales. There can be no assurance that these regulations will not change in the future
in a manner which could adversely affect NWCL’s business or results of operations. In addition, the PRC
Government is presently strengthening its regulation and control of the development of properties. While
enforcement of these and other regulations are beneficial to the entire property development industry, it is
possible that certain individual regulations could adversely affect property development companies, including
NWCL. As regulations continue to develop, prevailing industry practices may not comply with such regulations.
6. The PRC Government has in the past imposed restrictions on foreign investments in the property sector
to curtail the overheating of the property sector by, among other things, increasing the capital and other
requirements for establishing foreign-invested real estate enterprises, tightening foreign exchange control
and imposing restrictions on purchases of properties in China by foreign persons. Such restriction may affect
NWCL’s ability to make further investments in NWCL’s PRC subsidiaries and as a result may limit its business
growth and have a material adverse effect on its business, financial condition and results of operations.
