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Risk factors | 12 Months Ended
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Dec. 31, 2020
Risk factors | Financial risk factors The Group’s activities expose it to a variety of financial risks: credit risk and foreign exchange rate risk.
(i) | Credit risk
The Group has no significant concentration of credit risk, cash in banks in Hong Kong and PRC is insured with limit of approximately US$64,000 and US$72,000, respectively per bank per each depositor. Uninsured cash in banks and restricted cash balances in Hong Kong and PRC are of approximately US$4,594,000 (2019: US$6,468,000). Cash transactions are limited to high credit quality banks.
(ii) | Foreign exchange rate risk
The Group operates in Hong Kong, the PRC and trades with both local and overseas customers and suppliers, and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to purchases in Hong Kong dollars, Renminbi and Euros. Foreign exchange risk arises from committed and unmatched future commercial transactions, such as confirmed import purchase orders and sales orders, recognized assets and liabilities, and net investment in the PRC operations.
ZHEJIANG TIANLAN |
Risk factors | Financial risk factors The Group’s activities expose it mainly to credit risk. Credit risk The Group has no significant concentration of credit risk, cash in banks in PRC is insured with limit of approximately RMB500,000, per bank per each depositor. Uninsured cash in banks and restricted cash balances in PRC are of approximately RMB44,494,000 (2019: RMB7,258,000). Cash transactions are limited to high credit quality banks.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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