COPORATE GOVERNMACE AT CITIC PACIFIC - Running Head...

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Running Head: CORPORATE GOVERNMACE AT CITIC PACIFIC 1 CORPORATE GOVERNMACE AT CITIC PACIFIC {Insert your name} {Date} {Course number and section number} {Unit Number} {Case Name} {Page Number}
CORPORATE GOVERNANCE AT CITIC PACIFIC 2 Company and Situation CITIC Pacific is a China-based holding company. The company specializes in the m9ning of iron ore and manufacture of special steel used in the vast construction of infrastructure in China and elsewhere in the world. Being a holding company, other business areas for the company include power generation, property development, Telecommunication, as well as motor vehicle distribution. The nature of this company has led to great profitability for many years. For instance, the company recorded $2 billion profits after tax in the 2010 trading period. The growth in profits is mainly attributed to the growing demand for steel in China and other Asian countries (MClam, 2005). Despite its success in terms of growth and profitability, CITIC Pacific has had problems. Some of these include the 2008 foreign exchange scandal. During this period, the company is reported to have undergone a massive $ 2 billion due to ‘unauthorized trading' of hedging contracts (Kassem, 2012). This affected the Australian subsidiary of CITIC Pacific, but the aftermath affected the trading of shares of the mother company at Hong Kong. The lack of disclosure of this action by the CITIC Pacific led to the Hong Kong Securities and Futures Commission suspending the company from the financial markets. The disclosure of this incident to the Hong Kong financial market regulators led to the demotion as well as retrenchment of several managerial personalities at the mother company. As such, it can be seen that this problem that is the only one of importance since then is as a result of inefficient internal business. The unscrupulous activity of authorized trading of hedging contracts as well as the non-disclosure of this by the mother company led to action been taken against the company. Apart from incurring losses following suspension from the financial
CORPORATE GOVERNANCE AT CITIC PACIFIC 3 market; this incident must have had a negative impact on the company's managerial ability (Office of Mental Health, 2015). Strengths, Weaknesses & Alternatives Analysis of CITIC Pacific SWOT analysis indicates significant strengths and weaknesses. This analysis also shows that the company enjoys more strengths than it does experience weaknesses. The strengths list include a strong and diversified portfolio, high growth prospects, and a wide range of able employees including management. Apart from that, the company enjoys a higher return on equity compared to that of the general mining industry in China. Focusing on weaknesses, the company's most significant weaknesses is its limited global representation. This leaves the company to face global competition. Additionally, the company's debt to equity ratio is higher than that of the industry. This means that the company has reduced ownership due to

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