Page 168 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

In terms of managing the inventory, Central Retail has to reserve a proper number of merchandises in its warehouse for
its smooth business operation: its average inventory days was 103 days for 2021. In case that it estimates sales higher
than actual values, it may incur a lot of inventory and need to do promotions to get rid of the goods. Storage and
transportation expenses may also follow from keeping unsold inventories. In case that Central Retail’s sale estimation
is lower than reality or new product expectation is incorrect, its stock may run low, being unable to meet the
customers’ demands, losing the selling chances and possibly customer’s trusts to find their desired goods from
its stores, tarnishing its reputations. These may negatively affect Central Retail’s business, cash flow, operating
results, financial position and business opportunities. Furthermore, even if it has its own workflow and system to
prevent loss or thief of its goods, in case that the lost or stolen merchandises are higher than expected,
it may have to write off the number of lost or stolen stuffs higher and lose the selling chances, which may negatively
affect its profitability. Also, the deviation of inventory resulted from delayed delivery and lost or damaged goods
may negatively affect Central Retail’s operating results.

However, Central Retail has established risk response measures to ensure risk is within the acceptable level by
carrying out the following activities:

• Planning product purchase according to sales trends, cycle time, and product life cycle in order to maintain
the appropriate stock
• Report and follow-upon managing slow-selling product in an appropriate level, including various obsolete products.
• Planning on product control, inspection and product counting to avoid any loss, and regularly report the results
• Provision of alternate warehouses in case of emergency where major warehouses are inadequate or non-operational
• Use of multiple shippers to exploit their expertise in each location and backups in case of emergency
where any shipper faces shipping problems
• Determination of stores that are capable of receiving products directly from the suppliers in case of
distribution system problems of the Company
• Collaboration with distribution system management units of different business units to mutually develop
strengths and diversify risks and issues of each business unit

(6) Risks in Business Operation in Vietnam

Central Retail has operated its business in Vietnam and some of its assets are in Vietnam. The investment done
in Vietnam may cause the shareholders to encounter the more risks than the investment done in the developed
market. The developing market like Vietnam usually change fast and the information detailed in risk factors may
quickly be out-of-date.

Vietnam’s economy system is a mixed economy system in which most of the investments are done by government
and the private investments are under comprehensive supervision of the government. The government of Vietnam
plays an important role in directing various aspects of economy and the economic policy determined by
government also significantly affects the private sector businesses including Central Retail. For this reason,
operations or policies done by Vietnamese government may be important to business, business opportunity,
financial position, and operating performance of Central Retail.

Vietnam’s economy may be affected by the external risks including the interest rates in United States of America
and other countries, and by the exchange rate, which might affect the country’s economy, being affected.
Central Retail cannot estimate whether the current economic policy and operation would cause more fluctuations
or economy problems in the future or not. These situations may cause significantly negative effects on business,
financial position, operating performance, and business opportunity of Central Retail.

168 Annual Report 2021 (Form 56-1 One-Report)