By Xie Xin

A poster at a telecom expo in 2004 says “Amoi is ready for 3G.” The company's listing on the Shanghai Stock Exchange (SSE) will be suspended starting May 27 after Amoi failed to turn a profit for three consecutive years. Amoi is hoping 3G technology will help it regain profitability. Photo: CFP

Amoi Electronics released a statement Tuesday saying that its listing on the Shanghai Stock Exchange (SSE) will be suspended starting May 27.

The Xiamen-based company was suspended by the SSE due to its failure to turn a profit for three consecutive years, the statement said.

According to SSE regulations, if Amoi can return to profitability within one year, it can be re-listed on the exchange. Otherwise, the company will be de-listed, or potentially listed on an alternative exchange called the Agency Share Transfer System, commonly known as the “Third Market.”

The Third Market allows “over-the-counter” trades between non exchange-member brokers and large institutional investors of stocks listed on the exchange.

The suspension follows a move last year in which Amoi's shares were marked by the SSE as Special Treatment stocks after the company failed to make a profit two years running.
In a report on its 2008 finances released this April, Amoi admitted it was struggling with debt.

“Currently Amoi is burdened by debts of 2.7 billion yuan ($395.61 million), and is faced with difficulties in financing,” the report stated. “At the same time, current revenues are far from enough to solve (Amoi's) financial issues.”

Amoi has sold off assets in an effort to prop up its ailing business operations. In early 2008, the company sold its Research and Development Building in Shanghai; later that year it sold its 70 percent stake in Xiamen Xiaxin Engineering Plastics Co. Ltd.

Amoi has also sought to reduce costs through cutting staff, and layoffs are ongoing. Last March, the company's Shanghai office announced a 41 percent reduction in its workforce. Amoi said it is laying off workers in an “orderly and organized manner.”

Amoi predicted it will return to full production and business-as-usual once the financial crisis passes, as it has retained its organizational structure and core staff, as well as its crucial 3G technology.

The company has invested 500 million yuan ($73.26 million) in developing the technology, and the recent launches of China's 3G networks will boost its opportunities.

Amoi, formerly known as Amoisonic, was founded in 1981. It was formerly known as a leading producer of video tape recorders and VCD players in China.

Amoi later expanded into the mobile phone business, with revenue of 4.49 billion yuan ($657.88 million) and net profits of 607 million yuan ($88.94 million) in 2002, according to its financial report that year.