Part I

Item 1:    Identity of Directors, Senior Management and Advisers

(Not applicable)

Item 2:    Offer Statistics and Expected Timetable

(Not applicable)

Item 3:    Key Information

3.1        Selected Consolidated Financial Data

The following selected consolidated financial data is derived from the consolidated financial statements of the Company for the years ended December 31, 2008, 2009, 2010, 20112012, 2013, 2014 and 2012,2015, prepared in accordance with U.S. GAAP.International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Until and including our consolidated financial statements included in our annual report on Form 20-F for the year ended December 31, 2012, we prepared our consolidated financial statements in accordance with generally accepted accounting principles accepted in the United States (“U.S. GAAP”). As required by First Time Adoption of International Financial Reporting Standards, or IFRS 1, financial results for the year ended December 31, 2012 were adjusted in our annual report for the fiscal year ended December 31, 2013 (the “2013 Annual Report”) in accordance with IFRS and differ from the results reported in the annual reports filed with the Commission prior to the 2013 Annual Report.

The selected data set forth below should be read in conjunction with, and is qualified in its entirety by, the discussion in “Item 5: Operating and Financial Review and Prospects” and the consolidated financial statements and the notes thereto included in “Item 18: Financial Statements.”

(Figures in 2008, 2009, and 2010 were restated to reflect the results of discontinued operations of Shandong Pacific Fiber Optics Co. Ltd. (“SPFO”). For details, see “Item 5.3: Operating Results”)

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Sources: Federal Reserve Bulletin, Board of Governors of the Federal Reserve System. Federal Reserve Statistical Release H.10, (512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

Australia

The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Australian dollar. No representation is made that the Australian dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Australian dollars, as the case may be, at any particular rate or at all.

________________

3.3      Risk Factors

You should carefully consider the following risks before you decide to buy our Common Shares. If any one of these risks or uncertainties were to occur, our business, financial condition, results and performance could be seriously harmed and/or the price of our Common Shares might significantly decrease. The risks and uncertainties described in this Annual Report on Form 20-F are not the only ones facing us. Additional risks and uncertainties that currently are not known to us or that we currently believe are immaterial also may adversely affect our businesses, results of operations, condition (financial or otherwise) and operations.the value of any investment in our Common Shares.

3.3.1     Risks Related to PCAOB Inspection

Our auditor, Ernst & Young, is headquarteredAuditors of companies that are registered with the SEC and traded publicly in Taiwan (“E&Y Taiwan”). Taiwan permitsthe United States, including our independent registered public accounting firms tofirm, must be subject to inspection byregistered with the U.S. Public Company Accounting Oversight Board (“PCAOB”), and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess the auditor’stheir compliance with PCAOB rules and requirements and professional standards applicable PCAOB professional standards. However,to independent, registered public accounting firms. Because the Company has substantial operations within China, our auditor relied on its China affiliates to perform the audit component team foron the ChinaCompany’s consolidated financial statements in so far as they relate to the condition (financial and otherwise) and results of operations of the Company is composedin China and its overall impact on the consolidated financial statements of the affiliated firmCompany as a whole. The PCAOB is currently unable to conduct inspections of E&Y Taiwanthe work of our auditor’s affiliates in China ("E&Y China"). E&Y China, like other independent registered public accounting firms operatingas it is prohibited by the Chinese authorities. Investors should be mindful that the risk of inaccurate or incomplete reporting may be increased because our auditor’s work related to our operations in China is not permitted to be subject tocurrently inspected by the PCAOB.

The lack of PCAOB’s inspection of the audit work performed in China prevents the PCAOB from regularly evaluating the audit work of any auditor that is performed in China including the audit work performed by PCAOB. Therefore,our auditor. As a result, investors may be deprived of the full benefits arising fromof PCAOB inspections of the audit conducted by E&Y China of the Company’s China operations.  

3.3.2     Risks Related to Loan Covenants

Our credit facility agreement (the “Credit Agreement”) with Bangkok Bank Hong Kong Branch (the “Bank”) was entered into on March 17, 2011 with a total cash loan of $14 million and a trade facility of $8 million. The cash loan carries an interest rate of Singapore Inter-bank Borrowing Rate (“SIBOR”) plus 2.5% (later amended to 2.75% on December 27, 2012), with a term of 5.5 years. This agreement requires us to maintain at all times certain financial covenants and non-financial covenants for both the guarantor, APWC, and borrower, Crown Century Holdings Ltd. (“CCH HK”).  As of June 1, 2012, the Bank amended its Credit Agreement to make less onerous the financial covenants ratios applicable to the borrower and the guarantor. Since those amendments, APWC and CCH have been in compliance with all of the financial covenant ratios in the Credit Agreement. On December 27, 2012, the Bank again amended its non-financial covenants so that CCH HK should no longer be regarded by the Bank as a 100% direct owned subsidiary of PRC APWC Holdings.However, the Company decided to prepay the outstanding loan balance in the first quarter of 2013. Consequently, the outstanding loan balance was re-classified as a current liability as of December 31, 2012.

However, in addition to certain financial covenants relating to our financial position, operating performance and liquidity, the restrictions contained in our Credit Agreement may limit our ability to, or give rise to a risk of default if, among other things:

Ÿwe incur additional indebtedness for CCH HK for factory expansions, if any;

Ÿwe fail to maintain our listing on the NASDAQ Stock Market, Inc. (“NASDAQ”) or are suspended for more than ten days, in the event that APWC’s stock price were to fall under $1 for consecutive thirty 30 days on NASDAQ;

Ÿcreate liens on CCH HK’s assets;

Ÿenter into business combinations (if it would be interpreted as major change in our business) or disposal of subsidiaries under CCH HK and under APWC; and

Our ability to comply with the requirements of the Credit Agreement is subject to certain risks, including:

Ÿour ability to sustain the net worth requirements for CCH HK and APWC, if our organic growth in future years for CCH HK and for APWC is not sufficient;

Ÿour ability to meet the proposed waivers which are still under negotiation with the Bank if our actual operational performance is not sufficient; and

Ÿfuture covenant compliance issues, in the event of a rise in copper prices that leads to a material increase  in the Company’s indebtedness.

Our ability to comply with the loan covenants may also be affected by economic, financial and industry conditions, commodity prices such as copper and other factors beyond our control.

For further information, see section 5.7 “Off-Balance Sheet Arrangement”.

3.3.3     Risks Related to the Global Economic and Financial Crisisinspections.

The aftermathinability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work. As a result, investors may have reservations regarding our reported financial information and the accuracy and completeness of our consolidated financial statements.

Shortly after the 2008 global financial crisis continues to impactand economic crises, the Company, our customersU.S. Federal Reserve Bank (the “U.S. Fed”) and the marketscentral banks of most of the leading industrialized nations lowered their short-term interest rates to near zero in an effort to stimulate borrowing and increase economic activity. The U.S. Fed and certain other of those central banks also undertook a series of government bond repurchase programs to enhance market liquidity and to maintain a very low interest rate environment. The extremely low cost of borrowing, which we operate. One effect has beencontinued for an extremely long period of time, enhanced liquidity and facilitated borrowing to stimulate investment. Some economists and policymakers have expressed concern that this artificially low interest rate environment will have negative repercussions once interest rates start to rise. Recently, the growth of what some commentators referU.S. Fed and certain other central banks have curtailed their bond repurchase programs. In December 2015, the U.S. Fed raised its benchmark rate by 25 basis points (or .25%), which was the first U.S. central bank interest rate rise since it benchmark rate was reduced to as hyper-competition, meaning annear zero following the 2008 great recession. An increase in competition among participantsU.S dollar borrowing costs could adversely affect our business in various sectors competingthe markets where we have operating plants (Thailand, China, Singapore and Australia). Our financial statements for customersour operating subsidiaries in a diminishing demand environment. The growth of emerging markets, including those markets are reported and denominated in local currencies and when translated into US dollars, our reporting currency, these operating subsidiaries would suffer a decrease in reported revenue and operating profits due to foreign currency translation if one takes into account only increased U.S. dollar borrowing costs. Moreover, our copper purchases are based on U.S. dollar quotations, which conduct business, has continued, butmean the rateoperating subsidiaries would have to pay more in local currency in order to meet their trade payable obligations.

Impact of growth and investment has curtailed and future demand prospects are uncertain.Stronger U.S. Dollar

The ongoing recessionrate of exchange for the U.S. Dollar has strengthened materially over the course of 2015 as measured against most of other major global currencies. As our raw materials and most other costs of production are priced in U.S. Dollars, the increase in the Euro zone may indirectly impact the businessvalue of the CompanyU.S. Dollar, particularly as measured against the outcome of the Euro crisis may well affect global lending rates and policies,currencies in which could impact demand from our customers. China recently installed new leadershipand while the outcome of this tightly scripted affair is not in doubt, the economic policy consequences are: will there be more fiscal or monetary stimulus, or greater liberalization of the economy? It will take months to find out.The high corporate and individual debt levels in China, and the possibility of a housing bubble, raise serious questions regarding the level of infrastructure investment that will be undertaken in the near term. The political situation in Thailandoperating subsidiaries generate revenue, has stabilized for the time being; however, unrest in the future could adversely impact the level of infrastructure investment, and customer demand foran overall net negative effect on our products, as has happened in the past.financial results.

Actual and Possible Impacts on the CompanyPrice Volatility for our Principal Raw Material

A comparison of copper prices on the London Metals Exchange (the “LME”), between 2011year-end 2014 and 2012year-end 2015 shows thatthe average pricesprice for copper fell 10% in 2012.from $6,860 per metric ton to $5,502 per metric ton by year-end 2015, representing a 19.80% price decline. The effect of that decrease has furtheradversely impacted the Company’s ability to improve its overall financial performance, particularly since May 2012.results. The decrease in the average LME copper price over 20122015 was the principal contributing factor to the drop in 20122015 of our ASP (averageaverage selling price)price compared with 2011.  In Thailand, the net sales were slightly lower as our production and our ability to ship our products was curtailed by the nationwide flooding in 2011 that affected Thailand and severely disrupted many business operations in that country well into 2012.  In Australia and Singapore, we witnessed an increase in net sales, as manufactured products and distributed products each enjoyed a higher turnover.2014.

Copper prices on the LME dropped throughout the last two months of 2012during 2015 at one point to a price lower than $8,000$4,516 per ton. Consistent with industry practice, customers would expect that the selling prices of our products, particularly of copper based wires, would therefore be lower than our product prices at the first halfend of 2012.2014. The decrease in copper prices and other commodity prices also resulted in a decreased turnover for the last part of theentire year, as customers delayed placing orders with the Company or reduced the quantity of such orders in anticipation of a possible further reduction in copper prices. A further decrease in copper prices would likely have an adverse effect on the revenues of the Company.

When compared with 2011 sales, overall sales of Manufactured Products in 2012 decreased by 6.6%. Power cables recorded the greatest increase which was offset by a decrease in enameled wire sales. Sales of supply, delivery and installation project services decreased by 62%, while sales of distributed wire and cable products increased by 115%.

The Company is unable to determine the precise impact of the Euro zone fiscal crises,volatility of copper prices, and the fragile state of the global recovery, on its operations and cash flow, since its operating results are also affected by factors that are, or may be, unrelated to the economic turmoil,volatility and the downward pressures on commodity prices, such as the completion of routine purchase cycles by customers and the completion,expansion or contraction of large infrastructure projects. However, the Company has concludedis of the opinion that thecurrent economic instability has falling copper prices have negatively affected the Company’s operations and cash flow. The Company believes that any efforts to forecast likely future performance with any degree of specificity would be fraught with uncertainty. Accordingly, the Company cautions against placing reliance on any efforts to identify trends for the foreseeable future.

Macroeconomic events and conditions may have a material adverse impact on the Company’s business operations until such time as the global financial crisis has substantially abated and financial and economic conditions have materially improved.  The Company notes, however, that the foregoing is subject to a number of unknown variables, including the impact of actions taken or that may be taken in the future by governmental entities to address the capital needs of banks and other financial institutions and to increase the flow of credit to businesses.

3.3.4     Risks Related to the Common Shares and Corporate Governance

Consolidation of Charoong Thai Group Accounts

As of December 31, 2012,2015, the Company effectively owned 50.93% of the issued and outstanding shares of Charoong Thai Wire and Cable Public Company Limited (“Charoong Thai” or “CTW”), a decrease from the Company’s initial ownership percentage which iswas attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai. However, there may be circumstances under which the Company cannot maintain majority ownership of Charoong Thai. In the event Charoong Thai were to make a further offering of voting securities, or securities convertible into or exchangeable for voting securities, and the Company was not in a position to fund or finance its participation in the offering, the ownership interest of the Company in Charoong Thai could fall below 50%.  Ifa level necessary for consolidated treatment, and the Company’s ownership percentageCompany may lose the controlling interest in Charoong ThaiThai. If that were to fall below 50%,the case, the accounts of the Charoong Thai group, which includes all of the Company’s Thailand operations, would not be consolidated under IFRS, but instead would be accounted for under the equity method. In such an event, the Company’s accounts would show a significant decrease in revenue and most categories of assets and liabilities, which events could have a material adverse effect on the value of the Common Shares.

Potential Illiquidity of Common Shares

Approximately 75.5% of our Common Shares are either unregistered securities or registered securities held by affiliates (or were repurchased by the Company), which are subject to restrictions on trading. Accordingly, approximately 75%75.5% of our Common Shares are not fully liquid investments. Since April 2011, when APWC washas been listed on NASDAQ since April 2011; however, thevolume of trading in our Common Shares has picked up fractionally.  However, thenot been significant. The value of our Common Shares may be impacted negatively by their relative illiquidity when compared to the publicly-traded shares of many other issuers.

Control of the Company Rests with Majority Shareholder; Controlled Company Exemption; Risks Related to PEWC

As the majority shareholder, Pacific Electric Wire & Cable Co., Ltd. (“PEWC”), a Taiwanese company, has sufficient votes to control the outcome of any matters presented for a shareholder vote, including the election of the memberseach member of the Board of Directors.Directors of the Company (“Board of Directors”). PEWC may vote its shares in the Company in the manner that it sees fit. In addition, subject to compliance with applicable securities laws, PEWC may sell, convey or encumber all or a portion of its ownership interest in the Company without regard to the best interests of the other shareholders of the Company except to the extent that it is: (i)is prohibited from engaging in conduct oppressive to minoritynon-controlling interests under applicable law and (ii) required to comply with the terms of the Amended and Restated Shareholders’ Agreement dated March 27, 2009 among the Company, PEWC and MSD Credit Opportunity Master Fund, L.P. (“COF”) (as the assignee ofSOF Investments, L.P. (“SOF”) in July 2011), a Delaware limited partnership which owns beneficially approximately 9.8% of the issued and outstanding Common Shares (the “Amended and Restated Shareholders Agreement”).law.

The Common Shares of the Company are traded on the NASDAQ Global MarketsMarket tier. However, as the Company has a more than fifty percent (50%) shareholder, the Company is entitled to rely upon a “controlled company exemption” to the requirement that a company have a board of directors comprised of a majority of independent directors in order to be listed on NASDAQ. At present, a majority of the board of directors of the Company is affiliated with PEWC.

PEWC was delisted from the Taipei Stock Exchange in 2003 following the disclosure of a major corporate scandal involving fraud and embezzlement by certain former executives of PEWC, one or more of whom are now serving prison sentences for their actions. Commencing in 2004, PEWC brought a number of actions in different jurisdictions against those former executives and others seeking to recover substantial assets that had been misappropriated. Some of those actions are ongoing. PEWC is still seeking to recover financially, and in terms of its market reputation, from the malfeasance of those former executives. The financial and governance problems experienced by PEWC increase the uncertainty regarding its ability to perform under the Composite Services Agreement between PEWC and the Company, although to date PEWC has met its obligations under that agreement. (See---section 10.3 Material Contracts).

Limited Trading Volume

Although our Common Shares are traded on the NASDAQ Global MarketsMarket tier, the trading in, and demand for our Common Shares has been limited. As a consequence, shareholders may find that their ability to sell their Common Shares quickly or in substantial amounts is adversely affected by the limited public trading market. Thinly-traded equity can be more volatile than equity securities traded in an active trading market. The high and low daily closing priceprices for our Common Shares during the past 24 months (March 20102014 – March 2012) has been $7.852016) were $2.99 and $1.92,$1.2, respectively. In the future, our Common Shares may experience significant price fluctuations which could adversely affect the value of your ownership interest in the Company.

Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined underunder Rule 13a-15(f) under the Securities Exchange Act of 1934.1934 (the “Exchange Act”).

Based on the Company’s evaluation under the applicable framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), concluded that athere was not any material weakness in the Company’s internal controls over financial reporting was identified.

In connection withfor the audit of our consolidated financial statementsfiscal year ended December 31, 2015. However, in certain prior years, such as of and for the year ended December 31, 2012, our independent registered public accounting firm determined also the existence of a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement2014, management of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.  

Deficiencies were noted in our controls over complex and non-routine transactions in our financial statement closing process. These deficiencies were attributable to our decentralized reporting structure, our complex and manual consolidation process and inadequate reviews over account balances at the reporting date. The aggregate effect of these deficiencies represented a material weakness. Based on this assessment, the Company’s management,Company, including its CEO and CFO, concludeddid conclude that there then existed one or more material weaknesses. While your management took remedial measures to address the Company’s internal control over financial reporting was ineffectivematerial weaknesses identified as of December 31, 2012.

Some ofyear-end 2014, the above-described deficiencies, theCompany cannot be certain that those remedied material weakness and the conclusion by our CEO and our CFOweaknesses will not re-occur or that the Company’s internal controls over financial reporting were ineffective as of December 31, 2012 were disclosed alsonew material weaknesses will not take place in the Company’s annual report on Form 20-F for the year ended December 31, 2011 (the “2011 Annual Report”). Other deficiencies noted in our 2011 Annual Report were corrected by management and the Company subsequent to December 31, 2011. (See---Item 15 for a discussion of remedial measures undertaken by the Company).

future.

Delinquency in Reporting Obligations; Reporting of Financial Results

The Company is currently compliant with its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and believes that it has addressed certain corporate governance obstacles that led to its delinquency in filing its annual report six years ago.Act. As a foreign private issuer, the Company is not required by the rules of the Commission to provide financial results on a quarterly or semi-annual basis. In addition, Bermuda law does not require the Company to provide interim financial information to its shareholders, whether on a quarterly or semi-annual basis. As such, investors may not have the same access to financial information of the Company as they customarily receive in the case of a domestic issuer disclosing quarterly results on a Form 10-Q. Under the NASDAQ rules; however, listed issuers are required to report semi‑annualsemi-annual unaudited financial results, which the Company has donebeen doing since its listing on NASDAQ.

Potential Conflict of Certain Officers and Directors

In March 2011, the Company appointed a third independent director as required by NASDAQ. Other than ourWe have three independent directors, all ofdirectors; the other six members of the Board of Directors are also directors or officers or otherwise affiliated with PEWC, the majority shareholder. Certain of our officers are also affiliated with PEWC. In each case, they may be subject to potential conflicts of interest. In addition, certain of our officers and directors who are also officers and/or directors of PEWC may be subject to conflicts of interest in connection with, for example, pursuing corporate opportunities in which we and PEWC or one of its affiliates have competing interests, and in the performance by us and PEWC of our respective obligations under existing agreements, including the Composite Services Agreement (discussed in section 10.3). In addition, some of these persons will devote time to the business and affairs of PEWC and its affiliates as is appropriate under the circumstances, which could reduce the amount of time available for overseeing or managing our business and affairs. Notwithstanding any such potential conflicts, however, such individuals, in their capacities as our directors and officers, are subject to fiduciary duties to our shareholders.

The Bermuda Companies Act 1981, as amended (the “Companies Act”), subjects our officers and directors to certain fiduciary standards in the exercise of their executive and management duties on behalf of the Company. Under the Companies Act, an officer of ours (which term includes our directors) is subject to a duty of care requiring him to act honestly, in good faith and in the best interests of the Company in the discharge of his duties and to, among other things, give notice to the Board of Directors at the first opportunityof any interest he has in any material contract or proposed material contract with us or any of our subsidiaries. The Companies Act also prohibits us, subject to certain exceptions, from making loans to any directors without first obtaining the consent of shareholders holding in the aggregate not less than nine-tenths of the total voting rights of all the shareholders having the right to vote at any shareholders meeting. We do not make any loans to our directors or executive officers in accordance with the provisions of Thethe Sarbanes-Oxley Act of 2002.

Obligations under the Amended and Restated Shareholders Agreement

Pursuant to the original shareholders agreement dated June 28, 2007 (the “Shareholders Agreement”), the Company granted to SOF certain rights and protections (now held by COF, as successor-in-interest to SOF, as explained below).  Under the Shareholders Agreement, the Company agreed to indemnify SOF and its partners and certain of its affiliates (the “SOF Indemnified Persons”), for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the Internal Revenue Service (the “IRS”) to be a “controlled foreign corporation” (a “CFC”) or a “passive foreign investment company” (a “PFIC”), as such terms are interpreted and defined under IRS rules and regulations.  The Company has determined that it was not a CFC or PFIC at any time during the 2012 fiscal year and does not believe that it is likely to become a CFC or a PFIC; however, the Company cannot provide any assurances that it will not become a CFC or a PFIC in the future. 

In addition, the Company granted certain registration rights to SOF with respect to its Common Shares (the “Registrable Securities”) in the Shareholders Agreement.  In particular, the Company agreed to use its reasonable best efforts to prepare and file, and cause to go effective, as soon as practicable, a shelf registration statement covering the resale of the Registrable Securities on a delayed or continuous basis.  The Company also agreed to use its reasonable best efforts to keep its shelf registration statement effective until all Registrable Securities have been sold or until all Registrable Securities may be sold without restriction pursuant to Rule 144 promulgated pursuant to the Securities Act of 1933, as amended.  In addition, the Company granted to SOF two demand registration rights for underwritten offerings and customary piggyback registration rights with regard to the Registrable Securities.  Moreover, the Company agreed to use its reasonable best efforts to cause the Common Shares to be listed on a national “Securities Market,” which means any of the NASDAQ Stock Market, Inc. (Global Market or Global Select Market), the American Stock Exchange LLC (now known as NYSE Amex Equities) or the New York Stock Exchange LLC, not later than January 31, 2009, subject to notice and a sixty (60) day cure period.  All of the costs and expenses of the Company in connection with the fulfillment of its obligations under the Shareholders Agreement were to be paid by the Company, other than underwriting fees, discounts and commissions attributable to the sale of Common Shares held by SOF.

Under the Shareholders Agreement, if the Company failed to fulfill its obligations thereunder, SOF would have a claim for damages against the Company.  No such claim has been made.  In addition, if the Company fulfilled its reasonable best efforts undertakings but failed to meet one or more of the stated goals, SOF would have a put right of their Common Shares to PEWC.  In accordance with those terms, on February 2, 2009, SOF delivered to PEWC notice of its exercise of the put right under the Shareholders Agreement due to the fact that the Common Shares were not listed on a national Securities Market as of January 31, 2009.  On March 27, 2009, SOF sold 51% of its Common Shares to PEWC pursuant to the terms of a share purchase agreement between those parties.  Upon the consummation of that share purchase agreement, SOF held 1,355,415 registered Common Shares of the Company and PEWC held 1,410,739 registered Common Shares, respectively, representing 9.8% and 10.2% of the outstanding Common Shares, with PEWC holding an additional 7,664,615 unregistered Common Shares, giving it an aggregate of 65.6% of the total issued and outstanding Common Shares.  In connection with this transaction, the Company, PEWC and SOF entered into the Amended and Restated Shareholders Agreement, which among other things, granted to the Company an extension for listing the Common Shares on a national Securities Market until February 2011 and maintained for SOF the right to sell its remaining Common Shares to PEWC in the event the Company did not list its Common Shares on a national Securities Market by such time. In April 2011, the Common Shares of the Company were approved for trading on the NASDAQ Capital Markets tier, which tier does not fit within thedefinition of a national “Securities Market”, as provided in the Amended and Restated Shareholders Agreement.  As of July 1, 2011, SOF transferred its Common Shares to COF, at which time COF executed a joinder agreement and became a party to the Amended and Restated Shareholders Agreement and succeeded to the rights and interests of SOF thereunder.  The Company is not aware that COF has taken any action with respect to the Common Shares held by it. The Amended and Restated Shareholders Agreement also provides for those put, registration and indemnification rights set forth above in the description of the Shareholders Agreement and such rights now apply to COF in place of SOF.  While the sale of Common Shares by SOF to PEWC resulted in PEWC holding a higher concentration of Common Shares which may impact liquidity for the other shareholders, the Company does not believe that any definitive impact can be determined. 

In addition, sales of Common Shares held by COF and registered under the shelf registration statement, or any registration statement that goes effective following an exercise of demand registration rights, will increase the number of Common Shares available for purchase in the public market and may adversely affect the value of the Common Shares held by other shareholders.  Even without substantial sales by COF or PEWC of their respective Registrable Securities, the possibility of such sales may create a “market overhang” that has the effect of depressing the trading price of the Common Shares.

The Company has also granted to COF preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that COF may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company.

Holding Company Structure; Potential Restrictions on the Payment of Dividends

We have no direct business operations other than our ownership of the capital stock of our subsidiaries and joint venture holdings.affiliates and certain investments in the wire and cable business. While we have no present intention to pay dividends, should we decide in the future to do so, as a holding company our ability to pay dividends and meet our other obligations will depend upon the amount of distributions, if any, received from our operating subsidiaries and other holdings and investments. Our operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory restrictions. For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accordance with relevant PRC accounting standards and regulations. Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds. These reserves are not distributable as cash dividends. The foregoing restrictions may also affect our ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.

Requirement to Maintain Effectiveness of the Registration Statement and to List on a National Securities Exchange; Effect of the Put of the COF Shares to PEWC

Under the Amended and Restated Shareholders Agreement, COF has retained the right to sell its remaining Common Shares (the “COF Shares”) to PEWC if the Company does not achieve a listing on a national Securities Market within the time frame provided in the agreement. The Company’s Common Shares are currently listed on the NASDAQ Global Markets tier. In addition, the Company has agreed to maintain the effectiveness of the registration statement on Form F-3, for the benefit of COF, and if the Company fails to do so for any period of thirty (30) consecutive trading days or an aggregate of sixty (60) trading days during any twelve month period, then COF may, subject to compliance with notice and other procedural requirements, exercise a right to sell its remaining Common Shares to PEWC.  At all times, the Company must exercise its reasonable best efforts to comply with its covenants under the Amended and Restated Shareholders Agreement.  Otherwise, the Company could be subject to a damages claim by COF. 

We are incorporated in and organized pursuant to the laws of Bermuda. In addition, all of our directors and officers reside outside the United States and our material assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons or to realize against them in courts of the United States upon judgments predicated upon civil liabilities under the United States federal securities laws. Even if investors are successful in realizing against such persons in courts of the United States, the laws of Taiwan may render such investors unable to enforce the judgment against the Company’s assets or the assets of its officers and directors. Also, investors may have difficulty in bringing an original action based upon the United States federal securities law against such persons in the Taiwan courts. Additionally, we have been advised by our legal counsel in Bermuda, Appleby Global (Bermuda) Limited, that there is doubt as to the enforcement in Bermuda, in original actions or in actions for enforcement of judgments of United States courts, of liabilities predicated upon U.S. federal securities laws, although Bermuda Courts will enforce foreign judgments for liquidated amounts in civil matters subject to certain conditions and exceptions. As a result, shareholders may encounter more difficulties in enforcing their rights and protecting their interests in the face of actions taken by management, the Board of Directors or controlling shareholders than they would if the Company were organized under the laws of the United States or one of the states therein, or if the Company had material assets located within the United States or some of the directors and officers were resident within the United States. See “Enforceability of Certain Civil Liabilities” for additional information.

3.3.5     Risks Relating to Our Business

Risks Relating to Copper

Copper is the principal raw material we use, accounting for a majority of the cost of sales. We purchase copper at prices based on the average prevailing international spot market prices on the LME for copper for the one month prior to purchase, or the first five days of the current average copper price. The price of copper is affected by numerous factors beyond our control, including international economic and political conditions, supply and demand, inventory levels maintained by suppliers, actions of participants in the commodities markets and currency exchange rates. As with other costs of production, changes in the price of copper may affect the Company’s cost of sales. Whether this has a material impact on our operating margins and financial results depends primarily on the Company’s ability to adjust selling prices to its customers, such that increases and decreases in the price of copper are fully reflected in those selling prices. Most of our sales of manufactured products reflect the cost of copper used to manufacture those products at the time the products are ordered. In the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business. These inventories typically reflect the cost of copper prevailing in the market at the time of purchase. A long-term decrease in the price of copper would require the Company to revalue its inventory at periodic intervals to the then net realizable value, which could be below cost. Copper prices have been subject to considerable volatility and it is not always possible to manage our copper purchases and inventory so as to neutralize the impact of copper price volatility. Accordingly, significant volatility in copper prices could have an adverse effect on our operations. In November 2012, the average LME copper price dropped from $8,000 to just below $7,700 per ton, affecting our sales in the last two months of copper based products, as much of the Company’s copper inventory was procured prior to the price decline.  No assurance can be given that such volatility will not recur.

Risks related to our Customer Base and our Geographic Markets

Our sales of manufactured and distributed products are made primarily to customers that use our products as components in their own products or in construction or infrastructure projects in which they participate. The volume of our sales is dependent largely on generalsignificantly correlated with overall economic conditions in the markets in which we compete, including how much our customers invest in their own product manufacturing or project development. Increases or decreases in economic activity and investment in the markets where we operate generally will result in higher or lower sales volume and higher or lower net income for the Company.

Risks relating to Force Majeure Events

Operations and other business conducted at our plants and other facilities are at risk to acts of god consisting of uncontrollable natural and climatic events (often referred to as force majeure events), such as the 2011 flooding in much of Thailand that severely disrupted our manufacturing operations at our Thaithe Siam Pacific Electric Wire and Cable Ltd. (“Siam Pacific”) plant, a subsidiary 100% controlled by our subsidiary, Charoong Thai. The severe flooding affected much of our Thai operations and forced the suspension of operations of Siam Pacific for a period of five months. The temporary suspension of operations at Siam Pacific Electric Wire & Cable Company Limited (“Siam Pacific”), which is 100% owned by Charoong Thai impacted adversely on its 2011 sales, which experiencedmonths resulting in a 20% reduction in product sales in 2011. The adverse impact of the flooding carried over into 2012. WithSince then the help of its affiliated companies such asPacific Electric Wire & Cable (Shenzhen) Co., Ltd. (“PEWS”)andShanghai Yayang Electric Co., Ltd. (“Shanghai Yayang” or “SYE”), together with our parent company, PEWC, Siam Pacific fully restored its operations in second quarter of 2012. The insurance coverage in Thailand includes flood, fire and theft, but does not include flood or losses due to business interruption.interruption as coverage for business losses due to flooding is generally not available in Thailand or is considered to be prohibitively costly in the limited circumstances where it is available.

Risks Relating to North Asia Region

Risks Relating to China

We conduct substantial business operations in China.  Accordingly, our results of operations and prospects are likely to be materially impacted by economic, legal and other developments in China.

Economic Reform Measures in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The PRC government has gradually moved away from a planned economic model and implemented economic reform measures emphasizing decentralization, utilization of market forces in the development of the economy and a high level of management autonomy. When General Secretary Xi Jinping took office in December 2012, the government decreased its focus on export orientedexport-oriented activities and placed greater emphasis on building up rural areas in China, including integrating a number of primitive, largely inaccessible agricultural areas into the national economy. However, many of the reforms are unprecedented and may be subject to revision, modification or termination based on the outcomeoutcomes of such economic changesthe reform efforts and other considerations, such asincluding their social impact.impact on societal stability. There is not sufficient administrative or judicial precedent to permitallow the Company to determine with any degree of certainty how the reforms will impact our business in China. In

Recent Macro-economic Concerns

China has risen to be the years 2011world’s second largest economy measured by gross domestic product. Increasingly, over the past year there has been global concern about the possibility of the current economic downturn in China becoming more severe and 2012,leading to a possible recession. There is widespread concern about a possible “housing bubble” in China. A downturn in residential construction is one factor that could adversely affect the government began to curtailCompany’s business in China. A broader recession in China would likely have a more profound adverse impact on our business results in that market.

Any Decrease in Real Estate Development and Construction Activities in China May Affect the Company’s Operations or Financial Condition

Our wire and cable products are manufactured and sold in China and are used in the commercial and residential real estate industry and in infrastructure development. Therefore, the demand for our wire and cable products is affected by the pace of modernization and the growth of the real estate industry in China, which could in turn be affected by a number of factors, such as the level of governmental investment in infrastructure development, the strength of the commercial and residential real estate markets, the level of disposable income, consumer confidence, unemployment rate, interest rates, credit availability and volatility in order tothe stock markets.

To dampen an over-heated real estate market, includingthe PRC government implemented a series of measures in the real estate market. The real estate market in China may also be negatively affected by the reform of the real estate tax system in respect of levying real estate tax on individually owned real estate which is not used for a business purpose, which has already been implemented by certain local government authorities and may be expanded nationwide sometime in the future.

Any decrease in commercial and residential areas. While the extent of the impact is unknown at this time, any contraction in thereal estate development and construction sectoractivities would certainly affect the demand for building wires, oneour manufactured products and may affect the Company’s results of the products that the Company manufactures and sells in China.operations or financial condition.

The PRC Civil LawLegal System May Limit the Company’s Remedies

The ChinesePRC legal system is a civil law system based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since the late 1970s, the PRC central government has promulgated a large volume of laws and regulations dealing withgoverning economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. In particular, since reforms were first introduced in 1979, the PRC legislation and regulations have significantly enhanced the protections affordedprovided to various forms of foreign investment in China. Foreign investment laws and regulations in China are evolving and the interpretations of many laws, regulations and rules are not always uniform. Accordingly, enforcement of these laws, regulations and rules involves uncertainties, which may limit the remedies available to us in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and could result in substantial costs and diversion of resources and management attention. As the PRC legal system continues to evolve, we cannot predict future developments in the PRC legal system, including promulgation of new laws, changes to existing laws or the interpretation and enforcement thereof.

On January 19, 2015, the PRC Ministry of Commerce published a discussion draft of the proposed PRC Foreign Investment Law (“Foreign Enterprise Law”), aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to better align the corporate legal requirements for both foreign and domestic investments. The PRC governmentMinistry of Commerce is currently soliciting comments on this draft and uncertainties exist with respect to its enactment timetable, interpretation and implementation. The draft Foreign Investment Law, if enacted and implemented as proposed, may materially affect our relevant corporate governance practices and increase our compliance costs. For instance, the draft Foreign Investment Law imposes controlsperiodic information reporting requirements on foreign investors. Aside from an investment implementation report and an investment amendment report that are required for each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the convertibilitypersons directly responsible may be subject to sanctions.

PRC Regulations of the Renminbi into foreign currenciesLoans to and Direct Investment in certain cases, the remittancePRC Entities by Offshore Holding Companies may delay or prevent us from making Loans or additional Capital Contributions to our PRC Subsidiaries, which could adversely affect our ability to fund and expand our business

We conduct substantial business operations in China. We may make loans to our PRC subsidiaries, or we may make additional capital contributions to our PRC subsidiaries. Loans by APWC or any of currency out of China. Under existingour offshore subsidiaries to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange regulations, paymentsloan registrations. Such loans to any of current account items, including profit distributions, interest paymentsour PRC subsidiaries to finance their activities cannot exceed statutory limits and expenditures from trade related transactions, canmust be made in foreign currencies without prior approval fromregistered with the local counterpart of the State Administration of Foreign Exchange (“SAFE”). The statutory limit for the total amount of foreign debts of a foreign-invested enterprise is the difference between the amount of total investment as approved by complying with certain procedural requirements. However, approval from SAFEthe PRC Ministry of Commerce or its local branch is required where foreign currency is remitted outcounterpart and the amount of China to payregistered capital expensesof such as the repayment of loans denominated in foreign currencies unless SAFE has pre-approved the amortization schedule of the foreign currency loan in question. The PRC governmentforeign-invested enterprise. We may also at its discretion put restrictions on access in the futuredecide to foreign currencies for current account transactions. 

Pursuant to the Foreign Exchange Administration Regulation promulgated on January 29, 1996, as amended on January 14, 1997 and August 5, 2008, and various regulations issuedfinance our PRC subsidiaries by means of capital contributions. These capital contributions must be approved by the SAFE and other relevant PRC government authorities, the Renminbi is freely convertible only with respect to current account items, such as trade-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriationsMinistry of investments, require the prior approval of the SAFECommerce or its local branches for conversion of Renminbi into foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC. Payments for transactions that take place within the PRC must be made in Renminbi. Foreign exchange transactions under the capital account are still subject to limitations and require approvals from, or registration with, the SAFE and other relevant PRC governmental authorities, or their competent local branches.counterpart.

On August 29, 2008,March 30, 2015, the SAFE promulgated SAFE Circular No. 142,19, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how converted Renminbi may be used. This notice requires that the Renminbi capital converted from the foreign currency-denominated capital of a foreign-invested company onlyenterprise may not be directly or indirectly used for purposes withinbeyond the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless specifically provided for otherwise in its business scope. In addition, the SAFE strengthened its oversight of the flow and use ofsuch foreign-invested enterprise. The Renminbi fundscapital converted from the foreign currency-denominated capital of a foreign-invested company. The use of such Renminbi may not be changed without SAFE’s approval andenterprise may not be used to provide entrusted loans or repay Renminbi loans if the proceeds of such loans have not yet been used for purposes within the Company’s approved business scope. Violations of SAFE Circular No. 142 may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulation.between non-financial companies As a result, SAFE Circular No. 14219 may impose an additional layer of bureaucratic compliance and could, under certain circumstances, limit our ability to transfer the proceeds from our non-RMB denominated borrowing arrangements outside of the PRC to our PRC subsidiaries, which may, absent the requisite approvals from SAFE, adversely affect the continued growth of our business.

Pursuant

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, including SAFE Circular No. 75, (i)referred to above, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC resident must register with the local SAFE branch before establishing or controlling an overseas special purpose vehicle (“SPV”) for the purpose of obtaining overseas equity financing using the assets of or equity interests in a domestic enterprise; (ii) when a PRC resident contributes the assets of or its equity interests in a domestic enterprise into an SPV, or engages in overseas financing after contributing assets or equity interests into an SPV, such PRC resident must register his or her interest in the SPVsubsidiaries and any subsequent change thereto with the local SAFE branch; and (iii) when the SPV experiences a material event, such as a change in share capital, merger or acquisition, share transfer or exchange, spin-off or long-term equity or debt investment, the PRC resident must, within 30 days after the occurrenceconversion of such event, registerloans or capital contributions into Renminbi. If we fail to complete such event with the local SAFE branch. On May 29, 2007, the SAFE issued guidanceregistrations or obtain such approvals, our ability to its local branches for the implementation of the SAFE Circular No. 75,capitalize or otherwise fund our PRC operations may be negatively affected, which guidance provides for more standardized, specificcould adversely affect our ability to fund and stringent supervision regarding such registration requirements and requires PRC residents holding any equity interests or options in SPVs, directly or indirectly, controlling or nominal, to register with the SAFE.expand our business.

Political or social instability in China could also adversely affect our business operations or financial condition. In particular,addition, adverse public health epidemics or pandemics in China could not only interfere with our ability to operate our PRC subsidiaries, but could also affect the country’s overall economic growth, which could in turn affect the sales of our products in China. Growing environmental awareness and concern over the deterioration of the quality of the environment in China, including air and water quality, could dampen domestic industrial growth and reduce foreign investor interest in PRC investment. In addition, as our corporate headquarters are located in Taipei, any escalation in political tensions between the PRC and the government of Taiwan could impact adversely our ability to manage our Chinese operations efficiently or without third party interference.

Inflation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The rapid growth of the PRC economy has historically resulted in high levels of inflation, coupled with a rise in the value of RMB against U.S. dollars.inflation. The PRC government has publicly announced its commitment to control inflation, and the anti-inflation policies of the PRC government may have an adverse effect on the business climate and growth of private enterprise in the PRC. An economic slowdown may increase our costs. If inflation is significant, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.

PRC Power Shortages and Lack of Insurance May Adversely Affect the Company’s Operations or Financial Condition

We consume substantial amounts of electricity in our manufacturing processes at our production facilities in China. Certain parts of China have been subject to power shortages in recent years. We have experienced a number of power shortages at our production facilities in China to date, particularly in Shenzhen where numerous clusters of factories are situated. We are sometimes given advance notice of power shortages, and in relation to this webut often power shortages or outages occur unexpectedly for various periods of time. We currently have a backup power system at certain of our production facilities in China. However, there can be no assurance that in the future our backup power system will be completely effective in the event of a power shortage, particularly if that power shortage is over a sustained period of time and/or we are not given advance notice thereof. Any power shortage, brownout or blackout for a significant period of time may disrupt our manufacturing, and as a result, may have an adverse impact on our business.

The insurance industry in China is still at an early stage of development and foreign insurance companies are limitedpermitted to operate only in a certain number of biglarge cities.  In particular, PRC insurance companies do not offer extensive business insurance products. As a result, we have limited business liability and disruption insurance coverage for our operations in China. Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of resources.resources, which could have a material adverse effect on our business and operations.

PRC Tax Treatments May Affect the Company’s Operations or Financial Condition

On March 16, 2007, the National People’s Congress of the PRC, passed the new PRC Enterprise Income Tax Law (the “New EIT Law”).  Under the New EIT Law, effective January 1, 2008,current tax law in China, adoptedforeign-invested enterprises no longer receive more favorable tax treatment than domestic enterprises. China has in place a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises) and has revoked the then currentprior tax exemption, reductionexemptions, reductions and preferential treatments applicable to foreign-invested enterprises.  However, there is

Dividends Payable by Our PRC Subsidiaries to Their Respective Offshore Investors May Be Subject to PRC Withholding Taxes

Under Chinese tax law and related regulations, dividends, interests, rent or royalties payable by a transition period for enterprises, whether foreign-invested or domestic, that were receiving preferential tax treatments granted by relevant tax authorities atenterprise, such as our PRC subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the time the New EIT Law became effective.  Enterprises thatnet value of such assets) are subject to ana 10% withholding tax, unless the foreign enterprise incomeinvestor’s jurisdiction of incorporation has a tax or EIT,treaty with China that provides for a reduced rate lower thanof withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax. Bermuda, where APWC, the ultimate owner of our PRC subsidiaries and investments, is incorporated, does not have such a tax treaty with China. Hong Kong, where Crown Century Holdings Limited (“CCH HK”), the sole shareholder in Pacific Electric Wire and Cable (Shenzhen) (“PEWS”), is incorporated, has a tax arrangement with China that currently provides for a 10% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% may continue to enjoy the lower rate and gradually transition to the new tax rate within five years after the effective date of the New EIT Law.  Enterprises that are currently entitledPRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. However, if CCH HK is not considered to exemptions or reductions frombe the standard income tax rate for a fixed term may continuebeneficial owner of the dividends paid to enjoy such treatment until the fixed term expires. PEWS enjoyed a reduced tax rate under the transitional period.  The preferential income tax rate ofit by PEWS under the revised tax incentive regulations was 22%circulars promulgated in 2010October 2009 and 24% in 2011, and was 25% in 2012.Accordingly, PEWS has beenJune 2012, such dividends would be subject to withholding tax at a rate of 10%. If our PRC subsidiaries declare a dividend or distribution and distribute profits earned after January 1, 2008 to their respective offshore investors in the 25% uniform tax rate since the beginning of 2012.  In the beginning of 2012, the Chinese government announced that it was contemplating a conversion of its sales tax system into a value added tax system (“VAT”).  While a changefuture, such payments will be subject to a VAT system would help alleviate sales taxes to some extent, the details of the proposed changes are still unknown to industries and trading enterprises.  Accordingly, the Company cannotsay what impact, if any, a conversion to a VAT system of taxation might have on the Company’s financial results.withholding tax.

Labor Law Legislation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The PRC Labor Contract Law became effective on January 1, 2008.  It formalizes workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, this new law requires an employer to conclude an “open-ended employment contract” with any employee who either has worked for the employer for ten years or more or has had two consecutive fixed-term contracts. An “open-ended employment contract” is in effect a lifetime, permanent contract, which is terminable only in specified circumstances, such as a material breach of the employer’s rules and regulations, or for a serious dereliction of duty. Such employment contracts with qualifying workers would not be terminable if, for example, the Company determined to downsize its workforce in the event of an economic downturn. Under the newcurrent law, downsizing by 10% or more (or more than 20 persons) may occur only under specified circumstances, such as a restructuring undertaken pursuant China’sto the PRC Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations. Any of the Company’s staff employed to work exclusively within the PRC are covered by the new law and thus, the Company’s ability to adjust the size of its operations when necessary in periods of recession or less severe economic downturns has been curtailed. Accordingly, if the Company faces future periods of decline in business activity generally or adverse economic periods specific to the Company’s business, this new law can be expected to exacerbate the adverse effect of the economic environment on the Company’s results of operations and financial condition. Additionally, this new law has affected labor costs of our customers which maycould result in a decrease in such customers’ production and a corresponding decrease in their purchase of our products.

Exposure to Foreign Exchange Risks

ChangesFluctuations in foreign exchange rates influence our results of operations. Our principal operations are located in the three geographic regions that have now been designated as our revised business segments; namely, the North Asia region, the Thailand Australia, Singaporeregion and China, and athe Rest of the World (“ROW”) region. A substantial portion of our aggregate revenues is denominated in the following currencies: Baht, Australian dollars, Singapore dollars or Renminbi. Nearly all of the raw materials for these operations are imported and paid for in U.S. dollars and a substantial portion of our future capital expenditures are expected to be in U.S. dollars. We require a significant amount of U.S. dollars for our ongoing equipment upgrade and maintenance programs. Any devaluation of any of the Baht, the Australian dollar, the Singapore dollar or the Renminbi against the U.S. dollar would increase the effective cost of foreign manufacturing equipment and the amount of our foreign currency denominated expenses and liabilities and would have an adverse impact on our operations.

Although our reporting currency is U.S. dollars, the functional currency of our Thai operations,Thailand region, which accounted for 39.1%42.4% of our manufactured goods sales in 2012,2015, is the Thai Baht. The functional currencycurrencies of our Singapore operations,ROW region, which accounted for 9.6%34.4% of our manufactured goods sales in 2012, is2015, are the Singapore dollar. The functional currency of our Australian operations, which accounted for 13.0% of our manufactured good sales in 2012, isAustralia dollar and the AustralianSingapore dollar. The functional currencies for our ChinaNorth Asia operations, which, in total accounted for 25.0%23.2% of our manufactured goods sales in 2012,2015, are divided into two groups: for Shandong Pacific Rubber Cable Company, Ltd. (“SPRC”, equity investee with 25% equity owned by APWC, accounting under equity method for consolidation purpose)method), and SYE,Shanghai Asia Pacific Electric Co., Ltd. (“Shanghai Yayang”), their functional currency is Renminbi, while for CCH HK PEWS and Epan Industries Pte. Ltd (“Epan Industries”) in Singapore,PEWS their functional currency is U.S. dollars. Accordingly, the functional currency accounts of these operations are all translated into U.S. dollars utilizing for the year, the balance sheetreporting date exchange rate for balance sheet accounts, and an average exchange rate for the year for the income statement accounts.  Such translation ofaccounts for the functional currency accounts is recognized as other comprehensive income in the shareholders’ equity.reporting purposes. Any devaluation of the Baht, the Australian dollar, the Singapore dollar, or the Renminbi against the U.S. dollar would adversely affect our financial performance measured in U.S. dollars.