6.5 Credit risks
Credit risks are potential losses that arise from bad debts relating to product sales or service provision, or late collection thereof. When MHM sells the product directly to a third party, MHM bears the credit risks. MHM does not bear the risks for the products sold to MCI and MCIC as it is unlikely the related companies will default the payment. When the product enters the market via MCI and MCIC MCNT, MCI and MCIC MCNT as a distributor bears these risks. Hence, MHM bears partial credit risks for the portion of products sold directly to third party customers.