Hongguo is in the business of ladies' footwear in China. Footwear is one of the fastest-growing retail segments in the country, which accounts for about 22 per cent of the global market for this sector.

We have two main lines of business:

• Design, production and retail of our two in-house brands of ladies' footwear for the domestic market
• OEM (outsourced manufacturing) for global footwear brands for the international market

The two lines of business draw on the same basic strengths of China's manufacturing prowess built on inexpensive labour, raw material availability, quality mechanisms and production capability.

Hongguo aspires to be a global company, riding on two favourable trends:

• Expansion of the Chinese domestic consumer market
• Global trend of outsourcing manufacturing (OEM)

As part of the first prong of this growth strategy, we are increasing our design and production facilities, enhancing our existing brands, increasing our product portfolio to increasing retail penetration within China.

Our flagship brand C. Banner is now the third-largest selling ladies' footwear brand in China in the upmarket segment while E.Blan has a sizeable presence in the mid-segment. Our production lines at Dongguan and Nanjing are being expanded to increase capacity significantly. We intend to increase our retail network of stores to 730 at the end of 2006. We have recently diversified into fashion apparel through the acquisition of Jiangsu Unity Corporation (JUC), giving us retailing rights for international brands like Zegna and Hugo Boss.

Our core business of footwear is growing fast and we believe that Hongguo will achieve steady growth over the next few years.

• Access to wide-range of customers and market segments ranging from the premium segments to the mass market.
• Diverse opportunities for brand-building, positioning, product innovation and product testing.
• Business clout in negotiating terms and conditions from suppliers, franchisees and distributors.
• Relative insulation from vagaries of changing tastes, fashions and preferences.