Growth strategy

Strengthen brand building.

KINGHERO Group intends to continue exploring thefeatures of its brand and deliver a consistent brand image from product design to all sales and marketing activities. To achieve this objective, KINGHERO Group isintending to establish 30 flagship stores in China in the next years. In addition,KINGHERO Group intends to increase its budget in advertising its brands and Products.

Further strengthen the sales network.

KINGHERO Group intends to increase its number of distributors to increase sales volume and enhance brand image. The number of designated distributors is planned to be increased from 33 (31 December 2009) (in approximately 30 cities) to approximately 60 in 60 tier one to tier three cities in the next years. This is expected to not only strengthen the connection with end customers but also accelerate and improve feedback and information flow.

Further increase production capacity.

In order to meet the continuous demand for products, KINGHERO Group has purchased six factory buildings of approximately 70,000sqm in September 2009. Before the end of 2010 KINGHERO Group prepares to begin with refurbishment the buildings and purchase equipment. At the beginning of 2011 these new factories are expected to be fully operational.

Acquire new technologies.

In order to improve uniqueness and profit, the brand image, as well as the quality of products, KINGHERO Group prepares to acquire and purchase a knitting factory and a zip factory. As a result, the value chain of cloth production of KINGHERO Group can be further integrated, improving response time and flexibility.

Strengthen product development and design, and introduce new product lines in due time.

KINGHERO Group intends to increase its investments in R&D from current app. 1% of annual turnover to over 1.5%.

Respond quickly to the changing market, and further shorten the time from design to entering the market.

In the PRC, the time frame between design and market entrance of a product is 180 days on average. KINGHERO Group has shortened this time frame to 100 days on average, including about one summer collection and one winter collection plus three to four fashion series.