1. style and fashion
2. jewelry

Business Plan
MAYINLAY JEWELLERY HOLDINGS (HONG KONG)
COMPANY LIMITED
APRIL，2009
Business Plan
Foreword
Mayinlay Jewellery Holdings (Hong Kong) Company Limited
(hereinafter referred to as ―Mayinlay Jewelry‖ or the ―company‖),
as a jewelry enterprise of fast growth integrating independent R&D,
production and marketing, will set up 100 medium and high class
chain retail stores of its own brands by 2011 committing itself in
the prospect of becoming the symbolic brand in the jewelry
industry of China. Its average annual growth of estimated sales
volume is 68% with a sales volume growth from HKD 90 million
of 2008 to HKD 389 million of 2011. The annual growth rate of
profit will be 84% with the growth of profit from the HKD 7.7
million of 2008 to HKD 54.42 million of 2011. The profit margin
will achieve 90%. The earnings per share will be HKD 1.81 in 2011
with a gross profit rate of 26.67%, which is 14% higher than that of
a listed jewelry company. It is going to transfer part of its equity to
raise at least HKD 30 million in June 2009 to lay the foundation for
its business expansion in retail market.
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CONTENTS
OPERATION OVERVIEW ................................................................................................................... 3
ⅠCORPORATE PLAN ....................................................................................................................... 12
COMPANY OVERVIEW.......................................................................................................................... 12
LEGAL SYSTEM ................................................................................................................................... 18
PRODUCT INTRODUCTION AND TECHNOLOGY RESEARCH & DEVELOPMENT....................................... 19
HONORS AND INTELLECTUAL PROPERTY RIGHT .................................................................................. 26
COMPANY PROSPECT PLANNING ......................................................................................................... 27
MANAGEMENT TEAM AND STAFF ........................................................................................................ 27
ACCOUNTING AND LEGAL AFFAIRS ..................................................................................................... 41
ISSUANCE AND SAFETY MEASURES ..................................................................................................... 42
ⅡMARKETING PLAN ....................................................................................................................... 43
OVERVIEW AND TARGET OF MARKETING STRATEGY ........................................................................... 43
MACROECONOMIC AND ENVIRONMENT ANALYSIS .............................................................................. 44
MARKET ANALYSIS ............................................................................................................................. 51
SALES POLICY ..................................................................................................................................... 58
SUPPLIER PRESENTATION .................................................................................................................... 66
PRESENTATION OF MAIN CUSTOMERS AND INTRODUCTION TO RELATED BUSINESS ............................ 68
EVALUATION OF MARKETING BENEFIT................................................................................................ 71
Ⅲ FINANCIAL DOCUMENTS ......................................................................................................... 73
OVERVIEW OF CAPITAL DEMAND ........................................................................................................ 73
REPORT OF FUND USE ......................................................................................................................... 73
BASIC ASSUMPTION AND PARAMETERS OF FINANCIAL EVALUATION ................................................... 75
ANALYSIS ON REVENUE AND COST EXPENSES OF RETAIL STORES ...................................................... 77
ESTIMATION ON THREE-YEAR SALES REVENUE .................................................................................. 78
COST ESTIMATION ............................................................................................................................... 79
PREPARE FINANCIAL STATEMENTS ...................................................................................................... 80
PROFITABILITY ANALYSIS ................................................................................................................... 82
CONCLUSION ON FINANCIAL EVALUATION .......................................................................................... 84
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Operation Overview
1. Project Background
China’s jewelry industry has undergone unprecedented development
during the last 20 years. Its output value grows from 0.1 billion to 100
billion and the number of its practitioners increases up to 2 million from
20 thousand. China has become one of the largest diamond markets in
Asia with an annual diamond consumption of USD 1.1 billion; the
largest consumption country of platinum in the world with an annual
sales volume of 1.4 to 1.5 million ounces; the fourth largest consumption
country of gold with an annual gold jewelry demand of about 200 tons,
and also the largest consumption market of jade and emerald. Now,
China’s jewelry industry has entered a new stage featuring in all-round
development. The emergence of industry clusters results in the formation
of various characteristic jewelry industry bases. Many famous brands
come into being. Product design begins to convey more Chinese
elements and the patented products of independent property rights
emerge. Definitely, China’s jewelry consumption has occupied an
important position in the world and the trend of China’s jewelry market
will give direct influence on the tendency and price of the international
market.
In 2008, the international financial crisis gave obvious impact on
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worldwide jewelry industries. As a matter of fact, jewelers are optimistic
about our domestic market, which has a great potential although
shrinking foreign markets influenced the performance of the jewelry
industry. The financial crisis mainly influences the enterprises
depending on foreign orders. Its influences on those who are mainly
engaged in domestic market are within the scope of purchase capacity
changes and consumers’ confidence in the future. China’s jewelry
industry will keep on its upward develop trend as long as the domestic
economy and demand do not slip in general.
On one hand, facing the financial crisis, the governments of all countries
are implementing loose fiscal and monetary policies and consumers
psychologically have the prominent demand of retaining asset value,
which makes jewelry, as rare resource, undoubtedly the best choice for
them. On the other hand, financial tsunami brings great opportunity to
jewelry industry together with the remarkable challenge. At present,
domestic jewelry enterprises are at the turning point of strategic
transformation, development of independent brands and retailing
terminals. This project aims at financing for the further expansion of
retailing business, the advancement of design and processing capabilities
in order to form a complete industrial chain and to strengthen the core
competence and anti-risk capacity. Meanwhile, the competition among
enterprises has now expanded to the industry chain level. Mere
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Business Plan
processing and manufacture will no longer meet the demand of the
current trend. Only complete industrial chains can give sustainable
competitive advantages and vitality to enterprises by the reinforcement
and perfection of raw materials, R&D, design and end-consumption.
This project aims at financing for the further expansion of retailing
business and the advancement of design and processing capabilities in
order to form a complete industrial chain and to strengthen the core
competence and anti-risk capacity of our enterprise.
2. Operation Overview
As the financing subject of this project, Mayinlay Jewellery Holdings
(Hong Kong) Limited Company is a jewelry enterprise of fast growth
integrating independent R&D, production and marketing. It is mainly
engaged in the production and sales of middle and high-class inlaid
products of diamonds, rubies, jade and emerald. Mayinlay Jewellry has
been persisting in the operation concept and tenet of ―good faith oriented,
quality and brand first, fashion leading‖ bearing the ambition of carrying
forward national jewelry culture and promoting national jewelry
industry. Upholding the management concept of ―the combination of
humanity and science, the unification of individuals and teamwork‖, it
commits itself in building the brand of Mayinlay Jewellry. Mayinlay
Jewellry promotes its development with technology development and
independent innovation while building a united corporation management
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team with advanced management technique, producing delicate jewelry
by exquisite crafts.
MAYINLAY Investment Consultant (SHENZHEN) Co., Ltd. is solely
funded by Mayinlay Jewellery Holdings (Hong Kong) Limited
Company in China. It is authorized to run Shenzhen Mayinlay Jewelry
Co., Ltd. and Shenzhen Sufeiya Industrial Co., Ltd. as its subsidiaries.
With the joint effort of the whole staff, Mayinlay persists in
implementing the philosophy of ―R&D, implementation and credibility‖.
Besides, it organizes rich and colorful cultural and social activities for its
staff to form its unique corporation culture and strong cohesion, which
reliably ensures the sustainable development of the Company. In recent
years, our business has great development. In 2007, our sales volume
achieved HKD 71.38 million, with a growth of 29.95% compared with
the previous year. Influenced by the financial crisis and increased
uncertain elements of the global economy, the Company still realized the
sales volume of HKD 91.23 million in 2008, with a growth of 27.81%
compared with the previous year. This shows its good growing trend in
such unfavorable economic environment in the financial crisis, shown as
follows:
Sales Volumes of the Company in Recent Years
9123
10000
8000
7138
5493
6000
4000
6
2000
0
2006
2007
2008
Sales Volume
(HKD10,000)
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3. Analysis of Competitive Advantages
Mayinlay Jewelry is highly recognized by domestic and overseas
customers and business partners for its good faith in operation and
consideration in services, which lays solid foundation for its
development. Its competitive advantages on management, market
position, technology R&D, cost, customer resources, industrial chain
and chain-store operation, etc. not only ensure its good performance in
recent years, but also serve as the core competitiveness for future
development.
First, an excellent and professional management team. All the
members of its top management have over 10 years’ operation and
management experience and wide business relationship in the field as
the earliest professionals engaged in jewelry in China. They witnessed
the development of the jewelry industry in China from its very
beginning. Board Chairman Lin Huifeng (William Lam), the former
Sales General Manager of the Indian multinational company JB Group,
is very familiar with the market demand of the jewelry industry. General
Manager Zhu Hongzhan (Sammy Chu), the former General Purchase
Manager of a subsidiary of JB Group, with an annual purchasing amount
of nearly HKD 400 million, which ranks among the highest volumes of
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diamond purchases made by Chinese. Deputy General Managers Yuan
Yanru (Eve Yuan) and Wang Yinghui (Hardy Wang) have the sales
performance of over 100 million which proves their status as top sales
talents in this field. The entire management team, from marketing and
technology to finance, are experienced professionals full of vigor and
vitality in the prime of life.
Second, the advantage of raw material procurement. Our
management team, with over twenty years of experience in raw
materials of jewels, brings us mature and stable channels of raw material
procurement and good reputation. We have established stable
cooperation with several DTC sightholders from whom we directly
procured loose stones of high quality at low prices. We also have special
personnel on direct procurement of loose stones from DTC sightholders
in overseas diamond distribution centers, such as Belgium, India, and
etc., which saves intermediate steps to effectively reduce procurement
cost and time. Therefore, our raw material procurement prices are much
lower than the average level in the field.
Third, faithful customer resources. We have taken up a leading
market position with our broad distribution relationships and high
product quality and established sound sales network and market
consisting of 200 cooperators and distributors. Famous jewelry sellers in
China, such as Laomiao Gold, Batar Jewelry and Laofengxiang etc., are
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our long-term customers. In respect of customer development, we get rid
of the disadvantage of random customer finding for ordinary products
and adopt the strategy of choosing and classifying faithful customers to
implement differentiated management. We put forward the principle of
properly maintaining big customers and managing small customers that
is, mainly maintaining big customers, developing small customers and
regarding small customers as reliable and low-risk points of profit
growth.
Fourth, familiarity with the target market. As an information and
marketing center of jewelers, we acquired plenty of first-hand and true
marketing information and we clearly know the demand of nationwide
consumers on sales trend, product orientation and fashionable styles, etc.
Fifth, powerful R&D capacity. At present, our techniques have
reached the middle and high level in the field. We have a jewelry
promotion and technology R&D center that launches product series as
scheduled and styles meet the requirements of the mass market and
realizing technology innovation during development. Every year we
develop and release new products of 3,600 varieties according to
international fashion trends. The number of our best-selling styles is
6,800 to 8,000, which are developed by integration and optimization
observing our domestic market tendency. In style R&D and innovation,
we exceed our competitors greatly. Besides, we have been granted three
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national patents by now, under which the patented products have been
put into the market.
Sixth, complete industry chain. Compared with the single business of
common jewelry manufacturers, our business covers three sectors, i.e.
retail, wholesale and processing. Our complete industry chain brings the
advantages of multi-competence to us and diversifies the risks of
operation. Meanwhile the relation and support of the links of the
industry chain bring our products greater competence.
4. Financing Instructions
Mayinlay Jewelry has stable distribution customers and stable channels
of high-quality raw materials procurement with main global material
suppliers. Through years of practice, we know well about customers’
consumption habits with fine manufacturing techniques and we have
elementarily forged the brand and tried in retail sale. Our current capital
may realize conventional development. However, provided we enter the
retail market rapidly, our performance development will be in leaps and
bounds. Our anticipated financing amount is over RMB 30 million for
the first phase, which will be mainly employed in retail business
promotion, adding processing equipment and inventory of finished
goods. Further financing will follow up upon the completion of the
first-phase in order to realize the plan of establishing 100 retail stores
within 3 years.
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We have been placing the investors’ maximum capital appreciation at
retreat in the most important position and will persist in the operational
target of ―value maximization‖. The three investors’ retreat modes are
mainly IPO (Initial Public Offering), stock transfer or company
buy-back and liquidation or bankruptcy. The IPO mode is the most
successful with profit of listing exceeding those of the other two modes.
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ⅠCorporate Plan
Company Overview
1. Company Introduction
Name of Company: Mayinlay Jewellery Holdings (Hong Kong) Limited
Company
Registered Address: Rooms A&B, 13F, Chasegold Tower, 100 Ma Tau
Wai Road, Hunghom, Kowloon, Hong Kong
Time of Establishment: 23 January, 2009
Total Shares: 30,000,000
2. Main Business
(1) High-grade jewel trade: Procure high-quality jewelry like ruby,
sapphire, emerald and opal and rough diamond for cutting and
processing in domestic China and distribute them to big domestic
retailers.
(2) Wholesale of finished products: Independently operate an exhibition
hall of finished jewelry wholesale of mainly diamond-inlaid K-gold
products; secondary products are K-gold with inlaid medium and
high-end emerald, rubies and sapphires.
(3) Product processing: Possess a processing center mainly processing
PT, diamond-inlaid K-gold products; secondary products are K-gold
with inlaid medium and high-end emerald and diamonds.
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Business Plan
(4) Integrated solution service for distributors: There are a few big
enterprises have capacity and talents to provide this service, which is a
feature service of Mayinlay Company embodying differentiation.
A. Provide a series of services from product integrating, product concept
designing, shaping, and processing to advertising and promotion by
combining current market condition and fashion trend and in
correspondence to customers’ demand. So far, feature products have
been developed, promoted and sold jointly with multiple chain retail
brands.
B. To provide better service for medium and small jewelry brands,
multiple series of products and other auxiliary goods are developed
including show tools, brochures, slides, hanging flags and banner
advertisement, etc. for marketing terminals, winning marketing
opportunities.
5. Retail modes: Self-managed chain business is to be adopted for this
project and chain stores will be constructed and run by Mayinlay Jewelry.
Chain stores will be firstly opened in the Pearl River Delta and the
Yangtze River Delta to establish regional famous brands and then
business will be developed in other districts of the country for
construction of a national brand.
3. Development Strategy
Preliminary development stage: 2009-2010
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The Company has accumulated stable customers and suppliers in the
past two years. Financing is needed in the current stage through entering
the retail market by purchasing existing jewelry retail shops. It is
planned to purchase ten retail shops. Purchasing will enable reasonable
utilization of the current network and reduce cost and investment risk.
Fast development stage: 2010-2011
Accumulate operation experience of jewelry retail shops and reinforce
finished goods wholesale, product development, equipment renewal,
factory expansion and employee training for rapid development.
Stage of advantage establishment: 2011
The Company establishes perfect industry chain and competitive
advantage. Consider refinancing and constructing flagship stores and
medium-end standard shops in other districts like the Yangtze River
Delta to stably increase market share. Consider retail business in other
modes such as constructing league shops.
4. Main potential risk elements
The Company may face the following risks during development:
Market risks: In spite of the good marketing performance in early
operation of the Company, there will be competition with the existing
famous retailers and subsequent components after entering the retail
market. It is hard to predict accurately the final market share achieved in
competition, therefore uncertainty exists in the development perspective.
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Financial risks: Continuous input of great deal of capital is required for
the series of purchasing plans, retail business and scale expansion of the
processing factory afterwards. In current situation, equity financing is
needed to solve the capital problem; otherwise the implementation of the
above plans will be influenced.
Risks of raw materials: Though the raw materials of the Company are
mainly from first-grade foreign jewelry suppliers and the good
relationship with them are maintained, loose stones as non-renewable
resource has growing price in the long run, which will have unfavorable
influence on production cost and sales volume of diamonds the
Company.
Risks of operation modes: During the promotion of chain business,
capital shortage restricts the development of the main business and it is
big challenge of the Company to guarantee the increase of operation
efficiency and profiting capacity during continuous business expansion,
as with increasing competition, the expansion of chain business may
have the risk of reduction of the gross profit rate and net profit rate.
Force majeure and unpredictable incidents may cause investment loss of
the Company.
5. Countermeasures for risks
For market risks:
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Ameliorate the feedback system of market consumption information
while enhancing marketing and set reasonable product prices to increase
the profiting capacity of the Company.
Accelerate product design and supply, enhance market strain capacity,
adjust duly product structure and increase the output of popular goods.
Further improve product quality and reduce cost, increase the
comprehensive competitive capacity and market adaptation capacity of
products.
For financial risks:
The Company will implement financing in multiple channels and
cooperate with famous financial institutions in a long term for uniform
operation and planning of capital and to enhance routine management.
Meanwhile, communication with the finance circle will be maintained
for active capital operation for maximum payback for investors. In case
of financing failure, the current situation of the Company enables
operation with a slower speed.
For risks of raw materials:
From a long-term perspective, the increase of prices shows investment
value of this project in certain degree, which can be taken as a sales
point of product marketing. To avoid the operational risk, the Company
will in one hand continue to reinforce the cooperative relationship with
suppliers to stabilize the prices of raw materials, and in the other hand
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will implement the strategy of brand creation during development,
maintaining customers and prices through high-quality products and
eliminating the influence of market prices fluctuation on the product
prices of the Company. Meanwhile, after successful of this financing, the
Company will purchase rough diamond factories and seats of Shanghai
Diamond Exchange to further stabilize raw material supply.
For risks of operation modes:
The main reasons for the profit loss of current enterprises of jewelry
chain business are incomplete industry chain resulting in excessive
product cost, or not high standard of designing and processing and not
strong product originality, or not enough understanding of the market
and consumption trends resulting in unbalance of profit and loss of sales
volume. The risks are controllable for this project unlike the chain
business of other enterprises since raw material procurement, feedback
and collection of market information, its own processing and design
capacities and good relationship in the industry chain are favorable
conditions for chain business.
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Legal System
1. Enterprise character: public company
2. Equity structure
Mayinlay Jewellery Holdings (Hong Kong) Co., Ltd
Sole proprietorship
Mayinlay Investment Consultation (Shenzhen) Co., Ltd
Authorized operation
Authorized operation
Shenzhen Mayinlay Jewelry Co., Ltd.
Shenzhen Sufeiya Industrial Co., Ltd
Notes:
(1) Lin Huifeng is the big shareholder and actual controller of the above
four companies.
(2) At present, Mayinlay Investment Consultation (Shenzhen) Co., Ltd.
has started to negotiate its merger and acquisition with the jewelry
manufacturer of the brand Karlssa Fare from Guangdong DKD Group,
and will start to conduct the retail business of Mayinlay jewelry of
Mayinlay Investment Consultation (Shenzhen) Co., Ltd. by this
platform.
(3) Mayinlay Jewellry Company is applying for the Important Culture
Enterprise in Shenzhen, and it is forecasted that it will be applied
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Business Plan
successfully in Jun. to Jul. 2009.
(4) Sufeiya Company is applying for the national high-tech enterprise
attestation, it is forecasted that the application can be finished in
Jul.-Oct., 2009. There are only 2 jewelry enterprises in Shenzhen that
have passed the attestation, once succeeded, the income tax can be
reduced to 15% and the VAT (value-added tax) will be refunded 3%,
therefore, it can reduce the cost greatly, and improve the core
competitiveness.
(5) Within three years, Mayinlay Investment Consultation (Shenzhen)
Co., Ltd. plans to acquire 51% of shareholding or above of Shenzhen
Mayinlay Jewelry Co., Ltd. and Sufeiya Company.
Product Introduction and Technology Research &
Development
1. Overview on Product
Now, the company owns 4 great businesses, including: high-class
diamond trade, jewelry finished products wholesale, jewelry finished
products manufacture and overall solutions for distributors. The
company develops the products with aiming at the target market and
customer group by supporting the development of the above businesses,
including: high-class diamond, jewelry finished products and overall
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solutions for distributors.
2. Product Category
The products of Mayinlay Company mainly include high-class diamond,
jewelry finished products and overall solution service for distributors.
The products are classified in the following by different product
categories:
(1) High-class diamond: include diamond, high-class rubies and
sapphires, emerald and rare jewels etc., this kind of products take the
polished diamond as primary, and also include medium/high-class pearl,
polished rubies and sapphire, emerald, profiled rubies and sapphire and
rare diamond.
(2) Finished products of jewelry: PT and K-gold set with diamond
products, K-gold set with medium/high-class pearl, emerald and
diamond etc.
Finished products for jewelry are divided into two businesses: finished
products wholesale and finished products manufacture, the products
takes K-gold set with diamond as primary, and also include PT set with
diamond, K-gold set with medium/high-class pearl, emerald and
diamond etc.
3. Product Combination Mode
Take classical style as primary and luxury style supplementation, and
match with fashionable and popular styles. Products of classical styles:
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70% of the total output; luxury styles: 20%, and; popular styles: 10%.
4. Product Styles
The jewelry products of Mayinlay absorb the excellences of the classical
jewelry widely, with highly praise on the elegant layout and harmonious
shape principle. Based on the great works of forerunners, Mayinlay
incorporates the currently fashionable design innovatively, and embeds
the novel elements into the classical design, to create the inherent but not
traditional classical. The classical style focuses on the harmony of the
overall shape as well as the change and stereo on the line, and the luxury
style stresses on the representation of details on the harmony of the
overall shape as well as the innovation on the design and craft.
5. Price Structure of Products
There is certain demanding in the popular and high-class jewelry
consumption at home, but the manufacture in the finished products of
the high-class jewelry has developed just at the beginning stage. By
aiming at this market vacancy, this company locates as the exquisite and
high-quality jewelry manufacturer, and launches the medium/high-class
jewelry by meeting this segment of the market. It also launches the
medium-class jewelry products for the public market, to form the
complementary combination of medium/high-class products and
medium-class products, and minority of low-class products are as
supplementary.
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Divide in cost price partition of product (see figure):
·Low-class product <RMB 3000, account for 10%
·Medium-class product RMB3000－10000, account for 65%
·High-class product >RMB10000, account for 25%
6. Product R&D Achievements
For the specific research & development achievements on product, this
company launches the required classical style and luxury style series,
products and multiple chain retail brands applicable for the target market
continuously at the current stage in accordance with the planned
direction, and develops, promotes and sales the featured products.
6.1 Classical styles
Research and develop new products by the international fashion trend
every year, and the number for the launched styles through self research
& development is about 3500; integrate and optimize about 6800-8000
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popular styles in the market by the national market trend.
6.2 Patent technology:
Description: Metal Diamond Mount (invention patent)
Patent No.: 200810180288.X
Description for promotion: Star Diamond
―Star Diamond‖ is the mounting matched with little diamonds set in, and
is one of the patent products of this company and developed for the
medium-class jewelry market. The structure for ―Star Diamond‖ is that
one main diamond surrounded by nine little diamonds set in the metal
mounting with a shape like diamond, which simulates the visual effect of
the big diamond. It costs just 1/20 of a single diamond with equivalent
size, and the visual effects between them is very similar, thus it can
replace the single diamond directly to be set in various jewelry products,
to remain its decoration beauty at the same time of reducing cost greatly.
The whole production process is controlled by the computer and
fabricated by the machine from Switzerland; use another patent
technology ―Tiffany Setting‖ to set diamond, and the applied technology
is leading in the manufacturing industry of finished products of jewelry.
This company has developed multiple series of products based on the
invention of ―Star Diamond‖.
Description: Braille jewelry (utility model patent)
Patent No.: 200820180496.5
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Description: Micro-setting craft (invention patent)
Patent No.: 200810134484.3
Description for Promotion: Cut Claw Micro-setting
6.3 Theme series products:
【Angel Wings】Faith diamond series
―Angel
Wings‖
faith
diamond
series
is
launched
for
the
high/medium-class jewelry market. Most jewelry products in the current
jewelry market still adopt the old mode and traditional thought in the
shape, promotion and package, the product shape lacks the innovation
and a sense of design, an the promotion mode is single. The company
launches the products with faith value as core value and angel wings as
design element according to the market features and requirements. This
series not only can represent the product’s decoration value, and the
more important point is that it also shows the faith value of jewelry.
With Angel wings as design element, it stands for hope, protection and
peace, and the style is elegant and classical. This series product is the
visual representation of faith and dream and the spirit support of keeping
faith for ladies with good taste. For men buyers, it more represents the
care and love to the other person.
【The One , The Only】fashionable diamond series
―The One, The Only‖ is specially launched for spring 2009 by Mayinlay,
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―The One, The Only‖ is a fashionable diamond series specially launched
for Spring 2009 by Mayinlay, which incorporates the characteristics of
elegant, romantic and exquisite, and is made by the patent of diamond
combination mounting – ―Star Diamond‖ supplemented with the patent
technology ―Tiffany Setting‖. 【 The One, The Only 】 fashionable
diamond series exhibits the unique charming of diamond and noble
metal, combines the noble PT with the elegant rose gold perfectly, and
deduces the mystic and luxury fashionable art exactly.
This company also provides series assistant articles for product selling
for matching the launch of main series products, besides the
products-selves, including: magazine advertisement, soft article on
magazine, album, hanging flag, shop window advertisement, outdoor
advertisement, training material for employees of end retailer, to win the
best selling choice for retail customers.
6.4 Overall solutions for distributors
Until now, we has cooperated with multiple chain retail brands to
develop, promote and sell featured products together by incorporating
the market situation and fashion trend, and matching the requirements of
customers, to provide perfect series service for customers, from product
integration, product concept development, shape design, production
processing to publicity and promotion. For example,【Beloved】and
【Smart】series through cooperation with jewelry brand ― Hong Kong
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King Taifook‖.
Honors and Intellectual Property Right
1. Design Prizes
2003 Tahitian Pearl Trophy Asia
Second place
2003 Tahitian Pearl Trophy Asia
Third place
2004 ―China Gold Capital" 2nd National Gold Jewelry Design Contest
Second place
2005 Tahitian Pearl Trophy Asia
Champion
2006 1st National Jewelry Exquisites Contest
Excellent prize
2007 HRD International Diamond Design Contest
Entry prize
2008 China International Jewelry Design Contest
Third prize
There are still several works selected for multiple international jewelry
design contests.
2. Company Trademark and LOGO
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Company Prospect Planning
1. Three-year Planning
To become a jeweler holding 100 medium and high class chain retail
stores of its own brands within 3 years.
2. Company Vision
Be the leading brand of the jewelry industry in China.
3. Company Philosophy
Good faith is more precious than diamonds.
Management Team and Staff
1. Organization Structure
The departments of this company are established on the principle of
―scientific management, clear rights & responsibilities, incentive and
restraint mechanism‖, to realize the logical division & collaboration and
unified responsibilities, rights & benefits, and ensures the efficient
running of the operating activities of the company duly, accurately,
exactly and flexibly. For the organization structure of the company,
please see the figure as below:
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Board of
Directors
Audit
Committee
Board of
supervisors
Wage and employee
relation committee
Chairman
General Manager
Vice G.M
All departments
2. Introduction on management team and consultants
(1) Introduction on management team
Mr. Lin Huifeng (William Lam)
34-year-old; graduated from Shenzhen Polytechnic, and majored in
jewelry design and craft. Chairman and CEO of the Company.
Shenzhen people; born in a jewelry aristocratic family; one of the
earliest GIC and GIA appraiser in China. With 10-year jewelry
profession experience; held the General Manager position for J.B. Group,
which is an Indian transnational diamond company in 1999-2005, and
achieved annual sales of RMB 60,000,000; founded MAYINLAY
Jewelry Co., Ltd. in 2006. Deeply influenced by Chinese traditional
culture, is very fond of the calligraphy and has certain attainments in it,
once won national excellent work prize; likes social intercourse and
sports; frequently organizes the personnel in the profession to carry on
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the discussion and exchange on profession, economy, management and
so on. Loves the jewelry profession very much. With rich profession
experience, keen judgment ability to jewelry profession development,
unique investment judgment, as well as respectable moral character and
accomplishment, Chairman William Lin leads the Company to develop
rapidly and steadily.
Mr. Zhu Hongzhan (Sammy Chu)
51-year-old; General Manager of the Company.
With rich profession experience; engaged in the jewelry profession in
Hong Kong for 27 years. Entered into the profession in 1982; worked at
the jewelry purchase in India, Belgium, Israel and other countries; one of
few Chinese people who went abroad for purchasing jewelry material at
that time. Started managing own jewelry company in 1992, which
achieved annual sales of about 80,000,000 HK dollars during 10 years.
Afterward was hired to take charge of the purchase for all raw materials
by Sugem (Hong Kong) Limited subordinated to J.B. Group, which is an
Indian transnational diamond company, for 6 years, during the time
reached nearly 400,000,000 HK dollars of annual purchase amount,
becomes one of Chinese people who purchase the most diamonds in the
world. In 2007 joined this Company, established the purchase
department in Hong Kong, and is responsible for the purchase of raw
material specially. As years of purchase experiences knows the
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superiority well on the products of any big diamond manufacturer in
India, Israel, Belgium and so on, and maintains good relations with
various raw materials suppliers.
Ms. Yuan Yanru (Eve Yuan)
38-year-old; graduated from the Department of Foreign Languages,
Northeast Normal University; Bachelor's degree. Deputy General
Manager of the Company.
Engaged in Chinese jewelry profession for 17 years since entering it in
1992, is one of professionals who earliest works at the jewelry
profession in China. In 2000-2008 was hired by Amy Diamond Co., Ltd.,
which is an Indian transnational diamond company, and is one of
founders of Shanghai Amy Diamond Co., Ltd., as well as key executives
of this company, achieved annual sales of 120,000,000 Yuan, was one of
top saleswomen in jewelry profession. In 2008 joined this Company to
be Deputy General Manager.
Mr. Wang Yinghui (Hardy Wang)
30-year-old; majored in jewelry design and appraisal of Chinese Tongji
University; Bachelor's degree. Deputy General Manager of the
Company.
Held the Sales Director position for listed Zhejiang Diamond Holding
Co., Ltd., in 2000-2005 took charge of the sales in Shenzhen where is a
key area of the Company at that time, his annual sales reached nearly
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Business Plan
100,000,000 Yuan, became one of top salesmen in jewelry profession.
Managed own jewelry business in 2005-2007, has a set of precious
attainments in the jewelry management, and joined MAYINLAY to hold
the Deputy General Manager position in 2007.
Mr. Zhen Junwei (David Chen)
28-year-old; Master's degree of Sichuan Normal University; on-the-job
graduate student. Financial Director of the Company. Chinese licensed
auctioneer, with the title of intermediate accountant.
Held the Senior Manager position for Shenzhen Small & Medium
Enterprises Credit Guarantee Center Co., Ltd. in 2002-2008, once
handled the loan business for more than 40 small and medium-sized
enterprises, which amounts to over RMB 3,000,000,000; concurrently
held the Financing Consultant position for Shenzhen Jindingxin Pawn
Shop Co., Ltd., listed Shenzhen Clou Electronics Co., Ltd. and Shenzhen
Sunlord Electronics Co., Ltd. in 2003-2008.
Mr. Xiao Jinxiong
58-year-old. Deputy Financial Director of the Company.
Engaged in the finance work more than 30 years, in 1986-2002, held the
Chief position for Financial Department of Shenzhen Television Station;
with strong sense of responsibility, good communication ability and
team spirit, broad social relationship, excellent financial analysis,
financing and fund administration and dispatch ability. Held the
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Financial Director position for Shenzhen Lujinjiang Jewelry Co., Ltd. in
2003-2006, has rich experience in financial strategy plan on the jewelry
profession. Joined MAYINLAY to hold the Financial Director position
in 2006.
Ms. Huang Liwen (Cecilia Wong)
32-year-old; graduated from Shenzhen Polytechnic, and majored in
jewelry design and craft. Marketing Director of the Company.
With 10-year experience in jewelry profession, after graduation worked
in several well-known jewelry companies including two large-scale
listed HK companies as well as domestic well-known jewelry enterprises
to take charge of product development and planning, marketing and so
on, and successively led many large-scale new product projects and
exhibition projects. Once participated in lots of domestic and
international jewelry design competition, and obtained many important
awards including champion of Tahitian Pearl Trophy Asia and so on.
Presently is responsible for the routine work of promotion and R&D
center in the Company, including market development, product R&D
and promotion and so on.
Mr. Mao Jiarui (Garry Mao)
33-year-old. Graduated from Shenzhen Polytechnic, and majored in
jewelry design and craft. Technical Director of the Company.
With 10-year experience in jewelry profession, worked in several
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Business Plan
well-known jewelry companies to take charge of marketing, planning
market investigation and study and design on popular style. As a result
of deep love to handicraft, by integrating with years of marketing and
design experience in modern jewelry manufacture, proposed many craft
innovations, is one of inventors on“Po Zhua Wei Xiang”patent. With rich
experience in the R&D of jewelry craft, and the products manufactured
by him are more suitable to market and consumer. Presently is
responsible for the routine work of production and technology R&D
center in the Company, including technical R&D, quality monitoring and
so on.
（2）Introduction on consultants
Mr. Zhu Zhongyi
65-year-old; Professor and Master Tutor on Authentication of Jewelry;
Standing Vice Chairman of Shenzhen Polytechnic Labor Union, and the
member of the Shenzhen NPC Standing Committee. Technical adviser of
the Company.
Mr. Yang Mingxing
47-year-old; majored in Gemology and Mineralogy; Doctor’s degree.
Technical Adviser of the Company.
Promoted to be the Professor of Gemological Institute China University
of Geosciences (Wuhan) in 2003. Held the vice-president of
Gemological Institute China University of Geosciences (Wuhan), which
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specially is responsible for the development, concurrently was the Chief
of Jewelry Testing Center China University of Geosciences. The main
social concurrent posts includes: Deputy Secretary-general for Appraisal
Committee of Gems & Jewelry Trade Association of China,
Vice-chairman for Gems & Jewelry Trade Association of Hubei
Province, Vice-chairman for Appraisal Committee of Gems & Jewelry
Trade Association of Wuhan City and so on. Attained FGA certificate
and DGA certificate of the British Jewellers' Association in 1997;
attained CGC certificate of Gems & Jewelry Trade Association of China
in 1998; attained the US certificate of ―Techniques of Professional
Jewelry Appraising‖ in 2002.
Mr. Hu Chuyan
47-year-old; Technical Adviser of the Company.
Associate Professor; Master Tutor. Engaged in jewelry teaching for
many years in Guilin Institute of Technology before studying for the
doctorate in July, 2002. Had been a teacher of Shenzhen Polytechnic
until now from 2002. Worked at the jewelry manufacture and mosaic
craft, jewelry and jade appraisal, gem inclusion, jade teaching and
scientific research for a long time. Owns deep attainments in geology,
gemology and jewelry technology and so on, and published over 40
scientific research dissertations. CGC member.
Mr. Cao Yang
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Business Plan
53-year-old; Senior Economist. Marketing Consultant of the Company.
Once held the Investment Analyst position for JP, presently is the
Independent Director of Hong Kong Huanguan Group, Special Invited
Researcher of Beijing Gold Economic Development Research Center,
Chief Analysis of Shenzhen Jiesheng Financing and Special Consultant
of joint loan and guarantee business of China Construction Bank
Shenzhen Branch. Engaged in strategic research work on the jewelry
industrial development for a long time, has original opinion and rich
operation experience in the jewelry brand cultivation, modern enterprise
system establishing, gold investment and financing analysis, industry
economic development program and so on, as well as in the investment,
financing, property capitalization and IPO of jewelry enterprise. A
renowned expert of profession development matters in jewelry field, as
well as one of strategy advisers in Shenzhen’s jewelry industrial
development.
Mr. Shen Wei
41-year-old; double Bachelor’s degree in Law of Peking University and
Accounting of Nanjing University of Science and Technology.
Counselor of the Company.
Attorney, Registration Number: 19020811016404. Principal of Labor
Law and Business Secret Protection Law Department of Guangdong
Rong-guan Law Office. Member of Guangdong Law Society, Labor and
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Business Plan
Social Insurance Law Service Committee of Shenzhen Lawyers
Association. Independent Director, Senior Attorney, high-level HR
Specialist and Economist of listed companies. Has deep fundamental
research and practice experience to labor law, business secret protection
law, law of corporation and so on. Is good at handling the lawsuits and
non-lawsuit service including labor law, business secret protection law,
law of corporation and so on, has highly comprehensive professional
quality.
2. Employment plan
The table of employment plan for retail shops and processing
departments of the Company in next three years as follows:
A. Flagship stores
Name of Department
Population
Sales team
35~40
Logistics
4
Store Manager
1
Commodity controller
1
Maintenance department
1
Total
42~ 47
B. Standard stores
Name of Department
Population
Sales team
12~18
Logistics
2
Store Manager
1
Total
15~21
C. Processing departments
Name of Department
Population
Name of Department
Population
Sales Department
50－60
Setting Department
1000－1200
Commodity Department
30－40
Polishing Department
500－550
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Stone Matching Department
20－25
Gold Plating Department
100－120
Dispatching Department
20－25
Casting Department
20
R&D Center
200－220
Wax Injection Department
50－60
Grinding Department
500－550
QC Department
30－40
3. Succession Planning
(1) The Company has established good training, practice and
cooperation with Gemological Institute China University of Geosciences
(Wuhan), to provide high quality professionals for the Company.
Gemological Institute China University of Geosciences (Wuhan) is one
of the earliest and biggest gemology education and research institution
in China, as well as one of 3 national CGC training stations before
examination. Within 14 years since the establishment, it has developed
many advanced jewelry appraisal instrument, simultaneously, it also
trained large quantities of professionals for Chinese jewelry industry,
changed the lagging Chinese jewelry education, and accelerated the
development of domestic jewelry education. Yang Mingxing, the Dean
of this Institute is one of consultants of the Company. On May 16, 2009,
the Company reached agreement with this Institute officially to become
the only practice base in Shenzhen of Gemological Institute China
University of Geosciences (Wuhan). The Company may choose suitable
professional according to its developing requirement.
(2) Cooperates with the head-hunting company to advertise for
outstanding jewelry professionals for high-end talent reserve of the
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Company.
(3) Continues to employ the outstanding talents of enterprise and shop
purchased by the Company after passing unified training.
4. Primary departmental post responsibility
Sales Department
 Conducts the work under the guidance of General Manager. Takes
charge of the sales routine work;
 Establishes the sales strategy and sales program of the Company,
pays special attention to the market investigation and study, develops the
market positively, enhances the market share unceasingly;
 Builds
sales
network,
visits
the
customer
periodically
or
non-periodically, establishes the feedback network on customer
information, solutes the difficulty of customer;
 Prepared departmental management and assignment, as well as
reward means. Strengthens the study of clerk, improves the
comprehensive quality and market regulation ability unceasingly;
 Perfects the delivery procedure, pays special attention to the product
tracing management;
 Coordinates the Design Department to complete the product mix
adjustment, satisfies the market requirement unceasingly. Pays special
attention to the customer reception;
 Finishes the sales work economic activity analysis earnestly,
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according to the market tendency, adjusts the marketing strategy at right
moment;
 Fulfills the sales contract strictly, urges and receives the payment for
goods promptly; rationalizes the price based on the market at right moment;
 Grasps customer’s management and credit degree, and keeps the
secret of the Company;
 Is responsible for the collection, reorganization, filing and
management of the operation data;
 Completes other tasks delivered by the leader of the Company.
Finance Department
 Participates in management and operation of the Company, and main
financial personnel should participate in significant economic activity
and contract conclusion and signing of the Company;
 Prepares corporate finance control system of the Company, after
reporting the Company for approval, carries out specifically and
supervises its fulfillment;
 Establishes and fulfills the budget, use the fund of the Company
effectively.
Administrative & Personnel Department
 Logs in the website of the Company every day, carries on normal
examination and maintenance, makes the reply to conventional mail
promptly, reports to the related leader to special event;
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 Handles the procedure advertising for personnel, replies the
telephone consultation, arranges the interview notice and detailed
program;
 Establishes all personnel file, renews promptly and guarantees the
reality and validly of all material;
 Is responsible for handling staff's administrative procedure (including
probation, promotion, transfer, salary adjustment, demission, asking for
leave, overtime, vacation and so on), as well as daily check, surveillance
and statistical examination on work attendance;
 According to the Company's request and staff's practical need,
prepares monthly training plan.
Design Department
 Assigns the special user of the computer for design, and pays
attention to its using security and condition strictly;
 According to the requests of the Company arranges the tool
controller for correct purchase, use and storage;
 Handles the project work according to the Company's design
procedure, and the handover procedure should be perfect and clear;
 Is responsible for the template processing technology control,
guarantees the manufacturing craft for product scientific and reasonable;
 Storages and absolutely keeps secret to the product design,
development, as well as firsthand information to design and product;
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 Fulfills decision-making of the Company, proposes the suggestion
that is advantageous for the Company, collects the market information,
coordinates the upper-level department, and takes charge of the
localization and style control of product.
Accounting and Legal Affairs
1. Accounting system
International accounting standards; China’s Accounting Standards for
Business Enterprises
2. Financial software
Kingdee financial software
3. Legal affairs
The Company invites professional law office and counselors to handle
its legal affairs.
Name: Guangdong Rong-guan Law Office
Address: 47/F, Tower A, United Plaza, No. 5022, Binhe Road, Shenzhen
Tel: 0755－82901311
Website: www.szlzgw.com
Counselor: Shen Wei, Attorney
Duties: Handling the Company's economic contracts, rules and
regulations, labor contracts and legal disputes.
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Issuance and Safety Measures
1. The Company have all its employees covered by social insurance
according to the Labor Law.
2. The Company’s monitoring and burglarproof system is directly
linked to the network of police station, and is preparing to purchase
the business insurance from Hong Kong Insurance Company.
3. The company enters into confidentiality agreement with its staff. All
computers in the Company are monitored. All mails and transmitted
documents have backup for reference momentarily; regarding the
staff that do not use computers, the company controls them through
its strict management system; only backbone staff have the access to
key technologies.
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Business Plan
ⅡMarketing Plan
Overview and Target of Marketing Strategy
1. Overview of core marketing strategy
We adopt low price & differentiation strategies for both the finished
product manufacture and raw material wholesale business, i.e. our
products are priced at the bottom range for products of the same quality
and type and differentiated from competitive products of similar prices.
① Low price strategy: The technology R&D, network management
system and stable goods supply channel of the Company provide
favorable condition for the implementation of low price product strategy.
For example, in an large product category, the technology and craft
applied in each product shall be the same or close to each other to
improve the productive efficiency effectively; perfect network
management system simplifies the personnel system effectively and
improves work efficiency, thus the lost caused by human errors; and the
Company and the senior managers’ rich experience on supply channel
maintaining brings more cost advantages.
② Differentiation strategy: ―Differentiation‖ mainly comes from three
aspects including craft, appearance and concept culture. Firstly, the
Company put great emphasis on the application of new craft, it takes the
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Business Plan
lead among like product in aspect of craft R&D; secondly, the
appearance of the product is unique, the innovation meeting customers’
demand is the starting point for appearance improvement; thirdly,
different from other jewelry product stressing their decoration value and
sign value, the Company pays more attention to intrinsic culture of
product, which coincides with the great ancient Chinese culture.
2. Marketing objectives
 Maintaining and promoting brand value and product quality;
 Annotating product quality perfectly;
 Improving the customer satisfaction;
 Increasing the sales in 2009 by 1.3 times than that in 2008;
 Promoting 56% of profit margin in comparison with 2008.
Macroeconomic and Environment Analysis
1. Macroeconomic environment
① National economy grows continuously while the living standard
of residents are steadily improved.
In recent years, the national economy of our country has been developed
continuously, steadily and rapidly, in 2008 the GDP reaches up to
RMB30.067 trillion, increased by 9.0% than the previous year; the
annual disposal income per capita is RMB15,781 Yuan, increased by
14.5% than the previous year, and after adjusting for inflation, the actual
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growth rate is 8.4%, which is one of the few years in which the growth
rate of urban per capita disposable income is higher than that of GDP.
See following figure for the annual disposal income per capita and its
growth rate in 2003-2008:
Disposal Income Per Capita and Income Growth Rate of Urban Residents
in 2003-2008
18000
20.00%
15781
16000
8000
14.00%
11759
12000
10000
17.00%
13786
14000
10493
12.20%
9422
8472
9.00%
11.00%
10.40%
9.60%
8.40%8.00%
7.70%
6000
5.00%
4000
2.00%
2000
0
-1.00%
2003
2004
2005
2006
Amount (Yuan)
2007
2008
Growth rate
Data source: Natural Bureau of Statistics of China
With the fast development of domestic economy in China, residents’
income level is improved constantly. The capacity of consumption
correspondingly increases. The enhanced desire for high-grade
consumable goods promoted consumption expenditure.
② Total retail amount of commodities maintains fast growth, and
residents’ consumption structure upgrades faster.
Along with fast development of national economy, the sales growth rate
of commodities market in our country increases quickly, which presents
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a steady improvement situation. In 2007, annual gross retail sales of
commodities reaches RMB8.921 trillion, increased by 16.8% than 2006,
the increase rate is 3.1% than the previous year. In 2008, annual total
retail amount of commodities reaches RMB10.8488 trillion, increased
by 21.6%, the increase rate is 4.8% than the previous year. See following
figure for the change of commodities retail market in last six years:
Total Volume of Social Retail Sales and Growth Rate in 2003-2008
120000
108488
100000
60000
40000
21.60%
20.00%
89210
76410
80000
16.80%
67177
52516
59501
13.30%
12.90%
25.00%
15.00%
13.70%
10.00%
9.10%
5.00%
20000
0
0.00%
2003
2004
2005
2006
Amount (Billion Yuan)
2007
2008
Growth rate
Influenced by the income growth of urban residents, the investment
and recreational consumption is a trend, like gold, silver and diamond
jewelry, holiday gift and other commodities will continue to be sold well,
and the upgrade of resident consumption structure will speed up
obviously.
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Business Plan
③China's economy prospect in 2009 under financial crisis
At present, because of the common phenomenon of credit crisis and
confidence crisis in financial industry, the vitality of capital market and
credit market becomes weak, the commercial bank is reluctant to lend,
the finance support to real economic activities of industry and commerce
is decreased greatly and the risk of financial crisis is spreading to real
economy gradually.
The growth prospect of the three economic entities
including Unite State, European Union and Japanese is pessimistic, the
economic cycle synchronism of each country caused by economic
globalization will enlarge the risk of sub-prime crisis to the real
economy of the world, obviously Chinese economy with high net export
demand will be surely influenced, and each economic indicator faces the
pressure of downturn.
Under this background, to stimulate domestic consumption, Chinese
government released an economic stimulus plan up to RMB 4 trillion in
November, 2008, which is a great support to domestic economy growth.
At the same time, at Central Economic Working Conference held in
December of 2008, the government officially proposed that Chinese
GDP growth rate in 2009 will be 8%. And Premier Wen Jiabao
interpreted the possibility of achieving this goal from aspects of our need
and possibility, government's pledge and responsibility, confidence and
hope.
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Generally speaking, our country is standing in the watershed
export-oriented economy to internal-oriented economy, while the later
mainly consists of investment demand and consumption demand, the
final consumption demand is the most important. To achieve the goal of
―guarantee 8%‖, there will be more preferential measures to release to
drive domestic demand in aspect of macroscopic policies. Therefore the
commodities including high-class commodities, especially under the
sharp shrinkage of overseas market demand, confront the best
opportunities to enter domestic market and complete the strategic
transformation.
2. Jewelry industry environment in Shenzhen
The prospect of global jewelry industry is in China; the prospect of
Chinese jewelry industry is in Shenzhen. The development of Shenzhen
jewelry industry originates from the establishment of Shenzhen Special
Economic Zone beside Hong Kong-the important collecting and
distributing center of jewelry production and marketing of Asia. After
over 20 years’ development, Shenzhen has become a city of the fastest
overall development and the largest scale of jewelry industry. By the end
of 2006, Shenzhen has about 2100 registered jewelry enterprises, 2200
self-owned brands, including 17 Chinese Famous brands, 5 top China
brands and a large numbers of other well-known brands of jewelry.
Shenzhen jewelry industry has a total processing value of RMB50
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billion, its market share of the products takes up 70% of the domestic
industry. Its gold, platinum and diamond processing business volume
occupy 80-90% of annual turnover of Shanghai Gold Exchange,
Shanghai Platinum Exchange and Shanghai diamond Exchange.
Shenzhen is known as manufacturing base and trading center of Chinese
jewelry, and keeps ahead in the domestic jewelry industry. Shenzhen
International Jewelry Fair is the biggest jewelry trade platform in China,
and ranks the fourth in the world, and it is also the ―wind vane of
Chinese jewelry industry‖.
The jewelry industry has already become one of the five economic
pillars in Shenzhen, Shenzhen Municipal Government established
Shenzhen jewelry industry base in August, 2004 and set up a special
agency responsible for equipment foundation, industry chain facilities,
financing and promotion to release the core cohesion of the base, which
speeds up the internationalization of Shenzhen jewelry industry. The
base has following function:
Firstly, it strengthens the allocation ability of jewelry industry.
Concentration of industry overcomes the uneconomic resource
utilization for single enterprise; complementary supply expands the
effective demand. Optimized allocation of production factors including
natural
resource,
knowledge
resources,
capital
resources
and
environmental resources, makes the industry a magnetic field with more
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cohesion, and the effect of production factors allocation is realized to a
larger extent.
Secondly, it strengthens the internal connection of jewelry industry.
Through forward linkage and backward linkage of product structure, the
linkage mode integrating competition, cooperation and interaction has
been formed gradually; and to realize technology innovation, market
leading and scale development of industry cluster through optimized
allocation of production factors.
Thirdly, it highlights the brand advantage in jewelry industry. The
governmental guidance and policy support can promote the effect of
industry cluster effectively. After the formation of industry cluster, the
zone feature, industry feature, enterprise feature and product feature will
constitute the brand effect of competitive industry together.
Fourthly, it sublimates the cultural value of jewelry industry. The
government guides the development of jewelry industry and takes the
cultural pursue, cultural marking and cultural market as a standard for
cluster identification, through which to deepen jewelry culture
connotation, and it is advantageous to promote the internal factors
linkage in industry cluster and common value accumulation.
The company select Shenzhen as the base, which is one of the important
design towns and core cities of modern design, because Shenzhen
jewelry industry has above comprehensive advantages in aspects of
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industry source allocation, industry cluster, brand and culture, etc., from
above analysis, we see that macroeconomic policies and industry
policies provide advantageous support platform for the Company’s
development.
Market Analysis
1. Condition of market
With the rapid development of mainland China’s economy, the
consumption orientation of residents has obviously changed and people
gradually begin pay attention to high-grade commodities from daily
necessaries, mainly focusing on the value maintenance and collection of
commodities with high added value, while gold and silver jewelry has
such kind of value. According to the statistical data of National Bureau
of Statistics, in the retail sales of wholesale and retail industry above
designated in 2007, the retail sales of gold and silver jewelry was
RMB45.98, a 41.7% increase than that of 2006, and the annual growing
rate from 2003 to 2007 reaches 28.8%. According to the statistical data
of Gems and Jewelry Trade Association of China, the gross sales of
jewel of China is RMB170 billion in 2007, jewelry market of China
ranks the third in the world after that of America and Japan. The jewelry
market in our country will continue to keep at the growth rate of above
15% in the coming years. By the end of 2007, there were over 50,000
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different kinds of registered jewelry enterprises and over 3 million
people engaged in this jewelry industry of China. Among them, about
40,000 companies engaged in jewelry retail trade with 1.5 million staff.
As forecasted by China Jewelry Association, the expenditure of jewelry
market in China is shown as follows:
Billion USD
Nationwide Market Expenditure on Jewelry
2300
2500
1850
2000
1360 1460
1500 1130 1110 1180 1240
1000
500
0
2000 2001 2002 2003 2004 2005 2010E2015E
Expenditure
30.00%
20.00%
10.00%
0.00%
-10.00%
Growth rate
Data source: China Securities Journal
Currently, the jewelry can be classified into metallic jewelry, jewel and
jade jewelry and other jewelry in Chinese market. Following is the
analysis to relevant market.
Jade jewelry: jade jewelry is made through crafts of grinding, sculpting,
embedding and adhesion. This kind of jewelry is more and more popular
with people because of beauty and high state. The common kinds of jade
include diamond, ruby, sapphire, crystal, emerald, pearl, amber and
topaz, etc.
Platinum jewelry: according to the newest statistic data of International
Platinum Association, in 2007, during the traditional sales seasons of
Spring Festival and Valentine’s Day, the sales amount of platinum
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jewelry increased 23.4% than previous year. According to the market
investigation of the association in 2007, the platinum jewelry was loved
by the majority of Chinese consumers. According to the investigation
focused on the wedding market, it is found that consumers buy platinum
most in the wedding jewelry market in China. See the following chart:
Metal Types of Wdding Jewelry
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Platinum
Pure gold
White K gold
Yellow K
gold
Data source: China God and Jewelry, 2007
Diamond jewelry: The consumption of diamond jewelry increases at
the speed of 16% per year in inland cities. According to DeBeers
Diamond Promotion Center’s investigation on Beijing, Shanghai and
Guangzhou, each newlywed’s average consumption on diamond jewelry
is RMB5, 820. Among wedding jewelry, 81% of it is diamond ring, 14%
of it is single diamond pendant and the rest are earrings and brooches.
With the growth of residents’ income in our country, the purchasing
power of diamond jewelry will continue to increase.
Wedding market: Wedding market will serve as the major drive for
jewelry market in the coming years. There are about 1,000 newlyweds
getting married every year with a total consumption of RMB250.
Especially, those born in mid-1980, a birth boom period in China, will
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get married in 2007 to 2012. Based on the stability of married people,
the total consumption amount of wedding is increasing constantly. Based
on the stable marry rate, the total consumption is increasing without stop
at present. As an important part of wedding industry, the consumption of
wedding jewelry will bring jewelry market the new hot-point.
2. Analysis on competition situation and rivals
The enterprises of jewelry in mainland China mainly spread in
Guangdong, Shandong, Shanghai, Fujian and Zhejiang. Guangdong’s
jewelry production ranks first place in domestic jewelry market, of
which Shenzhen and Panyu are the main processing bases. The domestic
market share of gold and jewelry enterprises of Shenzhen ranks the first
place in domestic market, thus Shenzhen is known as ―Jewelry City‖.
The jewelry processing industry in the mainland is developing rapidly,
and processing of emerald, seawater pearl and freshwater pearl as well
as the design and processing of pure gold have reached the advanced
international level, which makes it the second largest diamond
processing center in the world.
China has great potentials of consumption market, which attracts many
international jewelry tycoons to share this market. DeBeers—the
globally largest diamond seller, Cartier—famous French clock tycoon
with over 150 years’ history, International Publicity Association of
Tahitian Pearl, Hong Kong famous jewelry brands—Chow Tai Fook and
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Business Plan
TSE SUI LUEN as well as other barons have entered into Chinese
market one after another. With the coming of foreign brands in Chinese
market, Competitions in the field of jewelry consumables among
domestic brands and foreign brands will heat up.
The main rivals of the company include TTF Modern Jewelry
Manufacturing Company, LJ. Jewelry Making Company, Gold Mill
Jewelry Company, Sanbailiang Jewelry Company and OCA Industry
Company. The target market and product type of them have following
features:
Name
Company
of
Target market
Type of Product
Developing and making jewelry
products of modern styles focused
on the middle and high-end
fashionable retail brands of jewelry
of the top and secondary cities in
China as well as European and
American market
LJ. Jewelry
Developing and making jewelry
Making
products of modern styles focused
Company
on middle and high-end popular
brands of in top and secondary cities
in China
Gold
Mill Developing and making the jewelry
Jewelry
Co., products of modern styles focused
Ltd.
on the middle and high-end
fashionable retail brands of jewelry
in top and secondary cities in China
as well as North American and West
European market
Sanbailiang
Developing and making jewelry
Jewelry
Co., products of American and European
Ltd.
styles focused on middle and
high-end popular brands of in top
and secondary cities in China
TTF Modern
Jewelry
Manufacturer
55
Main products: K-gold
jewelry with diamond-inlaid;
Supplementary products:
middle and high-end K-gold
jewelry of colorful
jewel-inlaid
K-gold jewelry with
diamond-inlaid, middle and
high-end K-gold jewelry of
colorful jewel-inlaid
K-gold jewelry with
diamond-inlaid, middle and
high-end K-gold jewelry of
colorful jewel-inlaid
K-gold jewelry with
diamond-inlaid, middle and
high-end K-gold jewelry of
colorful jewel-inlaid
Business Plan
OCA Industrial
Co., Ltd.
Developing and making jewelry K-gold jewelry with
products of modern styles focused diamond-inlaid
on middle and high-end fashionable
brands of in top and secondary cities
in China
In comparison with us, the above-mentioned rivals mainly are similar to
the Company in the aspect of enterprise scale and product positioning,
etc. In the market competition, the rivals have following disadvantages:
first, in terms of raw materials purchase, high purchase cost; second,
inferior processing and design capabilities, thus they can’t produce the
proper products meeting the requirements of the market in time, and the
processing cost is high; third, poor accuracy of grasping the market.
Therefore, the Company’s products have high performance-price ratio
and popularity. If the financing of retail terminal construction can be
realized successfully to improve the industry chain of the company, the
company shall exceeds the rivals above in aspects of sales scale,
profiting capacity and developing mode.
3. Marketing channel
In mainland China, jewel retail and wholesale are realized in following
channels: jewelry shoppe in shopping mall, chain store, supermarket,
franchised store and professional market. The investigation of Hong
Kong Trade Development Council in 2007 indicates that the department
store is still the main marketing channel, and franchised store comes
second.
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Business Plan
Jewelry shoppes in shopping malls are the earliest and most mature
marketing mode, which is the earliest marketing mode. The jewelry
brands with high popularity set shoppes in each department store and
shopping mall.
In recently years, more and more large-scale jewelers are inclined to
develop the form of chain operation and franchised stores, which result
in the fierce competition of shoppe of shopping mall.
Due to the policy limitation and unfamiliarity to the inland market,
majority of transnational jewelry companies set the shoppe in the
large-scale department store, they usually adopt the franchise and agency
modes, for example, in the previous two years, Chow Tai Fook and TSE
SUI LUEN are planning to build more franchised stores.
Additionally, many informal special markets with retail and wholesale
business have been formed in the manufacturing and wholesale base.
With the popularization of internet and further understanding to online
shopping, selecting the jewelry from the internet is more and more
popular. In Apr. 2007, 21GEM said that about 5% of the jewelry sales in
Shanghai were completed by on-line shopping. However, the network
safety and secrecy of personal information of consumers are the key
factors retarding the development of this sales channel.
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Business Plan
The nationwide diamond trading market and gold trading market are
located in Shanghai, namely the Shanghai Diamond Exchange and
Shanghai Gold Exchange respectively.
Additionally, the exhibition held in inland China has become the best
place for the enterprises to learn about the newest jewelry information
home and abroad and to contact with relevant sellers. From the second
half year of 2008 to the first half year of 2009, following exhibitions
were hold:
Time
th
Exhibition
th
Place
9 -12 , Oct.
2008
International
of China
Luxury Exhibition
22nd-26th,
Oct. 2008
The Three News Exhibition of
China, 2008
Guangdong Zhongyuancheng International
Accessories Exchange Center, Changan,
Dongguan
25th-28th, Oct.
2008
Fuzhou
International
Exhibition, 2008
Fuzhou International Convention and
Exhibition Center
11th-15th,
Nov. 2008
China International Jewellery Fair,
2008
China International Exhibition Center,
Beijing
27th-30th,
Nov. 2008
China (Shanghai)International
Gold, Jewellery & Gem Fair
Shanghai Exhibition Center
19th-22nd,
Mar. 2009
Second Tianjing International
Jewelry Exhibition, 2009
Tianjin International Exhibition Center
Jewelry
International Convention and Exhibition
Center of Chongqing Nanping
Sales Policy
1. Target market and product positioning
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Business Plan
Product categories and quality standards supporting sustainable
development of each business are made in accordance with the resource
advantages of the company and demands of target market:
(1) High-class gem trade
Positioning on middle and high-class jewelry retail brand clients in the
first and second-tier cities, providing a full range of natural diamond,
middle and high-class pearls, ruby, sapphire, emerald and other rare
gems
(2) Finished product wholesale
Positioning on the jewelry retail brand clients in the first and second-tier
cities, operating the exhibition hall of finished product wholesale and
providing the finished product of jewelry including K gold with
diamond-inlaid as the main products and the middle and high-class K
gold inlaid with pearl, emerald and ruby sapphire comes the second.
(3) Finished product processing
Positioning on jewelry retail brand clients in the first and second-tier
cities, providing the material processing business of PT and K gold
jewelry inlaid with diamond, middle and high-class pearls, emerald,
ruby and sapphire.
(4) Complete solution service for distributors
Positioning on the chain retail brand markets of first and second-tier
cities, providing perfect integrated and customized services of jewelry
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Business Plan
products to clients, the services including product integration, product
concept development, style design, processing, manufacturing and
promotion, etc.
Positioning on the middle and small jewelry brands in the first and
second-tier cities, developing independently various series of products
and sale auxiliaries including display property, brochure, lamp sheets
used in sales terminal, hanging flag, print advertisement and other
normal sale auxiliaries.
(5) New jewelry retail
Expand jewelry retail in the first and second-tier cities. The products
include fashionable gold, 18K gold, PT gold and K gold inlaid with
diamond, K gold inlaid with high-class pearl, emerald, ruby and sapphire
products.
2. Sales target
The target at the present stage is enlarging market share and ensure
stable growth.
3. Price Policy
In comparison with other jewelry brands, our products are priced at the
bottom range for products of the same quality and type in the same price
scope to improve the competitiveness of product price. Meanwhile, the
source and price advantages of raw materials purchase and the all-in-one
mode of production and marketing simplify make human resource
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Business Plan
system simple and the circulation rate of goods faster, thus the
production and operation costs are lowered, by which the profit rate is
ensured.
4. Mode of Sales
We adopt the complex marketing mode of ―wholesale focusing on
insiders + sale focusing on retail market‖.
(1) Wholesale
Exploiting finished products retail in northern region markets.
After over 4-year operation, wholesale business already has stable
purchase channels and clients resource. According to the analytical data
of the market condition above, it is obvious that China’s jewelry market
has huge development space. At present, the jewelry enterprises mainly
spread in Guangdong province. The jewelry retailers in the northern
regions need to purchase or place order for production in the distributing
center in Guangdong due to the lack of local upstream suppliers, which
increases the operation cost and prolongs the development cycle of new
product. It is easy to be seen from this that there is huge market vacancy
in retail market of finished jewelry products in the northern regions.
With sustainable growth of domestic consuming capacity and the
increasing demand for high-class jewelry products of domestic
consumers, our company plans to establish finished products exhibition
hall Changchun, Heilongjiang in Oct., 2009 to meet the demands of the
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Business Plan
old clients in northern regions and exploit the northern market to
develop new client resource.
(2) Sales of retail market
Retail business.
Entity shop: based on the vacancy of high-class jewelry products in
wedding market, aiming at young consumers with higher consuming
capacity in the first and second-tier cities and different from other brands
featuring common modern fashion, our company positions the brand on
the one combined with love and concept of traditional Chinese culture.
Step one: our company plans to merge 51% or above of the equity of 10
retail shops of the jewelry brand ―Karlssa Fare‖ under Guangdong
Dageda Dress and Adornments Design Center Co., Ltd. in 2010 to
re-plan and re-build the image and enter the jewelry retail market by it.
Step two: taking the important city Shenzhen or Hangzhou as the base to
establish flagship store and then spreading to the market of the whole
region.
Step three: expanding chain business
Brand introduce: establishing the sub-brand taking love as the concept
when developing jewelry retail terminal and uniting the famous
enterprises related to wedding business in each region, such as
photographic studio and wedding company, where lovers who shall get
married is the main part of customers, they have strong consumption
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Business Plan
goal and capacity. Our company, by mode of brand introduce,
establishes brand shoppes in the stores to display the samples (silver
jewelry inlaid with imitation stone) and to provide ordering service or
customization service. This mode features low operation cost, obvious
objective and has the most direct promotion effect to target customer
group. As the landmark product, the sub-brand products are displayed in
each retail terminal for sale through shoppe.
Marketing experience: uniting the high-class chambers in the brand’s
location to hold salons related to jewelry culture and knowledge, by
which letting the customers experience the high-quality service provided
by this brand. Meanwhile, our company provides the service of
high-class products sale, customization and lease.
E-business: establishing product and information database and
strengthening the internal communication to effectively reduce the cost
and time of internal data exchange and information communication of
the company. Based on the brand popularity and reputation of the
finished product wholesale and entity stores, building interaction
community to develop E-business.
5. Sales target
Our anticipated sales target in the coming three years is shown as follows:
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Business Plan
Sales Plan over Three Years
Sales Volume (HKD 1×104)
6. Promotion plan
(1) Target
●For industry
Improve the clients’ recognition to our company’s new business, the
popularity and reputation within the industry and consolidating the
professional image of fine product manufacturer of our company.
●For retail market
Initial stage of promotion: establishing brand popularity and consumers’
recognition for brand connotation.
Middle stage of promotion: promoting sales.
(2) Advertisement promotion strategy
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Business Plan
●To cooperators of the industry, emphasizing the profession and credit
of company.
●To retail market: different from other company’s products emphasizing
the decoration value and signal value, the culture value of the product of
our company is expressed in the advertisement.
●Media application strategy:
Public fashion plane media
MD
(3) Plan of promotion activities
●To industry
Object: middle and high-class retail brands owning above 20 chain
stores within industry
Activity: the following two methods can be considered for the
promotion in off-season (June and July): one is labor expense discount
and the other is to increase discount of finished product.
●To retail
The following measures can be adopted:
A. Member benefit
B. Presenting
C. Promotion of low-price products
D. Discount
E. Exhibition
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Business Plan
F. Lottery
(4) Plan of public relation activities
The following activities are included:
A. Holding shareholder meeting periodically
B. Releasing the information of the company through media
C. Issuing the internal publication of the company
D. Holding employees’ sodality periodically
E. Uniting the social organization to hold love activities
F. Cooperate with media to hold activities of public relation
Supplier Presentation
The suppliers of company are in the leading position in the field of
diamond production and wholesale. For the jewelry industry, the trust
between people is usually more important than the name of a company.
Mr. Zhu Hongzhan, the general manager of the company engaged in
purchase work for many years in India, keeping good and stable
cooperative relationship with it, which provides reliable quality
guarantee for the raw materials of company. Following are the main
suppliers of our company:
1. J.B GROUP
J.B GROUP is one of the largest diamond manufacturers in India as well
as the world-famous diamond manufacturer, owning 13 diamond
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Business Plan
processing plants and 15,000 professional employees with annual output
of 600,000 carats. It is one of the DTC suppliers controlling 40% of
resources of diamond in the world as well as one of the main suppliers
of MAYINLAY.
2. Leeheng Diamond Co., Ltd.
Established in 1949, Leeheng Group is one of the largest diamond
wholesalers with the best goodwill in Hong Kong. Currently, Leeheng
Group has developed into a diamond comprehensive enterprise group
integrating diamond grinding, wholesale, jewelry production and retail.
The brand MaBelle under the group is the first chain store of diamond
jewelry carrying out clearly-marked prices, whose market position has
received the favorable comment of the general public and customers.
MaBelle owns approximately about 50 exclusive stores in Hong Kong
and about 40 shops in the Mainland China, which are developing rapidly.
MaBelle is the chain store of diamond jewelry with the most branch
stores, largest scale and widest network. In 2009, MAYINLAY and
Leeheng Diamond Co., Ltd. will start overall cooperation.
3. Kiran Exports
Kiran Exports is one of the largest diamond manufacturers in India as
well as one of the DTC suppliers controlling 40% of resources of rough
diamond in the world. The business volume of this company increases
by 40% annually, ranking the first place in the world in the field of
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Business Plan
production and trade of diamond below 50 points. It owns over 20,000
workers in India and over 3,500 stores spreading in the world, which
was awarded with the second only to the best diamond seller in the field
of diamond trade by Gem Jewelry Export Promotion Council in 2007
and is one of the most important suppliers of our company.
4. H. K. Impex
H. K. Impex is one of the largest diamond manufacturers in India, whose
sales volume from 2007 to 2008 is 2.5 billion USD dollars, mainly
purchasing the blank of rough diamond of mines beyond DTC control of
Russia and Canada and is one of the most important suppliers of
MAYINLAY.
Besides the large-scale diamond suppliers above, our company keeps
stable business contact with more than other 30 diamond suppliers,
which provides the stable resource of raw material for our company.
Presentation of Main Customers and Introduction to
Related Business
1. Presentation of main customers
Currently, all the main clients of the company are the famous jewelry
sellers in China, owning years' operation experience and good reputation
and providing many channels of distribution for the products of
company. The most important five clients are:
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Business Plan
Shanghai Laomiao Gold Co., Ltd.
Established in 1982, the predecessor of Shanghai Laomiao Gold Co., Ltd.
is ―Shanghai Old Town God's Temple Arts and Crafts Shop‖, which is
the first gold retail point in Shanghai after State Council approved
recovering the sale of gold. The company is the famous brand in China,
owning 62 chain stores and sales points, over 200 nationwide exclusive
shops and thousands of employees, which is one of the few large-scale
enterprises integrating commerce, industry, science and technology at
home.
Lao Fengxiang
Shanghai Lao Fengxiang Co. Ltd. was developed from Lao Fengxiang
jewelry store established in 1848. The originality of the trademark ―Lao
Fengxiang‖ comes from ―Lao Fengxiang Jewelry Store‖. Lao Fengxiang
Co., Ltd. is a larger-scale jewelry enterprise group, which integrates
scientific research, industry and trade, owning over 60 chain stores, over
300 exclusive stores and over 1000 sellers. The marketing network of
this company has covered 27 provinces, municipalities and autonomous
regions by setting up chain store, image shoppe, priority dealer,
franchised store and regional agent, etc., whereof there are over 40
chains stores spreading everywhere in Shanghai. Lao Fengxiang is the
famous brand in China, which is listed as ―Top 500 of Asian brands‖ and
―Top 100 of Global Jewelries‖.
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Business Plan
Hong Kong King Tai Fook Jewelry
Shenzhen King Tai Fook Jewelry Co., Ltd. under Hong Kong King
Taifook Jewelry (Group) Co., Ltd. owns over 30 self-run jewelry stores
in Guangdong and over 300 sales points in middle and large cities as
well as 200 chain stores with the coverage rate of product above 98%. In
2006, it was awarded with ―China Top Brand‖.
Batar Jewellry
Batar Jewelry is a larger-scale gold jewelry enterprise integrating
research and development, manufacturing, processing and sale, its
wholly-owned subsidiary—Shenzhen Jin Batar Jewelry Co., Ltd. mainly
develops jewelries. The company was awarded with ―Famous Brand of
China’s Jewelry Industry‖ in 2004 and ―Famous Brand Product‖ in
2005.
Zhenbrand Jewelry
―Zhenbrand Jewelry‖ Golden Jewelry Co., Ltd. was established in 1996.
Currently, the Zhenbrand jewelry with over 10 years’ history and
experience has become the famous brand in Guangdong and Chinese
market; it has over 100 chain stores nationwide.
Others
In the client resource of our company, there are over 200 well clients
keeping long-term cooperation relationship with our company.
2. Introduction to supporting service of product
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Business Plan
The company provides a series of high-quality services different from
other common companies to clients when selling the jewelry products.
When a new pattern enters the market, the company will tell the selling
point to clients. There are various kinds of services, from the printing of
brochure, design and innovation of product package and training of
employee’s product presentation to advertisement, which have greatly
reduced the cost of time in the middle step and strengthened
competitiveness for the products of company actually.
Evaluation of Marketing Benefit
Generally speaking, the management level of company owning rich
industry resources and sales dispatching system with real time
monitoring, which are the two trumps of marketing policies. The
industry resources of management level can bring the most excellent
price and quality as well as credit payment period with the longest
period for the step of raw material purchase, which makes the company
enjoy the unique advantages in the aspect of product cost and capital
turnover. The sales dispatching system with real time monitoring has not
only shortened the delivery time, but also the more importantly, it has
reflected the information of market consumption in different places of
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Business Plan
the country in time, through which the important information of
consumption demands, such as product pattern, price and product
services can be hold in time, which provides guarantee for the company
to send best-selling product, adjust unmarketable product and make
reasonable manufacturing policy timely. With the ―one head and one
tail‖ trumps from raw material source to consumption terminal as well as
the coordination of rational marketing policy and market plan, the
marketing goal of company can be made rationally and the predicted
goal can be realized with strong maneuverability for policy and plan.
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Business Plan
ⅢFinancial Documents
Overview of Capital Demand
1. Project investment
In order to develop the retail business, enlarge processing scale, intensify
product development and improve brand image of company, the
company will invest RMB30 million to purchase jewelry detail stores
and processing plants, develop finished product wholesale, making R&D
and update equipment.
3. Project financing
RMB30 million will be directly financed by transferring part of equity of
MAYINLAY Jewelry (Hong Kong) Co., Ltd. This is the first phase
financing of our company and the financial analysis takes the first phase
financing as premise without considering the factors of re-financing in
the future.
Report of Fund Use
Within the RMB30 million, RMB10 million is used for merging 51% or
above equity of 10 retail shops of jewelry brand ―Karlssa Fare‖ under
Guangdong Dageda Dress and Adornments Design Center Co., Ltd.,
RMB5 million is used for purchasing the seat of member of Shanghai
Diamond Exchange and a rough diamond processing plant, RMB5
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Business Plan
million is used for developing finished product wholesale, RMB6.5
million is used for the R&D and equipment upgrading and
RMB3.5million is used for factory extension, training and management
improvement. Following is plan of fund use chart:
Financial Plan
12%
32%
22%
17%
17%
Purchasing seat and rough
diamond processing plant
Product
R&D
and
equipment upgrading
Factory extension, training and management promotion
Purchasing retail stores
Wholesale of finished product
Supplementary specification of plan of fund use:
Project
Amount
Supplementary specification
Merging 10 retail
RMB10
Current scale: each store owns goods worth RMB1.5 million with the total
stores of Karlssa
million
value RMB15 million. (The payment is made in three periods. RMB5 million
Fare Jewelry
should be paid at the first period, the other two periods of payment shall be
made in 3-5 months. This method of payment is individually based on the
establishment of credit in jewelry industry). Current sales scale of retail store:
RMB3 million for each month (sales volume of 10 stores). The profit of each
retail store is about 30%.
These stores are positioned on terminal standard stores by our company, which
is the initial attempt to conduct retail business.
Purchasing seat and
RMB5
The profit of rough diamond processing is high and the quality of supplied
a rough diamond
million
diamond can be ensured, which is the strategic measure to stabilize the supply
processing plant
of raw material and improve the profit.
Finished product
RMB5
The delivery time of client can be shortened, winning best sales opportunity
wholesale
million
for clients, it is the important measure to strengthen the relationship between
clients and the company.
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Business Plan
Research and
RMB6.5
Including two parts: first, RMB4.2 million will be used for research and
development of
million
development of product, of which RMB1.5 million is used for R&D and
product and
RMB2.3 million is used for R&D equipments, two sets of Rapid Modeling
equipment
System Digital Wax 029 will be bought, and RMB0.4 million is used for the
upgrading
training of design personnel and equipment perfection. Second, RMB2.3
million is used for equipment upgrading, which is mainly used for purchasing
6 sets of CNC lathe WZX－350 CNC by the price of RMB316 thousand per
set. RMB0.3 million is used for stabilizing the output and quality of hi-tech
content. It is the attempt of machinery assembly line of company. The
investment on advanced machines will be increased in the future.
Factory extension,
RMB3.5
RMB1.5 million will be used for extending factory and strengthening the
training and
million
personnel allocation of plant to meet the demand of production environment
management
due to the constant development of business.RMB2 million will be used for
promotion
improving the management level, strengthening the training for all the
personnel and improving work efficiency to make full preparation for the
development in the later period.
Total amount
RMB30
million
Basic Assumption and Parameters of Financial Evaluation
1. Evaluation Basis
International Accounting Standards and current tax policies
2. Basic Data and Parameters Selection of Financial Evaluation
(1) Financial price: Financial Evaluation refers that make analysis for the
future benefit and expenses of the proposed project, and forecast price is
adopted. During the forecast calculation, the relative price change and
general price level change isn’t too great.
(2) Method for costing: The price used for costing in the financial
evaluation doesn’t include value-added tax, therefore, Financial
Evaluation Reports in this report are prepared among the price exclude
value-added tax.
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Business Plan
(3) Taxs and dues (current taxation type):
① Mayinlay (general taxpayer)
VAT (value-added tax): 2％of tax incidence;
Additional tax: 1％ (construction tax); the equity will change;
Sales tax: technology import/export;
Additional tax: 1％ (construction tax)
Consumption tax: 5％; collected when retail is conducted;
Additional tax: 1％ (construction tax)
Income tax: 18％
② Sufeiya (small scale)
VAT (value-added tax: 3％;
Additional tax: 1％ (construction tax); the equity will change;
Consumption tax: 5％;
Additional tax: 1％ (construction tax)
Income tax: 18％
(4) Operation expense: calculate and draw about 3% of the sales revenue.
(5) Sales expense: calculate and draw about 5% of the sales revenue.
(Including expenses of brand promotion, wages and commission for sales
of personnel)
(6) Calculation period of project: the calculation period of the financial
evaluation of this project is three years.
(7) Financial benchmark interest rate: set it to 15% by reference to the
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Business Plan
average benchmark interest of the recent years of this industry and the
risk factors of the project.
3. Related Instructions
(1) Money of account is $HK.
(2) For Financial Evaluation Reports, please see attached forms at the end
of the report.
(3) In the calculation, the displayed values of some total items may be
inconsistent with the accumulated sums of single values due to the
number of the reserved decimal digits; it doesn’t mean that there is error
in the calculation.
Analysis on Revenue and Cost Expenses of Retail Stores
According to the current operation level of the retail stores to be bought
and development planning of this company, it is forecasted that the sales
revenue per month for every retail store is $HK 0.6 million, and annual
revenue is $HK 7.2 million.
Expenditure patterns are shown in the following table:
Item
Jan.-Dec. (per month)
Total (year)
Rent (about 30% of sales)
180,000
2,160,000
Wages
26,000
312,000
Water and electricity
5,000
60,000
Publicity expense
6,000
72,000
Sponsoring expenses for shopping center
6,000
72,000
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Business Plan
Maintenance fee for site
Total
1,000
12,000
224,000
2,688,000
As data shown above, the expenses per month for an retail store is $HK
224,000 taking up 37% of the revenue, plus the cost-to-income ratio 45%
from retail business, and thus the net profit rate of the retail business is
about 18% , about 10 percents higher average cost-to-income ratio 8.4%
of the company. Therefore, the increase on the proportion of the revenue
from the retail business in the total revenue of the company will improve
the profit capability of the company further in the future.
Estimation on Three-Year Sales Revenue
According to the growth trend of sales revenue in recent years, following
conclusions about sales revenue after marketing scale expansion shall be
made:
Table of Sales Revenue Forecast (Unit: $HK)
Item
2009
2010
2011
Wholesale (diamond/colored
gem)
95,896,071
116,904,965
136,177,857
Retail
53,275,595
87,678,724
155,631,837
Processing wholesale
63,930,714
87,678,724
97,269,898
Total
213,102,381
292,262,413
389,079,591
During the forecast period of the project, according to the market
investigation and preparation, it is forecasted that the annual increase
rate for the sales revenue of the company is about 68%, and the annual
sales revenue in 2011 achieves $HK 380 million.
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Business Plan
Cost Estimation
Table of Operating Cost Forecast (Unit: $HK)
Item
2009
2010
2011
Wholesale (diamond/colored gem)
64,917,723
85,318,390
108,251,997
Including: diamond
44,902,666
71,613,596
86,867,986
20,015,057
13,704,794
21,384,011
Retail
30,831,413
47,703,574
79,910,421
Processing wholesale
59,816,257
78,489,069
92,099,226
Including: 18K gold inlaid ornaments
30,088,475
45,872,583
64,960,925
PT inlaid ornaments
18,836,669
16,308,243
18,092,201
Pure gold
10,891,113
16,308,243
9,046,100
155,565,393
211,511,033
280,261,644
Colored gem
Total
In terms of cost, with the development and accumulation of the brand
and reputation of the company, the cost-to-income ratio for retail
products reduces year by year; and that of the wholesale business of
diamond and color gem is in the medium part, the cost-to-income ratio
fluctuates from 75% to 80%; the cost-to-income ratio of processing
wholesale of the inlaid ornaments is high, which is over 90%, the
company will control the scale of this business properly, and transfer the
strategic center to the retail gradually.
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Business Plan
Prepare Financial Statements
1. Income Statement Forecast
Income Statement (Unit: $HK)
Item
2009
2010
2011
I. Operating revenue
213,102,380.69 292,262,412.78 389,079,591.31
Less: cost of main operation
155,565,392.66 211,511,032.58 280,261,644.08
Tax and additional expense
1,649,052.61
2,443,994.64
3,933,340.16
Sales expenses
8,247,927.64 10,956,270.81
13,213,830.61
Operating expenses
6,154,920.63
9,010,013.59
11,245,639.93
Financial expenses
-57,952.79
-76,780.26
-77,583.78
41,543,039.94 58,417,881.42
80,502,720.31
13,453,731.80
18,931,112.82
26,081,223.53
28,089,308.14 39,486,768.60
54,421,496.78
28,089,308.14 39,486,768.60
54,421,496.78
II. Total profit
Less: Income tax expenses
III. Net profit
Including: net profit that belongs
to the owner of the parent company
2. Cash Flow Statement Forecast
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Business Plan
Financial Cash Flow Statement (Unit: $HK)
Item
Line No.
Year 2009
Year 2010
Year 2011
I. Cash flow from operating activities:
203,271,836.38
279,145,985.28
385,438,442.89
8
32,518,877.58
8,010,384.75
13,398,023.51
9
235,790,713.96
287,156,370.03
398,836,466.40
Cash paid for commodities or labor
10
164,225,604.91
231,994,972.17
317,732,230.97
Cash paid to and for employees
12
9,784,263.94
11,268,432.48
13,895,642.26
Taxes and fees paid
13
18,363,538.27
23,422,627.96
32,984,402.94
Other cash paid related to operating activities
18
14,918,997.78
15,527,218.19
15,351,071.64
Cash outflow subtotal
20
207,292,404.90
282,213,250.80
379,963,347.81
21
28,498,309.06
4,943,119.23
18,873,118.59
29
-
-
-
30
126,970.70
Cash paid for investment
31
25,964,496.20
Other cash paid related to investing activities
35
Cash outflow subtotal
36
26,091,466.90
-
3,757,318.05
37
-26,091,466.90
-
-3,757,318.05
Cash received from accepting investment
38
3,000,000.00
Borrowings
40
Other cash received related to financing activities
43
3,000,000.00
-
-
-57,952.79
-76,780.26
-77,583.78
53
-57,952.79
-76,780.26
-77,583.78
Cash flow from financing activities net amount
54
3,057,952.79
76,780.26
77,583.78
IV. Foreign Currency Translation Gains (Losses):
55
-156,544.24
-3.39
V. Net increase of cash and cash equivalents:
56
5,308,250.71
5,019,896.10
Cash from selling commodities or offering labor
1
Refund of tax and fee received
3
Other cash received related to operating activities
Cash inflow subtotal
Cash flow generated from operating activities net amount
II. Cash flow from investing activities:
Cash from investment withdrawal
22
Cash from investment income
23
Net cash from disposing fixed assets, intangible assets
and other long-term assets
Other cash received related to investing activities
Cash inflow subtotal
Cash paid to buying fixed assets, intangible assets and
other long-term investment
Cash flow generated from investing activities net amount
25
28
3,757,318.05
III. Cash flow from financing activities:
Cash inflow subtotal
44
Cash paid for debt
45
Cash paid for dividend, profit or interest
46
Other cash paid related to financing activities
52
Cash outflow subtotal
81
15,193,384.32
Business Plan
Profitability Analysis
1. Related indexes calculation
Index
Calculated value
Profit ratio of investment
Note
81.33%
Accounting rate of return
26.67%
Average
value
of
three-year
calculation period of the project
13.56%
Average
value
of
three-year
calculation period of the project
Gross profit rate
Net profit rate
Investment payoff period
1.05 years
2. Profit-making Structure and Profitability Analysis
The revenue composition and profit composition of the company by
2013 are respectively shown as follows according to the development
planning of the company in combination with the market forecast:
Composition Figure of Sales Revenue
20%
30%
50%
Wholesale (diamond/color gem)
Retail
Processing wholesale
Composition Figure of Gross Profit
5%
20%
75%
Wholesale (diamond/color gem)
Retail
Processing wholesale
It is obvious that the profit of processing profit is low. At that time, our
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Business Plan
retail business will make the profit requiring the ratio of 75% with the
income at the ratio of 50%, which is an important reason for this
financing for merger and acquisition and further expansion of retail
business.
4. Comparison of main financial indexes with a listed company
Shenzhen Fuqi Jewelry Co., Ltd. is the first Chinese jewelry company
that is successfully listed on NASDAQ. Its head office is located in
Shenzhen. Its main business includes designing, producing, processing
and wholesaling PT and gold jewelry, which is operating in the mode
similar to ours. It was successfully listed on NASDAQ on October 23,
2007. We made a comparison of gross and net profit margins of this
project with those of Fuqi Jewelry as of Sep.30, 2008 (annual report not
issued yet) as follows:
Comparison of profitability
Mayinlay
Fuqi International
26.67%
13.56%
11.70%
7.00%
Gross profit rate
Net profit rate
This project has obvious advantages over Fuqi Jewelry in both gross and
net profit margins as shown in the above figure.
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Business Plan
Conclusion on Financial Evaluation
According to the analysis above, it is clear that the gross profit rate and
net profit rate of the project after being put into normal operation are
26.67% and 13.56% respectively, which has the obvious advantages
compared wiht the gross profit rate 12% and net profit rate 7% of the
listed company in the same industry, Fuqi Jewelry. Meanwhile, in the
three years, the total sales volume is up to $HK 894,444,384.78 and total
amount of net profit is up to $HK 121,997,573.52, average annual net
profit is $HK 24,399,514.70, and the investment payoff period is 1.05
years, which indicate the project has good profitability, short investment
payoff time and good investment value.
Above all, the indexes of this project, including gross profit rate, net
profit rate, return rate on investment and investment pay-back period,
are on excellent level. The related financial data and evaluation indexes
indicate that the project has strong profitability, and also has certain
ability against risk at the same time. Therefore, this project is proved to
be reasonable and feasible in the aspect of finance.
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