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The Group is principally engaged in wholesale of home furniture, and retail of home furniture.
During the year under review, the Group continued to enhance product management to ensure it was producing the right products for each market segment. The Group instructed its sales team to study the furniture market and the impacts of the recent financial crisis on the Chinese economy to provide relevant reference for the Group to design products to suit market needs in the coming years. During the year, the Group offered seven products series including Light Walnut, Black Walnut, Sabili, Olympic Home, etc. which brought in stable revenues.
During the year, the sales team and product development team worked closely and commenced development of a new product series - "Beech" - to offer yet another choice of quality and value-for-money furniture to customers apart from the Olympic Home series. This new series is scheduled to launch formally in mid-2009.
During the year under review, the Group decided to merge two production bases into one at its Guangzhou headquarters to increase production efficiency and hence reduce production costs. In addition, the Group also carried out stringent cost control to enhance profitability. To encourage better performance among employees and efforts to heighten work efficiency, the Group raised the performance targets of the workforce and different operational units. It also continued to improve the logistics system to shorten the production lead time.
As at the end of 2008, the Group had over 1,400 franchise outlets (2007: 1,300 outlets) spanning across China and operated around 100 self-operating shops (2007: over 100 shops) in Beijing, Shanghai, Shenzhen, Hangzhou and Zhengzhou. The economic downturn which started in the second half year created pressure on the business of the Group in the traditional peak season. To boost sales performance during the period, the Group offered a variety of discount packages to stimulate sales for franchisees and its self-operating shops. To cope with changing market conditions, we exercised prudence in network management and placed emphasis on "quality" instead of "quantity" in pursuing expansion of our sales network.
Completion of Olympic Project
During the year, the Group completed the "Olympic Project" - exclusive supply of home furniture to the Beijing 2008 Olympic Games. The Group had received zero complaint against its furniture, evidencing its ability in designing and manufacturing high quality, comfortable and environmentally-friendly furniture. The experience has strengthened its foundation and confidence in bidding for big orders and participating in major projects.
In early 2008, the Group was named one of the "Top Ten Influential Brand of Chinese Furniture Industry" and the "Top 500 Chinese Brand". These titles represented recognition of the Group's tremendous efforts in promotion and marketing activities and brand building efforts that have notably enhanced its brand to the benefit of its business in the long run.