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We are principally engaged in the design, manufacture and sales of paper cigarette packages and to a lesser extent, other social product paper packages, in the PRC. Our principal operating subsidiary, Hubei Golden Three Gorges, has been established in the PRC for over two decades. Our history can be traced back to 2001 when our Chairman, Executive Director and Controlling Shareholder, Mr. Yang Yoong An, beneficially acquired a controlling stake in Hubei Golden Three Gorges. We have accumulated over 20 years of experience in the industry and established strong business relationships with our major customers.

According to the Euromonitor Report, our Group had a antenatal market share of approximately 1.5% in 2013.

We manufacture various types of paper cigarette packages for our customers, which can be broadly divided into (i) hard and soft cigarette packets; (ii) cigarette cartons; and (iii) gift sets designed to pack and carry various sets of cigarette packets. All of the sales of our paper cigarette packages are made to customers in the PRC.

During the Track Record Period, we manufactured paper cigarette packages for ten Provincial Tobacco Industrial Companies and five non-provincial companies from the China Tobacco Industry Development Center. For the years ended 31 December 2011, 2012 and 2013, sales from these 15 customers accounted for approximately 92.8%, 82.0% and 91.8% of our total revenue from the Continuing Operations respectively. Our Group supplied paper cigarette packages for 15 of the 30 Key Cigarette Brands designated by the State Tobacco Monopoly Administration of the PRC (STMA), including Pride (娇子), Haomao (好猫), Yunyan (云烟) and Yuxi (玉溪).

In addition, we also leveraged on our expertise in paper cigarette packages and commenced production of paper packages for drugs and medicines, liquor and alcoholic beverages, food and other social products in 2005. During the Track Record Period, our major customers of these social products included major brands such as Jing Brand (劲牌). We design and produce colour boxes, labels, gift sets and paper bags for our customers in different industries according to their specific product image design and package requirements.

Our Directors consider that we possess the following competitive strengths:

Committed to product design and technology development:

Our Group places strong emphasis on product design and technology development. Instead of positioning ourselves as a mere manufacturer of paper cigarette packages, it is always our strategy to strive to be technically competitive by equipping ourselves with our own design and other research and development capabilities. Hubei Golden Three Gorges was recognized as a High Technology Enterprise by the Science and Technology Department of Hubei Province, Department of Finance of Hubei Province, Hubei Provincial Office and Hubei Local Taxation Bureau in 2009 and 2012. We have professional and experienced technical personnel, who are committed to brand research, creative planning, brand design and new package design and promotion of new products, new technology and new skills. We also possess product design, technology, research and development capability. In terms of product design, our designs have been approved and adopted for commercial production by various customers, including subbrands of Pride (娇子), Haomao (好猫), Houwang (猴王), Huangjinye (黄金叶) and Golden Bridge (金桥). Our design capability is also well recognised by other public bodies. A sub-brand of Yuxi (玉溪) and Haomao (好猫) were awarded the "Golden Award of the Top 10 Cigarette Packages in China" in 2006 and 2008 respectively. In regards to technology, research and development, our technology center has been awarded by Hubei Provincial Development and Reform Commission, Hubei Provincial Financial Service, Hubei Local Taxation Bureau and Wuhan Customs to be the Provincial Technology Center of Hubei Province since November 2006. To date, we have registered eleven utility patents, eight design patents and two invention patents; other three invention patents are in the process of application. Our production technology and know-how have been successfully adopted in our production line and have strengthened our competitiveness.

Possess the essential comprehensive capabilities for tendering purpose:

The cigarette industry in the PRC was subject to major restructuring since 2011, pursuant to which the tendering system, amongst other measures, was incorporated. In considering a tender, the customer will not only consider the price but also other factors under the scoring system of the tendering regime. While the tendering system has intensified competition within the industry, we believe we have successfully turned this into opportunities. Our revenue from paper cigarette packages during the Track Record Period has been growing steadily and we recorded revenue of RMB411.5 million, RMB411.4 million and RMB469.5 million the years ended 31 December 2011, 2012 and 2013, respectively, representing an increase by 14.1% from 2012 to 2013. We believe our possession of such capabilities is mainly attributable to our leading position in the industry, commitment to product design and technology development, maintenance of a strict and effective quality control system and investment in a wide range of equipment and machinery imported from overseas manufacturers.

We are an approved paper cigarette package supplier of key cigarette brands in the PRC:

The PRC cigarette industry is highly regulated. As a result of industry consolidation, only 26 cigarette manufacturers remain in China since 2010, 16 of which are Provincial Tobacco Industrial Companies and nine are non-provincial companies from the China Tobacco Industry Development Center and one tobacco corporation, Shanghai Tobacco. To date, ten of the 16 Provincial Tobacco Industrial Companies were our customers. Five out of the nine non-provincial companies from the China Tobacco Industry Development Center were also our customers. For the years ended 31 December 2011, 2012 and 2013, sales from these 15 customers accounted for approximately 92.8%, 82.0% and 91.8% of our total revenue respectively.

As a result of the efforts of our senior management and sales and marketing staff, we have been recognized as an approved supplier to, and have developed long-term relationships with, these 15 customers. In particular, our Group has supplied paper cigarette packages to China Tobacco Chuanyu, our largest customer for the year ended 31 December 2013 and which manufactures the Pride (娇子) brand, for more than ten years. Our Group has also supplied cigarette packages to China Tobacco Yunnan, which manufactures the Yuxi (玉溪), Hongtashan (红塔山), Yunyan (云烟) and Honghe (红河) brand cigarettes, for over seven years. Our Directors believe that these long-term relationships play an important role under the existing tendering system and secure a stable customer network and revenue source. Our Directors believe these long-term relationship are crucial to the long-term business development and success of our Group.

In 2008, the State Tobacco Monopoly Administration of the PRC(STMA)identified the 30 Key Cigarette Brands. During the Track Record Period, our Group supplied paper cigarette packages for 15 of the 30 Key Cigarette Brands, including Yunyan (云烟), Yuxi (玉溪), Hongtashan (红塔山), Honghe (红河), Baisha (白沙), Septwolves (七匹狼), Golden Bridge (金桥), Pride (娇子), Taishan (泰山), Huanggoshu (黄果树), Haomao (好猫), Diamond (钻石), Huanghelou (黄鹤楼), Shuangxi (双喜) and Double Happiness (红双喜). Our Directors believe that as an approved supplier to these key cigarette brands, we are well-positioned to enjoy continued customer loyalty and consistent growth going forward.

We have an experienced and capable management team and operating staff with in-depth knowledge in the paper cigarette package industry:

We have an experienced and capable management team and operating staff with in-depth knowledge of the PRC paper cigarette packages industry. In additional to their in-depth industry knowledge, our management team also maintains good relationships with our customers and suppliers. In particular, Mr. Yang Yoong An, our Chairman and Executive Director, has been engaged in the paper cigarette packages industry for over 13 years. Mr. Feng Bin, Chief Executive Officer and Executive Director, also has more than 13 years of experience in the paper cigarette packages industry. Our Directors believe that our management team possesses the operational and product development experience required to lead our growth. The other key management members have been stable and possess highly relevant experience and expertise required within their department. In particular, Ms. Song, the Deputy General Manager of Hubei Golden Three Gorges, has over 13 years of experience in the design, printing and packaging industry. Mr. Yu, our production director of Hubei Golden Three Gorges, has over 20 years of experience in production management in the industry. Our Directors are confident that our Group will be able to keep abreast of the changing industry landscape and demands of our customers, thus allowing us to be competitive in the paper cigarette packaging market in the PRC.