ANTA Sports Products Limited

361 Pages·2007·4.57 MB·English

IMPORTANT
Ifyouareinanydoubtaboutthisprospectus,youshouldconsultyourstockbroker,bankmanager,solicitor,professionalaccountantorotherprofessional
advisers.
ANTA Sports Products Limited
(Incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the Global : 600,000,000 Shares (subject to
Offering adjustment and the Over-allotment Option)
Number of Hong Kong Offer Shares : 60,000,000 Shares (subject to
adjustment)
Number of International Placing Shares : 540,000,000 Shares (subject to
adjustment and the Over-allotment Option)
Maximum offer price : HK$5.28 per Hong Kong Offer Share plus
brokerage of 1%, SFC transaction levy of
0.004% and Stock Exchange trading fee of
0.005% (payable in full on application in
Hong Kong dollars and subject to refund)
Nominal value : HK$0.10 per Share
Stock code : 2020
Sole Global Coordinator, Bookrunner, Sponsor and Lead Manager
TheStockExchangeofHongKongLimitedandtheHongKongSecuritiesClearingCompanyLimitedtakenoresponsibilityforthecontentsofthis
prospectus,makenorepresentationastoitsaccuracyorcompletenessandexpresslydisclaimanyliabilitywhatsoeverforanylosshowsoeverarising
fromorinrelianceuponthewholeoranypartofthecontentsofthisprospectus.
A copy of this prospectus, having attached thereto the documents specified in the section headed ‘‘Documents Delivered to the Registrar of
Companies’’inAppendixVIItothisprospectus,hasbeenregisteredbytheRegistrarofCompaniesinHongKongasrequiredbySection342Cofthe
CompaniesOrdinance(Chapter32oftheLawsofHongKong).TheSecuritiesandFuturesCommissionofHongKongandtheRegistrarofCompanies
inHongKongtakenoresponsibilityastothecontentsofthisprospectusoranyotherdocumentsreferredtoabove.
TheOfferPriceisexpectedtobedeterminedbyagreementbetweentheGlobalCoordinator(onbehalfoftheUnderwriters)andusonorbeforeJune
30,2007orsuchlaterdateasmaybeagreedbyusandtheGlobalCoordinator,butinanyeventnotlaterthanJuly5,2007.TheOfferPricewillbe
not more than HK$5.28 per Offer Share and is currently expected to be not less than HK$4.28 per Offer Share unless otherwise announced.
InvestorsapplyingfortheHongKongOfferSharesmustpay,onapplication,themaximumofferpriceofHK$5.28foreachOfferSharetogetherwith
abrokerageof1.0%,anSFCtransactionlevyof0.004%andaStockExchangetradingfeeof0.005%,subjecttorefundiftheOfferPriceislower
thanHK$5.28.
TheGlobalCoordinator(onbehalfoftheUnderwriters),withourconsent,mayreducetheindicativeofferpricerangestatedinthisprospectusand/or
reduce the number of Offer Shares being offered pursuant to the Global Offering at any time prior to the morning of the last day for lodging
applicationsundertheHongKongPublicOffer.Insuchacase,anoticeofthereductionoftheindicativeofferpricerangewillbepublishedinthe
SouthChinaMorningPost(inEnglish)andtheHongKongEconomicTimes(inChinese)notlaterthanthemorningofthelastdayforlodging
applicationsundertheHongKongPublicOffer.IfapplicationsforHongKongOfferShareshavebeensubmittedpriortothedaywhichisthelastday
forlodgingapplicationsundertheHongKongPublicOffer,theneveniftheindicativeofferpriceand/orthenumberofOfferSharesissoreduced,
suchapplicationscannotsubsequentlybewithdrawn.
If,foranyreason,theOfferPriceisnotagreedbetweenusandtheGlobalCoordinator(onbehalfoftheUnderwriters)onorbeforeJuly5,2007,the
GlobalOfferingwillnotproceedandwilllapse.
TheOfferShareshavenotbeenandwillnotberegisteredundertheU.S.SecuritiesActoranystatesecuritieslawintheUnitedStatesandmaynotbe
offered,sold,pledgedortransferredwithintheUnitedStates,exceptthatOfferSharesmaybeoffered,soldordeliveredtoQIBsinrelianceonan
exemptionfromregistrationundertheU.S.SecuritiesActprovidedby,andinaccordancewiththerestrictionsof,Rule144Aoranotherexemption
fromtheregistrationrequirementsoftheU.S.SecuritiesAct.TheOfferSharesarebeingsoldoutsidetheUnitedStatesinoffshoretransactionsin
accordancewithRule903or904ofRegulationS.
Priortomakinganinvestmentdecision,prospectiveinvestorsshouldconsidercarefullyalloftheinformationsetoutinthisprospectus,includingthe
riskfactorssetoutinthesectionheaded‘‘RiskFactors’’inthisprospectus.
PursuanttocertainprovisionscontainedintheUnderwritingAgreementsinrespectoftheOfferShares,theGlobalCoordinator,onbehalfofthe
Underwriters,has the right in certain circumstances,subject to the sole opinion of the Global Coordinator,to terminate the obligations of the
UnderwriterspursuanttotheUnderwritingAgreementsatanytimepriorto8:00a.m.(HongKongtime)onthedayonwhichdealingsintheShares
firstcommenceonTheStockExchangeofHongKongLimited.Furtherdetailsofthetermsofsuchprovisionsaresetoutinthesectionheaded
‘‘Underwriting’’inthisprospectus.Itisimportantthatyourefertothatsectionforfurtherdetails.
June 26, 2007
EXPECTED TIMETABLE(1)
Application lists open(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:45 a.m. on Friday, June 29, 2007
Latest time for lodging WHITE
and YELLOW Application Forms . . . . . . . . . . . . . . . . . . . . . 12:00 noon on Friday, June 29, 2007
Latest time for giving electronic application instructions
to HKSCC(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on Friday, June 29, 2007
Application lists close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on Friday, June 29, 2007
Expected Price Determination Date(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Saturday, June 30, 2007
Announcement of the Offer Price, the level of indication of interest in the
International Placing, level of applications in the Hong Kong Public Offer
and basis of allotment of the Hong Kong Offer Shares under the
Hong Kong Public Offer to be published in the South China Morning Post
(in English) and the Hong Kong Economic Times (in Chinese) and on our
Company’s website at www.anta.com and the website of the
Stock Exchange at www.hkex.com.hk on . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, July 9, 2007
Results of applications and Hong Kong identity card/passport/Hong Kong business
registration numbers of successful applicants under the Hong Kong Public Offer to
be available through a variety of channels as described in the
section headed ‘‘How to Apply for the Hong Kong Offer Shares
— Publication of Results’’ including the Company’s website at www.anta.com
and the website of the Stock Exchange at www.hkex.com.hk from . . . . . . . . . Monday, July 9, 2007
Dispatch of share certificates on(5) & (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, July 9, 2007
Dispatch of refund cheques on(6) & (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, July 9, 2007
Dealings in Shares on the Stock Exchange to commence on . . . . . . . . . . . . . . Tuesday, July 10, 2007
Notes:
(1) AlltimesrefertoHongKonglocaltime.
(2) Ifthereisa‘‘black’’rainstormwarningoratropicalcyclonewarningsignalnumber8oraboveinforceinHongKongatany
timebetween9:00a.m.and12:00noononFriday,June29,2007,theapplicationlistswillnotopenorcloseonthatday.Please
refer to the section headed ‘‘How to Apply for the Hong Kong Offer Shares — Effect of bad weather on the opening of the
applicationlists’’inthisprospectus.
IftheapplicationlistsdonotopenandcloseonFriday,June29,2007,thedatesmentionedinthissectionheaded‘‘Expected
Timetable’’maybeaffected.Wewillmakeapressannouncementinsuchevent.
(3) ApplicantswhoapplyfortheHongKongOfferSharesbygivingelectronicapplicationinstructionstoHKSCCshouldreferto
thesectionheaded‘‘HowtoApplyfortheHongKongOfferShares—Applyingbygivingelectronicapplicationinstructionsto
HKSCC’’inthisprospectus.
(4) The Price Determination Date, being the date on which the Offer Price is to be determined, is expected to be on or about
Saturday,June30,2007and,inanyevent,notlaterthanThursday,July5,2007.If,foranyreason,theOfferPriceisnotagreed
between the Global Coordinator (on behalf of the Underwriters) and us by Thursday, July 5, 2007, the Global Offering
(includingtheHongKongPublicOffer)willnotproceedandwilllapse.
— i —
EXPECTED TIMETABLE(1)
(5) Share certificates for the Offer Shares will only become valid certificates of title at 8:00 a.m. on Tuesday, July 10, 2007
providedthat(i)theGlobalOfferinghasbecomeunconditionalinallrespectsand(ii)theUnderwritingAgreementshavenot
been terminated in accordance with their terms. If the Global Offering does not become unconditional or the Underwriting
Agreementsareterminatedinaccordancewiththeirterms,wewillmakeanannouncementassoonaspossible.
(6) Refund cheques will be issued in respect of wholly or partially unsuccessful applications pursuant to the Hong Kong Public
OfferandalsoinrespectofwhollyorpartiallysuccessfulapplicationsintheeventthatthefinalOfferPriceislessthantheprice
payableperOfferShareonapplication.Partoftheapplicant’sHongKongidentitycardnumberorpassportnumber,or,ifthe
application is made by joint applicants, part of the Hong Kong identity card number or passport number of the first-named
applicant,providedbytheapplicant(s)maybeprintedontherefundcheque,ifany.Suchdatawouldalsobetransferredtoa
thirdpartyfor refundpurpose.Banksmayrequire verificationof an applicant’sHong Kongidentitycardnumberor passport
numberbeforecashingtherefundcheque.Inaccuratecompletionofanapplicant’sHongKongidentitycardnumberorpassport
numbermayleadtodelayinencashmentoformayinvalidatetherefundcheque.
(7) ApplicantswhohaveappliedonWHITEApplicationFormsfor 1,000,000or more HongKongOfferSharesunderthe Hong
Kong Public Offer and have indicated in their Application Forms that they wish to collect any refund cheques and share
certificates in person, may do so from our Hong Kong branch share registrar, Computershare Hong Kong Investor Services
Limited,atShops1712–1716,17thFloor,HopewellCentre,183Queen’sRoadEast,Wanchai,HongKongbetween9:00a.m.to
1:00p.m.onMonday,July9,2007.Applicantsbeingindividualswhooptforpersonalcollectionmustnotauthorizeanyother
persontomakecollectionontheir behalf.Applicantsbeingcorporationswhooptfor personalcollectionmustattendbytheir
authorized representatives bearing letters of authorization from their corporation stamped with the corporation’s chop. Both
individuals and representatives of corporations must produce, at the time of collection, identification and (where applicable)
documentsacceptabletoComputershareHongKongInvestorServicesLimitedatthetimeofcollection.Applicantswhohave
appliedonYELLOWApplicationFormsfor1,000,000or moreHongKongOfferSharesunder theHongKongPublic Offer
maycollecttheirrefundcheques,ifany,inpersonbutmaynotelecttocollecttheirsharecertificateswhichwillbedeposited
intoCCASSforthecreditoftheirdesignatedCCASSparticipants’stockaccountsorCCASSinvestorparticipantstockaccounts,
as appropriate. The procedures for collection of refund cheques for YELLOW Application Form applicants are the same as
those for WHITE Application Form applicants. Applicants who apply for Hong Kong Offer Shares by giving electronic
application instructions to HKSCC should refer to the paragraph headed ‘‘Applying by giving electronic application
instructions to HKSCC’’ under the section headed ‘‘How to Apply for the Hong Kong Offer Shares’’ in this prospectus for
details.Uncollectedsharecertificates(ifapplicable)andrefundcheques(ifapplicable)willbedispatchedbyordinarypostatthe
applicants’ownrisktotheaddressesspecifiedintherelevantApplicationForms.Furtherinformationissetoutinthesection
headed‘‘HowtoApplyfortheHongKongOfferShares—Dispatch/Collectionofsharecertificatesandrefundcheques’’inthis
prospectus.
Particulars of the structure of the Global Offering, including the conditions thereto, are set out in the
section headed ‘‘Structure and Conditions of the Global Offering’’ in this prospectus.
— ii —
CONTENTS
IMPORTANT NOTICE TO INVESTORS
ThisprospectusisissuedbyANTASportsProductsLimitedsolelyinconnectionwiththeHong
Kong Public Offer and does not constitute an offer to sell or a solicitation of an offer to buy any
security other than the Hong Kong Offer Shares offered by this prospectus pursuant to the Hong
Kong Public Offer. This prospectus may not be used for the purpose of, and does not constitute, an
offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken
to permit a public offering of the Offer Shares or the distribution of this prospectus in any
jurisdiction other than Hong Kong.
You should rely only on the information contained in this prospectus and the Application
Forms to make your investment decision. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. Any information or
representation not made in this prospectus must not be relied on by you as having been authorized
by us, the Sponsor, the Global Coordinator, any of the Underwriters, any of their respective
directors, or any other person involved in the Global Offering.
Page
Expected Timetable ................................................................ i
Summary .......................................................................... 1
Definitions ......................................................................... 15
Risk Factors ....................................................................... 24
Waivers from Compliance with the Listing Rules ...................................... 40
Information about this Prospectus and the Global Offering ............................. 42
Directors and Parties Involved in the Global Offering ................................. 46
Corporate Information ............................................................. 49
Industry Overview ................................................................. 51
History and Corporate Structure .................................................... 58
Business ........................................................................... 67
Overview ..................................................................... 67
Our Strengths .................................................................. 68
Business Strategies ............................................................. 70
Our ANTA Business Model ...................................................... 72
ANTA Brand and Products ...................................................... 72
Production .................................................................... 74
— iii —
CONTENTS
Page
Sales and Distribution of ANTA Products .......................................... 80
Inventory Control .............................................................. 96
Research and Development ...................................................... 97
Quality Control ................................................................ 99
Retail Business ................................................................ 100
Competition ................................................................... 102
Employees .................................................................... 103
Director and Staff Remuneration ................................................. 103
Properties and Facilities ......................................................... 104
Intellectual Property Rights ...................................................... 106
Environmental and Safety Matters ................................................ 107
Insurance ..................................................................... 109
Legal Compliance and Proceedings ............................................... 109
Government Regulations ........................................................ 110
Relationship with Controlling Shareholders ........................................... 112
Connected Transactions ............................................................. 117
Directors, Senior Management and Staff ............................................. 126
Substantial Shareholders ............................................................ 132
Share Capital ...................................................................... 134
Financial Information .............................................................. 137
Future Plans and Use of Proceeds ................................................... 175
Underwriting ...................................................................... 177
Structure and Conditions of the Global Offering ...................................... 184
Corporate Investor ................................................................. 190
How to Apply for the Hong Kong Offer Shares ....................................... 191
— iv —
CONTENTS
Page
Appendices
Appendix I: — Accountants’ Report ............................................ I-1
Appendix II: — Unaudited Pro Forma Financial Information ...................... II-1
Appendix III: — Profit Forecast ................................................. III-1
Appendix IV: — Property Valuation .............................................. IV-1
Appendix V: — Summary of the Constitution of Our Company
and Cayman Islands Companies Law ........................... V-1
Appendix VI: — Statutory and General Information ............................... VI-1
Appendix VII: — Documents Delivered to the Registrar of Companies
and Available for Inspection ................................... VII-1
— v —
SUMMARY
Thissummaryaimstogiveyouanoverviewoftheinformationcontainedinthisprospectus.Sinceit
is a summary, it does not contain all the information that may be important to you. You should read the
prospectus in its entirety before you decide to invest in the Offer Shares.
There are risks associated with any investment. Some of the particular risks in investing in the
Offer Shares are set out in the section headed ‘‘Risk Factors’’ of this prospectus. You should read that
section carefully before you decide to invest in the Offer Shares.
OVERVIEW
We are one of the leading branded sports footwear enterprises in the PRC. We primarily design,
develop, manufacture and market sportswear, including sports footwear and apparel for professionals and
the general public under our ANTA brand. We also design, market and sell accessory products under the
same brand. We sell our ANTA products on a wholesale basis to our distributors who are responsible for
distribution to authorized ANTA retail outlets which sell our ANTA products to consumers in the PRC.
We place great emphasis on brand building and promote ANTA products through advertisements in
the press and television media, sponsorship of PRC sports competitions, national leagues such as the
Chinese Basketball Association, and athletes, and various other promotional activities. In 2002, the
Trademark Office of the State Administration for Industry and Commerce of the PRC
( ) named our ANTA trademark as applied to our sports footwear as
one of ‘‘China’s Well-Known Trademarks’’ ( ).
Our ANTA products are manufactured through a combination of internal and external production,
which we believe is cost-effective and offers us greater flexibility to adjust our production schedules and to
meet unforeseen demand. During the Track Record Period, we produced the majority of our footwear
productsatourproductionfacilitiesinJinjiang,Fujian,whiletheremainderofourfootwearproductsandall
of our apparel and accessory products were outsourced to contract manufacturers. We commenced our own
production of a proportion of our apparel products in 2007.
We believe that our ANTA products have high levels of performance and customer appeal. Each year
weintroducefourdistinctseasonalproductcollectionsdesignedtomeetconsumertastesandfashiontrends.
We conduct research and developmentand cooperate with external scientific and educationalinstitutions to
further enhance the technological content of our ANTA products. We have obtained patents for footwear
technologiesincluding,amongothers,our‘‘Magnetic-Core’’shockabsorptiontechnology.DuringtheTrack
Record Period, we recorded no sales returns to us, which we believe is attributable to our commitment to
product quality.
Pursuant to our wholesale business model, we do not sell our ANTA products directly to consumers
but rely on our distributors to distribute our products to authorized ANTA retail outlets which sell our
products to consumers in the PRC. Our Directors believe that our wholesale business model is a common
business model in the sportswear industry in the PRC and has enabled us to achieve growth in sales by
leveraging economies of scale from our distributorship arrangements.
As at December 31, 2004, 2005 and 2006 and March 31, 2007, we had 12, 28, 35 and 37 distributors,
respectively. Almost half of the 35 distributors as at December 31, 2006 have had business relationships
with us for more than two years. In addition, during the Track Record Period, we also sold some of our
ANTA products directly to department stores and sole proprietors. However, since January 2007, all such
sales have been made to our distributors.
— 1 —
SUMMARY
We enter into distributorship agreements with each of our distributors to distribute exclusively our
ANTAproductsforatermofoneyearwhichisrenewableatourdiscretion.Suchdistributorshipagreements
are normally entered into at the end of the preceding year and contain substantially the same terms for the
distributors except for the sales and expansion targets and payment and credit terms.
These distributorship agreements include the following principal terms:
. Geographic exclusivity — pursuant to our distributorship agreements, the distributors are
authorized to sell exclusively our products under the ANTA brand name within a defined
geographical area.
. Sales and expansion targets — since January 2007, our distributorship agreements specify sales
and expansion targets for the number of new authorized ANTA retail outlets the distributors are
required to open during the year. All of our distributors are required to meet such individual
sales and expansion targets. We negotiate and agree the annual sales and expansion targets with
our distributors. No minimum purchase amount is stipulated in such distributorship agreements.
. Payment and credit terms — the distributorship agreements include the payment and credit
terms agreed with the distributors, determined on a case-by-case basis.
. Undertakings — the distributorship agreements contain undertakings by the distributors to
complywithoursalespolicies,adheretoourpricingpolicies,andrefrainfromsellingcompeting
brands of sportswear, including footwear, apparel and accessories.
. Sales reports and estimates — pursuant to the terms of the distributorship agreements, our
distributors are required to provide monthly sales reports and quarterly sales estimates to us.
WesellourANTAproductstoourdistributorsatawholesaleprice,whichrepresentsadiscounttothe
suggested retail price of our ANTA products. Save for such discount and subsidies and training mentioned
below, we do not offer any sales incentives to our distributors and no fees were payable by our distributors
to us or by us to our distributors under the terms of the distributorship agreements.
Our distributors manage local networks of authorized ANTA retail outlets, which they either directly
operate themselves or appoint third party retail outlet operators to manage, subject to our approval. We do
not own or operate any of these authorized ANTA retail outlets and do not enter into any contractual
relationship with the third party retail outlet operators appointed by our distributors. These authorized
ANTA retail outlets operate under the ANTA brand name with a uniform store layout and sell exclusively
ourANTAproducts.Weprovideretailpoliciesandguidelinesaswellastrainingtoourdistributorstoassist
them in the management of their ANTA retail networks. Our distributors directly operated or indirectly
managed an aggregate of 4,108 authorized ANTA retail outlets as at December 31, 2006 and had increased
this number to 4,217 as at March 31, 2007.
— 2 —
SUMMARY
The following chart illustrates the structure of the ANTA sales network for our ANTA products:
OurGroup
Distributors
Management
ThirdPartyRetailOutletOperators Directoperation
AuthorizedANTAretailoutlets
The criteria we consider when approving the appointment of third party retail outlet operators by our
distributors include whether the operator:
. has experience in retailing sportswear;
. has the ability to meet our sales targets;
. has adequate operating capital to operate an authorized ANTA retail outlet; and
. has a suitable store location and size.
Retail outlet operators are not required to meet any minimum number of years of experience in retail
business.
Such third party retail outlet operators appointed by our distributors enter into annual contracts with
our distributors. Our distributors are responsible for supervising and managing the third party retail outlet
operators’retailingactivitiesaccordingtoourretailpoliciesandguidelines.Since2007,ourdistributorsare
required to sign substantially the same form of agreement provided by us with the third party retail outlet
operators appointed by them. Any change to the principal terms of this agreement must be approved by us.
The agreement entered into between our distributors and the third party retail outlet operators provides,
among others, that such agreement would automatically terminate if that distributor’s distributorship
agreement with us is terminated.
Our distributors and third party retail outlet operators appointed by them are subject to retail policies
governing sales and expansion targets, product pricing, stock management, store layout, promotion,
customer service and after-sale service standards which we provide to our distributors. Pursuant to such
policies and the terms of the agreements that the third party retail outlet operators enter into with our
distributors, they are prohibited from selling any products other than our ANTA products in the authorized
ANTA retail outlets and are required to adhere to our guidelines in the use of ANTA brand materials, store
layoutandproductdisplay.Werelyonourdistributorstoimplementandenforcesuchretailpoliciesanddo
not have any direct redress against third party retail outlet operators in the event of any breach of such
policies or agreement. However, it is our policy that if any of our distributors consistently fails to cause the
third party retail outlet operators engaged by it to comply with our policies and guidelines, or fails to take
— 3 —
SUMMARY
necessary steps to cause such operators to remedy any breach or terminate its contract with such operators,
we may choose not to renew our distributorship agreement with that distributor. See ‘‘Risk Factors — We
rely on third party distributors and the retail outlet operators appointed by them for the sales of our ANTA
products and any failure by us to maintain good relationships with the distributors or failure by them to
ensure that such third party retail outlet operators adhere to our retail policies may adversely affect our
business.’’ Some of the authorized ANTA retail outlet operators may also own and operate other stores or
retail outlets in addition to the authorized ANTA retail outlets operated by them.
We plan to selectively establish and operate ANTA flagship stores in prime commercial locations in
major cities in the PRC for brand building purposes, with three to four flagship stores planned to open in
2007. These ANTA flagship stores will be significantly larger than existing authorized ANTA retail outlets
andareintendedtoshowcaseourlatestANTAproductranges,enhanceourbrandprofileinthelocalmarket
and give us a platform to test marketing initiatives and gain direct access to consumer feedback.
To leverage our strong marketing resources and our experience in the sportswear market in China, we
have entered into retailagreementswithAdidas (Suzhou)andAdidas(China)to retailsportinggoodsunder
the adidas and Reebok brands, respectively, in China. We have also signed a re-distributorship agreement
withDongzhijie,anauthorizedsub-distributoroftheKappabrandinChina,tosellsportinggoodsunderthe
Kappa brand in Shanghai. As at April 30, 2007, we operated and managed 13 retail outlets selling adidas
branded products, 15 retail outlets selling Reebok branded products and 12 retail outlets selling Kappa
branded products.
Our turnover grew by approximately 301.3% from 2004 to 2006 which we believe is a result of our
broad range of high quality products, the extensive ANTA sales network and our strong marketing and
manufacturing capabilities.
OUR STRENGTHS
We believe that our competitive strengths have positioned us well to capitalize on the increasing
spending power of consumers in the PRC. We believe that our competitive strengths include:
. Well-established and market-leading brand position
. Extensive network of third party distributors which manage nationwide retail outlets
. Vertically integrated business model with strong manufacturing capabilities
. High quality and functionality of ANTA products
. Strong and effective marketing and promotional capabilities
. Experienced management team
BUSINESS STRATEGIES
We aim to become the number one domestic sporting goods brand in China by leveraging our
competitive strengths and by implementing the following strategies:
. Enhance brand image and recognition
. Continue to work with our distributors to expand and strengthen the ANTA sales network
— 4 —