DEVELOP A STORE CHAIN NETWORK SPANNING NATIONWIDE WITH A STRONG
FOOTHOLD IN JIANGSU PROVINCE
Since the opening of Nanjing Xinjiekou Store, our first department store, the Group has, with its devoted efforts in the past 13 years, successfully opened 15 self-owned stores and 1 management store as at the date of this report. These stores spanned across three provinces in the PRC namely Jiangsu Province, Shaanxi Province and Yunnan Province, covering eleven cities, namely Shanghai, Nanjing, Nantong, Yangzhou, Suzhou, Xuzhou, Taizhou, Huai’an, Yancheng, Xi’an and Kunming, with a total gross floor area of approximately 500,000 square meters and a total operating area of approximately 310,000 square meters.
The Group has successfully established a leading position in Jiangsu Province, the major market of the Group. The Group has accumulated valuable experiences in cross-province expansion and operation management through the opening of Xi’an Guomao Store, Xi’an Gaoxin Store, Kunming Store and Shanghai Store, establishing a solid foundation for achieving the target of building a nationwide chain store network.

INSIST ON THE STRATEGY OF DEVELOPING AT SELF-OWNED PROPERTIES WITH
ESTABLISHMENT OF LONG TERM LEASES AS ALTERNATIVE
The Group’s department stores are situated at the prime shopping locations in their respective cities. Except for Suzhou Store, Xi’an Guomao Store, Nanjing Zhujiang Store, Yangzhou Second Store, Shanghai Store and Nanjing Hanzhong Store, all the Group’s department stores are located in self-owned properties, with its proportion reaching 73.6%. The strategy of developing at self-owned properties enables the Group to be immune from rental increase in the future and to enjoy long-term property appreciation. In order to capture development opportunities, the Group also occupies high quality properties by entering into long-term leasing agreements, which can minimize the impact of rental increase on the operations of department stores. The target term of leasing agreements is above ten years.

FOCUS ON VIP CUSTOMER EXPANSION PLAN TO ATTRACT LOYAL VIP CUSTOMERS
Through the provision of value-added services exclusively for VIPs and continuous improvement in the quantity and quality of our services, the Group has successfully secured over 616,000 loyal VIP customers as at the date of this report, which further strengthened the Group’s foundation for long-term development and expansion. As at 30 June 2009, VIP customers’ spending accounted for approximately 62.7% of the gross sales proceeds (“GSP”) of the Group.

ADOPT STANDARDIZED MANAGEMENT SYSTEM AND LEADING ERP MANAGEMENT
SYSTEM IN THE INDUSTRY
The Group has obtained ISO9001 quality management system recognition and manages every department store with a standardized management system. In order to centralize the management of all chain stores, the Group has successfully developed an ERP management system, which provides timely operational, financial and human resources data to the headquarter and the management. The ERP system enables the Group to monitor the operational status of the Group’s chain stores effectively and formulate its development strategy in response to the ever-changing market conditions.

INSIGHT FOR INTERNATIONAL MANAGEMENT AND LOCALIZED OPERATING STRATEGIES
The Group highly respects the efforts and contributions of its employees. The Group organizes regular professional training sessions and overseas study trips for the management and employees, so as to enhance their sustainable development capabilities and their insights for international management. The Group also implements a localized management system which is suitable for the relevant local markets. The Group recruits local talents who are familiar with the local market to form its own management team for the relevant department stores. As at 30 June 2009, the Group had approximately 3,700 employees.