HISTORY AND DEVELOPMENT AND REORGANISATION
Our business was founded by our Founders in Hong Kong in the early 1980s. We have since grown into a PRC-based manufacturer and supplier of amenity products with established market position offering a wide range of quality amenity products for hotel, hospitality and travel industries. Throughout our history of development, we have continued to enhance our production facilities, broaden our product range and expand our sales market.
Business Development
1980s
Our business originated in 1981 when Ever-rich (Group) Limited (formerly known as Ever-rich Plastic Industrial Company Limited) (“Ever-rich”) was established by our Founders together with four other third parties to engage in the manufacture of shower caps in a small workshop in Hong Kong. In 1984, our Founders and Mr. Ching Chi Keung established Ming Fai Plastic Industrial Co as a partnership which acted as the processing agent of Ever-rich by gradually succeeding Ever-rich’s manufacturing operations while Ever-rich continued to source raw materials for such manufacturing operations and placed orders to Ming Fai Plastic Industrial Co. Under this arrangement, most of our products were sold to Ever-rich for export to overseas markets (including North America and Europe) through a trading company, which was controlled by one of the shareholders (other than the Founders) of Ever-rich at the time.
In order to enjoy lower production costs and preferential tax treatments, we decided to move our production to mainland China. In 1986, we entered into a five-year processing arrangement with Shenzhen Baoan County External Trade Company ( )(“External Trade Company”), an Independent Third Party, pursuant to which the External Trade Company provided factory premises and labour and we sourced the raw materials required for production of shower caps, hotel-use slippers, and other bag items.
1990s
The processing arrangement with the External Trade Company was extended for a further term of five years in 1990. In 1992, with a view to securing a firmer grip of our production process, this processing arrangement was terminated and replaced with a cooperative joint venture arrangement with Shenzhen Pinghu Bainikeng Economic Development Company Limited ( ), an Independent Third Party, whereby we acquired our first processing factory and formally established our production facilities in China.
In 1994, as part of our product offering expansion plans, we commenced product printing and packaging operations. At the same time, our product offerings further expanded to include other paper packaging products such as packaging boxes for shower caps and sewing kits.
Benefiting from the successful implementation of economic reforms and market policies, the PRC hotel and travel industries went through a rapid growth during the 1990s which brought along substantial market potentials for amenity products. In 1995, in view of
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In 1996, we established our in-house export sales department in order to develop our own sales and marketing capabilities and diversify our customer base. In the same year, we also commenced production of our chemical-based products.
In 1998, our dedication to excellence led us to be awarded with the ISO accreditation for our quality system. In the same year, we also developed our in-house design capabilities by setting up our own design team under the sales and marketing department in order to customise our products for our customers.
In 1999, noting the success of our Shenzhen initiatives and in order to increase our presence in the booming PRC market, particularly in Northern China, we established our second sales office in Beijing.
2000s
In 2000, with continued business growth particularly in our PRC domestic sales, there was a need for expansion in our production capacities. For better management and economies of scale, we believed that a consolidated and fully integrated production base was essential. We therefore acquired land at Pinghu over which we began construction of our Pinghu Production Base.
With our Shenzhen and Beijing sales offices servicing our customers in Southern and Northern China respectively, we expanded our sales network to cover Eastern China by establishing our third sales office in Shanghai in 2001. With Southern China, Northern China and Eastern China covered, we continued to extend our customer reach by setting up our fourth sales office in Dalian in 2002 to explore the Northeast China market.
At the same time, we recognised the importance of branding and market potentials of branded products within the industry, and therefore launched our in-house branded amenity products under the “Rose Magnifique” and “Essence d’Orient” lines for distribution in the Greater China Region. Since then, we have continued to develop a selection of our own in-house brands as well as securing licences for other overseas brand names, thereby offering increased flexibility and choices to our customers to meet their respective marketing strategies and product positioning initiatives. As our sales were made mainly through Ever-rich at the time, all our brands were registered in the name of Ever-rich.
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With the incorporation of Ming Fai Enterprise and Ming Fai Asia Pacific (which was then known as Ming Fai Group Holdings Limited) in 2001 and 2002 respectively, we established our own overseas sales and sourcing arms and no longer relied on Ever-rich and the brands registered in the name of Ever-rich were transferred back to our Group. Pursuant to an assignment dated 28 August 2004, Ever-rich transferred the trademarks owned by it to our Group for a consideration of HK$16,000. We no longer made sales through Ever-rich since 4 November 2002, being the date when Ever-rich ceased business. Since then, Ever-rich has gradually ceased its operations and is currently in the process of being voluntary wound up by its shareholders.
We also upgraded our management information system by purchasing the FLEX system from Flexsystem (Shanghai) Co. Ltd. ( ) in 2001. Our FLEX system comprised several modules covering sales, purchase, inventory and accounting.
The year 2003 witnessed an important milestone in our development into a one-stop amenity products supplier and manufacturer. Our Pinghu Production Base, which occupies a total gross floor area of approximately 58,439 sq.m. comprising of production workshops, administration and office building, staff dormitories, warehouses, and other ancillary facilities, was completed and commenced operations. Equipped with advanced and sophisticated production facilities, our Pinghu Production Base significantly increased our production yield and enabled us to enhance our production of chemical-based amenity products such as bath soaps, shower gels, shampoo, hair conditioners and body lotions. We also established an advanced chemical and microbiological laboratory to develop our in-house product formulation capabilities and exert better quality control over our chemical-based products. With larger operations, the effective and efficient management of our Pinghu Production Base required more advanced management solutions and we developed our FLEX-side system based on our FLEX system to further cover the information management of our manufacturing operations.
In 2005, our sales efforts received an incentive boost when we commenced our business relationship with Shangri-La Hotels and Resorts for supply of amenity products to its hotel rooms.
In anticipation of further business growth, particularly our increasing sales in the PRC market and to relieve the pressure on our Pinghu Production Base, in May 2006, we signed a land transfer agreement with the Municipal Government of Shuangdong Town, Luoding City, Guangdong Province ( ) for the purchase of land use rights over a piece of land in Luoding and for the construction of our Luoding Production Base. Due to the additional time required in reclaiming the land and in view of needs for additional production facilities and early training of skilful workers to prepare for our Luoding Production Base, we leased our Luoding Leased Factory from an Independent Third Party and commenced production of some of our labour-intensive products such as shower caps, laundry bags and sewing kits.
Our investment in and commitment to producing high quality chemical-based amenity products was first rewarded with GMPC accreditation in 2006 certifying that our daily chemical-based products were compliant with the GMPC standards applied in the United States and Europe.
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In 2006, we entered into a cooperation agreement with Wuhan Huali Environmental Technology Co., Ltd. ( ), an Independent Third Party, for the PSM biodegradable materials supply which replaced traditional plastic raw materials for production of our PSM environmentally-friendly amenity products.
In October 2006, we commenced trial run of our sampling of PSM environmentally-friendly amenity products (including toothbrushes, shavers, sewing kits, shoe polishers and combs) for promotional distribution at our various sales offices. In May 2007, we commenced mass production of our first batch of PSM products being toothbrushes for an airline operator.
In July 2007, our established corporate identity and position in the market received cogent recognition when we entered into an agreement with Molton Brown, an international retailer of innovative luxury goods, to whom we supply packing service and have the exclusive rights to distribute amenities of its brand to hotels in China.
Corporate Development
Ming Fai Shenzhen
On 8 August 1992, Ming Fai Shenzhen was jointly established in its initial name of Shenzhen Ming Fai Plastic Products Company Limited ( ) by Ming Fai Plastic and Shenzhen Pinghu Bainikeng Economic Development Company Limited ( ) as a sino-foreign cooperative joint venture with an initial registered capital of HK$10,000,000 and a business scope of manufacturing and sales of hotel room accessories and plastic products. Ming Fai Shenzhen is our major PRC operating subsidiary responsible for manufacturing and sales of amenity products and accessories.
On 22 August 1994, the registered capital of Ming Fai Shenzhen was increased from HK$10,000,000 to HK$15,000,000. On 17 February 1998, the business scope of Ming Fai Shenzhen was expanded to cover the manufacturing of household consumer products and travel kits.
On 4 September 2001, Ming Fai Shenzhen was converted from a sino-foreign cooperative joint venture to a wholly foreign owned enterprise and became our wholly-owned subsidiary. Ming Fai Shenzhen also changed its name to Ming Fai Plastic Products (Shenzhen) Company Limited ( ).
On 19 September 2002, Ming Fai Shenzhen changed its name to its present name.
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On 22 December 2003, the business scope of Ming Fai Shenzhen was further expanded to cover the packaging and printing of decorative printed products, and the manufacturing and sale of shampoos, hair conditioners, shower gels, body lotions, bath soaps and quartz clocks.
On 19 November 2004, the registered share capital of Ming Fai Shenzhen was further increased from HK$15,000,000 to HK$50,000,000.
Ming Fai Enterprise
On 9 May 2001, Ming Fai Enterprise was incorporated in Hong Kong as a limited liability company under its former name of Hong Kong Ming Fai Plastic Industrial Company. Its present name was adopted on 25 September 2002. Ming Fai Enterprise is principally responsible for trading of amenity products and accessories.
Ming Fai Asia Pacific
On 15 May 2002, Ming Fai Asia Pacific was incorporated in Hong Kong as a limited liability company under its former name of Eternal Billion International Limited. It changed its name to Ming Fai Group Holdings Limited on 3 July 2002 and changed to its present name on 8 June 2007. Ming Fai Asia Pacific is principally responsible for trading of amenity products and accessories.
QAS HK
On 18 June 2003, QAS HK was incorporated in Hong Kong as a limited liability company. QAS HK is principally responsible for trading of amenity products and accessories.
QAS Singapore
On 9 February 2004, QAS Singapore was incorporated in Singapore as a limited liability company. QAS Singapore is principally responsible for trading of amenity products and accessories.
QAS Malaysia
On 28 September 2005, QAS Malaysia was incorporated in Malaysia as a limited liability company and was owned as to 50% by QAS HK and 50% owned by three other Independent Third Parties. QAS Malaysia is principally responsible for trading and distribution of amenity products and accessories.
Pacific Harvest
On 23 March 2006, Pacific Harvest was incorporated in Hong Kong as a limited liability company. Pacific Harvest is principally responsible for the investment holding of Luoding Quality Amenities.
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Luoding Quality Amenities
On 1 August 2006, Luoding Quality Amenities was established as a wholly foreign owned enterprise by Pacific Harvest with an initial registered capital of US$2,000,000 and a business scope of manufacturing and sales of plastic products, travel kits, quartz clocks, and packaging service of travel amenities. It commenced business on 13 September 2006. Luoding Quality Amenities is principally responsible for manufacturing and sale of amenity products and accessories.
Ming Fai Plastic
On 7 December 2006, Ming Fai Plastic was incorporated in Hong Kong as a limited liability company under its former name of Ming Fai International Investment Limited. It changed to its present name on 9 May 2007. Ming Fai Plastic is principally engaged in the investment holding of Ming Fai Shenzhen.
Actual shareholding of our Controlling Shareholders
As mentioned above, we were founded by our Founders, namely Mr. Ching Chi Fai and Mr. Ching Chau Chung, in 1981 when they established Ever-rich (Group) Limited. In 1984, Mr. Ching Chi Keung (“Keung”), the brother of Mr. Ching Chi Fai, joined us by way of partnership with our Founders to form Ming Fai Plastic Industrial Co. Keung has made a significant contribution to and has actively participated in our history and development. During the Track Record Period, Keung was a registered shareholder of two of our principal operating subsidiaries, namely Ming Fai Enterprise and Ming Fai Shenzhen, which accounted for over 90% of our revenue and over 80% of our total assets throughout the Track Record Period.
Mr. Liu Zigang (“Mr. Liu”) and Ms. Chan Yim Ching (“Ms. Chan”) have joined us since 1995 and have been part of our senior management overseeing our sales and marketing in the Greater China market and overseas respectively. In 1995, in order to attract and retain key employees for our development, our Founders and Keung agreed, based on a verbal agreement, to grant an approximately 5% interest in our Group to Mr. Liu. In 1999, Keung agreed to grant half of his interest in our Group to Ms. Chan.
As a result of the said arrangement, the actual percentage shareholding of Mr. Ching Chi Fai, Mr. Ching Chau Chung, Keung, Mr. Liu and Ms. Chan in our Group are approximately 43.4%, 40.4%, 5.3%, 5.6% and 5.3% respectively.
Since we were still a group of private entities in the past, we did not formalise the procedures to properly register Keung as a legal shareholder of our other subsidiaries with relatively minor operations and Mr. Liu and Ms. Chan as shareholders of the companies comprising our Group.
Keung was content with this arrangement because of his family links and his long term working relationship with our Founders. Mr. Liu and Ms. Chan were also content with the arrangement since both of them have trust and confidence in our Founders and Keung due to their close and long term working relationship and their characters.
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Despite the absence of formal registration of the arrangement, the Controlling Shareholders have confirmed by way of statutory declaration of the existence of such arrangement and their respective actual shareholding in our Group.
Reorganisation
We underwent the Reorganisation to rationalise our structure in preparation for the Listing. Details of the Reorganisation are set out in section headed “Reorganisation” in Appendix VI to this prospectus.
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