Dutch Caribbean Securities Exchange, Listing Advisor 荷兰加勒 ⽐证券交易所上市保荐机构
Information Memorandum For the Listing of Rui Long Yi Da Commerce Group Limited
Incorporated under the laws of BVI Business Companies Act, 2004 (No. 16 of 2004) on November 15th, 2017 with BVI Company Number 1961060
www.chinacccg.com 0
Table of Contents
1. Summary of Certain Defined Terms ...... 2
2. Important Information and Notices ...... 3
3. Issuer and the List of Institutions Related to the Listing ...... 6 4. Company Overview ...... 7 4.1 Business Structure ...... 7 4.2 About the Company ...... 8 4.3 Company’s Operation ...... 8
5. Terms of the Issuance and Investment Overview ...... 10
6. Business Overview ...... 12 6.1 Executive Summary ...... 12 6.2 Products and Services ...... 12 6.3 Marketing Strategy ...... 15 6.4 Development Strategy ...... 15 6.5 Business Partners ...... 16 6.6 Permit and License...... 17 6.7 Related Parties ...... 20 6.8 Main Competitors ...... 24
7. Company Advantages and Investment Highlights ...... 26 7.1 Potential Market Demand ...... 26 7.2 Good Brand Reputation ...... 26 7.3 Quality Product Supply ...... 26 7.4 Efficient Cooperation Structure ...... 26 7.5 Stable Operating Income ...... 26 7.6 Promotion with Fidelity ...... 26
8 Directors and Senior Management ...... 27
9 Financial Statements ...... 32
10 Material Contract and Agreement ...... 36
11 Risk Factors and Litigation ...... 37
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1. Summary of Certain Defined Terms
“The Company / RL” Rui Long Yi Da Commerce Group Ltd. (BVI Company Number: 1961060), a company incorporated in BVI and having its registered address at the offices of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands, is the holding company that indirectly controls 100% shares of Jilin Rui Yi Sheng Trading Co., Ltd.
“RYS” Jilin Rui Yi Sheng Trading Co., Ltd., a company registered in PRC and having its registered address at No.7-1, 4th Road, Xiamen Street, High-tech District, Jilin City, Jilin Province, China, with 100% of its shares indirectly controlled by the Company.
“DCSX” The Dutch Caribbean Securities Exchange.
“ACT” The BVI Business Companies Act, 2004 (No. 16 of 2004) including any modification, extension, re-enactment or renewal thereof and any regulations made thereunder.
“IFRS” International Financial Reporting Standards, the set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements.
“LAD” Listing Advisor.
“Chu Cheng Capital” Shanghai Chu Cheng Investment Management Co. Ltd.
“Listing Rules” The Listing Rules of the DCSX.
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2. Important Information and Notice
Dear investors,
This Information Memorandum for listing has been approved by Rui Long Yi Da Commerce Group Ltd. (BVI Company Number: 1961060, “the Company”). The sole purpose of this Information Memorandum is to list the presently outstanding shares on the Dutch Caribbean Securities Exchange N.V. (“DCSX”) in Curacao (Dutch Caribbean). Curacao is a country within the Kingdom of the Netherlands. The listed shares will be replaced on a one to one basis by listed Depository Receipts (DR) upon completion of the official issuance of such DR in full accordance with the legal and procedural requirements of the issuance and listing of such DR as demanded by the DCSX.
This Information Memorandum does not contain all the information that a future investor should consider before investing. Potential investors should not regard the content of this Information Memorandum as a suggestion on legality, taxation, finance and so on, or as a relevant instruction or advice for the subscription, purchase, holding or disposition of the securities. Every potential investor should consult his or her independent professional advisor to evaluate the strengths and risks of investing in the Company. You and your advisors must rely on your investigations about the Company's stocks and listing clauses to assess the advantages and risks.
This Information Memorandum does not constitute or form any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe to any securities. In any jurisdictions, it should not form or rely on any part of this Information Memorandum, or the publication of the facts as the incentives to sign any contract. This Information Memorandum may be revoked at any time before the proposed listing, and it is especially subject to the terms of this Information Memorandum. This document intends to allow future investors to consider the relevant information and should only be used for this purpose. The Company may consider future (initial) public offering. More information shall be available to investors when the Company gets to that stage.
The Company expressly reserves the right to reject any or all of the tender offer or investment in its sole discretion, and at any time to notify any potential investor to terminate the discussion. Also, the Company certainly reserves the right to revoke, supplement, alter, modify, sort, or reduce the scope of the document and its subject under the rules and regulations of the DCSX.
This Information Memorandum contains forward-looking statements concerning plans, objectives, goals, strategies presented by the Company in the form of projections or expectations of revenues, income (or loss), earnings (or loss) per share, or other financial projections. These statements include the words such as “'believe”, “estimate”, “expect”, “intend”, “may”, “will”, “shall”, “may”, or “should” and other expressions of similar nature, and they address matters that involve risks and uncertainties. Forward-looking statements are based on an assessment of the economic developments, operating conditions, and certain assumptions regarding the future events and actions that are current views of the Company and/or the Directors as of the date of this Information Memorandum. As a result, these forward-looking statements are not guarantees of future performance, and many known and unknown risks, unexpected uncertainties, assumptions and other important factors other than the Company, the Directors and the Management of the Company could cause actual results to differ materially from those expressed in or implied by these forward-looking statements. Investors should be aware not to exclusively rely on such forward-looking statements. The Company does not undertake any obligation to update or revise any of the forward-looking statements contained in this Information Memorandum, whether as a result of new information, future events or otherwise. The Company does not make any representation, warranty or prediction that results anticipated by such forward-looking statements will be achieved., All subsequent written and forward-looking oral statements are based on the above and the cautionary statements contained in this Information Memorandum.
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Certain statements, estimates and financial projections included in this Information Memorandum are based on a variety of assumptions which later may or may not prove to be (completely) true or may be subject to disagreement. Each potential investor should investigate and analyze the quotations and other information presented in the document. Rui Long Yi Da Commerce Group Ltd. does not have any obligation to provide any other information to the recipient in the provision of documents. The document does not constitute a recommendation, endorsement or confirmation of the value of the offering.
In some jurisdictions, the distribution of this document and security issuance may be restricted. Any person who reviews the document and wishes to invest is responsible for his or her understanding and compliance with all applicable laws and regulations of any relevant jurisdictions. The potential investors should also understand by themselves the foreign exchange and tax regulations apply to their citizenship, residence and or country of residence.
The Ministry of Finance in Curacao, Dutch Caribbean, the Central Bank of Curaçao and Sint Maarten, and the Dutch Caribbean Securities Exchange (DCSX) or any other county/government authority and/or agency of Curacao are not responsible for any information contained in this Information Memorandum, and also they do not make any statements or guarantees to the accuracy or completeness of the Information Memorandum. Moreover, the content of the Information Memorandum doesn't mean any approval, authorization, warranty, commitment, statement, or certification of any country/government.
The Company, Directors and Senior Management are responsible for the authenticity, accuracy, and completeness of the content of this Information Memorandum. The Listing Advisor (LAD), Shanghai Chu Cheng Investment Management Co., Ltd., mentioned in this Information Memorandum shall not take any responsibility for the authenticity, accuracy or completeness of any information (finance, law or other) contained in this Information Memorandum, and also, it does not make any approval, commitment, statement, certification or guarantee to any information in this Information Memorandum. When making an investment decision, investors must rely on their independent examination and the provisions of this Information Memorandum, to consider the risks involved. Also, the content of this information shall not be deemed legal, commercial or tax advices or any offer. Every investor should consult a lawyer, business or tax advisor for legal, commercial, or tax advices.
For the sake of completeness it is reiterated that the securities to be listed by the Company through this Information Memorandum are the outstanding shares of the Company. These shares may and can be replaced on a one to one basis by listed Depository Receipts (DR’s) upon completion of the official issuance of such DR’s in full accordance with the legal and procedural requirements of the issuance and listing of such DR’s as demanded by the DCSX.
Each Depository Receipt represents one share, and each Depository Receipt enjoys all the beneficial rights to each corresponding share or stock. The Depository Receipt is a security that has the same rights in all respects as the Company's share. A separate contract must be agreed upon between the Company and the shareholders specifying the provisions for Depository Receipt holders and their detailed rights. All shares owned by the shareholders of the Company will be registered as Depository Receipts on the DCSX and in the Brokers’ system. The Company and all the shareholders shall undertake the responsibility of submitting all the information and details about shares and Depository Receipts accurately and completely to the DCSX and Brokers.
The DR holders will enjoy benefits on their holdings as if they were shareholders. The Company's Depository Receipt numbers will be consistent with the number of shares. Depository Receipts will be reserved in the form of electronic data. The DCSX and Brokers do not have the obligation to issue any Depository Receipts certificates to the shareholders. Only when the shareholders convert their shares to Depository Receipts these can become tradeable on the DCSX and Brokers’ system. The DCSX and Brokers will register and manage the Depository Receipts under the relevant rules. The Company promises that during the listing of the Company, the DCSX and its Brokers’ records shall prevail.
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Potential investors should read the full text of this document and be aware that investing in the Company involves a certain degree of risk. Potential investors should also pay special attention to the “Risk Factors and Litigation” section of this Information Memorandum. Prospective investors, before deciding to invest, should carefully consider all of their risks, including financial and tax issues, and consult professional advice from their accountants, lawyers, and other professional advisors. The Company is not in any capacity to recommend or decide whether the investors can or should invest in the Company. For such advice, each prospective investor must contact their independent professional consultant.
If you need any further information, please consult the stock brokers and other professional advisors.
The date of this Memorandum is on May 9th, 2018.
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3. Issuer and the List of Institutions Related to the Listing
Issuer Rui Long Yi Da Commerce Group Ltd. Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands Contact Person: Jiyu Yuan Tel: +86-0432-62217808 E-mail: [email protected]
Operating Entity in China Jilin Rui Yi Sheng Trading Co., Ltd. No.7-1, 4th Road, Xiamen Street, High-tech District, Jilin City, Jilin Province. Contact Person: Jiyu Yuan Tel: +86-0432-62217808 E-mail: [email protected]
Listing Advisor Shanghai Chu Cheng Investment Management Co., Ltd. Room 601, Huaneng Union Tower, Lane No. 958 Lu Jiazui Ring Road, Pudong District, Shanghai, China Contact Person: Houhai Li Tel: +86-021-31663586 E-mail: [email protected]
Lawyer Beijing Yingke Law Firm Shanghai Office Yingke Law Building, 181, Jiangchang No.3 Road, Jing 'an District, Shanghai, China Contact Person: Zhihua Wang Tel: +86-021-36697980 Fax: +86-021-36697889 E-mail: [email protected]
Auditor Shanghai Shunzheng CPAs LP Room 1220, No.28, Yuanwen Road, Shanghai, China Contact Person: Fengshan Liu Tel: +86-021-62122672 E-mail: [email protected]
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4. Company Overview
4.1 Business Structure
“Rui Long Yi Da Commerce Group Ltd.”, a company registered in the British Virgin Islands, BVI, is the Company seeking to be listed on DCSX. “Rui Long Yi Da Commerce Group Ltd.” is the 100 % owner of the sub-company named “Rui Long Yi Da Commerce Group Ltd.” registered in Hong Kong and subject to the laws of Hong Kong under the Companies Ordinance, which in turn is the 100% owner of a sub-company named “Rui Long Yi Da Commerce Co., Ltd. Jilin Province”. “Rui Long Yi Da Commerce Co., Ltd. Jilin Province”, a company incorporated and organized under the laws of China as a Wholly Owned Foreign Entity (“WOFE”), owns 100% of “Jilin Rui Yi Sheng Trading Company Limited.” (“RYS”). RYS is the actual operating company in China with real business.
Rui Long Yi Da Commerce Group Ltd. (Incorporated in British Virgin Islands: BVI Company Number: 1961060)
100% Holding
Rui Long Yi Da Commerce Group Ltd. (Incorporated in Hong Kong)
100% Holding Rui Long Yi Da Commerce Co., Ltd. Jilin Province (Incorporated in Jilin City, China)
100% Holding Jilin Rui Yi Sheng Trading Company Limited (Incorporated in Jilin City,China)
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4.2 About the Company
“Jilin Rui Yi Sheng Trading Company Limited” is 100% owned by “Rui Long Yi Da Commerce Group Ltd.”, a company incorporated and registered under the laws of the British Virgin Islands. “Jilin Rui Yi Sheng Trading Company Limited” is a company incorporated and organized under the laws of China on January 4th, 2018.
“Jilin Rui Yi Sheng Trading Company Limited” holds the validated business license (Uniformed Social Credit Code: 91220214MA152NC46C) issued by Industry and Commerce Administrative Bureau of Jilin City, on January 22nd, 2018.
Company Name: Jilin Rui Yi Sheng Trading Co., Ltd. Type of Company: Limited liability company (Non-natural person investment or holding by sole proprietorship) Address: No.7-1, 4th Road, Xiamen Street, High-tech District, Jilin City, Jilin Province. Legal Representative: Jinhua Hou Registered Capital: RMB 5 million Date of Establishment: January 4th, 2018. Operating Period: Long term Business Scope: Electronic products, Mineral products, Digital products, Communication products, Building materials (excluding timber), Metal products, Machinery equipment, Cosmetics, Jewelry, Crafts, Textiles, Clothing and household goods, Pre-packaged food and bulk food, Health care products, Furniture, Household appliances, Cultural products, Sports products, Kitchen products, Daily necessities, Lighting equipment, Decoration materials (excluding paint), Medical equipment, Sanitary ware, Chemical products (excluding hazardous chemicals), Computer and auxiliary equipment, Car sales; Import and export trading; Providing online commodity information consulting services; House buying and selling agent services; House letting agent services; Enterprise management consulting; Insurance agency; Computer graphic design and production; Packaging products design and manufacture; Conference and exhibition services; Photography services; Corporate image planning; Marketing planning; All kinds of domestic advertisements design, production, acting and publication; Organizational culture and art exchange activities (excluding performances); Computer animation design and production; Education information consulting (excluding studying abroad, agent, or education and training); Health consulting services (excluding medical diagnosis and treatment); Beauty service. (Projects needed to be approved under the laws can be carried out after approved by the relevant departments.)
4.3 Company’s Operation
Rui Long Yi Da Commerce Group Ltd. and its ultimate subsidiary “Jilin Rui Yi Sheng Trading Company Limited” (hereafter often referred together as “RYS”) is a company that aims to become the leading advocate for the “intelligent and healthy life” in China, which provides high-quality health products and offers operation services. More details about the Company can be found in Section 6 “Business Overview” of this Information Memorandum. Detailed background information of the Directors and Senior Management Team can be found in Section 8 of this Information Memorandum.
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Picture 1. Jilin Rui Yi Sheng Trading Co., Ltd. Office
Picture 2. Jilin Rui Yi Sheng Trading Co., Ltd. Office
6 5. Terms of the Issuance and Investment Overview
The information provided in this section is a summary of highlights contained elsewhere in this Information Memorandum and should be reviewed carefully together with other sections before making an investment decision.
Company Nature
The Company is a limited liability company incorporated in the British Virgin Islands, on November 15th, 2017. The Company owns 100% of the shares of China’s operating entity, Jilin Rui Yi Sheng Trading Company Limited. Till the submission date of this memorandum, the Company’s shares are not listed in any other exchange. The Company’s listed securities will be the Depository Receipts as explained in this Information Memorandum. Investing shares or Depository Receipts or other securities involves risks, and investors themselves shall have to consider the risks involved.
Listing Advisor (LAD)
Shanghai Chu Cheng Investment Management Co., Ltd is a Chinese company and has been licensed as a DCSX Listing Advisor (LAD) by the DCSX. The Company has appointed it as Listing Advisor (LAD) under the Listing Rules of the DCSX. The mission of Shanghai Chu Cheng Investment Management Co., Ltd is to assist the Company to be listed on the DCSX. Shanghai Chu Cheng Investment Management Co., Ltd is not responsible for the authenticity, accuracy or completeness of any information (financial, legal or other) contained in this Information Memorandum, and it doesn’t make any approval, commitment, statement, certification or guarantee to the content of this Information Memorandum.
Listing in the DCSX and Fund-raising Purposes
As aforementioned, the Company intends to apply for listing via issuing Depository Receipts that will replace the listed shares on a one to one basis. With the listing of ultimately the Depository Receipts, no new shares will be issued at this stage. In other words, the Company is not to raise or receive new funds with this listing. That the company may wish to raise additional funds in the future through a complete new issuance and listing is confirmed below. However, the Company and/or its shareholders may wish to trade in the future the Depository Receipts corresponding to their existing shares through listing on the DCSX. The authorized capital of the Company is 300,000,000 shares, the nominal value of the shares is 0.3014 USD per share, and the listing price of the shares will be 0.11 USD per share. The estimated market value of the Company will be 33,000,000 USD (specific future projections and calculation on which the market value is based can be found in the second and third parts of Section 9 “Financial Statements” of this Information Memorandum).
The Company does not exclude the possibility of raising funds through the issuance of new securities in the future but will prepare and declare relevant and necessary documents and procedures under the laws or listing rules, including the submission of a new Information Memorandum.
Sales Period Commitment
Currently, the Company’s board of directors holds a total of 51% shares. To provide potential investors with some extent of comfort toward the long-term expectation of the Company, all directors of the Company (hereinafter referred to as the “restricted shareholders”) have agreed not to trade any of their stocks or securities in any form within 12 months from the date of listing on the DCSX and/or being able to trade (once converted to Depository 7 Receipts). To assure non-violation of the above and the applicable law, each restricted shareholder will agree not to sell or distribute the Company’s shares or securities publicly or privately, and not to convert or exchange their shares or securities into any other securities, options or rights, during this period.
However, as to the Company’s total issued share capital, the restricted commitment mentioned above will not apply to a possible tender offer. A more than 51% equity purchase offer can be regarded as a buyout offer, and if the board of directors decides to accept the offer, the stock or security transaction caused by it can be exempt from the above commitment, such a buyout shall be submitted for approval first to the DCSX.
The Stock Options
On the issuing date of this Information Memorandum, the Company or the group does not have any other unrevealed stock option commitment.
The Registration/Transaction of the Depository Receipts
The Company will in the end and through a yet to be agreed issuer (a Financial Institution accepted by the DCSX) issue Depository Receipts corresponding to the issued and outstanding shares but will not issue any certificates. With the listing of the Company’s Depository Receipts on the DCSX, the DCSX and its Brokers will register and manage the trading of the securities. The DR securities may be traded in the market, but the Company will and cannot make any guarantee of their liquidity. The Company agrees that the Company and all the shareholders should take the responsibility of submitting the complete and accurate information about the shares/stocks and the required Depository Receipts to the Financial Institution that will issue the DR’s. After the listing, the registration and trading of the Depository Receipts must obey the laws and regulations of the DCSX and other relevant regulators.
The Company agrees that the Depository Receipt holders have the same rights as ordinary shareholders registered in their names. Meanwhile, when the Company holds a general meeting of shareholders, the Depository Receipt holders should also be notified, and the Company allows Depository Receipt holders to exercise the same voting rights as direct shareholders.
Listing Cost
The cost of the listing and all other directly attributed costs (including audit fees, legal fees, and other professional costs) associated with the listing are paid by the existing funds of the Company.
Inquiry
Any inquiry on / regarding this Information Memorandum about listings should be dealt with the Listing Advisor (LAD), Shanghai Chu Cheng Investment Management Co., Ltd.
8 6. Business Overview 6.1 Executive Summary Jilin Rui Yi Sheng Trading Company Limited (hereafter referred as “RYS”) is registered in Jilin City, Jilin Province, China.
RYS is a trading company based in the health industry in China. Its main business is to help their clients to open physical “experience stores” (which will be explained through this document). RYS will supply high-quality health products to those stores as the upstream supplier and will offer paid business consulting services that helps clients to operate their businesses implementing the RYS’s corporate culture.
RYS is determined “to enhance quality by intelligence, to change life by quality” with the core values “to discard the false, to keep the true, and to hold righteousness and benefits together”. Based on this determination and values, RYS applies a cultural strategy to create an independent brand throughout the whole operation process. The brand positioning of RYS is “the constructor of platforms for health products and high-quality healthcare services”. RYS aims to become the leading advocate for the “intelligent and healthy life” in China. It is constantly striving to raise Chinese people’s awareness of health preservation by outputting health concepts, and to improve Chinese people’s life quality by offering them more convenient access to quality health products.
Development History
The founding team of RYS consists of elites who grew up from grassroots in different fields. Previous experience has enriched their understanding of product selection standards, marketing planning, human resource management, and market demand, and has helped them accumulate the needed resources and to build up a wide range of contacts as well.
The team was formed as a result of Ms. Yanrong Qiao’s proposal. Ms. Qiao entered the health industry in 2006. She has acknowledged the potential development prospects of this field. It is her wish to achieve one of the goals of social responsibility, which is to help more people to gain wealth and also to lead them to a healthier life. Mr. Jiyu Yuan, Ms. Jinhua Hou, Mr. Yang Yu, Mr. Jianfeng Wang are the core members of the founding team. They have broad experience in marketing, management and administration of health products, and have brought valuable resources to RYS. These experience and resources have contributed to the establishment of RYS and have played an important role to its promotion and development.
Also, RYS has set a unique marketing mode, equipped with selected quality products, that is expected to become the leading advocate for the “intelligent and healthy life” in China.
6.2 Products and Services
The main business of RYS is divided into three categories:
1. Authorizing its clients to use its own trademark “Bubushengwei” to open physical stores, which deliver the health concept of “tonic food” and help to enhance customers’ life quality via selected health products (which will be introduced in the following section).
2. Providing clients with tutoring and training throughout the whole process, including consulting services about 9 marketing planning and store management.
Picture 3: “Bubushengwei” Experience Store
3. Supplying three series of health products to clients: i. Century Luwangchao® Deer Series Products
North China sika deer is a kind of precious medical animal. This series of products are based on a concept of traditional Chinese medicine: that medicine and food have the same origin. Raw materials are taken from different parts of deer, and then extracted, processed and refined via modern technology. This series includes 9 types of products: Deer Marrow Calcium, Penis et Testis Cervi Vitality Element, Deer Fetus Umbilical Cord Blood Stem Cells, Deer Tail Slice, Deer Blood Slice, Deer Antler Root Powder, Deer Hide Gelatin, Deer Cerebra and Walnut Powder, which cover all parts of deer that have medical value. The complete product line coincides with the long-standing traditional Chinese medical culture. This culture is deeply buried in Chinese consumers’ hearts, as Chinese people have accepted the concept of “tonic food” since a long time ago, which helps to promote products.
Tieling Lubaotang Pharmaceutical Group Limited., the manufacturer of the products, has signed an agent contract and built up a strategic cooperation with RYS, and authorized RYS to use the trademark “Century Luwangchao” freely and independently from January 1st, 2018 to December 31st, 2021.
10 Picture 4: Century Luwangchao® Deer Series Products ii. ZOAN® Blueberry Products
Blueberry has multiple benefits for the human body, for example protecting and improving vision, and preventing oxidation. RYS has introduced four representative products from Jilin Yunshang Healthcare Food Company Limited, a leading manufacturer in the field of blueberry processing in China. The high-quality products that RYS has selected for consumers include: Blueberry Juicy Candy, Blueberry Liquid Drink, Blueberry Powder, and Blueberry Wine.
Picture 5: ZOAN® Blueberry Products iii. Yuanli Healthcare Wine
Ningcheng Yuanli Healthcare Wine was developed by Professor Yonghe Jin, the director of Xingyang Traditional Chinese Medicine Institute, Wuhan. To develop this wine, Professor Jin concluded more than 30 years’ clinical experience in disease prevention, treatment, healthcare, and health preservation, and applied traditional brewing process and modern extraction technology. He used high-quality Ningcheng Laojiao pure grain Chinese liquor, desert-broomrape and wild sea buckthorn fruit as the main ingredients and added 28 precious Chinese herb medicines as supplementary ingredients, which include milkvetch root, ginseng, Chinese sage, Chinese rat snake, epimedium herb, Chinese wolfberry, Chinese date, licorice and etc. Yuanli Healthcare Wine has multiple special functions, for example immunoregulation, retarding the aging process and so on. It has been approved by the Ministry of Health in China (License SHIJIANZI-2000-0558). With specific and effective functions, this wine is good for the aged and people with low immunity.
11 Picture 6: Yuanli Healthcare Wine
6.3 Marketing Strategy
After examining the market, RYS has synthesized advantages of direct-sale stores, counters and chain stores, so they created a new model of channel on the basis of traditional ones: “experience stores” that combine product exhibition, customer interaction, product promotion, and after-sales services.
RYS intends to protect their clients’ business from the following aspects, applying several marketing strategies.
- To ensure smooth operation, RYS has set up the Marketing Department and the Tutoring Department. The Marketing Department is responsible for studying the market comprehensively, collecting product information, and then making reasonable marketing plans according to the gathered data. The Tutoring Department is responsible for designing and editing tutoring materials, through which experience store owners (the clients) can gain professional knowledge, practical skills and guidance about how to manage a store more successfully. They apply a multi-tiered training mode, using a systematic delivering pattern, gathering teachers with the same values, and implementing internet teaching methods. RYS introduces corporate culture and values to clients, enhance clients’ operating skills and comprehensive qualities further. All of these will ensure that the mode of experience store can be continuously operated, and a solid resource base can be developed.
- To ensure supportive services, RYS has set up the Client Service Department and the Storage Control Department. The Client Service Department is responsible for dealing with clients’ purchasing procedures, archives, and consulting about products and services. The Storage Control Department is responsible for product storage management.
Also, making accurate media promotion, the influence of experience stores will be expanded further, which helps to improve the brand reputation.
6.4 Development Strategy
RYS plans to apply strategies to maintain customer relationship in a high-loyalty level to ensure its development. To be specific, RYS will form a marketing net with a number of experience stores, which will allow the company to build up close and effective connections with consumers. Through hundreds of experience stores acting as selling spots, this comprehensive marketing net will have multiple functions, for example product logistics, customer interaction, information delivery, and health services supply. Through this net, RYS can thoroughly dig out customer value at a lower operating cost in the long term and spread the concept of health preservation to a wider audience. 12
13 6.5 Business Partners
RYS has established strategic partnership with a few manufacturing companies as listed below: • Tieling Lubaotang Pharmaceutical Group Limited • Jilin Yunshang Healthcare Food Company Limited • Ningcheng Town Yuwei Wine Business Firm
Tieling Lubaotang Pharmaceutical Group Limited
Tieling Lubaotang Pharmaceutical Group Limited is the holder of the trademark “Century Luwangchao” and the manufacturer of deer series products. It authorizes RYS to use this trademark for three years and supplies products to RYS.
Jilin Yunshang Healthcare Food Company Limited
Jilin Yunshang Healthcare Food Company Limited is the holder of the trademark “ZOAN” and the manufacturer of blueberry products. It supplies products to RYS.
Ningcheng Town Yuwei Wine Business Firm
Ningcheng Town Yuwei Wine Business Firm is the authorized distributor of Yuanli Healthcare Wine for Ningcheng Yuanli Healthcare Wine Company Limited. It supplies this product to RYS.
14 6.6 Permit and License
Business License Business License (Duplicate copy) Uniform Social Credit Code: 91220214MA152NC46C
a) Company Name: Jilin Rui Yi Sheng Trading Co., Ltd. b) Type of Company: Limited liability company (Non-natural person investment or holding by sole proprietorship) c) Address: No.7-1, 4th Road, Xiamen Street, High-tech District, Jilin City, Jilin Province. d) Legal Representative: Jinhua Hou e) Registered Capital: RMB 5 million f) Date of Establishment: January 4th, 2018. g) Operating Period: Long Term h) Business Scope: Electronic products, mineral products, digital products, communication products, building materials (excluding timber), metal products, machinery equipment, cosmetics, jewelry, crafts, textiles, clothing and household goods, pre-packaged food and bulk food, health care products, furniture, household appliances, cultural products, sports products, kitchen products, daily necessities, lighting equipment, decoration materials (excluding paint), medical equipment, sanitary ware, chemical products (excluding hazardous chemicals), computer and auxiliary equipment, car sales; Import and export trading; Providing online commodity information consulting services; House buying and selling agent services; House letting agent services; Enterprise management consulting; Insurance agency; Computer graphic design and production; Packaging products design and manufacture; Conference and exhibition services; Photography services; Corporate image planning; Marketing planning; All kinds of domestic advertisements design, production, acting and publication; Organizational culture and art exchange activities (excluding performances); Computer animation design and production; Education information consulting (excluding studying abroad, agent, or education and training); Health consulting services (excluding medical diagnosis and treatment); Beauty service. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Issued by Industry and Commerce Administrative Bureau of Jilin City
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16 Food Business Operation License Food Business Operation License Description (Duplicate Copy) 1. Food Business Operation License is the legitimate certificate of the permit for a). Operator Name: food business that an operator gets. Jilin Rui Yi Sheng Trading Company 2. The License has original and duplicate copies, which have the same legal effect. Limited The original License should be hung or placed on a prominent position at the b). Social Credit Code: operating site. 91220214MA152NC46C (Identity 3. The License must not be forged, modified, resold, leased, lent, or transferred in Card Number) any other illegal forms. c). Legal representative (Person in 4. The operator should carry out business within the approved scope. Charge): 5. The operator should accept the supervision and management of the Food and Jinhua Hou Drug Supervision and Administration Department. d). Address: 6. The operator should apply to change the License when the permitted items are No.7-1, 4th Road, Xiamen Street, changed. High-tech District, Jilin City, Jilin 7. The operator should timely apply for an extension at the former department in 30 Province working days before the License expires. e). Operation Address: h). License Number: JY12202860078065 No.7-1, 4th Road, Xiamen Street, i). Daily Supervision Management Organization: Food and Drug Supervision and High-tech District, Jilin City, Jilin Administration Bureau High-tech District Branch of Jilin City Province j). Daily Supervisors: Guannan Wang, Gongming Wen f). Main Body Type: k.) Complain Call:12331 Food Business Operator l). License Issuing Authority: Food and Drug Supervision and Administration g). Food Type: Bureau High-tech District Branch of Jilin City Pre-packaged food (Without frozen m). Issuer: Baoqing Yan food), hot food products February 2nd, 2018 Valid until January 30th, 2023
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18 6.7 Related Parties Information below is provided by Chinese National Enterprise Credit Information Publicity System and updated by www.qichacha.com (Updated by May 9th, 2018).
Jilin Province Luwangchao Biological Technology Co., Ltd.
Ms. Jinhua Hou, the Chief Administrative Officer of the Company, is the legal representative and shareholder of this company. Mr. Changfang Zhao, the Executive Director of the Company, is also the shareholder and supervisor of this company.
Company Name: Jilin Province Luwangchao Biological Technology Co., Ltd. Uniform Social Credit Code: 91220101MA0Y64HW19 Date of Establishment: November 15th, 2016 Address: Room 3321, No. 21 Hankou Street, Kuancheng District, Changchun City, Jilin Province Legal Representative: Jinhua Hou Type of Company: Limited liability company (Natural investment or holding) Registered Capital: RMB 5 Million Business Scope: Biological products research and development (excluding vaccine); Distribution of health food, pre-packaged food, agricultural products, clothing, cosmetics, jewelry, crafts gifts, groceries, business information consultation. (Projects prohibited by laws, regulations and decisions of the State Council shall not be operated. Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Although Jilin Province Luwangchao Biological Technology Co., Ltd has partly overlapping business scope with RYS, such as health food, it does not operate any such business now. Therefore, these two companies are not in competition.
Jilin Province Luwangchao Biological Technology Co., Ltd. (Jilin Branch)
Ms. Jinhua Hou, the Chief Administrative Officer of the Company, is the head of this company.
Company Name: Jilin Province Luwangchao Biological Technology Co., Ltd. (Jilin Branch) Uniform Social Credit Code: 91220201MA0Y65HR3Q Date of Establishment: September 21st, 2016 Address: No.229, S2-2WE Chuang Ke Kong Jian, Jilin E-commerce industrial park, Zhihuixincheng Zone two, No. 1235 Southern Songjiang Road, Fengman District, Jilin City Head of the Company: Jinhua Hou Type of Company: Limited liability company branch (Natural person investment or holding) Registered Capital: Unknown Business Scope: Biological products research and development (excluding vaccine); Distribution of health food, pre-packaged food, agricultural products, clothing, cosmetics, jewelry, crafts gifts, groceries, business information consultation. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Although Jilin Province Luwangchao Biological Technology Co., Ltd. (Jilin Branch) has partly overlapping business scope with RYS, such as health food, it does not operate any such business now. Also, the shareholder is registering the cancellation of the company. Therefore, these two companies are not in competition.
19 Jilin Xinkebangda Commerce Co. Ltd.
Ms. Jinhua Hou, the Chief Administrative Officer of the Company, is the supervisor of this company.
Company Name: Jilin Xinkebangda Commerce Co. Ltd. Uniform Social Credit Code: 91220101MA0Y692U3D Date of Establishment: October 12nd, 2016 Address: Room 3321-2, No. 21 Hankou Street, Kuancheng District, Changchun City, Jilin Province. Legal Representative: Fengmei Ju Type of Company: Limited liability company (Sole proprietorship) Registered Capital: Unknown Business Scope: Distribution of health food, pre-packaged food, agricultural products, clothing, cosmetics, jewelry, crafts gifts, groceries, metal building materials. (Projects prohibited by laws, regulations and decisions of the State Council shall not be operated. Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Although Jilin Xinkebangda Commerce Co. Ltd. has partly overlapping business scope with RYS, such as health food, it does not operate any such business now. Therefore, these two companies are not in competition.
Shenzhen Linghangshengshi Investment Management Co. Ltd.
Ms. Yanrong Qiao, the Chairwoman of the Board of Directors and Chief Executive Officer of the Company, is the shareholder of this company. Mr. Jiyu Yuan, the Vice President and the Board Secretary of the Company, is the shareholder of this company.
Company Name: Shenzhen Linghangshengshi Investment Management Co. Ltd. Uniform Social Credit Code: 91440300349964531M Date of Establishment: August 17th, 2015 Address: Room 3321-2, No. 21 Hankou Street, Kuancheng District, Changchun City, Jilin Province. Room 201, Building A, No. 1 Qianwan Road, Qianhai Shenzhen-Hong Kong Cooperation zone, Shenzhen City (Entering Shenzhen Qianhai Commercial Secretary Co., Ltd.) Legal Representative: Hong Wang Type of Company: Limited liability company Registered Capital: RMB 10 Million Business Scope: Investment management, investment consultation, investment consultant, enterprise management consulting, tourism information consulting, financial consulting, business consulting (the above cannot exclude restricted projects); Entrusted asset management (trust, financial asset management, securities asset management and other restricted projects cannot be carried out); Enterprise marketing planning; Education information consulting (excluding securities consulting, talent agency services and other restricted projects); Cultural activities planning; Undertaking approved exhibition activities; Advertising business (activities that need separate approval for advertising operation according to laws, regulations, and rules of the State Council regulations can be operated after approved); Online commercial activities (excluding restricted projects); Domestic and international freight agent; Investing in industrial enterprises (specific projects shall be separately declared). (The above shall exclude projects prohibited by laws, administrative regulations and decisions of the State Council. Restricted projects can only be operated after approved.)
The two companies do not have overlapping business scope, and therefore are not in competition.
20 Jilin Huari Small Loan Co., Ltd.
Ms. Fang Cheng, the Independent Non-Executive Director of the Company, is the shareholder of this company.
Company Name: Jilin Huari Small Loan Co., Ltd. Uniform Social Credit Code: 91220201550459326W Date of Establishment: February 8th, 2010 Address: No. 95 Henan Street, Chuanying District. Legal Representative: Yinghui Mo Type of Company: Limited liability company (Natural person investment or holding) Registered Capital: RMB 50 Million Business Scope: Handling small loan business; Handling consulting services about development, management and finance of small enterprises. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
The two companies do not have overlapping business scope, and therefore are not in competition.
Jilin Lanjin E-commerce Co., Ltd.
Ms. Fang Cheng, the Independent Non-Executive Director of the Company, is the supervisor of this company.
Company Name: Jilin Lanjin E-commerce Co., Ltd. Uniform Social Credit Code: 9122021431661448X3 Date of Establishment: September 11st, 2014 Address: Room 58, Floor 30th, Unit 1, No. 6-3 Building, Wankecheng Building, No. 99 Southern Binjiang Road, Gaoxin District Legal Representative: Xiuying Shi Type of Company: Limited liability company (Natural person investment or holding) Registered Capital: RMB 5 Million Business Scope: Electronic products, metal products, chemical products (excluding hazardous chemicals), mechanical equipment, digital products, communication products, building materials (excluding wood), home accessories, cosmetics, jewelry, crafts, textiles, clothing and household goods, toys, pre-packaged food and bulk food, healthcare products, furniture, household appliances, stationery supplies, kitchen supplies, daily necessities, decoration materials (excluding paint), sanitary ware, automobiles and auto parts, computers and auxiliary equipment sales; Commission agency (excluding auction); Export and import trading; House sales information consulting; House renting information consulting; Corporate management consulting; Insurance agency; Machinery equipment leasing; Conference and exhibition services; Corporate image planning; Design, production, agent, publishing all kinds of domestic advertisements. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Although Jilin Lanjin E-commerce Co., Ltd. has partly overlapping business scope with RYS, such as healthcare products, it is focused on the real estate development industry consulting and construction machinery leasing. Meanwhile, it does not operate any such business now. Therefore, these two companies are not in competition.
21 Songyuan Sihandacheng Commerce Co. Ltd.
Ms. Yanrong Qiao, the Chairwoman of the Board of Directors and Chief Executive Officer of the Company, is the legal representative, shareholder, executive director and general manager of this company.
Company Name: Songyuan Sihandacheng Commerce Co. Ltd. Uniform Social Credit Code: 91220701307855628M Date of Establishment: May 27th, 2014 Address: Room 801, Unit 8, Building A, Zuoanyuyan Apartment, economic and technological development zone, Songyuan City, Jilin Province Legal Representative: Yanrong Qiao Type of Company: Limited liability company (Natural person investment or holding) Registered Capital: RMB 0.5 Million Business Scope: Pre-packaged food, bulk food, drinks, gifts, electrical and metal materials, daily groceries, labor protection products, computer consumptive materials sales, product promotion, market research and consulting services, advertising information and media services (excluding media advertising). (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
The two companies do not have overlapping business scope, and therefore are not in competition.
Jilin Xinkeqi Investment Co, Ltd.
Ms. Yanrong Qiao, the Chairwoman of the Board of Directors and Chief Executive Officer of the Company, is the shareholder of this company.
Company Name: Jilin Xinkeqi Investment Co, Ltd. Uniform Social Credit Code: 91220201MA144GR50B Date of Establishment: April 6th, 2017 Address: No. 7-1, 4th Road, Xiamen Street, Jilin hi-tech industrial development zone, Jilin City, Jilin Province Legal Representative: Qixue Dai Type of Company: Limited liability company (Natural person investment or holding) Registered Capital: RMB 200 Million Business Scope: Investing in its own assets; Investment consultation (excluding financial management, illegal fund-raising, illegal storage, loan, etc.); Corporate management consulting; Corporate image planning; Commodity trading information consulting; House renting; Large-scale event planning (excluding performance planning); Conference and exhibition services; Construction projects; Thermal insulation engineering; Decoration engineering; General cargo road transport; Building materials (excluding wood), metal products, electrical products, office supplies, computer and ancillary equipment, chemical products (excluding hazardous chemicals), thermal insulation materials, metal materials (excluding precious metals), steel, building decoration materials (excluding hazardous chemicals), machinery and equipment sales. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
The two companies do not have overlapping business scope, and therefore are not in competition
22 6.8 Main Competitors
Information below is provided by Chinese National Enterprise Credit Information Publicity System and updated by www.qichacha.com (Updated by May 9th, 2018).
RYS’s main competitors in the local area are listed below:
Hunchun Huaruishenye Biological Engineering Co. Ltd.
Company Name: Hunchun Huaruishenye Biological Engineering Co. Ltd. Uniform Social Credit Code: 912224047911079970 Date of Establishment: July 24th, 2006 Address: No. 3 Community, Hunchun border economic cooperation, Jilin Province Legal Representative: Lihua Jin Type of Company: Limited liability company (Non-listed, natural person investment or holding) Registered Capital: RMB 127.7 Million Business Scope: Processing and selling: ginseng products, ginseng series health products, bee products, beverages, vegetable products, confectionery products, tea and tea-related products, other food, traditional Chinese medicine granules, extracts, plastic containers (specific types of products can be found in Food Production Permit); Producing and selling: liquors; Planting and selling: ginseng; Purchasing and selling: agricultural products, sideline products, food and Chinese herbal medicines; Selling wholesale and retail: pre-packaged food (nutritious food), special equipment for food, groceries, cosmetics, healthcare products; Importing and exporting all kinds of goods and technologies that are self-operated or acted (excluding goods and technologies restricted or prohibited by the State); Nutrition and health consulting services, creative planning services, healthcare services; retailing: medical equipment, electronic healthcare equipment, instruments, electronic machinery and equipment; Breeding, processing and selling forest pigs, chickens and ducks; Agricultural technology promotion services, biotechnology promotion services. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
Tonghua Baiquan Health Food Co. Ltd.
Company Name: Tonghua Baiquan Health Food Co. Ltd. Uniform social credit code: 91220501686991549U Date of Establishment: June 15th, 2009 Address: No. 8555 Xinhua Street, Tongliao City, Jilin Province Legal Representative: Jie Kang Type of Company: Limited liability company (natural person investment or holding) Registered Capital: RMB 80 Million Business Scope: Health food sales; Pre-packaged and bulk food wholesaling and retailing; Primary processing of ginseng and Chinese herbal medicines; Primary processing of soup materials; Primary processing and purchasing of agricultural and sideline products; Confectionery products (tablet candy), beverages (solid beverages and other beverages), animal protein freeze-dried powder production, import and export trading. (Projects needed to be approved under the laws can be operated after approved by the relevant departments.)
RYS has several advantages that set it apart from its competitors and make it a more desirable choice to potential clients and consumers.
23 Competitive Advantages
RYS applies the business mode of experience stores. Compared with other traditional modes, this one has unique advantages, which are specifically exhibited in four aspects:
I. Benefits for Both Sides In traditional modes, terminal sales points will ask for more profits from companies, which leaves companies less margins. However, in RYS's marketing mode, RYS and experience stores are in a cooperative relationship. They are one community of interests, facing the same customer groups. Therefore, RYS and experience stores will work together to achieve greater benefits and profits for both sides.
II. Avoiding Competition with the Same Kind Homogenization is a serious problem in the health product market, and consumers find it hard to make decisions when facing numerous choices. However, experience stores sell a series of products supplied by the same company, narrowing down consumers’ choice range. At the same time, RYS helps experience stores develop personalized services, so that they can promote products with clear targets. Therefore, opening experience stores avoids competition with products of the same kind in the terminal sales points.
III. Attracting Loyal Consumer Groups An experience store is a powerful proof of the company's overall strength, product quality, and service sincerity. The information delivered by experience stores to customers is "We do not do one-off business. Instead, we provide post-sale services." Therefore, experience stores can achieve more sales and develop more loyal consumers.
IV. Pleasant Shopping Experience The marketing mode of experience stores takes consumers’ increasing rational thoughts into account. After experiencing a product, consumers will have a chance to confirm the effect, and therefore they will be more likely to purchase the product in stores. At the same time, Chinese consumers prefer to spend money at fixed places, because a fixed place is more reliable. Therefore, experience stores will provide consumers with pleasant shopping experience.
In addition, in experience stores, many consumer-targeted business activities can be carried out to develop markets, for example health education lessons, social events, and products sales. These advantages may help RYS stand out in the competition.
24 7. Company Advantages and Investment Highlights 7.1 Potential Market Demand
As the living standard rises, Chinese consumers pay more attention to health issues and need more reliable platforms to purchase health products. Furthermore, consumers’ demand generates investors’ demand for reliable marketing channels. The selected products, authorized chain experience stores, consulting and tutoring services about store operation supplied by RYS are exactly in line with this market demand.
7.2 Good Brand Reputation
The trademark “Bubushengwei” used by experience stores has a good brand reputation and consumer base. After RYS has the authorized license to use this trademark and related business, it is used as a unified mark in all experience stores. Through well-operated experience stores, the brand effect can be enhanced, the brand image can be improved, and therefore more loyal customers and clients can be attracted.
7.3 Quality Product Supply
The upstream suppliers that RYS has selected have complete product lines, which supply products that aligns with the traditional Chinese health preservation concept “tonic food”. RYS cooperates with three mutually independent suppliers, which cuts down supplying risks.
7.4 Efficient Cooperation Structure
The cooperation between RYS and upstream suppliers has reduced the sales and management costs for upstream suppliers, enabling them to focus on product research and development. Store operation guidance and selected quality product series have reduced the store operation costs for downstream distributors (clients), enabling them to focus on services and sales. Manufacturers, RYS, and experience stores perform their duties respectively, divide profits reasonably, and therefore achieve profits in a more efficient way. 7.5 Stable Business Income
The business income of RYS comes from consulting and tutoring fees and product sales. Costs and tax rate of consulting and tutoring services are relatively low, which leaves more margin for RYS. Also, consulting and tutoring services help to keep the client group stable and to promote products, which ensures stable business income.
7.6 Promotion with Fidelity
RYS uses experience stores as promotion bases, implements “to inform customers honestly and fully” as the market promotion principle, establishes good corporate reputation in customers’ minds, develops markets step by step, and attracts customers via favorable communication and considerate care.
25 8. Directors and Senior Management
Directors
Name Position
Ms. Yanrong Qiao Chairwoman of Board of Directors
Ms. Yanru Li Executive Director
Ms. Fenghua Chen Executive Director
Mr. Changfang Zhao Executive Director
Mr Yang Yu Executive Director
Mr. Jiyu Yuan Executive Director
Ms. Jinhua Hou Executive Director
Mr. Shuheng Tang Independent Non-Executive Director
Ms. Fang Cheng Independent Non-Executive Director
Ms. Yanrong Qiao, Chairwoman of Board of Directors
Ms. Yanrong Qiao is the Chairwoman of Board of Directors of the Company. Ms. Qiao started her business career from a beauty salon. She did business in various fields, such as garment, agricultural production materials and chemical fertilizers, pharmacy and health products, and has achieved great success. Ms. Qiao is experienced in managing and operating a company.
Ms. Yanrong Qiao, age 46, is a resident of China. Home address: Room 1-2-202, Block 12, Banfutown, East Dongzhen Road, Ningjiang District, Songyuan City, Jilin Province.
Ms. Yanru Li, Executive Director
Ms. Yanru Li is the Executive Director of the Company. Ms. Li had run a beauty salon for 23 years. Via learning advanced technology consistently and updating the equipment to meet customers’ needs, she has earned a good reputation for her salon. Ms. Li is good at maintaining customer relationship and managing employees.
Ms. Yanru Li, age 46, is a resident of China. Home address: Room 806, Block 149, Longxiwan, Tuanjie Street, Songyuan City, Jilin Province.
26 Ms. Fenghua Chen, Executive Director
Ms. Fenghua Chen is the Executive Director of the Company. Ms. Chen had run her own kindergarten for 7 years. Then, she entered China Life Insurance Co., Ltd Jilin Branch. For her hard work, she got promoted from a saleswoman to senior business manager. Ms. Chen is good at expanding market and maintaining customer relationship.
Ms. Fenghua Chen, age 54, is a resident of China. Home address: Room 101, Unit 1, Block 24, New Pingan Home Second District (B), Northeast of East Zhentie Street, Kouqian Town, Jilin City, Jilin Province.
Mr. Changfang Zhao, Executive Director
Mr. Changfang Zhao is the Executive Director of the Company. Mr. Zhao has worked in different fields. He entered life insurance industry in 1996 and got promoted to Sales Director due to his hard work and positive attitude. Then he worked as Vice Executive Officer in Luzhou Liquor Company Limited. Mr. Zhao is experienced in sales and management.
Mr. Changfang Zhao, age 48, is a resident of China. Home address: Second Committee of Wenhua Street, Ningjiang District, Songyuan City, Jilin Province.
Mr. Yang Yu, Executive Director
Mr. Yang Yu is the Executive Director of the Company. He has abundant working experience in corporate management, as he had worked as the General Manager in several companies for over 10 years. In 2013, he worked as the CEO in Tieling Lubaotang Pharmaceutical Company Limited and brought this company back to profitability via his effective management. Mr. Yu is good at managing a company and coordinating resources.
Mr. Yang Yu, age 45, is a resident of China. Home address: No. 44, 8th Floor, Block 45, North Shengli Road, Lishan District, Anshan City, Liaoning Province.
Mr. Jiyu Yuan, Vice President and the Board Secretary
Mr. Jiyu Yuan is the Executive Director of the Company. Mr. Yuan has more than twenty years’ working experience in purchasing and sales and 8 years’ individual business experience. He is skilled in expanding market and managing enterprise, as he helped several companies return to profitability by improving marketing strategies, enhancing brand reputation, and making promotion plans. Also, Mr Yuan is good at communication, business operation and management.
Mr. Jiyu Yuan, age 42, is a resident of China. Home address: Room 1402, Unit 4, 27 Longtaifuliwan, Henan Street, Panshi City, Jilin Province.
28 Ms. Jinhua Hou, Executive Director
Ms. Jinhua Hou is the Executive Director of the Company. Ms. Hou has more than twenty years’ working experience as a manager in Changchun Tongleyuan Dancing Hall and Anli Company. During her work, she helped to build up management system and arranged professional training to employees.
Ms. Jinhua Hou, age 51, is a resident of China. Home address: 2nd Floor, Unit 4, Block 13, District C, High-tech Zone, Jilin City, Jilin Province.
Mr. Shuheng Tang, Independent Non-Executive Director
Mr. Shuheng Tang is an Independent Non-Executive Director of the Company. Mr. Tang graduated with a bachelor’s degree in Law from Changchun University of Science and Technology and holds a Lawyer’s License issued by Jilin Provincial Department of Justice. He has been providing various legal services for many clients since 2009, and helping clients improve management structure. Mr. Tang is highly praised and well-known for his professionalism.
Mr. Shuheng Tang, age 47, is a resident of China. Home address: Room 2003, Block 6-4, Wankecheng, Fengman District, Jilin City, Jilin Province.
Ms. Fang Cheng, Independent Non-Executive Director
Ms. Fang Cheng is an Independent Non-Executive Director of the Company. Ms. Cheng graduated with a bachelor’s degree in Biopharmaceuticals from Jilin University, and a master’s degree in Economics Management from Jilin Provincial Committee School of the Communist Party of China. She holds a Pharmacist’s License approved by Jilin City Pharmaceutical Chemical Industry Management Office.
Ms. Fang Cheng, age 47, is a resident of China. Home address: No.17, 11th Floor, Unit 1, Block 9, World New Village, East Jiefang Road, Changyi District, Jilin City, Jilin Province.
29 Senior Management
Name Position
Ms. Yanrong Qiao Chief Executive Officer, CEO
Mr. Jiyu Yuan Vice President / the Board Secretary
Ms. Jinhua Hou Chief Administrative Officer, CAO
Mr. Jianfeng Wang Chief Financial Officer, CFO
Ms. Yanrong Qiao, Chief Executive Officer
Ms. Yanrong Qiao is the Chief Executive Officer of the Company. Ms. Yanrong Qiao has more than 10 years’ business experience in pharmacy and health industry since she entered the field in 2006. She is experienced in maintaining customer relationship, expanding customer resource, analyzing market and managing a company. Ms. Qiao established Rui Long Yi Da Commerce Group Ltd. in 2017.
Mr. Jiyu Yuan, Vice President and the Board Secretary
Mr. Jiyu Yuan is the Vice President and the Board Secretary of the Company. Mr. Yuan entered the health industry in 2008. From his previous experience as a marketing director, he has gained a thorough understanding about product promotion, market expansion and company management, which enables him to run the Company well.
Ms. Jinhua Hou, Chief Administrative Officer
Ms. Jinhua Hou is the Chief Administrative Officer of the Company. Ms. Hou has abundant experience in administrative work and management. She entered the health industry field in 2014 and has gained useful resources from her previous work.
30
Mr. Jianfeng Wang, Chief Financial Officer
Mr. Jianfeng Wang is the Chief Financial Officer of the Company. Mr. Wang graduated with a bachelor’s degree in Finance from Harbin University of Commerce. He had worked as a financial officer in Jilin City Pharmaceutical Co., Ltd. and Jilin Pharmaceutical Trading Co., Ltd. for 26 years. Mr. Wang is experienced in taxation and finance inspection, reasonable tax avoidance and business assets management.
Mr. Jianfeng Wang, age 48, is a resident of China. Home address: No. 62, 6th Floor, Unit 2, Block 2, Carton Factory, Xiangyang Street, Chuanying District, Jilin City, Jilin Province.
31 9. Financial Statements Please find the Auditor’s Report in the Appendix.
32 Three-Year Projection
Summary of Three-Year Projection (in RMB)
Three-Year Projected Profit Composition (in RMB)
Summary of Three-Year Projection (in USD)
Three-Year Projected Profit Composition (in USD)
Note: This projection in USD is based on the exchange ratio between USD and RMB on March 12th, 2018, 1 US Dollar equals 6.33 RMB.
33 Basis for Profit Projection
Revenue from Consulting Services: According to RYS’s development plan, the number of experience stores is expected to reach 102 in 2018, and the estimated revenue from consulting services is RMB 4.66 million. In 2019 and 2020, the number of experience stores is estimated to increase by 115 on average, while the revenue from consulting services is estimated to increase by RMB 5.45 million. The estimated cost is around 35%. Therefore, the estimated profit is RMB 3 million in 2018 and RMB 3.54 million in 2019 and 2020. Revenue from Other Aspects: The main revenue from other aspects is from product sales. As the number of experience stores increases, product sales will increase accordingly.
Asset-liability Ratio: RYS’s main business is focused on product sales and consulting services, and therefore it has no liabilities. Thus, the asset-liability ratio is 0.
Net Assets: Net assets are converted into monetary funds from profits.
Market Value According to the Company's three-year projection, the total number of shares is 300 million, each share will be 0.11 USD, and the total market value of the Company will be 33 million USD. The projection of the market value of the Company will be described in this section.
Methodology The discounted cash flow method (DCF) is adopted to project the market value. DCF is a method that uses the concept of time value of money to value a project, company, or assets. This method is suitable for the Company which has great development potential and strong core competitiveness. Therefore, DCF is the method applied to project the market value of the Company.
Approach The calculation process of the market value consists of two sections: one is the total profit of three years, the other one is the present value of perpetual annuity which equals the profit of product sales and other services. The formula is shown below. “P” stands for the present value of perpetual annuity. “A” stands for the annual return and “i” stands for the interest rate.
The present value of perpetual annuity:
Analysis
The formula for market value: [(Total three-year projected net profit) + P (A,i)] / RE Input Symbol Description Data
F2018 Projected net profit in 2018 RMB 5 million
F2019 Projected net profit in 2019 RMB 7 million
F2020 Projected net profit in 2020 RMB 10 million “A” During the calculation, the profit in2020 will RMB 10 million be regarded as the annual return for the present value of perpetual annuity. “i” For “i”, the rational interest rate is used, 5%
34 referred to the interest rate from the bank financial products.
th, “RE” The exchange ratio on March 12 2018 from 6.33 USD to RMB used by the Company
Calculation for Market Value [(5+7+10) + P (10, 5%)]/6.33= 33.49 million USD Calculation for Share Price 33.49 million USD/ 300 million shares =0.11 USD per share
Limitation This projection has its limitation due to potential biases in the calculation process because it lacks consideration of risks and other uncertainties. Meanwhile, some unpredictable factors can also affect the result, such as the changing exchange ratio and inflation. Therefore, limitation of this projection should be made aware of to the decision makers.
Conclusion Based on the concept of the time value of money, the market value is calculated on the total projected profit from 2018 to 2020 and the perpetual annuity which uses the projected profit in 2020 with the rational interest rate referred to the interest rate of the bank financial products. The market value is around 33.5 million USD with 300 million shares (the total number of shares listed in this company), and the share price is 0.11 USD.
Disclaimer: Above projections are based on data and information provided by the Company, which might contain biases from the unilateral subjective projection of the Board of Directors and the management team. The projections are also based on the macroeconomic and social environment, the specific industry’s situation, market situation and the Company’s current position. Hence, the above projections do not provide any warranty. Therefore, the listing advisor, lawyer, and auditor will also not be liable for these projections. The Company and the management team want to pursue an excellent financial condition, but the risks and uncertainties can affect the result. Therefore, the Company cannot guarantee the outcome would be the same as the above projections. Consequently, all investors should be aware of these risks and uncertainties and should not solely rely on these predictions when making their decisions. Investors must carry out independent analysis and judgments.
35 10. Material Contract and Agreement
Material Contracts Executed by the Company
According to the information provided by the Company, the Company’s performance and completion of the major contracts during the reporting period are shown below.
Loan Contract
The Company confirmed that they do not have any loan contract.
Supply Contract
RYS has supply contracts with Jilin Yunshang Healthcare Food Company Limited (hereafter referred as Yunshang) and Ningcheng Town Yuwei Wine Business Firm (hereafter referred as Yuwei). Yunshang supplies ZOAN series products to RYS. Yuwei supplies Yuanli Healthcare Wine to RYS.
Sales Agent Contract
RYS has a sales agent contract with Tieling Lubaotang Pharmaceutical Group Limited (hereafter referred as Lubaotang). Lubaotang authorizes RYS to use the trademark “Century Luwangchao” solely during the cooperation and supplies products to RYS. The two form a partnership based on mutual understanding and trust.
Other Receivables and Payables
According to the relevant information provided by the Company and the Auditor’s Report, other receivables and payables of the Company are legitimate, valid and related due to regular production and business activities.
36 11. Risk Factors and Litigation
Investors to buy our stocks should consider the risks below.
Business Risks
(a) Operational risks: Downstream distributor clients of RYS applies independent operation mode, hence clients have the control and operation rights of experience stores. Client loyalty depends on RYS’s long-term regulation, marketing planning and business tutoring. Therefore, if RYS does not provide satisfactory services, there is a risk of losing clients.
(b) Risks related to products and services: The products and services that RYS supplies include health products and operation consulting and tutoring services. These two parts are combined in balance to achieve better results. If the balance is broken, RYS will face problems such as losing clients and trust, which will directly affect its economic benefits. Meanwhile, as the market develops, if RYS fails to meet the emerging demands, new products will impact on the current products of RYS. However, RYS has prepared well-designed plans to tackle with this situation.
Industrial Risks
As technology progresses, health products are being upgraded and replaced at a fast pace. As the information industry and communication tools develop, sales channels are being reshaped. These have a great impact on current businesses. Therefore, if RYS fails to continuously develop itself or maintain its strength, there is a risk of it being eliminated from the market.
Market Risks
Now RYS is rather focused on one area in the market, it requires hard work and time to expand its scope and increase its market share, as well as branching out geographically to establish stable sales channels. This is a competitive market hence there is a risk of it not being competitive in some markets.
Risks Related to National Policy
The Chinese government is currently exercising a reform and gradually opening our market to the world, this means our national economy policies, taxation system and so on will also experience changes gradually. The changes in policy might affect the operation and performance of our company.
Stock Market Risks
The risks of stock market are ever presenting, and the fluctuation of stock prices may result loss to investors. There are numerous factors that can affect stock prices, including our company’s performance, changes in national economy policies, changes in the national financial situation, changes in interest rate, inflation and deflation and other unpredictable factors. Investors should be aware of the risks of the stock market before buying our stocks.
37 Other Risks
Investments
Investing involves certain risk considerations, including currency fluctuations, lack of liquidity and price volatility of the stock markets, government involvement and influence on the private sector, political and economic factors, leverage and other factors. These might adversely affect the Company’s activities and the value of its investments. There are particular risks relating to the investment and trading of equity and debt instruments, which include the uncertainties involved in trading in emerging markets. The ability to trade profitably in emerging markets may be affected by world events, changes in foreign policies and other economic and political factors that are outside the control of the Company. Set forth below are certain factors, which should be taken into consideration before making a decision to buy shares of the Company. While the Management believes the following to be comprehensive, it is not intended to include all of the risks that may be encountered. Accordingly, potential investors are advised to consult their financial advisors before buying any shares of the Company.
General
The transactions that the Company will engage in may involve risks. Growing competition in the market may limit the ability to take advantage of opportunities. No assurance can be given that the Company strategies employed will be successful or that shareholders will realize net profits on their respective investments.
General Uncertainty and Risks
There are some unpredictable factors that might affect the business. The previous sales cannot be the guaranteed indicator for the future. Sales might increase or decrease in the future.
Economic Conditions
The success of any investment activity may be affected by general economic conditions.
Exchange Rate Fluctuations
The Company’s accounts are denominated in US Dollars. Investments of the Company may be in currencies other than the US Dollars, such as the Chinese RMB. Similarly, certain expenses of the Company including organizational, offering, operating expenses and the fees of the Management and service providers, will incur in Chinese RMB. Accordingly, the Company is at risk and liable for any gain or loss incurred due to the exchange rate fluctuation, for example, the investment for the natural resources, automation equipment, brand development and human resources, as referred in Section 6. Thus, shareholders and investors should realize the risk of exchange rate- fluctuations.
Litigation
The Company might be named as a defendant in a lawsuit or in a regulatory action stemming from the conduct of its business and activities of a company personnel. In the event that such litigation occurs, the Company would bear the costs of defending itself, and understands the risk of unsuccessful results of the litigation. It should be noted that the Company and Management have consulted with lawyers, accountants and other experts regarding the constitution of the Company and the business of its subsidiaries. Each prospective investor should consult his own legal, tax and financial advisors regarding their desire to make an investment in the Company.
38 IN VIEW OF THE COMPLEXITIES OF APPLICABLE TAX LAWS, EACH PROSPECTIVE FUTURE
INVESTOR / SHAREHOLDER OF SHARES OF THE COMPANY IS STRONGLY URGED TO CONSULT
ITS OWN TAX ADVISORS ON THE POSSIBLE TAX CONSEQUENCES OF BUYING, HOLDING, SELLING
OR TRANSFERRING SHARES UNDER THE LAWS OF THEIR COUNTRY OF CITZENSHIP, RESIDENCE OR DOMICILE
The Company’s litigation, arbitration or administrative penalties
According to the “China Judgement Online”: http://wenshu.court.gov.cn/, until May 8th, 2018, Jilin Rui Yi Sheng Trading Company Limited does not have any litigation record.
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40 Dutch Caribbean Securities Exchange, Listing Advisor
荷兰加勒⽐证券交易所上市保荐机构
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