We have adopted a strategy of opening self-operated retail points in major cities in the PRC, which we consider to be our core markets, so as to establish a meaningful presence in each of them. Cities in which we operate self-operated retail points include Beijing, Shanghai, Chengdu, Tianjin, Shenzhen, Guangzhou, Nanjing, Qingdao, Wuhan, Jinan, Taiyuan, Changsha、Dalian and Zhengzhou.
 

As at 31 December 2023, we had 131 self-operated concession counters, all located within major department stores, like Wangfujing, Parkson, INZONE, Golden Eagle, Maoye, INTIME and New World etc., and popular shopping malls that primarily cater lifestyle products to mid-to-high income consumers. Selling our products through self-operated concession counters has enabled us to increase the exposure of our brands. Moreover, leveraging on our reputable brands and established relationships with these experienced store and mall operators will help us secure more choice spaces for our self-operated concession counters in new department stores and malls established by these operators in future.
 

As at 31 December 2023, we had 3 self-operated standalone stores, mostly located in shopping malls enjoying high levels of customer flow, thus ensuring a steady flow of consumers while enhancing our sales and brand awareness. In general, we believe that the shopping mall environment provides our brands with better sales penetration opportunities than having stores on high streets.

 

We engage third-party retailers which directly operate stores or concession counters in department stores or shopping malls in cities in the PRC where we do not operate retail points so as to prudently expand our sales network. These third-party retailers, located in cities like Hohhot, Mudanjiang, Yibin and Taibei, first purchase our products from us before selling them to retail customers according to our standardized nationwide pricing guidelines. Through this strategy, we increase the exposure of our brands and benefit from increased revenue upfront without having to incur the investment costs and inventory risks associated with establishing self-operated retail points in those cities.

 

We select our third-party retailers based on a range of criteria which we consider important for the operation of our sales network and brand image. Besides needing to have a solid background and impeccable creditworthiness, our third-party retailers are selected based on their local recognition and network, existing relationship with us, managerial capabilities, retail experience, capital resources, and ability to secure suitable retail point locations.

 

As maintaining a nationwide unified image for each of our brands is critical to our success, we require all our third-party retailers and their sales personnel to undergo our mandatory training sessions on brand image, retail point operation and product features.