Business Credit Report
Thorough Report
Normal

Contents

I. Summary

II. Registration
III. History

IV. Shareholders/Responsible Authority

V. Management
VI. Administrative Structure

VII. Operations

VIII. Business Condition and Foreground
IX. Bankers

X. Financial Standing

XI. Major Indicators

XII. Affiliated Companies
XIII. Field Enumeration
XIV. Industry Overall
XV. Comments
XVI. Credit Rating

All amounts in this report are given in Renminbi Yuan unless otherwise stated and in this report, the “subject” means the “Sample Cosmetics Co., Ltd.”

I. Summary

Name：
Sample Cosmetics Co., Ltd. (SSS)

Address：
** North Road, Beijing China

Zip Code：
100000

Telephone：
86-10-68888888

Fax：
86-10-68888888

Starting Year：
1991

Legal Form:
Joint Venture

Executive：
Mr. Mu **

Nature of Business：
Daily used chemicals manufacturing

Scale:
Middle

Employees：
1080 (average in 2000)

Registered Capital：
94,300,000

Right to Imp. & Exp.:
Yes

Listed Company or Not:
Unlisted

II. Registration

Registered Office:
Beijing Administration of Industry and Commerce

First Registered Date:
Dec 24, 1991

New Registered Date:
Jan 5, 2000

Registered Add:
Same as above

Registration Number:
S0000001

Registered Capital:
94,300,000

Legal Representative:
Mr. Sen **

The Term of Validity:
15 years

Business Scope:
Cosmetic, dressing appliance, packing container, mouth care and cleaning article, cosmetic materials, traveling cleaning article, and little ornament manufacture and sales; related technology consulting

III. History

1. Establishment Background

The Foreign Sample Co., Ltd. is one of the world famous enterprises for manufacturing high-class cosmetic products. It is listed as the top four cosmetic company in the world.

In the early 1980’s, Foreign Sample Co., Ltd. began to cooperate with Beijing LL Company in the way of selling its advanced technology to it.

Beijing LL Company was one of the early factories in China to produce and sell cosmetics. It is recognized by the state as a pillar enterprise in the national cosmetics industry.

Based on more than ten years of technological cooperation, Foreign Sample Co., Ltd. and Beijing LL Company jointly established the Sample Cosmetic Co., Ltd. (SSS) in December 1991. The joint venture has adopted the advanced technology and scientific management for the production of popular and high quality cosmetics to meet the market demand both in China and abroad.

2. Development

Dec.1991
Subject was registered with the capital of 72,300,000 and began the initial construction.

Jan. 1994
Started to sell “Auau” series cosmetics and set up exclusive counters at major department stores in Beijing, Shanghai, Tianjin, Harbin, Dalian, Chengdu, Hangzhou, Guangzhou, etc.

1996
Due to a sharp increase of sales, subject conducted a reconstruction in order to enhance its capacity of production. The product lines were added to 8 when the reconstruction had been finished by early 1998.

1998
More than 180 exclusive counters were set up in more than 30 cities.

1999
Added registered capital to 94,300,000 and changed its registration record by the end of this year.

2000
Former GM Y (Current position is the GM of Sample Europe Branch) left the company and Mr. Mu took the position.

IV. Shareholders/Responsible Authority

V. Management

Position: Chairman of Board


Name: Mr. Sen **
Nationality: JJ

Gender: Male
Married Status: Married

Age: 58
Education: Master’s degree

Work Experience:


1991-present
At the present position, responsible for important decision

He is the Chairman of Board of Sample Co., Ltd. in Japan

Position: General Manager


Name: Mr. Mu **
Nationality: JJ

Gender: Male
Married Status: Married

Age: 52
Education: BS degree

Work Experience:


2000-present
At the present position, responsible for daily operation

Before 2000
Worked in Sample Co., Ltd.

VI. Administrative Structure

VII. Operation

1. Employees
Total Employees:
1080
(Average in 2000)

Full Time
980

In headquarter
680

Administrators:
121

Technicians:
35

2. Area
Total Area: 32700
Square Meters


Out of which, the owned office area: 2700
Square Meters


the owned factory area:30000
Square Meters

3. Main business
Cosmetics manufacture and sales; related beauty consulting and service.

4. Primary Products

Now subject has about 200 types of products.

5. Purchase and Payment Terms

Among the 35% materials purchased in domestic market, there are parts supplied by the branches or offices of foreign manufacturers. In a word, there are about 80% materials imported from overseas.

6. Sales and Payment Terms

Auau branded products sells in North China a little better than in South China. The main reason lies in the fewer brands in north market.

VIII. Business Condition and Foreground

l Business condition

1.Brand

Now subject and its brand, Auau, are famous in domestic market. The sales revenue of Auau products is among the top 3 in 90% retail shops.

2.Production organization

The production is strictly designed according to sales demand. Each week, each counter reports its sales plan to its responsible office, and according to its inventories, the latter reports it to the headquarters in Beijing monthly. The report is the base of production.

3. Capacity of produce

4. R&D

Subject has no independent R&D department. Sample Co., Ltd. in Japan set up a special department to development products in China to insure the technology and fashion of AUAU consistent with its headquarters.

l Foreground

2001 is the 10 years anniversary of subject. Subject plans to carry out some new ways to develop. Firstly, it changed its image prolocutor. Secondly, it plans to speed the renovation of new products.

The marketing ways and internal management is imported from Japan Sample, and will not changed in near future.

To be a first-rate domestic enterprise with the top one market shares in the international cosmetics field is its goal.

IX.            Bankers

X. Financial Standing

Data Source: Local ABIC

1. Profit & Loss Sheet

2.Balance Sheet

Dec 31; RMB 1,000

XI. Major Indicators

1. Major Indicators             

(Source: The Annual Report of Industry, 1999, State Statistical Bureau)

Profit of Sales = Pre-Tax Profit/Sales Revenue

Turnover of Total Assets = Sales Revenue/Total Assets

Profit Return = Pre-Tax Profit/Total Assets

Equity Return = Pre-Tax Profit/Equity

Debt Raito = Total Liability/Total Assets

Current Ratio = Current Assets/Current Liability

Quick Ratio = Current Assets-Inventories/Current Liability

Inventory Turnover Rate = Cost of Sales/Inventory

Receivable Turnover Rate = Sales Revenue/Accounts Receivable

2. Financial Analysis

l The profit gaining indicators is much higher than the average level in the industry, which shows its strong capacity of profit gaining.

l The debt ratio is 25.68% in 2000, and the current ratio and quick ratio is good in both 1999 and 2000. The capacity of paying off debts is good.

l The inventory turnover rate and receivable turnover rate is fair.

XII. Affiliated Companies

1. Office (18)

Tianjin, Shenyang, Changchun, Dalian, Zhengzhou, Nanjing, Shanghai, Fuzhou, Changsha, Hangzhou, Wuxi, Chengdu, Kunming, Wuhan, Jinan, Hefei, Chongqing, and Nanchang

2. Branch

Beijing


Add:
No. 3701 Jing Guang Center, Beijing 100020, China

Tel:
010-65973010

Fax:
010-65973250

Shanghai


Add:
Shanghai Commercial City, No. 100 Nanjing West Road,

Shanghai 200020, China

Tel:
021-62798379

Fax:
021-62798040

3. Sister company

Name:
Shanghai Zotos CITIC Cosmetics Co., Ltd.

Add:
No. 1558, Long Dong Street, Xinyuan Zhangjiang Industrial Park,

Shanghai 201203, China

Tel:
021-58558788

Fax:
021-58952786

XIII. Field Enumeration

Area:
Industrial

Type of building:
Office/factory

Condition of premises:
Good

Condition of facilities:
Advanced

Subject is located in Beijing Economy & Technology Development Area. It is the first enterprise to be established in the Area. It is conveniently located next to Beijing-Tianjin highway, a mere ten kilometers from downtown Beijing. The company occupies 32,700 sq.m. The factory site is peaceful and capacious.

XIV. Industry Overall

The company belongs to the Daily used chemicals manufacturing sector. In this sector, there are 1197 producers, of which, 27.32% are of deficit enterprises. In 1999 sales revenue was 52,892,000,000. The average Pre-Tax Profit/Total Assets in this sector is 2.56%.

1.The Scales of the Industry:

1999, Unit: RMB1,000

2.Financial Standing

1999, Unit: RMB 1,000,000

Source: Industrial Annual Report 1999, the Statistical Bureau

3.Top five enterprises in the industry in term of revenue

Unit: RMB 1,000,000

Source: Industrial database of ACMR.

XV. Comments

1. Operation

SSS is the first company invested by Japan Sample. As one of the leading companies in this field, Sample granted subject many advanced management experience and technology.

The managers of subject are all experienced in this field, which is proved by the increasing sales and reasonable management system. There should be no big problem on management and operation in near future.

Subject’s management is strict and its distribution system is fairly reasonable.

2. Financial strength

The net assets reached 220,000,000, and the debt ratio is below 26%. Subject has strong financial strength.

Judging from the current ratio and quick ratio, the capacity of paying off debts short term is good.

3. Proficiency

Since its establishment, the sales revenue of subject has been increased. Most of its major financial indicators are better than the average level of the industry, especially those of profit gaining.

4. Perspectives

Subject kept consecutive two profitable years at a much higher rate than the average of this sector.

It is a market with great potential in China. With the good image in domestic consumers, its sales revenue is expected to be increase more.

Each subject will declare new products, which is an important and effective ways to attract consumers.

Under the permanent policy of “High quality, high service and high image”, subject keeps stable development in recent years. Subject has the potential to develop.

XVI. Credit Rating