Industry Prospects

Prospects for media storage products and related accessories

More than 80% of our turnover was accounted for by media storage products (including media storage pockets). The target market for these products is primarily the storage market for multimedia products such as CDs and DVDs as storage mediums which we believe is a growing market with the increase in usage of such multi-media products.

We are confident that the demand for our products to further increase with the rise in consumers' expectation for better quality and sophisticated products.

We are also of the view that markets such as Europe, US, Japan and the PRC will contribute significant growth to our Group in the near future.

Europe

Europe is our fastest growing market segment for AGVA. Presently, we supply to OEM customers in Europe such as the Hama Group whose marketing network includes Germany and Spain, and has strong store presence in department stores, specialist consumer electronics dealers and cooperative retail outlets. We believe that by working closer with our partners, we can tap into greater market potential in the whole of Europe. We expect the European market to contribute significantly to our growth as the demand for our lifestyle-oriented products increases.

The US & South America

Our Directors believe that our Group can benefit significantly by tapping into the world's largest market - the US market. We see strong potential in the US and South America market for both our own brands and products for OEM customers as it is a relatively new market for our Group.

Asia

Our Directors believe that the Asian countries are emerging from the regional economic downturn and are potential markets for growth. Our in-house brand of lifestyle-oriented products are sold and distributed in more than nine countries in Asia. In particular, we are placing our emphasis on the following Asian markets.

Japan

The Japanese economy is one of the largest economies in the world. Coupled with its high literacy rate, Japan is positioned as one of the largest consumers for information storage products, which will in turn create demand for media storage products.

Japanese consumers are immensely attracted by novelty. This represents an opportunity for us to satisfy niche market demand for product differentiation. We believe that the wide variety of our in-house brand lifestyle-oriented products could meet the ever-evolving consumers' demand in Japan. Our competitive production cost structure gives us an edge when marketing to the Japanese market.

The PRC

To tap the potential of the vast PRC consumer market, we established two subsidiaries, Dongguan Jinsheng Plastic Manufacturing Co. Ltd and Shanghai AGVA Co. Ltd to market our products. This has enabled us to directly distribute and market our own "AGVA" products to the PRC consumers. With the advent of consumerism in the PRC, in particular the increase in demand for branded and premium quality products by the increasingly affluent Chinese consumers, we believe that there are substantial demands for our in-house brands of lifestyle-oriented products.

Our Directors believe that we will benefit from the continual global outsourcing trend. Many OEMs, having realized the benefits of focusing on competencies, have increased the transfer of their more operational cost-centered functions to third party specialty manufacturers.

We believe that our manufacturing facility, which is located in Dongguan, the PRC, where labour and overhead costs are generally lower, will allow us to have price-competitiveness over other non-specialty manufacturers. Our fully integrated supply chain management system also allows us to provide a complete one-stop manufacturing solution to our OEM customers. Therefore, our Directors believe that our Group is well positioned to take further advantage of the global outsourcing trend.