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Sportswear revenue up sufficiently by 30.8%, Shenzhou International
04
Apr '11
The board of directors of Shenzhou International Group Holdings Limited is pleased to present the results of the Company and its subsidiaries for the year ended 31 December 2010.

Business review and future prospects and strategies

Business review
During the year, the surge in raw materials, water resources and energy prices and the rise in labor cost have exerted immense cost pressure on garment manufacturers. Due to the requirements under the energy-saving and emission-reduction project carried out by the government in August 2010, the production in the Group's plants in Ningbo has been suspended for 8 days.

Even though the operating environment was severe during the year, the Group has successfully surmounted all kinds of hurdles and achieved satisfactory results attributable to its advanced planning and preemptive measures, such as stockpiling raw materials, acquiring the right to use water from a local reservoir for 20 years and unremittingly improving the working and living environment of the staff.

In review of the work during the year, the Group has paid enormous efforts to adjust its product mix, forage for domestic customers, optimize the layout of production bases and improve the welfare of its staff. The specific performance included:

More Reasonable Product mix
The Group has sustained close cooperative relationship with key sportswear brands and expanded the business volume so that the Group's product mix has improved persistently. For the year ended 31 December 2010, the revenue of sportswear increased by 30.8% as compared to 2009 and accounted for 50.2% of the total revenue, surpassing the share of casual wear in the total revenue for the first time.

The revenue of underwear maintained rapid growth for the year ended 31 December 2010 and accounted for 11.0% of the total revenue, rose by 41.3% as compared to 2009. The continual improvement in product mix helped the Group to effectively weather the adverse influence of the increase in production cost and secured a relatively stable profitability.

Optimal Enlargement of Domestic Customer Base
The Group considers the mainland China market as one with the highest potential. This is not only due to the aggregate garment consumption demand from the Chinese population of 1.3 billion, but also, more importantly, higher expectations for garment that result from the higher income of the mainland Chinese.

It is expected that while the overall consumption amount of garment rises, the consumption pattern will also change drastically with an accelerated increase in market demand for quality, stylish and inexpensive garment products. During the year, the Group has secured some leading domestic sportswear brands as its new customers.

This laid a better foundation for the Group to enlarge its sales in the domestic market while helping the Group mitigate the negative influence of the fluctuation in Renminbi exchange rate and changes in trade policies. For the year ended 31 December 2010, the revenue from the domestic market accounted for 20.2% of the Group's total revenue and increased by 24.0% from 2009.

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