I
annual report 2014
12
Statement from the
Managing Director/CEO
MANAGEMENT DISCUSSION AND ANALYSIS
Our Group celebrates another year of commendable performance in 2014 amid the various challenges faced by the
sportswear industry in China. Our Group have effectively leveraged on our strong fundamentals including the established
brand equity, stringent quality control, value-for-money functional yet aesthetic product design and increased production
capacity to stay competitive amid the intensifying market competition.
During the financial year under review, our Group has realigned the market positioning, whereby the primary focus remained
to be a brand-driven sportswear manufacturer targeted on the China domestic mass-market with a secondary focus on
OEM production for various overseas brands (through intermediaries – the import/ export trading companies).
Our continued success for the year is primarily attributable to the following strategic measures:
• Effective Management of Distribution Channel
During the financial year, our Group continued to coordinate with our authorised distributors and retailers to optimise
the retail coverage of our ‘XiDeLang’ brand products. Our Group has collaborated closely with our authorised
distributors and retailers to reform the existing portfolio of retail channels, whereby retail stores with lower profit
efficiency were either being closed down or consolidated with other neighbouring outlets.
In order to sustain the competitiveness and profitability of our authorised distributors and retailers, which is important
for the future growth of our proprietary brand business segment, our Group continued to implement a proactive
control on sales orders to the distributors and retailers to minimise the risk of overstocking at the retail end. The
distributors and retailers were encouraged to be more flexible in making replenishment orders to optimise the in-
store inventory level while remain vigilant to capture the market potential.
• Efficient Supply-Chain
In order to ensure prompt delivery of quality products to support the extensive retail network and to fulfil the customers’
demand, our Group has placed great emphasis on enhancing the integration and management of the supply-chain.
Stringent quality control has been put in place to minimise the risk of defects and to ensure only the top quality
products are delivered to our customers. In-house production is closely monitored with quality control incorporated
into the various stages of the production for prompt detection of any defects. For external supply, our Group leverages
on the close rapport with the raw material suppliers and outsourced apparel manufacturers to ensure the incoming
supplies are of good quality.
Product homogeneity is one of the key challenges faced by the sportswear industry in China. To overcome this, our
Group has placed great emphasis on continuous product innovation. Our marketing team engage the authorised
distributors and retailers regularly to gather the consumers’ feedback and insights to the local market condition and
development of the various provinces and cities in China. These inputs are shared with our in-house research and
development team for improvement on the functionality and design of the existing models, as well as innovation of
new models that meet the fast-changing consumers’ taste and preference.
Our Group has also leveraged on the increased production capacity at the new headquarter and production centre
to improve the flexibility and efficiency of sport shoes production and minimise the reliance on outsourcing, thereby
reducing the production lead time and the waiting time for stocks replenishment to the distributors and retailers.
Our Group is also better positioned to serve the OEM contract customers and establish another stream of stable
income.
• Balanced Marketing Strategy
Branding has always been an important distinguishing factor for our Group, which helps differentiate our Group from
other industry players.
During the financial year, our Group continued to adopt a balanced marketing strategy. Marketing and promotional
efforts are carefully planned to maintain adequate level of brand exposure while ensuring cost-effectiveness, so
that our Group is well-positioned to tap into any expansion opportunities when the market demand recovers in the
future.
