Dear shareholders:

• INDUSTRY, MARKET AND COMPETITI

  According to a study in the United States, the estimated average reported constipation prevalence rate in the United States ranges between 12%–19%, just after the number of occurrence of hypertension. The Digestion Department of Internal Medicine of the Sixth Affiliated Hospital of the Sun Yat-sen University stated that “the domestic prevalence rate of constipation is very high, which is 6% among natural population, while the prevalence rate of chronic constipation in the 60+ group is as high as 22%.” Constipation related issues could be very serious, dry stool will lead to constipation difficulties, resulting in increased intra-abdominal pressure, higher blood pressure, and induce ischemic angina, cardiac arrhythmia, myocardial infarction and cerebral infarction.

  The Institute for Health Metrics and Evaluation of Washington University had analyzed 1,700 investigation reports, covering 188 countries and regions during 1980 to 2013, and the study found that currently 2.1 billion out of the approximately 7 billion population in the world were obese. During the 33 years, the overweight or obese male population had increased from 28.8% to 36.9% and the overweight or obese female population had increased from 29.8% to 38%. The United States is the country with the highest overweight or obese population, amounting to 160 million in aggregate, in which 86.90 million fall within the obese population, accounting for 13% of the total number of obese in the world. In China, the overweight population has reached 22.4% and the obese population has also reached 62 million, accounting for 9% of the world and ranks number two globally.

  Obesity is not only an isolate disease, but also a high-risk factor underlying type 2 diabetes, cardiovascular diseases, hypertension, stroke and various cancers. It has been classified by the World Health Organization as one of the top 10 high-risk disease inducing factors. Obesity not only affects the quality of life, but also imposes heavy burden to the public health services system of the society.

  Inheriting the essence of traditional Chinese medicine, combining with the healthy elements of tea leaves and following the concept of “medicine food homology”, Besunyen develops therapeutic tea products with laxative and slimming effects. As consumers are increasingly pursuing for safe and reliable green and natural herbal products, products of Besunyen have received continuous acceptance from consumers for 14 years. According to the “statistics of 2013 Big Varieties Health Products Sales TOP 20 (Retail Market) (二零一三年保健品大品種銷售TOP 20 (零售市 場))” released by Sinohealth Intelligence (Group) Co., Ltd. on 1 March 2014, the Group’s Besunyen Detox Tea and Besunyen Slimming Tea ranked number 10 and 13, respectively.

  
  

• BUSINESS REVIEW

  Building on the solid foundation laid down by our remarkable operation and management restructuring efforts in 2013, the Group adopted systematic and strategic management initiatives in 2014. By reshaping our brand, upgrading product packages, enhancing channels’ confidence, expanding our sphere of influence among terminals and facilitating the justifications for customers’ to select the products of Besunyen, Besunyen not only has consolidated its market, but also rapidly reversed and enhanced our overall operational effectiveness. Set forth below is our status of business development during the year:

  Package Upgrading and Price Increase
  Repositioning and Package Upgrading

  2014 was a year about reshaping and pursuing for changes and breakthrough for Besunyen. By 14 years of accumulation, the “effectiveness” gene in the Besunyen brand had taken its shape. This core value supported the long term competitiveness of Besunyen. In respect of marketing, we emphasized on and reshaped the substance of Besunyen’s brand and its leading position in the industry so as to enhance the value of our brand. In respect of brand positioning, we reinforced the idea of “oriental tea-making technique” and advocated for the “quality functional tea, Besunyen” advertisement theme to attract highly focused attention from consumers. By activating internal and external resources, we had transformed from a traditional healthcare product oriented model to a product value oriented model; presented our identity of and value as oriental functional tea specialist for consumers’ recognition; and established our identity and position as a leader in oriental functional tea as well as fostered the development of Besunyen Detox Tea and Besunyen Slimming Tea.

  For a clear portrait of our brand positioning and advocation, the Group comprehensively revised the graphic designs of our packages on 1 January 2014. The packages adopted pictures of herbs, the raw materials of our products, as the new elements to adequately present the natural herb concept for the brand as well as to optimise the gene of the brand so that the presentation of our brand logo became more concise, fresh and trendy. We had uplifted the identity of Besunyen to a higher level by provoking changes in our brand value so that Besunyen would become the representative brand among functional teas. This would facilitate the justifications for consumers to buy and reinforce consumers’ belief so that Besunyen would come out on top of their list of preferred products. We had reshaped the brand and upgraded the packages, while strategically enhancing the competitive advantages of Besunyen, thereby enabling the sales performance of Besunyen to record a positive and rapid growth in 2014.

  Preliminary Alignment of the Price of Besunyen Slimming Tea with Psychological Price Level

  The price of Besunyen Slimming Tea has long been lower than that of Besunyen Detox Tea, however, the consumer group of slimming tea is less price sensitive towards the slimming products. While brand value is reflected in the price of a product and the psychological awareness of the consumers, undoubtedly, the price of Besunyen Slimming Tea used to represent a discount over the psychological price level of the consumers. In addition, the key production elements, raw materials and staff costs, experienced cost inflation in the recent years due to price increase in commodities. Therefore, with a view to align with the psychological price level of the consumers and the production costs, the price of Besunyen Slimming Tea had been increased to the same level as Besunyen Detox Tea on 1 January 2014.

  Improving Brand Image and Establishing Leading Position
  Title Sponsor for Besunyen Divas Hit the Road(《碧生源花兒與少年》) Program on Hunan Satellite TV

  After the strategies on brand reshaping and package upgrading were determined in early 2014, the advertisement strategy and advertisement creation were decided immediately. A series of TV commercials, from the notification of “new packages on shelves” to the proposition of “quality functional tea, Besunyen” to the credential declaration of “sales volume exceeds 3 billion bags in 14 years”, were shot successfully. Media strategy and media placement became top priorities for the year. For the purpose of strengthening the brand recognition and credibility of Besunyen, the Group continued to embark on various promotional and interactive activities through various media, including TV, print media, outdoor media, public transportation mobile media, as well as internet and new media. Among which, our sponsorship for the hit show “Besunyen Divas Hit the Road”（《碧生源花兒與少年》） on Hunan Satellite TV and the popular show “King Wang” (《大王小王》) on Hubei Satellite TV received extremely positive feedback, thereby achieving deep placement of the advertisements of Besunyen Detox Tea and Besunyen Slimming Tea. Besunyen Divas Hit the Road broadcasted 8 episodes for 1 episode per week consecutively from 25 April 2014 onwards, with the rating points hitting 2.5%, the highest rating points for the same time slot among all satellite TV channels across the country.

  Hosting of European Family Trip

  With a view to amplify the advertising effect of broadcasting Besunyen Divas Hit the Road, we had launched large scale public relations activities of “European Family Trip” on Mango TV and various websites, and activated social media platforms such as Weibo and WeChat so as to roll out our marketing plan for comprehensive and close contact with channel distributors, sub-distributors, terminal retailers and consumers. A series of promotional activities were also carried out at the same time, such as the lucky draw for a family trip to Europe, buying products to get free T-shirt, online game of Divas Hit the Road, forwarding Weibo and WeChat messages to participate in lucky draws. The objectives of the above were to amplify the effect of the TV advertisement, create WeMedia broadcast and integrate the online and offline interactive communications.

  Hosting of the Besunyen Cup Charity Advertising Contest

  In the spring of 2014, the Twelfth (2013–2014) Chinese University Students Advertisement Art Show Academy Award “Besunyen Cup Charity Advertising Contest” hosted by the China Advertising Association conducted the assessment and selection of the graphic works on the theme of charity at the headquarters of Besunyen. Hundreds of university students from about a dozen universities participated in the contest with more than one hundred thousand works submitted. Through the appraisal, we delivered the Besunyen’s concepts of “Herbal”, “Healthy”, “Functional” and “Oriental” to the university students, which built a good brand image of Besunyen in the minds of young people.

  Participating in the IAA World Congress

  The 43rd “IAA World Congress” was held at China National Convention Center in Beijing in mid-May 2014. Besunyen was the only product-oriented exhibitor at the congress. On the sub-forum of the congress, Besunyen announced its plan to submit an application of the world’s intangible cultural heritage for the “Oriental tea-making technique” (東方茶術), a move aiming at promoting the traditional tea culture and leading the development of the whole industry.

  Official Cooperation Partner of the Chinese Figure Skating Team

  Besunyen cares about the sports affairs of China and was invited by the General Administration of Sport of China for cooperation to act as the official cooperation partner of the Chinese Figure Skating Team. On the basis of this cooperation, Besunyen is entitled to use the title of the “Official Cooperation Partner of the Chinese Figure Skating Team” and the combined logo with and the collective images of the Chinese Figure Skating Team in (among others) advertisement, packages and promotion events. The figure skating team fully represents the elegance postures and healthy images of the athletes, which is in line with the positioning of the Besunyen brand. At the same time, the capability of the Chinese Figure Skating Team ranks number one in Asia and is first-class in the world, which resonance to the leading position of Besunyen in the therapeutic tea arena, thus the cooperation can achieve “winwin” effect.

  Close Cooperation with Channel Allies

  The Group divided our sales regions across the country into 13 large regions and 44 districts, spanning across 31 provinces, autonomous regions and municipals, and served about 125,000 OTC pharmacies and retail terminals in shopping malls and supermarkets via the distributors, sub-distributors and the sales team directly under the Group. Moreover, by means of the dynamics of brand attraction and channels’ promotion, the sale of the Besunyen Detox Tea and Besunyen Slimming Tea has a coverage of about 400,000 pharmacies across the country.

  Hosting of the “Back Home” Program for Distributors

  In 2014, with a view to provide a better understanding of the Company and products for distributors, the Group initiated the “BACK HOME” (「回家」) program, specifically inviting customers, including distributors, subdistributors and OTC chain stores, to visit Besunyen’s headquarters, Besunyen Building located in West 4th Ring Road North, Beijing, and production base located in Fangshan, Beijing. There were a total of 200 visitors paid visits to our Company during the year. We had received a total of 110 customers, including distributors, sub-distributors and OTC chain stores. Through the “BACK HOME” program, the Company and customers, including distributors, sub-distributors and OTC chains, cultivated deeper mutual trust. The Company also took this opportunity to conduct in-depth discussion and analysis with the customers in respect of the mode of cooperation, inventory management and retail channel management.

  Channels Enhancement: Supporting the Excellence while Eliminating the Inferior

  In 2014, in order to maintain the stability of the channels and manage the product pricing system of the Company effectively, the Company formulated clear distributors and sub-distributors standards, focused the resources of our Group in the key distributors that have delivered more contributions to the Company. Through restructuring and integrating the distributors and sub-distributors channels, the Company’s products could flow in a targeted direction as designed by the Company, further enhancing our control in the product pricing system and the sales channels. As of 31 December 2014, the number of distributors of the Group decreased from 148 at the end of 2013 to 102, while the number of sub-distributors decreased from 630 at the end of 2013 to 480. Through this series of “supporting the excellence while eliminating the inferior” management initiatives, the Company had not only enhanced the management of the channels but also further supported the development of distributors that had contributed more to the Company, such that the Company, distributors and sub-distributors could grow together, thereby establishing a sound, mutually supportive and closely cooperative relationship and facilitating the growth in sales effectively.

  System: Mobile Phone Terminal System in Place

  Thanks to the advanced technologies, the Group fully put in place a mobile terminal management system for our sales staff in August 2014, covering 13 regions and 44 districts across the country. Market information, such as the name of outlet, time, location, transaction data, goods displayed and POP management, of the customers visited by our sales staff are logged into the mobile phones and uploaded to the sales management center in the headquarters on real time basis. The data effectively facilities improvements of sales management of the Company after being organised and analyzed.

  Alliance: Strategic Alliance with Chain Stores

  As a result of the introduction of the new Good Supply Practice for Pharmaceutical Products (“GSP”) of China, chain store model gaining momentum in pharmacies operation, the number of chain pharmacies increased from 159,200 in 2013 to 243,800 in 2014, representing a growth rate of 53%. In anticipation of this structural change of the pharmacy chain industrial format, the Group took the initiative to join hand with the top 100 OTC chains at the beginning of the 2014. And the Group participated in the China Drug Retailing Information Conference held in Hainan on 14 August 2014 to have face to face contacts and exchanges with the management of national large scale pharmaceutical retail chains. The Group formed strategic alliance and conducted close cooperation with 103 large scale pharmacy chains, covering 23,000 pharmacy chain terminals.

  Online-offline Interactive E-commerce

  In proactive reaction to the trend of the go online thinking and the changes in shopping habits of the post 1990’s new generation, the Group has been continuously exploring digital marketing models for the Company’s products as we deemed fit, availing the products of the Group on our self-owned retail website 7cha.com, as well as other professional B2C websites. The online platform not only displays and sells the Group’s core products well received in physical stores, but also focuses on promoting the Company’s newly-launched products and products specifically designed for online shoppers.

  During the second half of 2014, the Company restructured and integrated the e-commerce sales team. As of 31 December 2014, the Group’s official Sina Weibo and WeChat public accounts “Besunyen” had already commenced official operation. The e-commerce team had also worked with our traditional channels sales team for a number of times to embark on a series of online marketing activities. The Company tried to leverage on the new media to interact with more young and trendy user groups, so as to facilitate the development of e-commerce, and enhance the brand awareness of Besunyen among the young consumer groups.

  While strengthening the traditional offline sales channels, it is expected that the e-commerce team would expand the Company’s retail network by the establishment of an online-offline interactive marketing model, in turn delivering income and profit growth for the Company.

  Talents Admission and Share Option Incentives
  Engagement of Chief Operating Officer

  After the strategic restructuring of the Group calling for “horizontalization of organisation, optimization of structure and rationalization of procedures” in 2013, our organisation and staff had been streamlined. 2014 was a critical year for Besunyen to internally implement in-depth management initiatives to enhance efficiency and externally grasp the opportunities arising from the grand health industry. And therefore, upon approval from the Board, we engaged Ms. Zhao Yuanhua as the chief operating officer of Besunyen in August 2014. Ms. Zhao is responsible for the management of production, marketing, sales, e-commerce and human resources. She will work towards a more systematic and efficient operation mechanism of the Group.

  Campus Recruitment and Talent Pool Training

  For the purpose of training up a pool of talents, the Group visited several colleges and universities in China in June 2014 for recruitment of fresh graduates. After one month’s isolated training, they were designated to the Beijing sales department to receive two months of practical sales and sales techniques training. Upon completion of the training, these post-1990s youngsters were designed to different regions in the country to engage in the basic sales operations, who would become sales skeleton of the Company in the future.

  For the purpose of enhancing the operational abilities and management skills of middle and senior management, management members of different levels had been sent to join trainings such as Trout positioning, leadership diamond, High Brain and trainings for directors and secretary to the Board of listed companies since February 2014.

  Joining Hands with the Harvard Business School in Case Study and Course Program

  In August 2014, the Group had the honor to be selected as one of the teaching plans in the case study analysis program of Harvard Business School among the 156 cooperation partners of Harvard Business School in 13 countries all over the world. The professor from Harvard Business School who was responsible for the case study materials visited the Beijing headquarter of the Group twice to interview with the senior management of Besunyen, so as to obtain first-hand and genuine operational and management data. The case study on the 14 years of Besunyen’s operations would be adopted as a live scenario-based teaching material for discussion and analysis by students of Harvard Business School during their classes.

  At the same time, another group of six Harvard Business School students participated in the “FIELD” (Field Immersion Experiences for Leadership Development) course jointly organised by the Group and the School. The course aims at train-up of business leaders by acquisition of practical experience through on-site participation in operation and management. This is a mandatory course for the first-year students of Harvard Business School. From October 2014 onwards, the senior management of the Group and the team of students from Harvard conducted distant interactive discussions on the project content, after which the student team arrived at our Besunyen Beijing headquarters on January 2015 to undergo a 10-day on-site internship. The students put forward their ideas after conducting consumer research and study in China. Subsequently, they presented their ultimate project proposal. At the same time, the students acquired from Besunyen abundant practical experience and intellectual knowledge in operation and management of enterprise, which could not be acquired by discussion in classroom.

  Share Equity Incentives

  In October 2014, with a view to incentivize the management staff, the Group introduced a stock option incentive policy upon approval by the Board. A total of 44,860,000 share options had been granted under the share option scheme to 91 participants, including Directors, staff and advisors.

  Quality Products with Professional Accreditation
  Evidence-based Medicine and Scientific Study

  On 27 June 2014, the fifth Healthplex & Nutraceutical China exhibition was officially convened in Shanghai, and the “Result of Evidence-based Medicine on Besunyen Functional Tea Bag (碧生源功能袋泡茶循證醫學結果)” by the Evidence-based Medicine Project Seminar of Healthcare Food was announced at the exhibition. According to the initial experimental results, Besunyen Detox Tea and Besunyen Slimming Tea are effective, safe and applicable. The seminar provided scientific answers regarding the effectiveness and safety of Besunyen products through evidencebased medicine method to consumers and healthcare food industry.

  This Evidence-based Medicine Project regarding Healthcare Food was a large scale scientific and systematic research project on healthcare food sponsored by China Health Care Association. Institutions participated in the experiments include Shanghai Municipal Center for Decease Control & Prevention, the Second Military Medical University, Institute of Chinese Materia Medica under China Academy of Chinese Medical Sciences (中國醫學科學院中藥研究所), etc. Besunyen Detox Tea and Besunyen Slimming Tea received the accreditations from the Project of Evidence-based Medicine regarding Healthcare Food, once again demonstrated the effectiveness of the Group’s products.

  GMP Regulations

  The Group has approximately 13,600 square meters of production plant that is GMP-compliant (healthcare products), with approximately 1,400 square meters of 100,000 grade clean area constructed up to GMP (healthcare products) standards. The Group also adopted 18 production lines assembled under the state of art Italian IMA-C24 fully automatic tea bag packaging machine in the world. The machine is equipped with the specifically designed “cotton thread nautical knot for tea bag and tag fixing” technology for hygienic and safety purpose. The Group put much emphasis on the management and control of both the source for safety food production and the entire production process. Procurement and utilization of all raw materials has been consistently in compliance with national requirements.

  Awards and Honors
  Well-known Trademarks in China

  In December 2013, the Trademark Office of State Administration for Industry & Commerce of the PRC (“Trademark Office”) issued its “Approval of the Recognition of ‘Besunyen and device’ trademark as a Well-known Trademark”. According to the relevant provisions of the “Trademark Law”, “Implementing Regulations of the Trademark Law” and “Provisions for the Determination and Protection of Well-known Trademarks”, the Trademark Office has recognised the registered trademark of “Besunyen and device”, as used by Beijing Outsell on products classified under the International Classification of Goods and Services for the Purposes of the Registration of Trademarks Class 30, tea leaves and tea leaves substitutes, as a well-known trademark after review and examination.

  Beijing Famous Brand Enterprise

  The Group has received the following awards and honors:

  The Beijing Administration for Industry & Commerce recognised Besunyen as “Famous Trademark” in 2010

  The Beijing Quality Association issued “Famous Brand” to Besunyen in 2012

  Beijing Annals • Industry Volume

  Besunyen’s name was entered into the 1999–2010 “Beijing Annals • Industry Volume • Healthcare Chapter” by Beijing Municipal government in 2013. The contributions from Besunyen to the industrial development of Beijing municipal will remain in the official document ever after.

  Top Ten Brand with Public Credibility

  As at 30 March 2014, the Fifth China Credible Healthcare Products Forum and the Fifth Credible Healthcare Products and Brands Selection Activity Commendation Conference were officially held in Beijing. The senior officials from National Health and Family Planning Commission (NHFPC), the China Food and Drug Administration (SFDA), China Health Care Association, the State Administration for Industry & Commerce, the Ministry of Commerce, General Administration of Quality Supervision, Inspection and Quarantine and other relevant departments participated in the conference. Besunyen had been granted the honor of the Credible Healthcare Product Brand for the Fifth Forum in this selection activity. The products under Besunyen, including the two traditional teas had been granted the honor of the Credible Healthcare Product for the Fifth Forum. The Chairman of China Health Care Association, Mr. Zhang Fenglou, presented the “Top 10 Credible China Healthcare Product Brands ” award to Besunyen. Since Besunyen had already received the award in three consecutive sessions of the Forum (2010, 2012 and 2014), Besunyen also received the honorable title of “Famous Brand for China Healthcare Industry”.

  Accredited High and New Technology Enterprise

  The wholly-owned subsidiary of the Group, Beijing Outsell received the High and New Technology Enterprise Certificate issued by the Beijing Municipal Science & Technology Commission on 30 October 2014 for an effective term of three years.

  Charity Works
  Received the Ninth Annual People’s Corporate Social Responsibility Award — the Case of the Year Award

  On 3 July 2014, the establishment ceremony of “Besunyen Charity Fund” jointly established by Besunyen and the Beijing Charity Association was held in the Besunyen Building located in West 4th Ring Road North, Beijing. Besunyen had donated RMB5 million (payable during a period of 10 years for RMB0.5 million per year) into the fund for charity affair, such as conducting social relief activities, providing services to the people in need, serving as complementary aids to the social security system.

  The People.com hosted the Ceremony for the ninth Annual People’s Corporate Social Responsibility Award Ceremony on 18 December 2014, during which the “Besunyen Charity Fund” received the ninth Annual People’s Corporate Social Responsibility Award — the Case of the Year Award.

  Received the “China Corporate Social Responsibility — Best Charity Demonstration Award”

  On 15 January 2015, the “Seventh China Corporate Social Responsibility Summit and the Release of China Corporate Social Responsibility Report Whitepaper 2014” was officially held. Besunyen received the “China Corporate Social Responsibility — Best Charity Demonstration Award 2014” in the submit. We were increasingly committed to the performance of social responsibility, at the same time, the performance of social responsibility is the key to realize sustainable development. As a leading enterprise in therapeutic tea products in China, Besunyen actively participated in charity works for the last 14 years and launched various charity projects, such as the establishment of “Besunyen Special Charity Fund”, participation in disaster and poverty relief and construction of water storage projects. Besunyen had continuously made charity contributions over the years.

  
  

• PROSPECTS

  Macro Economy                          

  The Economic Forecasting Division of State Information Centre estimates that, as the property market continues to trend down, it is expected that China’s 2015 economic growth rate will be slower than 2014, which translated to about 7.0% of GDP growth and 2.4% of CPI growth. From the perspective of “Troika”, the foreign trade in 2015 may improve slightly from that of last year, and consumption is also expected to remain basically stable. Despite strengthened efforts in investment, the domestic financing ability is subject to policy limitations. Overall speaking, the economic growth rate will slowdown in 2015, but the possibility of tumbling down can be ruled out. The economy is going to remain in a “low growth + low inflation” landscape throughout the year.

  Repositioning and Consumer Base Expansion

  In 2015, the Group will expand the scope of the consumer population by repositioning, with the message dissemination having been upgraded from functional purpose in the past to preventive healthcare. In respect of media strategy and media mix, in addition to the official strategic partnership with the Figure Skating Team under the General Administration of Sport of China, the Group will also sponsor two classic programs, namely, the “King Wang” (大王小王) on Hubei Satellite TV and “Doctor” (我是大醫生) on Beijing Satellite TV. Combined with local televisions and radio stations across the country, it will form a three dimensional communication model with wide coverage and in-depth communication.

  Focusing on Terminals and Strict Cost Control

  The Group will adhere to the sales strategy of last year and will stay focused on implementing its marketing initiatives for Besunyen Detox Tea and Besunyen Slimming Tea. It will launch a new 40-bags tailor-made package in 2015 for exclusive supply to large scale chain pharmacies with key cooperation. At the same time, we will keep optimizing the sales channels, further enhance the management of sales terminals, closely monitor market inventories, take an active role in maintaining the relationship with sale terminals personnel. In addition, by leveraging on our cooperation with the China Figure Skating Team, positive promotion of the Company’s products will be strengthened, while promoting the concept of a healthy living to the market as well as to the public. The Group expects to maintain a steady growth in terms of the Company’s sales of the Two Teas in 2015 by the abovementioned series of efforts. The Group will continue to prudently control the advertising expenses, and further expand advertising influence in the manner of media communications achieved by online and offline interaction, so as to obtain a cost-effective marketing communications effect with relatively economical measures, and will seek to deliver further contribution to the shareholders by increasing income and saving cost.

  New Products Go With New Business

  According to the statistics of China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE), the scale of China’s grand healthcare industry was around RMB2 trillion in 2013. By the end of the “Twelfth Five-Year” in 2016, the scale of China’s healthcare industry is expected to be about RMB3 trillion, ranking number one in the world. In the case of the United States, healthcare services is the largest industry in the United States, accounting for 17.6% of its GDP in 2009.

  China’s healthcare industry will undergo rapid development attributable to various reasons. In terms of consumer demands, as China’s per capita nominal GDP exceeded US$6,000, the household spending in China has entered into a structural upgrading stage. The spending in services as represented by the healthcare spending will continue to expand, and the demands in healthcare spending will increase significantly. In terms of population, the elderly population in China reached 194 million in 2012, representing an aging level of 14.3%. The elderly population in China exceeded 200 million in 2013. The arrival of “The Age of Aging” will further release the market demands for healthcare industry.

  The Group has always leveraged on our own resource advantages in the healthcare industry, and keeps abreast of the development of related healthcare functional products, aiming at meeting the demands for healthy living. With dedicated efforts in the grand healthcare industry including medical, medicine, equipment and traditional Chinese medicine by Chinese government, the Group will take the initiative to expand into the pharmaceutical and medical services industry to enhance Besunyen’s competitive position in the industry by way of merger and acquisition or cooperation under the guidance of the relevant policies. In the short term, the Group will actively select the products which have market development potential in domestic and overseas markets by leveraging on the advantages of wide coverage nationwide sales network. The Group will quickly access the strategic market segments by way of agency, cooperation or joint venture, aiming at enriching product structure, enhancing the dynamic of sales channels and bringing higher profits for the Group.

  
  

• ACKNOWLEDGEMENT

  On behalf of the Board of Directors, I would like to express my heartfelt gratitude to the steadfast support from many parties, including our customers, distributors, suppliers, media and other partners, shareholders and investors. In particular, I would like to thank all the staff of our Group for their dedicated work in 2014!                        

Chairman and CEO

Zhao Yihong

Hong Kong, 6 March 2015