product mix for the upcoming sales fairs. The pre-agreed fees are determined based on the experience, professional capability and quality of services of similar service providers in the same industry. All the intellectual property rights of our products belong to our Group. I.S. Planning does not work exclusively for us in the PRC and to the best knowledge of our Directors, it does work for other companies in the same industry in the PRC. However, it is prohibited from disclosing our confidential information to any other third party without our prior consent. Our agreement with I.S. Planning will expire in October 2014. While there is no renewal term in the existing agreement, we intend to negotiate a new agreement with I.S. Planning upon expiration of the existing one.

# Design

Our design team is also responsible for conceptualising, designing and developing apparel products. Our technical team is primarily responsible for production of samples.

We typically start our design process for our upcoming spring/summer collection and fall/winter collection a year before the relevant collection is released. Once the seasonal themes, main colours and materials to be used are determined by our research team alongside with our design consultants, our design team commences design of the collections. Our design team prepares drawings and sketches of our products and develops the specifications for the materials and accessories to match the design of the collections. We conduct several internal style evaluation meetings before making the final decision as to which styles or products are to be launched in the market for each collection. To encourage the creativeness of our designers, we have established a promotion and demotion system for them pursuant to which they are free to compete constructively. We have also established an incentive plan for our design team such that they are awarded based on various criteria such as design/sales ratio; design innovativeness, mix and match variety and team work. We have also signed confidentiality agreements with some members of the design and product development team to keep our information including but not limited to our product design drawings, paper patterns and processes confidential.

Our design team will communicate with our retail store supervisors on a selected basis through on-site meeting or telephone calls every week to discuss the sales task, feedback on best-selling products and review sales data, in order to understand the sales performance of particular products of our brands and competing brands and identify any design themes with high customer recognition. The store managers report on sales data on a daily basis and prepare sales reports on a weekly basis. Such reports will be analysed and used in our half-yearly product planning and design conference. After that, our designers develop ideas that form the basis of the creation of upcoming collections after consultations with our design consultants. Our sales and marketing team is involved in the design process to ensure that the new collection will better cater to the needs and preferences of our targeted customers.

We have cooperated with I.S. Planning to design and develop the products of our upcoming brand, Koradior elsewhere which is expected to be launched in the second half of 2014. As at the Latest Practicable Date, our design team is working closely with I.S. Planning on 2014 autumn/winter collection and we expect the new collection of Koradior elsewhere could be ready for sale in our first Koradior elsewhere retail stores in the second half of 2014.