Tsann Kuen Transnation Group Brief introduction of the

燦坤跨國集團 Tsann Kuen Trans-nation Group

Brief introduction of the Company History Originated Sep. 02 1978 Introduction of shares May 07 1997 Capital NT$ 2, 122, 900, 000 President Tsann Kuen Wu Products & Service Dual Core Businesses： Channel Group& Manufacture Group Manufacturing Group’s Grill , Iron , Coffee Maker , Pop 6 major product lines： -up Toaster , Oven , Motor Products

Operation Strategy Maximizing Dual Core Businesses 1. Dual Core Businesses Operation World Class Manufacturing": Manufacturing Group World Class Retailing": 3 C Channel Business 2. World Class Manufacturing: Manufacturing Group's Strategies Global Logistic Dividing Major Component Self-production & vertical Integration Just be the No. 1 or No. 2 Approach to the Market and Global R&D 3. World Class Retailing : 3 C Channel Business Group's Strategy Members , Low Price and Technical Support Customers Intensive Differentiation Stores Numerous Armed Information

Company’s Vision A world class company serving to perfect human wellbeings through its core in design and integration Company’s Value Honesty Upright Innovation Professional Company’s Target To become the leader of small home appliances and 3 C retail chain store businesses in Greater China Consumers' best choice of healthy and comfortable home appliances

Tsann Kuen 3 C 5 -year Operating Strategy n Customers Satisfaction: A service business to satisfy our customers n 4 Beliefs: Membership services Excellent technical support High quality and lowest price Hedgehog strategy and service focus n Barrier-Free IT Platform: Profitability through information management, quick response and high service quality

Corporate Culture n The core value STYLISH PRODUCTS ＋ EFFICIENT DISTRIBUTION ＋ GOAL ACHIEVEMENT n Philosophy Even though the Earth will be destroyed tomorrow, TSANN KUEN still plants two grapes today： 1. Research & Development 2. Education & Training

Global Operations

World Manufacturing n Tsann Kuen's Six No. 1 • Grill 2002 yr. Shipment 21, 200, 000 units. • Iron 2002 yr. Shipment 10, 720, 000 units. • Coffee Maker 2002 yr. Shipment 4, 660, 000 units. • Pop-up Toaster 2002 yr. Shipment 790, 000 units. • Oven 2002 yr. Shipment 1, 130, 000 units. • Motor Products 2002 yr. Shipment 4, 710, 000 units

n Quality Certificate

n Great Product Line Tsann Kuen China (TKC) Tsann Kuen Shanghai(TKS) Tsann Kuen Technology(TKK)

World Class Retailing 1. 130 chain stores all over Taiwan in 2003 2. Taiwan 3 C Channel Core of Inn value： 1. Stylish Products 2. Efficient Distribution 3. Goal Achievement Status of 3 C Chain Stores： 1. Performance Of Business 2. Budgeting Strategy 3. "POWER IT" Customers Support Service 4. Current 3 C Chain Stores In Taiwan

n Great China 3 C Channel • Purpose: Introduce the model of 3 C chained business in Taiwan to China, through the chained outlets to gradually expand the retailing market in this area. • Action Plan: To open the first flagship shop in Fujen on July 1 st, 2003. It is expected to open 6 to 8 shops in this province. Shanghai shop will open in the mean time. It is expected to open 20 - 30 chain stores every year throughout the nation. These stores are based on B Class (i. e. , 6, 000 - 12, 000 square meters). • Goal: The sales amount is expected to achieve to PRC Dollar 12. 5 billions in 2009. Our goal is to open more than 1, 000 chain stores, becoming the leader in the retail market of China.

2004 -2005 COLOR COLLECTION

Production Management 1. Conformity 2. Network 3. Quality and Technology 5. Achievements 4. Service 7. knowledge 6. Education

Production strategy n E. D (Electronic Design) (1)Every 1. 5 days quantities produce a new product 3 months 1 new product publication meeting (2)The innovation designed capacity (3)Global research and development conformity ability (4)The international industrial of strategy has the competitive advantage in the same business (5)The output economical scale reaches the whole world n S. S (Supply Service) (1)Has the purchase negotiations ability, and has 120 days payments deadlines (2)Produces the vertical conformity (3)Has 6 Sigma qualities standards and 100% delivery achieving rate

Industrial workshop of the world impetus 1. Xiamen TSANN KUEN TRANS-NATION GROUP ----Core base production equipment Product line: Iron, coffeepot, cooking 2. Shanghai TSANN KUEN Product line: Electricity pot, oven, motor class product 3. Zhangzhou TSANN KUEN New manufacture core Product line: Electric iron, cooking, coffeepot, healthy electrical appliances

Advantage and shortage points analysis 1. Advantage (1)The main raw material supply is stable (2)The cost palm controls the difficulty (3)International specialized labor division (4)Easily is created the law influence the cost rise 2. Shortage (1)The feeding cost is inexpensive (2)Easily for price competition (3)Grasps the production elasticity (4)The talented person cultivates the difficulty

Marketing Management • The Member System Tsann Kuen 3 C adopts the member system and provides members with more discount and service. They can increase revenue by means of this marketing method. Stores Numerous In order to raise the share of the market, Tsann Kuen 3 C continue to enlarge the mount of stores. They use the chain store model. All their stores have a big space. So the customers have a comfortable space for shopping. Product Differentiation The products are various and full. So every customer can select the product they want happily in the store.

• In League with Different Industry Because of cooperating with other different industry, they can increase the mutual business volume. • Marketing Method If Tsann Kuen 3 C’s product price is higher than the same products in other store. They will pay return the money to customers. • Pricing Strategy Tsann Kuen fixes a lower price for the high quality products. So they can attract more customers who concern about the price. Tsann Kuen has a sale on the special day or in the different season.

Financial Management n Release over 80 million dollars By the end of February 2004, "Tsan kuen ” might release the overseas convertible company’s debt of 80 million dollars, try to strengthen the company to manage at the same time. The main reasons for Tsan Kuen to induce overseas finances is because it wants to establish a concrete financial system and company policy. Besides of establishing relation with overseas investors, Tsan Kuen is actually looking for overseas legal person or investing companies as a priority.

n Tsann kuen distributor success to increase 60 percent Though Tsann Kuen has set up 50 chain stores over mainland China during last year, but because showed in the financial statement last year that all the state lost slightly appeared in ever area of the China, it is expected this year in cost control and under financial structure change, there will be more than 60% growth in this year. There are two undertaking in Mainland China, one is world manufacturing and the other is channel undertaking.

For manufacturing, receives orders from Taiwan, the mainland produce the goods at present. The manufacturing brought the company over 21, 224 million of profit, the gross profit is 1, 441 million too. As distributor, has made 21, 566 millon in profit, gross profit of 550 million. But due that although last year opened over 50 stores without profit made the investor to have their doubts. About this subject, Tsann Kuen has decided to slow down the growth of stores in China and put emphasis on each stores good management. The Tsann Kuen group plans for year until 2009 is to reach annual revenue of 4000 billons, and it’s manager wants to retire at age of 60, but Mr. Wu Tsann Kuen is actually 54 years old so he has only six years to reach this dream.

Human Resources personnel requirement 1. As a result of the stores continuous to grow up, and positive to develop more international. It is imperative to recruit human resources from the basic level personnel to the higher level managers, especially the professional financial managers. 2. The method of recruiting human resources a. Job bank by internet b. Advertising in the newspaper. c. Campus interview, employment agencies, referrals by present employees. d. Interval recruiting.

n The select way & standard 1. The basic information technique. 2. The ability of expression (foreign languages) 3. The self ability (marketing ability) 4. The creativity and venture spirits n Personnel training 1. Vestibule training 2. On-the-job training 3. Systematic job rotations and transfer

S. W. O. T. Strengths 1. The exhibition shop manages the effect remarkably; the scale economic performance is reflected. 2. The turnover hits new peak continuously, obtains the growth by a wide margin. 3. It is a huge amount of money of the goods purchase, the goods purchase is the main factor for negotiation. 4. The popularity of the product channel is high, and the membership is numerous.

n Weakness 1. It is difficult for recruiting and keeping members. 2. The personnel flowing rate is on the high side. 3. The goods show a large amount in stores, stock number value is difficult to force down. 4. The exhibition shop expands and develops rapidly; personnel’s supply and demand have not been improved yet.

Opportunity 1. The cell-phone market has a good prospect; the slim TV is led popularly. 2. The traditional thorough fare shrinks day by day, still expand some and combine the space. 3. The China market has potentiality deeply; the business opportunity of market open-up is limitless. 4. The differentiated strategy is made, the market orientation is emphasized.

1. Threats 1. The expense for management and selling is high, so the growth of profit is influenced. 2. Foreign companies and hypermarket channel get into the electrical home appliances market, the competitive environment is fierce. 3. Network channel is becoming popular; the competition is getting multiple day by day. 4. China and Taiwan’s selling channel is not integrated completely, scale merit has not been reached yet.