Annunciation Bird's Initial Public Offering Stock Prospectus

Zhejiang Xinxiu Fashion Co., Ltd. IPO for initial public offering (VI)

V. Major capital expenditures

(I) Major capital expenditures of the company in the past three years

Since the second half of 2006, the company embarked on the implementation of the chain marketing network centralized management system in the chain marketing network project in which the raised funds are to be invested. Now it has invested 5.64 million yuan with its own funds, and has initially realized the existing franchisees. Information management.

(II) The company's future predictable major capital expenditure plan

As of the signing date of this prospectus, the company has no foreseeable major capital expenditure plans Other than the projects invested by the issuance fundraising plan. The details of the impact of the raised capital investment project on the company's main business and operating results are detailed in the “Thirteenth Use of Raised Funds”.

Sixth, the company's main advantages, difficulties and future trends

(I) Major advantages

1. Advantages of the external environment: The apparel industry belongs to the industry encouraged by the state. The Notice issued by the Ten National Ministries on Accelerating the Structural Adjustment of the Textile Industry and Promoting Industrial Upgrades proposes to focus on supporting and vigorously cultivating a number of competitive enterprises in the areas of brand design, technology research and development, and marketing channel construction, and vigorously promote it. Independent brand building, creating independent brands with international influence. At present, the State is studying the reform of the income distribution system and the standardization of income distribution order. It will take effective measures to increase the proportion of middle-income people. This will have a positive effect on branded apparel companies.

2. Brand advantage: The clothing brand management has a unique competitive advantage in the clothing market competition. The creation of a successful brand requires a lot of investment for a long period of time, and it is difficult for new companies to form in the short term. After ten years of hard work, the "Zhenbao" brand has become a well-known clothing brand in the country. It has a high reputation, good reputation and loyalty in the market, and has a relatively stable customer base.

3. Network advantages: The company has established more than 500 franchised stores (halls) in more than 370 cities in 29 provinces (municipalities, autonomous regions), and has established a relatively complete franchise management system and method. Strong network advantage.

4. Management advantages: There are no kinship relations among the five natural persons of the company. None of the immediate family members of the shareholders is the middle-level or above management personnel of the company. The company's management layer has successfully achieved a smooth transition from “founding shareholder” to “professional manager”. It has overcome an insurmountable obstacle in the development of private enterprises in China and has truly achieved the separation of ownership and management rights.

5. Design Advantages: The company has a team of senior designers and the design concept of leading trends. The design strength is at the leading level in China. With strong design power, the company continues to introduce new technologies to provide consumers with the latest technology, and each year will at least introduce a unique design concept and technology products based on Men's fashion trends.

6, financial advantages: the company's main business is outstanding, the main business income accounted for almost 100% of the year's income;

The company's main business income has increased year by year, and its profitability and development prospects have been stable and good. The company's external investment is less, focusing on the production and operation of the leading products and brand management; the company’s asset quality is high, non-production and operation assets, high risk Assets and idle assets; corporate accounts receivable accounted for a low proportion of current assets, short ageing, high turnover rate, and low risk; the company's product gross profit margin improved steadily, the company’s profitability was strong, and market acceptance was high. Higher; The company receives a higher level of cash flow from the sale of goods, labor services and net cash flow generated from operating activities, and has a stronger ability to obtain cash.