About JIA YAO HLDGS Company

We are mainly engaged in the design, production and sale of paper cigarette packaging (followed by paper packaging for other social products) in China. Our main operating subsidiary, Hubei Golden Three Gorges, has been established in China for over 20 years. Our history dates back to 2001, when our controlling shareholder, chairman of the board of directors and executive director, Mr. Yang Yongan, effectively acquired the holding shares of Hubei Golden Three Gorges. We have accumulated more than 20 years of experience in the paper cigarette packaging industry in China and have established strong business relationships with major customers. According to the Euromonitor report, the Group accounted for about 1.5% of the national cigarette box packaging market share in 2013. We produce a variety of paper cigarette packages for our customers, which can be roughly divided into three categories: (i) hard and soft cigarette boxes; (ii) cigarette bar boxes; and (iii) cigarette gift boxes that can be packaged and packed in multiple small boxes. All paper cigarette packaging products are sold to domestic customers. We produced paper cigarette packaging for 10 provincial China Tobacco Industrial Companies and 5 non-provincial companies under the China Tobacco Industry Development Center during the business record period. Sales to the above 15 customers accounted for about 92.8%, 82.0%, and 91.8% of the total revenue from continuing operations for the year ended December 31, 2013, and respectively. The Group supplies paper cigarette packaging to 15 of the 30 key cigarette brands designated by the China Tobacco Monopoly Administration, including Jiaozi, Good Cat, Yunyan and Yuxi. We produced paper cigarette packaging for 10 provincial China Tobacco Industrial Companies and 5 non-provincial companies under the China Tobacco Industry Development Center during the business record period. Sales to the above 15 customers accounted for about 92.8%, 82.0%, and 91.8% of the total revenue from continuing operations for the year ended December 31, 2013, and respectively. The Group supplies paper cigarette packaging to 15 of the 30 key cigarette brands designated by the China Tobacco Monopoly Administration, including Jiaozi, Good Cat, Yunyan and Yuxi. In addition to paper cigarette packaging, with our expertise in paper cigarette packaging, we also began producing paper packaging for social products for pharmaceuticals, alcoholic beverages, food, and other consumer goods in 2005. During the business record period, the main customers of these social products included major brands such as Jinpai. We design and produce color boxes, labels, gift boxes and paper bags according to the specific product image design and packaging requirements of customers in different industries. The directors believe we have the following competitive advantages: Committed to product design and technology development: The Group attaches great importance to product design and technology development. With our own design and other R&D capabilities, striving to improve technical competitiveness is our consistent strategy, rather than positioning ourselves as a pure paper cigarette packaging manufacturer. Hubei Golden Three Gorges was rated as a high-tech enterprise by the Hubei Provincial Department of Science and Technology, the Hubei Provincial Department of Finance, the Hubei Provincial State Taxation Bureau, and the Hubei Provincial Local Taxation Bureau in 2009 and 2012. We have experienced professional and technical personnel dedicated to brand research, creative planning, brand design and new packaging design and promotion of new products, new technologies and new techniques. We also have product design, technology and R&D capabilities. In terms of product design, our designs have been approved by many customers and used in the commercial production of sub-brands such as Jiaozi, Good Cat, Monkey King, Golden Leaf, and Jinqiao. Our design strength has also been widely recognized by other public agencies. A sub-brand in Yuxi and a sub-brand of Good Cat won the China Top Ten Tobacco Labels Gold Award from “China Tender Global Tobacco Packaging” in 2006 and 2008, respectively. In terms of technology and R&D, our technology center has been rated as a provincial enterprise technology center in Hubei Province by the Hubei Provincial Development and Reform Commission, the Hubei Provincial Department of Finance, the Hubei Provincial Local Taxation Bureau and Wuhan Customs since November 2006. So far, we have registered 11 utility model patents, 8 design patents and 2 invention patents, and are applying for 3 other invention patents. We believe that our advanced technology center combined with our design and R&D capabilities will make us stand out from other cigarette packaging suppliers and enhance our competitiveness. Has the core comprehensive strength of bidding: China's tobacco industry underwent major reforms in 2011, including the adoption of a tender system. When considering tenders, customers will consider not only the price, but also other factors in the scoring system of the tender system. Although the tender system has intensified competition in the industry, we believe it can be successfully turned into an opportunity. The revenue from our paper cigarette packaging has been growing steadily during the business record period. For the year ended 31 December 2011, 2012 and 2013, our revenue was RMB411.5 million, RMB411.4 million and RMB469.5 million respectively, an increase of 14.1% from 2012 to 2013. We believe that our strength is mainly due to our leading position in the industry, attaching great importance to product design and R&D capabilities, implementing strict and effective quality control systems, and investing in equipment and machinery imported from various overseas manufacturers. We are an approved paper cigarette packaging supplier for key cigarette brands in China: China's cigarette industry is strictly regulated. After the industry merger, there were only 26 cigarette manufacturers left in China in 2010. Of these, 16 were provincial Chinese tobacco industrial companies, 9 were non-provincial companies under the China Tobacco Industry Development Center, and the remaining 1 was the tobacco company Shanghai Tobacco. Up to now, out of the 16 provincial tobacco industry companies mentioned above, 10 are our customers. Of the 9 non-provincial companies under the China Tobacco Industry Development Center, 5 are also our customers. Sales to the above 15 customers accounted for about 92.8%, 82.0% and 91.8% of our total revenue for the year ended 2011/2012 and 2013/12/31, respectively. Thanks to the joint efforts of senior management and sales and marketing personnel, we have become an approved supplier to these 15 customers and have established long-term relationships with these 15 customers. Specifically, in the year ended December 31, 2013, the Group had been supplying paper cigarette packaging to the Jiaozi brand of its largest customer, Sichuan and Chongqing China Tobacco, for over 10 years, as well as cigarette packaging for more than 7 years to Yunnan Tobacco, which manufactures cigarettes from the Yuxi, Hongtashan, Yunyan and Honghe brands. The directors believe that these long-term relationships play an important role under the current bidding system, help us obtain a stable customer network and revenue stream, and are essential to the Group's long-term business development and success. In 2008, the National Tobacco Monopoly Administration selected 30 key cigarette brands. According to the Euromonitor report, during the business record period, the Group supplied paper cigarette packaging to 15 of the 30 key cigarette brands, namely Yunyan, Yuxi, Hongta Mountain, Honghe, Baisha, Seven Wolves, Jinqiao, Jiaozi, Taishan, Huangguoshu, Good Cat, Diamond, Yellow Crane Tower, Shuangxi, and Red Double Happiness. The directors believe that as an approved supplier for these key cigarette brands, we have sufficient advantages to maintain customer loyalty and future continuous development. Our management team and operators are experienced and highly competent, and have in-depth knowledge of the paper cigarette packaging industry: Our management team and operators are experienced and capable, and have a deep understanding of the paper cigarette packaging industry in China. Our management team not only has a deep understanding of the industry, but also maintains good relationships with customers and suppliers. In particular, Mr. Yang Yongan, the controlling shareholder, chairman of the board of directors and executive director of the company, has more than 13 years of experience in the paper cigarette packaging industry, while Mr. Feng Bin, CEO and executive director of the company, also has more than 13 years of experience in the paper cigarette packaging industry. The directors believe that the management team has the operational and product development experience needed to lead our growth. Other key managers have the closely related experience and expertise required by their departments. In particular, Ms. Song, the deputy general manager of Hubei Golden Three Gorges, has over 13 years of experience in the design, printing and packaging industry. Mr. Yu, head of production at the Golden Three Gorges in Hubei, has over 20 years of experience in production management in the industry. The directors are convinced that the Group can always understand the changing industry environment and customer needs, and maintain its competitiveness in the Chinese paper cigarette packaging market.