1. Seasonal-complementary arrangements for the cultivation of our shiitake mushrooms
We have established our shiitake mushroom cultivation bases on the agricultural lands leased from individual farmers represented by their respective Villagers' Committees. These lands are leased from late September to April of each year -, which is the off season for the cultivation of other agricultural products on the same lands. During our harvest season, we engage individual farmers to provide farming services, mainly including daily maintenance, harvesting, sorting and transportation of the shiitake mushrooms.
Taking advantage of the different growing and harvesting seasons between our self-cultivated shiitake mushrooms and other agricultural products which are complementary in nature, we are able to lease the agricultural lands from the individual farmers at favourable rates. In addition, our labour cost are minimised as we do not have to maintain a large number of full-time employees, .Therefore, these increase the profitability of our self-cultivated shiitake mushrooms.
As part of the arrangements, we have also adopted an output and quality-oriented system when calculating the payments for the farming services as an incentive to improve efficiency and productivity.
2. Established major supplier of self-cultivated edible fungi in PRC
We believe that the cultivation of shiitake mushrooms in Fujian Province, PRC is a fragmented industry, where the players are mainly individual farmers and/or sole proprietors who operate on a smaller scale in terms of size of cultivation bases and production output.
We are a major supplier of self-cultivated edible fungi and operate one of the largest shiitake mushroom cultivation bases in Fujian Province, PRC, which measured an aggregate of 5,134 mu as at the Latest Practicable Date. As one of the few suppliers of self-cultivated shiitake mushrooms in Fujian Province, PRC who has adopted an institutionalized management structure, we are able to achieve economies of scale and to consistently supply quality self-cultivated shiitake mushrooms to our customers to satisfy their needs and requirements. This has enabled us to win the trust and confidence of our customers and established us as a reputable player in the market.
3. Potential upstream resource sustainability from own eucalyptus plantations
Currently, our self-cultivated shiitake mushrooms are grown on synthetic logs made from sawdust generated from frutex (杂木) which are purchased from the Villagers' Committees. In order to achieve potential upstream resource sustainability, we intend to adopt the use of synthetic logs made from eucalyptus sawdust in our future cultivation of shiitake mushrooms to the extent that the output of eucalyptus sawdust harvested from our eucalyptus plantations allows. This will enable us to (i) manage and control the cultivation costs, (ii) ensure a timely and reliable supply of synthetic logs, (iii) ensure the consistency in the quality of our shiitake mushrooms, and (iv) tap on the higher yield of eucalyptus sawdust harvested from the eucalyptus plantations as compared to other types of plantations which generally have longer maturity periods.
As at the Latest Practicable Date, we had eucalyptus plantations which measured an aggregate of approximately 51,193 mu.
4. We have an experienced management team
Our Group is led by an experienced, dedicated and dynamic management team. Our Executive Chairman and CEO, Chen Qiuhai, has more than 10 years of experience in the food processing industry. In addition, most of our Executive Officers have an average of over 10 years of experience in their respective fields. We believe that the valuable knowledge, experience and expertise of our management team will add value and contribute significantly to our business operations.
5. We have a well-established network of Japanese customers with whom we enjoy strong relationships
We have been a supplier of processed food products for more than 10 years and have established a good track record and reputation by continuously providing high quality products and services to our Japanese customers who are located in southern part of Japan.
We have a well-established network of Japanese customers, including Tennen Sozai, Fujimoto, Kyosai Co., Ltd. and Kurai Seika Co., Ltd. with whom we enjoy strong relationships. With our close relationships and constant communication with our Japanese customers, we are able to respond and adapt effectively to their specific requirements, changes in customer preference and market requirements. We believe that our strong relationships with our Japanese customers allow us to maintain our competitive edge against our competitors.