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The Company's formal headquarters are located in Hong Kong and its strategic headquarters are located in Beijing , China . The Company currently operates a manufacturing facility with two factory buildings together with administrative offices in Harbin , Heilongjiang Province, China .
Management is planning to establish four new production bases in Beijing , Xinjiang , Anhui and Chongqing , increasing total aggregate capacity to 13,000 metric tons. The new plants will have a two year tax holiday and the following three years are taxed at 50% of the normal rate. The Anhui factory, opened July 2006, is a regional converting factory in the east and adds 2,000 metric tons of capacity. The Beijing factory, opens September 2006, is a central factory producing up to 5,000 metric tons of syrup concentrate and 2,000 metric tons of capacity for the finished product. The syrup concentrate is sent to regional factories for customization and dilution.
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| Currently, China Agritech experiences a high degree of fluctuations in demand due to seasonality; the first and fourth quarter are historically the weakest while the second and third quarter are the strongest. The warmer climate in the southern and western areas allows for longer growing season with multiple harvests and more diversified crops. Expanding to these areas should result in an increase and more evenly distributed demand for the company's products throughout the year. |
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The establishment of a distribution network is a critical component to support the build-out of manufacturing capacity. China Agritech currently serves 12 provinces with the bulk of product sales coming from northeast China . The Company is penetrating new markets through regional factories and establishing a village-level presence in each community with multi-level sales support. Regional distributors will support sales agents who will be dedicated to working with the local retailers and farmers on educating them on the benefits of China Agritech's products. Direct selling at the local level provides enhanced connectivity with individual farmers and will better serve the individual needs of its customers. This model is to appeal to farmers who prefer to purchase locally produced government certified fertilizers.
China Agritech is focused on enhancing and building brand awareness of the Lulingbao, Tailong and the new Green Vitality product lines. The Company has made a commitment to marketing its branded fertilizer products nationwide through television commercials on national, provincial and local TV stations, print advertising and through trade conferences. In rural areas and smaller cities, the Company plans to promote its products through wall advertising, free samples and demonstrations and the organization of educational meetings for farmers.
China Agritech has been recognized by the China Association for Quality Supervision and the China Quality Standard Research Center for its Tailong brand of products. The Association named Tailong the most competitive brand of 2006, in terms of product quality, brand reputation and customer loyalty. |
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