October 2007 marked a significant milestone for Beauty China, as the Group moved upstream into the manufacturing of cosmetics products, propelling the Group to become an integrated cosmetics player.

The Group acquired a new EU and US Good Manufacturing Practice (“GMP”)-certified cosmetics manufacturing facility in Zhuhai, Guangdong Province, for the production of its Colour Zone and CharmingLady brands as well as for OEM/ODM customers in China and overseas.

With the anticipation of tighter government regulations on cosmetics products, the Group believes that owning and operating a GMP-compliant production facility will give Beauty China an early-mover advantage, and position it favourably amongst international cosmetics brands seeking a manufacturing partner in China.

The Group invested a total of HK$325,137,000 to acquire the factory, comprising cash payments, issue of new shares and costs directly attributable to the acquisition.

Having its own GMP-certified production facility reinforces the Group’s capability to produce products of international standard and strengthens consumer confidence in the Group’s brands. It is also a strategic move to diversify the business risk of the Group’s reliance on a single source of income, and to create a new revenue stream when ample production capacity can be utilised for manufacturing third-party products on OEM/ODM basis. With EU and US GMP certificates, the factory is one of the very few cosmetics manufacturers in China able to satisfy quality conscious OEM and ODM customers.

In January 2009, the Group inked a three-year agreement with major Japanese cosmetics producer JO Cosmetics Co. Ltd. to manufacture, use and sell certain finished and semi-finished cosmetics products, under the technical expertise and patents owned by JO Cosmetics. With the signing of the deal, Beauty China is now JO Cosmetics’ first and exclusive manufacturing and distribution partner in the PRC. This partnership with JO Cosmetics will enable Beauty China to not only leverage on JO Cosmetics' network to expand its OEM business to major cosmetics companies and well-known international brands, but also to tap on its R&D expertise to improve the quality of its own Colour Zone and CharmingLady brands.