1. Proposal to G2000 Apparel Limited Jane Lam97194890 Jason Chen08934099 Roger Gao08934166 Roy Ng08934233 Stanley Tsui08936463 October 2009

2. 2 2 The Story Line Situation G2000 has been employing C Trading as the exclusive franchisee for all its operations in Thailand for the past 10 years. C Trading is a heavy weight player in the Thailand apparel market, carrying another 26 domestic and foreign brands in addition to G2000. Complication In the past 3 years, merchandise purchase volume from C Trading has seen no growth. G2000 management would like C Trading to open new G2000 stores in order to increase purchase volume. Question How to motivate the franchisee, C Trading, to resume store opening program for G2000? Answer Illustrate to C Trading that resuming store opening program for G2000 has good financial returns, carries very low risk, and growing the G2000 brand can result in a stronger apparel brand portfolio for C Trading. Rationale 1.Good Financial Return –Thai apparel retail market has been growing fast and the trend is expected to continue. Foreign business wear brands such as G2000 will be the fastest growing segment. –C Trading’s competitors have been opening new stores and seen sales grow, while for G2000, the number of stores and sales volume have been stagnant over the years. –G2000 is willing to offer incentive program to C Trading for opening new stores, including special discount for the initial order, and reduced royalty for the first 2 years. 2.Low Risk –Based on historical data, on average, 94% of G2000 stores are profitable. –Opening counters rather than shops can further reduce the risk of opening new stores as counters require lower CAPEX but yield higher profit margin and ROI. 3.Stronger Apparel Brand Portfolio for C Trading –G2000 is a foreign business wear brand. This segment is growing fast, but it is heavily under-represented in C Trading’s current brand portfolio. By investing in the G2000 brand, C Trading achieves a better brand mix and will be well positioned to capture any growth in the Thailand apparel market.

3. 3 3 Total Thailand apparel retail market has been growing fast while growth for G2000 has stalled Source: based on market research and Thailand franchisee internal statistics Thailand apparel retail market is expected to grow at 11% p.a. in next 5 years Foreign business wear market is expected to grow at an even high rate Total Thailand apparel retail market has been growing fast while growth for G2000 has stalled

4. 4 4 Competitors have been growing fast while growth for G2000 has stalled Competitors’ store opening programs have directly led to substantial increase in sales and profit G2000 should compete aggressively by reinitiating store opening program Source: based on market research and C Trading internal statistics Competitors have been growing fast while growth for G2000 has stalled

5. 5 5 New store profit outlook is attractive after G2000’s incentive program Royalty is one of the biggest expenses G2000 is willing to incentify C Trading by –reducing Royalty for the first 2 years –offering special discount for the initial order Source: Based on C Trading and G2000 internal data

6. 6 6 Counter vs. Shop Counter Profit Margin is HIGHER Source: Based on C Trading internal statistics Counter Sales per Foot (SPF) is HIGHER

7. 7 7 Counter vs. Shop (cont’d) Counter Setup Lead Time is SHORTER Counter Setup CAPEX is LESS Source: Based on C Trading internal statistics

8. 8 8 G2000 stores are generally profitable Source: C Trading Financial Data On average, 94% G2000 stores in Thailand are profitable

9. 9 9 Investing in the G2000 brand results in a stronger brand portfolio for C Trading G2000 is uniquely positioned to be the foreign business wear brand in C Trading’s brand portfolio. Growing the G2000 brand is inline with C Trading’s strategy, which is to be the brand conglomerate in Thailand.

10. 10 Appendix 1: Interview Notes Interview 1: Time:2 Oct 2009 Venue:via the phone Interviewer:Jane Lam, Stanley Interviewee:Ms. Sung, Brand Manager C Trading Ms. Sung believes G2000 is a great brand that cannot be missed in fashion retail portfolio and with massive potential to grow further into premium fashion. However, local business development lack motivation to open new stores as they are fine with status quo. Political instabilities are great hindrance in their mind when taking new initiatives with uncertainties and risks. Nevertheless, they are happy to devote their time and effort to aim higher for G2000 in Thailand market given their local management has committed with the brand principal, Hong Kong G2000. Interview 2: Time:2 Oct 2009 Venue:via the phone Interviewer:Jane Lam, Roger Interviewee:Ms. Alicia, Operation Manager C Trading There are 30 G2000 stores in operation in Thailand. On average 94% stores are able to make good profit in the past 10 years. Ms. Alicia revealed that other apparel brand stores generally have only 75%-80% of stores which are generating profit and recognized that G2000 has better than average profit generating capability. Ms. Alicia noted while C Trading has not been actively expanding its G2000 operations in the last few years, competitors have in fact been opening new stores with good sales increase and healthy profits. Interview 3: Time:5 Oct 2009 Venue:via the phone Interviewer:Stanley, Jason Interviewee:Mr. Kong Senior Marketing Manager Thailand Retail Association C Trading is a major player in the Thailand apparel market. This market has seen much growth in recent years and the outlook is good for foreseeable future in spite of all the political turmoil. Foreign business wear brands are performing especially well due to lack of quality local players and the air of prestige associated with foreign brands. Interview 4: Time:6 Oct 2009 Venue:via the phone Interviewer:Jason, Roy Interviewee:Mr. Kiet, Retail Vice President C Trading C Trading is a conglomerate in Thailand retail industry. It is highly vertical integrated (from manufacturing, merchandise to department store). It is also horizontally wide in the mechanizing business. The products distributed are divided into Fashion Apparel, Watches, Cosmetics & Personal Care Products, Photographic & Musical Instruments. Traveling Goods, Electronics & Electrical Appliances, etc. G2000 business is only a small part of C Trading’s operations. In the apparel line, C Trading currently carries 27 brands. Only 3 of these are business wear brands. Out of the 3 business wear brands, only G2000 is a foreign brand. Mr. Kiet agreed that a complete brand portfolio will benefit the sales of their department store.