Focus on expertise and quality

Tenfu.s procurement and production are differentiated based on its different product lines,

respectively:

■ Tea leaves: Tenfu procures tea leaves in their finished form, while it participates in their

categorising, quality control and packaging as shown in Figure 47. We believe

categorising and quality control is of high importance given the tea leaves. complexity

and the necessity for expert tasters. The key value that Tenfu delivers in its tea leaves

products is consistent quality and good value at a reasonable price, in our view.

■ Tea snacks: Tenfu controls the whole production process as shown in Figure 48. Given

the food safety problems that have surfaced in China during recent years, we believe the

company.s focus on the quality of its tea snacks segment is essential. Tenfu obtained

the HACCP (Hazard Analysis and Critical Control Points) certification in respect to tea

snacks in 2009, which is a systematic preventative approach to food safety that

addresses physical, chemical and biological hazards.

■ Tea ware: Tenfu currently outsources most of the production of its tea ware to third

parties as this business requires completely different techniques, human resources

and facilities. The company is only involved in the packaging of tea ware with a

packaging factory in Zhangpu, in Fujian province. Although the profit margin in tea

ware is lower than that in tea leaves and tea snacks due to the outsourcing model, it

helps the company centralise its resources, expertise and management efforts in

areas where it can achieve the best efficiency and effectiveness.