Welcome everyone to China Xiniya Fashion Limited 2014 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question. And for your information, a webcast replay will be available within an hour after this conference is finished. Please visit www.xiniya.com under the Investor Relations sections. I’d like to introduce Mr. Christian Arnell from Christensen. You may begin.

Thank you. Good morning and good evening to all participants, and welcome to Xiniya's second quarter 2014 earnings conference call. You may find a copy of our earning press release that we issued last night in the IR section of our Web site or through PRNewswire. Joining me on the call today is Xiniya's Chairman and CEO, Mr. Qiming Xu and Mr. Chee Jiong, CFO. Please note that we will be making a number of forward-looking statements today, and all such statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today, due to a variety of factors that affect the Company, including the risks specified in the most recently filed Form 20-F with the U.S. Securities and Exchange Commission. Let me turn the call over to Mr. Chairman Xu, who would like to take you through some introductory comments. I'll translate for him. Mr. Xu, please go ahead.

Good morning and good evening to everyone, and thank you for joining us today. Before we go over this quarter’s financials, I’d like to take the time with you today to discuss the following topics. First, the current situation in China’s menswear market. Second, our view of the Chinese economy and menswear market over the next five years and third and final our strategic plan and use of our strong cash position. Let me begin with the current situation in China’s menswear market. China menswear industry experienced rapid expansion in brands up until 2012. The years that followed were characterized by gradual slowdown in China’s economy, which resulted in a substantial over supply in the menswear market with inventories increasing rapidly across the board. The supply and demand imbalance has led to excess inventory. In response, menswear companies began offering frequent discounts and promotions to reduce inventories which led to store closings and shrinking profits for all of the -- for all in the industry. We believe that closing retail shops actually reduces excess supply which will over the long run positively impact the development of the menswear industry. Many menswear brands are repurchasing excess inventory from their retail channels in order to improve performance and healthy development. In order to support our partners, we’re putting in place a program to repurchase excess inventory from our over 1,400 retail outlets, so that our authorized retailers and distributors can develop in a more healthy long-term manner. China’s branded menswear industry has largely been dependent on traditional distribution channels which revolve around department stores and retail outlets. This business model, however, is suffering from the rapid decrease in foot traffic caused by the rise of e-commerce and the resulting rise in inventory levels, this has (indiscernible). Faced with this situation, branded menswear…

Thank you. Thank you, Qiming Xu. Let me now walk you through the financial and operational performance of our business in the second quarter. During the second quarter of 2014, Xiniya has revenue of RMB201 million, a decrease of 9.5% year-over-year. The Company delivered approximately 1.19 million units during the second quarter of 2014, compared with 1.27 million units during the second quarter of 2013. Xiniya network of authorized retailers had a net reduction of 93 retail outlets in the second quarter of 2014, consisting of 55 new retail outlets opened and 148 retail outlets closed. The total number of authorized retail outlets was 1,421 as of June 30, 2014. Gross profit decreased to RMB63.6 million during the second quarter of 2014, from 67.8 million during the same period last year. Gross margin was 27% compared with 28.5% during the same period last year. The decrease in gross margin was primarily due to increased expenses associated with the research and development of the Company’s latest collection in order to improve their competitiveness and fashion appeal. Selling and distribution expenses decreased to RMB4 million from RMB44.4 during the same period last year. The decrease was primarily due to a decrease in rack expenses for authorized retailers of around RMB5.5 million, as well as decrease in sales fair expenses and advertising expenditure. During the second quarter of 2014, the Company paid for shop rack, signage, and various outlet-related accessories for 55 new retail outlets and refurbished 26 existing retail outlets, which include expanding floor space for 5 existing retail outlets, as compared to 55 new retail outlets and 78 refurbished retail outlets during the same period last year. These expenses were approximately RMB21 million, or 10.4% of revenue, in the second quarter of 2014, compared with RMB26.5 million, or 11.9 million (sic)…

Yes, thank you. We will now begin our question-and-answer session. (Operator Instructions) The first question is from John Shi He. Please go ahead.

Hello everybody. Thank you for that very detailed presentation, and thank you for taking my questions. Can you estimate the sell-through rate of your 2014 spring and summer collections?

At the moment we don’t have fully implemented ERP, so we do not have precise information on the sell-through rate.

Okay. And do you have any new strategies for Internet marketing and Internet sales?

We do not have a direct Internet strategy -- direct sales from the Internet. But we do have retail Web site operated by our distributors to sell Xiniya products. The volume is not huge.

So do you have any plan to do something bigger, do something more directly?

We do have plan to have online sales which we will collaborate with the retail outlet on the ground whereby they can try on the clothing and then can buy on in the Internet.

Okay. So like online, offline integration?

Yes. Online, offline integration, yes.

Okay. And thank you for the very detailed information about the strategic plan. Can you give us a little bit more detail about what changes we might see over the next three to six months?

Qiming just mentioned that his partners are going through an operating crisis in terms of inventory. So we have devising a supporting plan for repurchase their inventory over the next three to six months. This is to ensure they’ve lesser pressure in operating -- operations and the orders that they’re going to place with will not be reduce drastically over the course of the next few sales risk (indiscernible) to support them to have a healthy development over the long run.

Okay. And over the next three to six months, are we going to see any significant progress on the initiatives you mentioned like building and optimizing the retail network, high profile at acquisition, ERP system, production facility, acquisition of second brands?

What we’ve just mentioned in detail our five-year plan, over the three to six months will not be clearly visible actions.

Okay. And my last question is about the delisting notice that you received from the Exchange, do you have any plan to address that?

We will do a relist stock split in December. This is the deadline set by the New York Stock Exchange. So that’s the plan for our -- this is our plan to address the deficiency.

Okay. Thank you very much. Thanks for answering all my questions and thank you for the detailed presentation.

Next question is from Peter Cyrus. Go ahead please.

Thank you. First, I just want to make a comment. I’ve been in the apparel business in the United States for 50 years and this is exactly what you’re talking about in China is exactly what happened in the United States, 40 years ago. So I think you’re doing all the right things. Now let me -- I’ve some questions I just want to understand. The top 10 companies in the apparel -- in your niche of the apparel business, what market share with the top 10 companies have today?

Based on his understanding, the top 10 menswear brand in China now probably less than 10% of the market share and he feel that this is the golden opportunity coming.

I’m sorry CJ, what was the last comment?

He said the top 10 men’s apparels in China markets is less than 10% and now it’s a golden opportunity (indiscernible) mentioned, smaller brands will be retired by the market [ph] [force] over the next five years.

Right. So the smaller brands, in addition to the fact that the smaller brands can’t invest the way you can, I also assume the smaller brands wont be able to get any money from the banks because there is a credit crunch, is that reasonable?

Yes, we agree with your comments. This smaller brands, menswear brands, they have -- they don’t have collateralizable assets and the -- that the China’s banks are not lending them money. So they more likely to be retire by the market over the next five years. He observes that a few brands, menswear brands in Guangdong province and Fujian province, they -- smaller brands have been retired by the market. So he said over the next few years -- he say this trend will continue.

Okay. So if you were to look (indiscernible) for your company specifically, because a lot depends on fashion, but say over the next five years, let’s say the top 10 brands now have 5% -- five years, now what percentage with the top 10 brands have?

He is of the view that the top 10 menswear brand will have bigger market shares than now and just like what happened in U.S -- United States 50 years ago is as many smaller brands now -- those market shares are contemplated in a few brands. So he tell that China will follow the trends -- follow that trends definitely.

But he doesn’t have any guess as to how big the consolidation will be? Because in the United States we went from thousands of small brands to a small number and small brands all grew very fast. So I’m just curious if he has any view as to, just how big the consolidation will be?

He tell that the -- with the retirement of those small (indiscernible) over the five -- next five years that tends (indiscernible) will probably over 50% of the market share.

So that with this change in the structure of the industry, you guys should be in a position to over time to grow very fast and very profitably?

Yes he agrees with your comment. With our financial results and our strategy planning that have in place, we believe our future profitability and operations will be much more stronger.

Thank you very much.

Thank you.

We are now in question-and-answer session. (Operator Instructions) Thank you. Our next question is from Jimmy (indiscernible). Go ahead please.

Hi, gentlemen. Quick question for you -- actually a couple of quick questions. First one was I didn’t hear the answer that you gave on the delisting notice, what actions you’re going to take to address that? Can you just repeat that please?

That is the efficiency on the under US$1. Its not delisting. So we have a cure period of six months. We can cure it in December by doing reverse stock splits.

So you’re going to do a reverse stock split to get it back up over a US$1 to take your deficiency, okay. That’s unbelievable. Why are you guys a public company?

(Indiscernible).

That’s a serious question. As a shareholder, who basically watch the entire stock market go up, in excess of 50% recently yet watched this get more than cut in half, while your cash piled continues to build, yet you don’t buy any stock back in the open market even though the stock is trading at basically a fifth of cash. So you could literally buyback every single share in the entire market in this stock and create enormous value for all your remaining shareholders. I don’t know if too many other investment opportunities where you can basically put your money to work and know right off the bat that you’re getting four or five times your money is worth. Do you know any other investment opportunities that will yield you the same exact kind of return at easily, such as all these other efforts and plans that you’ve made in your five-year plan? Will those give us a 400% return on our capital?

Let me just translate that for the Chairman.

Sure, absolutely. Thank you CJ.

Okay. He mentioned that we looking -- we look at things at long-term perspective. We will [technical difficultly] a brand with over 100 years. So we see things more of a long-term (indiscernible) short-term. We can’t (indiscernible) short-term, we want to be a listed company to -- (indiscernible) listed company we can access to the capital markets to build our brand, more profitability over the next five-years.

So now that you’ve got an access to the capital markets via a listing, then obviously of a pilot cash, so I’m guessing, well I’m not going to guess, do you have intensions of raising additional cash in the capital markets?

At the moment we don’t have plan to raise more capital, but as we progress in our development and within recognition by the investor on our strategic development, we may in future may have this more capital raising plan that goes in line with our strategic initiative and planning.

Right. I unfortunately can’t explain this to you logically. You guys should be buying back stock. There is no doubt about that. That will get you back above a US$1 and cure the delisting notice. I don’t know why you guys don’t take the appropriate steps to help shareholders who have been in this thing for a while when the stock is trading at such a ridiculous discount cash, its like saying I can -- I will pay you US$0.20, you give me back a US$1. That’s basically what I’m telling you here and you’re telling me no, let’s not do it, let’s not pay US$0.20 to get a US$1. So I’m not sure exactly why you believed you’re doing the right thing for shareholders by investing this cash for a five-year plan. It will be potentially better for the business overall, but you will do nothing to help your shareholder. By reverse splitting this thing all you’re going to see is the stock prices going to go straight back down. So I don’t believe you have the best interest of shareholders in mind right now? I hope you change that view and I hope you do something extremely responsible in the near-term. Thank you.

I think we’re running out of time now. And we thank you for all your questions. Now I’m going to pass it over for -- to Mr. Arnell for closing comments. Mr. Arnell please go ahead.

Thank you. In closing, on behalf and on behalf of the senior management team, we would like to thank you for your interest and participation in today’s call. If you require any further information or have any interest in visiting the Company in China, please let us know. Thank you for joining us. This concludes the call.

We thank you for your participation in Xiniya’s conference. There will be a webcast replay within an hour. Please visit www.xiniya.com under the Investor Relations section. You may disconnect now. Good bye.