The Dream Factory of China

　　Established in 1991, Luk Fook Holdings (International) Limited (the Group) is one of the leading jewellery retailers in Hong Kong and Mainland China. The Group principally engages in the sourcing, designing, wholesaling, trademark licensing and retailing of a variety of gold and platinum jewellery, gold ornaments and gem-set jewellery, with a total of over 1,350 shops in Mainland China, Hong Kong, Macau, Singapore, the United States, Canada and Australia. The Group will continue to identify new business opportunities in the international market in response to its corporate vision, “Brand of Hong Kong, Sparkling the World”.

　　The Group currently sources gold from Mainland gold merchants and processes gold in its major processing plant in Guangzhou City. Considerable logistics costs are incurred in the course of sourcing, processing and distribution. Qianhai is situated at the mouth of the Pearl River, - at the heart of the Pearl River Delta. With its proximity to the Group's Guangzhou processing plant, as well as both the airports in Hong Kong and Shenzhen, with business presence in Qianhai, the Group will have convenient access to the new logistics hub and optimise the logistics network to reduce logistics costs.

　　Gold price in Mainland China is subject to the fluctuation of Renminbi exchange rate due to its pricing mechanism. If the Group can directly purchase gold from international gold merchants via Qianhai, it can mitigate exchange rate risks, and enjoy greater flexibility in the purchase of gold from Mainland China or overseas to better control costs. The Chinese Gold & Silver Exchange Society is negotiating with the Shanghai Gold Exchange to explore the possibility of forming a strategic alliance. If these two leading precious metals exchanges of the two cities are able to achieve a mutual market access between them, Hong Kong, Qianhai and Shanghai could possibly develop into the largest precious metals exchange market in Asia and even in the world, which would greatly facilitate the gold trading of market participants.

　　Besides, the "Qianhai Precious Metals Logistics Assay Centre" is a "tariff-free storage centre within the border" that allows gold users to complete the physical delivery and processing of gold bought from international gold merchants in Qianhai. Moreover, instead of immediate pick-up, the processed gold can be stored in the storage centre for user flexibility and cost effectiveness.

　　Qianhai also introduces a variety of incentive programmes and preferential policies. The recognised demonstration modern service project will be entitled to financial support of up to RMB 50 million. As the first Hong Kong enterprises cluster in Qianhai, the "Qianhai Precious Metals Logistics Assay Centre" may operate more efficiently if it can receive the financial support. Eligible high-calibre overseas specialists and short-supply specialists working in Qianhai are exempted from paying their portion of individual income tax that exceeds 15% of their taxable income. The tax credit helps attract and retain overseas specialists, which is conducive to the Group's long-term development.