Polo currently sells its products through a network of licensees in China. It currently has licensees in 20 PRC provinces. It does not currently sell its products in Taiwan, Tibet, Hong Kong or Macau. Polo is also expanding its business to commence selling products in South Asia and East Europe.

The health supplement and cosmetic markets in China have grown. By 2015 it is expected that the middle class will increase to approximately 317 million people and the affluent class is expected to grow to 8.5 million. People in these classes have disposable income that can be spent on discretionary items. Urban residents are spending considerably more on health care, both in total amount spent and in percentage of total annual consumption. Continued growth for the over the counter health supplement market in China is expected, primarily because of an increasingly stressful lifestyle for white-collar workers, prolonged exposure to pollutants (especially in urban centres) and the increased willingness of Chinese parents to spend large sums of money on health supplements for their children. Annual sales of cosmetics are showing strong growth. Polo Biology has identified four major consumer groups that purchase health supplements and personal care products: middle-aged women, parents of young children, the elderly and white-collar workers. Its current marketing efforts focus on these consumer groups.

Industry Overview

The health supplement market in China has grown as a result of rising incomes and an increased focus on health care. The middle-income segment in China includes approximately 100 million consumers, who enjoy discretionary spending power. The middle class in China includes those earning between US$6,000 and US$25,000 annually. As stated in the article “Understanding the Affluent Consumers of China”, MasterCard Worldwide, Second Quarter 2007, the middle class has grown from almost zero before 1995, to approximately 87 million in 2005. By 2015 it is expected that the middle class will increase to approximately 317 million people. In addition, the affluent class (those earning more than US$25,000 annually) is expected to grow to 8.5 million by 2015. This segment of the population spends approximately 75% of household income on discretionary items.