Major Shareholder:

• Mr. Kyoo Yoon Choi and direct family - 62.14% interest

Company Subsidiary:

• JY International100%): Trading of plush stuffed toys
• JY Shanghai (100%): Manufacturing plush stuffed toys
• C & H America (100%): Trading of plush stuffed toys
• JY Toys (100%): Trading and manufacturing of plastic and steel toys
• C & H Suzhou (100%): Manufacturing of fabric and plush stuffed toys

The Group is principally engaged in the design, development, manufacturing and sales of a wide range of plush stuffed toys as well as steel and plastic toys on an OEM and ODM basis. Plush stuffed toys manufactured and sold by the Group include traditional and fashionable toys, such as character licensed products. The Group's principal customer for its plush stuffed toys include character licensors, such as Warner Bros, and Bandai Co,, Ltd.

Steel and plastic toys manufactured and sold by the Group include ride-on toys, such as tricycles for children whose age ranges from 12 months to 6 years, and collectible miniature automobile, such as steel truck toys for children of all ages. Principal customers of the Group's steel and plastic toys include character licensors, such as Funrise Toys Limited. The Group has a diversified customer base. For the year ended 31st December 2000, the Group sold its products to approximately 139 customers in over 13 countries. The principal markets for the Group's products are the US, Europe and Japan.

As at the Latest Practicable Date, the Group operated seven production bases for production of plush stuffed toys and one production base for production of plastic and steel toys in the PRC, with an estimated total annual production capacity of approximately 67 million pieces of plush stuffed toys, 360,000 pieces of tricycles, 1,200,000 pieces of steel and plastic toys and 3 million yards of fabrics largely used as materials for the manufacturing of the Group's plush stuffed toys.

In the midst of new high-tech toys with the latest technological advances, demand of classic toys, such as plush stuffed toys, games, pre-school and infant items will remain the backbone of the toy business and is likely to be steady in the near future.

Despite the slowdown of the global economy, consumer spending on toys as a whole is expected to be steady and in particular, demand for character licensed products and small gift items with creative design and low cost, will continue to be strong in the retail market.

According to toy Industry Association, Inc. and the International Council of Toy Industries, sales of plush stuffed toys accounted for approximately 9.5%, of the US$16.4 billion. The Directors believe that, in light of this huge market demand for plush stuffed toys in the US, the Group can further expand export to the US increase its market share.

The Directors believe that the Group has the following competitive advantages:

• Its qualified and experienced management team with its in-depth knowledge and expertise in the toy industry, which enables the Group to operate effectively and efficiently;
• Its long standing business relationships with customer with internationally recognized brandnames;
• Its ability to secure business from a broad range of customer in major markets worldwide, such as the US, Europe and Japan, thereby mitigating the Group's exposure to changes in any single market;
• The design and product development ability of the Group which enable the Group to respond timely and effectively to changing market demands, and to provide technical support to customers in product design thereby expanding the Group's product portfolio;

• There is no assurance that the Branded Customers and other customers of C & H Korea will continue to place orders to C & H Korea and if these customers fail to place orders with the C & H Korea Group, the sales and the profitability of the Group may be adversely affected.
• There is no assurance that the major customers will continue to purchase from the Group. If any of the major customers stop purchasing from the Group, the Group's turnover and profits may be adversely affected.
• If the C & K Korea and the Directors do not act in the best interests of the Group and its Shareholders as a whole, the operation and the profitability of the Group may be adversely affected.
• Any reduction in the sales of plush stuffed toys during Christmas and New year may have a material adverse impact on the Group's turnover.

The Group at present intend to increase the marketing and customer service focus through the Group's New York and Los Angeles offices in US to enable the Group to maximize business potential with existing customer. The Group also intends to expand marketing and design capabilities in the US to enable the Group to rapidly act on customer requests and changing market conditions thereby enhancing the Group's ability to attract new customers.

In addition, the Group also intends to explore the US market for suitable investment opportunities, such as acquiring an established marketing firm for plush stuffed toys in the US, with a view to complementing the Group's existing business while capitalizing on the US market in a timely manner.

The Group will focus its design and product development efforts on the development of new and marketable product designs and characters. Also, the Group intends to allocate some of its design and product development resources in developing interactive toys by incorporating personal computer and other technology in traditional plush stuffed toys enabling them to interact with the environment through sight, touch, hearing and physical orientation in order to capture the rising market demand for interactive products.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$175 million (based on the offer price HK$1.20 per share). The Group at present intends to apply the net proceeds as follows: