Pou Chen Group

History

Pou Chen Corporation ("Pou Chen") was founded in September 1969 with canvas and rubber footwear as major products initially. Thereafter, Pou Chen focused on athletic and casual footwear manufacturing. To reduce the sole manufacturing risk and to pursue an endless business growth, Pou Chen diversified into manufacturing electronic components and products since 1999. Currently, Pou Chen has transformed itself to be an industrial holding company, its footwear and electronics businesses are mainly operated by its subsidiaries and affiliates (collectively, the "Group"). At the end of 2006, Pou Chen's paid-in capital reached to NT$ 24.43 billion dollars and its market value was over NT$90.00 billion dollars.

Footwear business
In the late 1970s, Pou Chen began to produce athletic footwear on an original equipment manufacturer (OEM) basis for the branded company, "adidas". With the professional R&D ability and experienced factory management, Pou Chen successfully turned to be an original design manufacture (ODM) from a simply OEM. Based on the risk diversification and cost saving consideration, Pou Chen via its major subsidiary, Yue Yuen Industrial (Holdings) Ltd. ("Yue Yuen", http://www.yueyuen.com), expanded production bases to China, Indonesia, Vietnam, United States and Mexico from 1980s. In 2002, Pou Chen sold its interests in 67 companies engaged in footwear material manufacturing to Yue Yuen as part of the Group's strategy to vertically integrate its footwear business within Yue Yuen.

Currently, the Group manufactures athletic and casual footwear on an OEM/ODM basis for major global brand such as Nike、adidas、Asics、Reebok、Puma、New Balance、Merrell、Timberland、Converse、and Salomon. In the end of September 2006, the Group owned 376 production lines, and its annual production was nearly 200 million pairs of shoes. Meanwhile, the Group maintained its dominant position with an estimated 17~18% of the combined wholesale value of the world's athletic and casual shoes market. In 2006, footwear business contributed 66% of Pou Chen's consolidated turnover.

Electronics business
In order to leverage the Group's strengths in manufacturing on an OEM/ODM basis, the Group diversified into electronics business first by investing Global Brands Manufacture Ltd. ("GBM", http://www.gbm.com.tw) in 1999, which is engaged in manufacturing printed circuit boards (PCB) and PCB assembling (PCBA). Starting in 2002, the Group sequentially established Digital Decade Ltd., MindTech Display Co., Ltd., and Techview International Technology Inc. to manufacture and assemble TFT-LCD modules and LCD monitors. Besides, Pou Chen has invested in Pro Arch Technology Inc. which is a trading company for LCD monitors and other related products. In 2006, electronics business accounted for 34% of Pou Chen's consolidated turnover.

"For footwear business, the Group will continue the expansion strategy of diversifying product categories, increase investments into footwear-related business, and proactively develop retail distribution channels in Greater China. The Group will also keep on cooperating with its branded companies to provide full-line products and value-added services. For electronics business, the Group will expand its production capacity of PCB and PCBA with diversifying its products and customer bases in the near future. Looking ahead, the Group believed that having reliable, integrated supply chains for key components will enable it to respond quickly to the supply-demand balance and achieve in-time delivery, both of which should lead to enhanced utilization and cost competitiveness. The Group will focus on the OEM/ODM operation model in its core businesses to deepen the strategic partnerships with its global branded companies." said Mr. C.J. Tsai, Chairman of the Group.