San Shang Group—San Shang Enterprise and the UK’s MFI officially signed an agreement to establish the joint venture San Shang M.F. Furniture

1. Date of occurrence: 2001/02/21

2. Counterparty to the contract: MFI plc, UK

3. Relationship with the company: None

4. Contract start and end dates (or termination date): 2001/02/21

5. Main contents (not applicable to terminations): San Shang M.F. Furniture was officially established today (February 21) after San Shang Enterprise Chairman Chen Ho-Tung and MFI Group President Mr. John Hancock signed the agreement. The joint venture will enter Taiwan’s kitchen and bedroom furniture markets.

According to MFI President Mr. John Hancock, this is the company’s first overseas joint venture. Previously, the company’s overseas plans involved establishing furniture chains through licensing and franchising. This joint investment project in Taiwan with San Shang is intended primarily to leverage San Shang Enterprise’s decades of experience in Taiwan’s retail chain channels and to develop the Far Eastern market more deeply. Because MFI and San Shang are both optimistic about Taiwan’s strong consumer potential and the rapid improvement in the quality of home living, the two parties conducted long-term development assessments, market research, and marketing planning before finally settling on this cooperation project.

San Shang Enterprise stated that MFI is the UK’s largest furniture company, with integrated operations ranging from upstream production and manufacturing, logistics, and warehousing to downstream chain stores. Its products include kitchenware, furniture, and bedding. The joint venture, San Shang M.F., will primarily introduce kitchen and bedroom furniture. For various related kitchen fittings and accessories, it will seek Taiwanese suppliers as cooperative sales partners to provide consumers with comprehensive kitchen design, delivery, and installation services.

6. Restrictive provisions (not applicable to terminations): None

7. Expected impact on the company’s production and sales volume, operating revenue, and profit or loss (not applicable to terminations): San Shang indicated that domestic consumer demand for European-style kitchen furniture has continued to grow rapidly year after year. This year, San Shang M.F. will open four chain stores in the Greater Taipei metropolitan area and will then gradually expand to other regions. It is expected to begin generating profits after three years.

8. Specific purpose (not applicable to terminations): As stated in the preceding item

9. Other matters to be disclosed: The new company’s capital is NT$200 million: San Shang contributes NT$10 million, its affiliate Family Shoes contributes NT$90 million, and the UK’s MFI contributes NT$100 million.

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