a business solution for sustainable community development in wuxi, april 2011

LOHO Food Trading Platform

A Business Solution for Sustainable Community Development

1

Table of Contents

Page

Executive Summary 3

Background 5

Food Safety 8

Wuxi 10

LOHO Philosophy 12

Objectives and Project Scope 14

Business Model : Creation of a Unique Social Enterprise 17

Marketing Strategy 27

Quality Control Strategy 57

Supply Chain Strategy 69

Organizational Structure and Key Responsibilities 76

Pilot Investment : LOHO Wuxi Chicken 90

Unique Selling Proposition 91

Quality Control 93

Supply Chain 94

Financial Analysis 95

Sample of Profit Sharing Structure 98

Organizational Structure Options 99

Risks and Mitigation 101

Implementation 105

Conclusion 108

Appendices 110

2

Executive Summary

• Wuxi County presents tremendous opportunities with its landscape, climate, people and

high agricultural productivity culture. The farming community along with the Wuxi

government and GVB (Global Village of Beijing) are all committed to work together and

create a commercially viable social enterprise to address the food safety concerns in

China and in particular, Chongqing

• The current estimated market (1.6 million customers) for organic and safe food in

Chongqing is expected to grow at CAGR of 15% for next 5 years

• The enterprise is to be set up between private investors and as a spin off of GVB with the

Board comprising of representatives from GVB, private investors, government, LOHO

association and an independent advisor

• The social enterprise will manage quality control, supply chain, sales and marketing and

distribution whilst also managing community development activities to ensure long term

sustainability

3

Executive Summary

• A new branding and marketing strategy is recommended along with stricter production

and quality control guidelines, based on the LOHO philosophy and Wuxi culture

• Key marketing initiatives including a new logo for Wuxi products, opening up of an

exclusive organic store in Chongqing and integrated branding efforts to promote the

LOHO Wuxi brand through local media

• The LOHO Wuxi chickens are Daninghe natural free range chickens in the Wuxi county,

which is used as a pilot product to be marketed in Chongqing city. The model created is

transferable to the other Wuxi products

• The social enterprise is targeting an initial investment of 20 million RMB for the pilot

case which expects an IRR of 23% with a payback period of 2 years

• In summary, the pilot case highlights a robust and holistic business plan that addresses

food safety based on the LOHO philosophy and creates value for all stakeholders and

the local community

4

BACKGROUND

5

Overview

• Concerns on food safety in China

• Demand for safe food products

• Opportunity to position Wuxi as a supplier of healthy and safe food products

• Use of LOHO Philosophy as guiding principle in Wuxi’s food production

6

Concerns on Food Safety in China

Food safety is now a major concern of consumers in China

• Food safety problems range from food borne illnesses caused by pathogenic

microorganisms, chemical contaminations (e.g. pesticide residues) to the illegal use

of food additives

• Examples of recent food safety scandals are:

– Presence of Sudan Red IV in salted duck eggs (2006)

– Melamine-tainted infant milk produced by Sanlu (2008)

– Use of lean meat powder by a major meat producer, Shuanghui Company

(2011)

• The consistency of implementing the Chinese government's tougher food safety

laws continues to be a challenge, as the regulations are being implemented across

approximately 450,000 food production and processing enterprises dispersed all

over the nation

Consumers are losing faith in the safety of food products in China

7

Demand for Safe Food Products

• To seek safer food alternatives, Chinese consumers are turning to green food and

organic food products

• The organic market in China has been growing annually at a double digit rate over the

past decade1. Domestic sales of organic products is expected to be as high as USD

3.6 – 8.7 million by 20152

• Despite the growing demand, key challenges still exists in the supply of safe products

– Shortage of available green and organic food products – out of 122 million

hectares of China’s farmland, over 70% of the land has not been certified to

meet the basic pollution-free standards

– The use of fake organic certificates by unscrupulous businessmen has negatively

affected consumers’ confidence in certified products

1 US Department of Agriculture Global Agriculture Information Network (USDA GAIN) Report February 2009

2 USDA GAIN report October 2010

With the rising market demand for safe food products, a business

opportunity exists to create a brand which consumers can trust

8

Wuxi: County Background

Wuxi County is located in the northeast corner of the Chongqing municipality in China. It

is known for its picturesque landscape and rich natural resources.

Geography and Infrastructure

•Land area of approximately 4000 km2

•Bordered by Shaanxi and Hubei provinces

•Surrounded by mountains with 15 rivers that run through Wuxi

•Has four main roads to link Wuxi to Chongqing city, Shaanxi and Hubei

Demographics

•Population of 530,000 people, with 19 different ethnic groups

Economy and Natural Resources

•GDP: RMB 2.4 billion – GDP growth of 15.5%

•GDP per capita: RMB 4,445

•Major industries: agriculture, coal mining, tourism

•Has more than 3000 km2 of forests and 311 km2 of meadows

9

What Makes Wuxi Special

There are three main characteristics that makes Wuxi an ideal supplier of healthy and

safe food products and strongly supports the business opportunity proposition.

1. Clean natural environment

The terrain and pollution-free environment makes Wuxi a prime location for organic

farming

2. Natural farming

Most of crop and livestock production in Wuxi uses the natural and traditional farming

techniques. Livestock are raised in forests and are fed with corn, vegetables and other

natural foods. Many Wuxi produced crops have already been certified as either

“pollution-free” or “organic”

3. Wide altitude range

Wuxi has over 425 km2 of farmland at altitudes ranging from 150m – 2700m. The large

altitude range allows Wuxi to deliver out of season agricultural production

10

LOHO Philosophy: Background

The Life of Harmony (LOHO) vision is built on Chinese philosophy with a strong belief on

“respecting nature and cherishing everything around us; embracing the connectedness

and harmony of all things.”

Five Elements of a LOHO community

LOHO Livelihood

LOHO Governance

LOHO Wellness

LOHO Stewardship

LOHO Culture

• Emphasizes organic production and connection to local cultural identity

and revolves around the development of eco-farming, education, tourism,

arts and wellness

• Emphasizes an integrated social governance mechanism with government

providing guidance and services, social organizations providing resources

and the local community (LOHO Association) taking charge of their

initiatives

• Emphasizes the importance of a healthy lifestyle and the use of natural

remedies to stay healthy

• Emphasizes the harmonious relationship between people and the

environment and the need to take good care of environment

• Emphasizes community education and cultural activities to uplift the

spiritual life and nurture the balance of mind, spirit and body

11

LOHO – Wuxi Collaboration

Food Safety

Quality Assurance

Sustainability

Economic Development

Harmony with Nature & Environment

Leveraging on the already established eco-practices of natural farming in Wuxi county, a

new social enterprise will be set as the intermediary between the demand (consumers) &

supply (farmers)

The principles governing the enterprise shall be based on the LOHO philosophy

represented by:

The social enterprise can serve as a model for other provinces in China to adopt and

implement in the future.

12

OBJECTIVES AND PROJECT

SCOPE

13

Overall Objectives

14

• To address food safety and rural livelihood issues by building a rural development

based business model that integrates a quality assurance system, a cold chain

logistics system and a consumer market system.

• To enhance LOHO governance as the social development component of the Wuxi

government‟s 12th five year plan

• To build a LOHO philosophy incorporated food industry in Wuxi to drive local economy

• To provide a model for sustainable

food production with an emphasis

on food safety in China by developing

a business model incorporating the

LOHO philosophy and attracting

investors

Project Scope

• Build a commercial business model for a social enterprise to meet Wuxi’s social

development needs

• Propose a comprehensive marketing strategy focused on developing a trusted brand

(LOHO Wuxi) based on the principles of LOHO to create demand

• Outline strategy plans complete with financial figures for the other key areas of supply

chain, production and organizational structure

• Propose a pilot case using LOHO Wuxi chickens to show the full range of costs and

benefits

• Identify future business development

opportunities

15

BUSINESS MODEL

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Overview – Business Model

• Addressing social development needs

• Approach to social development

• LOHO philosophy as a social development model

• Value proposition

• Key partners

• Social enterprise’s business model

• Social enterprise in the value chain

• Impacts of social enterprise to community

17

Addressing social development needs

The key focus areas are:

• Improve the quality of life by increasing the rural income levels

• Reduce migration outflow by creating more job opportunities

• Improve social security benefits such as income protection and health care

• Improve rural education systems

• Enrich culture and healthy lifestyle

18

Approach to social development

Leverage the opportunity to utilize Wuxi’s unique environment for agriculture production to

meet the growing consumer demands for safe and healthy products in the surrounding

markets, thereby increasing the livelihood of the community.

The Wuxi community is able to produce

healthy and safe food products allowing

for sustainable economic growth

opportunities

However, they lack:

• Quality market demand information

• Branding and marketing strategies to be

able to demand a premium price for their

premium organic products

• Awareness of quality control procedures

• Effective and stable distribution

channels to reach the target market

• Efficient logistics system to bring the

products to market at a reasonable cost

WUXI COMMUNITY

Consumers have shown increasing

preference and demand for safe and

healthy food products, especially in light

of the numerous recent food safety

scandals in China.

However, they lack:

• Knowledge on where to buy safe and

healthy food products

• Trust in existing certifications provided

by the government and other producers

• Assurance of the consistency of food

quality and stability of the supply of safe

food products

CONSUMERS

Solution:

A social

enterprise

which will

bridge the

gap between

producers

and

consumers

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Value Proposition

The business model leverages Wuxi’s unique heritage,

culture and environment to produce high quality products

and services that deliver health and wellness.

By adopting the LOHO philosophy and values, it creates a

brand that commands consumers’ trust and gives value

back to the community, investors and local government.

20

LOHO Philosophy as Social Development

21

The application of the LOHO philosophy to the social enterprise results in

economic development, wellness, ethics, good governance and stewardship.

CULTURE:

Rebuilding of Ethics

WELLNESS:

Healthy living

金金水水

土土

LIVELIHOOD:

Eco-industries and economic development

STEWARDSHIP:

Environmental preservation and

management

GOVERNANCE:

Integrated social governance

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• Supply high quality products

• Participate and benefit from the social development programs

Key Partners

Government

• Provide financial and non-financial assistance to Social Enterprise and Cooperatives

GVB

• Specialize in LOHO values concept

• Advise the appropriate fund usage for social development programs

Investors

• Provide capital

• Offer management and financial decisions

• Insight into corporate governance

$$Cooperatives

• Collect farmers‟ produces

• Coordinate between farmers and Social Enterprise

Villagers Consumers

• Experience quality products and service of LOHO Wuxi brand

• Become a promoter of the LOHO

Wuxi brand CO-OP

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Business Model

Producers(community)

Social

EnterpriseConsumers

LOHO Life ( Arts, Culture, Harmonious Living , etc)

Engage Consumer to Protect the Environment

• Ethical Production

• High Quality Products

The integration of rural and urban communities leads to economic

development, social governance, sharing of cultures, with a

harmonious relationship with the environment.

• Premium Price

• Training / Education

• Profit sharing

• Community Funding

• Insurance, Micro-finance

• Higher standard of Living

• Food safety

• Wellness Education

• Increase sales

Eco- tourism

Additional Income (Handicraft, Ederly care, etc)

LOHO Business Model = Power of Community

23

Value Chain Model

PRODUCER

COMMUNITY

PROCESSING &

DISTRIBUTION

OUTSOURCING

COMPANY

RETAILER /

WHOLESALERCONSUMER

SOCIAL

ENTERPRISE

GOVERNMENT GVB

Production,

Farming

Packaging,

Supply Chain

Activities

Distribution Activities

SELL

LOHO QCLOHO QC

RETURNED PROFIT

& COMMUNITY BENEFITS PROFIT

DISTRIBUTION

COSTS

SUPPLY CHAIN

COSTS

SOCIAL

ENTERPRISE

GOVERNMENT GVB

Consumption

LOHO QCLOHO QC

RETURNED PROFIT

& COMMUNITY BENEFITS PROFIT

DISTRIBUTION

COSTS

SUPPLY CHAIN

COSTS

ECOTOURISM

HANDICRAFT

EDUCATION

MAXIMUM TRUST /

SAFE PRODUCT

SELL

AT

PREMIUM

24Business model creates value for the community

•Organic Food

•Rebuild the ethic

•Tourism

•Elderly care

•Society issue like women and unattended children

•Sustain the culture

•Reduce the conflict with government

•Grow income

•Ownership

•Education

•Wellness

•Help to grow economics

•Monitor government

•Rebuild ethic system

•Create job opportunity

Impacts of Social Enterprise

25

Consumers

Government

Community

Producers

• Economic growth

• Build stronger

relationships with

the community

• Harmonious

society

The social development business model provides benefits

to all segments of society

• Experience

quality food

and LOHO

values

• Enhance life style

of wellness

• Contribute to the

rural communities

in China

• Higher living

standards

• Food safety

and security

• Harmony with

environment and

people

• Strengthen ethics and

culture

• Fair price on products

• Ethical production

and quality control

• Increase in income

and livelihood

opportunities

25

MARKETING STRATEGY

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Overview – Marketing Strategy

There is over 7.0 million people in Chongqing city and an estimated market of

1.2 million customers who are looking for organic and safe food options. With an

effective brand and marketing strategy to build awareness, trust and loyalty, long

term sustainability of the Social Enterprise is achievable.

• Market analysis

• Branding strategy

• Marketing plan

• Future opportunities

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Market Analysis

• Chinese consumers increasingly pay more attention to food safety due to a

series of local scandals over the past several years.

• Organic market accounts for 0.01 % of China‟s food consumption.

• However, analysts contend that annual organic consumption growth may

reach 30 to 50 % within 10 years.

Food safety is a key concern amongst Chongqing residents. There is confusion

on food certifications and a high level of distrust on the authenticity of the

certificates. There is currently low consumption of organic food but it is

projected that there will be exponential growth in the trend to consume safe

foods.

2828

29

Customer segments

Customers of Chongqing represent Tier 2 group.

Number of cities

Median

Population

(000 & %)

GDP

(000 & %)

Tier 1 4

8,890 8,004,586

Megacities 5 22

Tier 2 17

4,190 1,756,654

Developed provincial capital cities 13 21

Tier 3

40

1,690 896,750

Developed medium-sized cities &

developing provincial cities13 29

Tier 4 90

866 186,174

Developed small cities 13 12

Tier 5 494

609 1,674

Underdeveloped small cities 56 16

Mass affluent customers and High Net Worth Individuals is 1.2M and

0.37M respectively taking up 3.7% and 0.1% of total population

Source : 2008 China City Statistical Yearbook

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Target Customer

Most buyers of organic products are …

• Age: 28-50

• Occupation: Office worker

• Marital Status: Married

• Education: University education

• Demographic Group: Pregnant women, infants, seniors and expats

This target customers is expected to grow by 88.4% by 2015

( Source: ‟10 affluent Chinese consumption trends, Warc Ltd., March 2011 )

30

Voice of Customers

Verbatim of Chongqing City residents on food safety and organic

products are…

“I have heard about organic products but

do not know exactly what they are.

I‟m confused about the numerous

certifications in the market.”

“I have rarely buy organic products in

the market.

I just can‟t believe its quality.”

“I am willing to pay 2 - 3 times the normal

price for organic products if I can be really

assured of the product quality.”

“I don‟t even know what MSG, Coloring

and Preservatives are, not to mention the

impact of these chemicals to my health.”

( Source: Field interview, Chongqing, March 2011 )

31

Competitor Analysis

Conventional Green Imported

SourceSuppliers come from

different areas in China

Mostly come from the

areas of Tongnan,

Mianyang, and Yunnan

Japan, France and

Netherlands

Product

Type

Vegetables, fruits, herbal

and meat products

Vegetables, fruits, herbal

and meat products

Vegetables, fruits, nuts

and meat products

Target

Market

Open market, traditional

market, cantina

Supermarkets, hotels,

restaurants,

specialty stores

High - end individual

consumers, supermarkets,

imported products stores

Price

Strategy

Competitive price,

wholesale price is most

attractive to consumers.

1-3 times higher than

conventional products

7-8 times more expensive

than conventional products

Imported products command the highest price as customers trust the

certification process for foreign organic products.

( Source: Field research, Chongqing, March 2011 )

32

Price Analysis

Customers are willing to pay average 2.4 times higher price for LOHO

WUXI products, compared to conventional products if LOHO WUXI

products guarantee best organic quality.

Product Type LOHO WUXI Conventional Green Imported

Chicken 65 /kg 18/kg 66/kg NA

Mushroom (dried) 95 /kg 56/kg 90/kg NA

Potato 6 /kg 2.8/kg 5.5/kg NA

Cucumber 5.5 /kg 2.2/kg 5/kg 17.5/kg

Egg 30 /kg 16/kg 28/kg NA

( Unit: Yuan / Kg )

( Source : Market Research in Chongqing, March, 2011 )

33

The LOHO Wuxi Brand Strategy

-Build greater awareness, enhance value and sales of LOHO Wuxi’s products and

services

-To share the message of the LOHO way of life, particularly educating the communities

in Chongqing and China on food safety and wellness

-For Wuxi to be identified as the benchmark city for producing top-grade agricultural

and processed food, as well as a top travel destination blessed with natural beauty and

a long tradition of unique culture and hospitality

LOHO Wuxi Brand

LOHO Wuxi’s

agricultural &

processed

products

LOHO Wuxi’s

wellness

(eco-tourism)

LOHO Wuxi’s

culture &

handicrafts

One umbrella brand to unite and coordinate resources

to market LOHO Wuxi’s products & services

34

The LOHO Wuxi Brand What we want people to think of when they hear “LOHO Wuxi”:

LOHO Way of Life

• With the LOHO Philosophy of respecting nature and embracing the harmony of all things, the enterprise is integrated with community support to nurture wellbeing, health/wellness, education and culture to achieve a sustainable Wuxi, Chongqing and China

Pure, Untainted Environment

• Wuxi is a place of breathtaking natural beauty blessed with pristine rivers, mountains, meadows and forests untainted by heavy industries

Innovation & Quality

• While Wuxi has a long heritage of producing top-quality agriculture products, it now sets the benchmark in China with independent international food standards, in line with its core LOHO Food Principles

LOHO Wuxi delivers health and wellness. It supports fair trade for the Wuxi community.

LOHO Wuxi contributes to a sustainable Wuxi, Chongqing and China.

35

Statistics show that the people of Wuxi live longer

than most urbanized areas in China

The LOHO Wuxi Brand What we want people to think of when they hear “LOHO Wuxi”:

36

The LOHO Wuxi brand will be able to demand a premium price with the

correct positioning in the Chongqing market

Positioning in the market:

• A high-end luxury brand that guarantees healthy and safe foods

and other products

• Is environmentally friendly

• Focuses on giving back to the community and fair trade

• Produces goods in line with the LOHO Philosophy

• Target affluent individuals who are concerned about food safety

and community benefits

The LOHO Wuxi Brand Logo Concept

The LOHO Wuxi Brand logo allows our customers

to recognize the quality and standards of the products

The logo aims to include the philosophy of LOHO

and the harmony of life in Wuxi

37

The Logo incorporates the philosophy of LOHO to

all our operations, production & community spirit.

LOHO balance circle

- Philosophy values of LOHO

- Strong belief of respect for nature

- Cherish of all relationships around us

- Embrace the harmony of all things

Blue arc

- Purity of life & business practices

- Rising flow of business towards flourishing growth

Green leaves

- Evergreen business practices

- Growth (economic & social development)

LOHO WUXI Logo - Option A

The LOHO Wuxi logo builds on the social & economic development beliefs of the LOHO

philosophy. It emphasizes on pure, clean & organic business practices that governs the

behaviors, production practices & harmony for people

3838

The Logo incorporates the philosophy of LOHO &

community spirit of Wuxi county through its

simplicity and completeness

LOHO Wuxi wordings


- Strong belief of respect for nature in Wuxi



Embossed blue circle

- Gives strength and sincerity to its commitment to

business quality

Circular flow

- Represents the co-related relationship between

LOHO and Wuxi community

LOHO WUXI Logo - Option B




乐和

巫溪

3939

The Logo incorporates the philosophy of LOHO &

natural mountainous surroundings of Wuxi

county

LOHO balance circle


- Strong belief of respect for nature



Wuxi Mountain

- Symbol of strength and everlasting sustainability of

the business

Green leaves

- Evergreen business practices

- Growth (economic & social development)

LOHO WUXI Logo - Option C




4040

LOHO Wuxi Products

In the short-term and mid-term:

Easy to produce, transport, pack and store

Less technical requirements

Existing sales channel

Easy to expand market size

High profit margin

LOHO quality standards

For example:

Chicken, eggs, potato, mushroom & cucumber

LOHO Wuxi Chicken and

Eggs Existing brand and sales channel

Easier to expand market

Easy to breed

High profit margin (Chicken:65

RMB/Kg, Eggs: 28 RMB/Kg)

LOHO Potato Large amount of consumption

Easy to plant with low cost

Easy to transport, pack and store

Less requirement of technology

and quality control

In the long term (> 5 years):

More advanced processed food

Higher requirement of quality control

More investment needed

High profit margin

Expand to tourism, handicraft, education and wellness

Maintain the LOHO concept in the long term

For example:

Processed food like potato chips, sweet potato

chips, Honey Wine, herbs

LOHO Mushroom Easy to plant

Less technological

requirements and quality control

High profit margin

LOHO Cucumber Easy to plant

Productive

Less requirement of technology

and quality control

Very High profit margin

41

Pricing – LOHO Wuxi Chicken as

example

Type A: Superior LOHO Wuxi

Chicken

Price: 85 RMB/Kg

Target: Internal restaurants in the

Government and related parties

-On-call door to door delivery

-Processed chicken, ready to cook

-Priority service

-Luxurious packaging

Type B: Excellent LOHO Wuxi

Chicken

Price: 65 RMB/Kg

Target: High-end supermarket i.e.

Carrefour, Far East, high-end

restaurants, hotels, schools and e-

store

-Similar price as other existing free

ranged chicken in high-end

supermarket (66 RMB/Kg)

- Premium packaging

Type C: Good LOHO Wuxi

Chicken

Price: 35 RMB/Kg

Target: Regular consumers

concerned with food safety and

quality

- Slight premium in price vs non-

LOHO chicken in the open fair

(18-20 RMB/kg)

- Good quality LOHO Wuxi

chicken

42

Sales Distribution – Expanding from

Chongqing City to Greater China

43

High-end Hotels and Restaurants

- Large and satiable quantity of demand

- High profit margin

- Established reputation and customer base

LOHO Wuxi Theme Restaurant

- Educate the public on LOHO concept

on food, culture and wellness

- Showcase LOHO Wuxi

High-end Supermarkets

Such as Chong Ke Long, Yuan Dong

etc.

- Large number of potential customers

- Already established consumer trust

Home Delivery/ Direct Marketing

- To deliver to high-net-worth customers

- Through direct delivery, allows more

margin for farmers- Niche market

High-End Schools & Kindergartens

- Food safety is essential for children in

China

- Parents are willing to pay more for

children‟s food

Other Channels

-Major cities along the Yantze River-Neighborhood cities of Chongqing-Relying on an established logistics cold chain

Targeting markets in major

cities beyond Chongqing

- Hubei, Shaanxi, Beijing or Shanghai

Phase 1Year 1

Phase 2Year 3

Phase 3Year 5

E- business

Using established platform such as

Taobao, Alibaba; set up LOHO Online,

E-business platform of Wuxi‟s own

- Low cost, comparing to opening a

store

- Easily accessible to buyers

- Generate cash flow faster, i.e. via

Alipay

43

Sales Distribution

Wuxi Market Place 1200m² (current)

- Distribution of „good‟ grade products

- Targeting heartland consumers

- Convenient / quick purchase

- Providing LOHO WUXI quality produce to the masses

NEW Wuxi culture exhibition lifestyle Store (2012)

- Processed Products

- Agricultural Produce

- Handicraft

- Cultural exhibits

- Educating the Chong Qing Market on LOHO Wuxi philosophy

NEW Wuxi Market Place 1000m² (2012)

- Distribution of „superior & excellent‟ grade products

- Targeting higher end mass affluent customers

- Product range that matches preference, budget & desire of market

- Fulfilling the desire for premium & safe product range

- Customer indirect support for LOHO Wuxi Community

44

Promotion 360-degree promotion and communications plan

Community Education on Food Safety

Public Relations

MediaCampaigns

Point of Sale

360-degree

promotion

plan

SHORT TERM (1 Yr)

Driving awareness of food

safety and LOHO Wuxi brand

MID TERM (3 Yrs)

Driving the awareness and

sales of other LOHO - Wuxi

products and services

LONG TERM (5 Yrs)

Expand to other markets, build

LOHO Wuxi as the benchmark

for food safety & top eco-

travel destination

Reach targeted customers by selling LOHO Wuxi products and services via total customer

experience and set the market benchmark for food safety and top travel destination

45

Year 1 Promotion Plan

• Outreach program to schools and supermarkets inChongqing and Wuxi to educate the public on foodsafety, chemicals/additives and organic food

• “Read Food Label” campaign to housewives

Community Education on

Food Safety

• Work with key “influencers” such as editors, journalists,food columnists, celebrities and sports personalitieswho support LOHO to drive awareness of LOHO Wuxiand food safety through blogs, newspapers, magazineand TV programs

Public Relations

• Create a LOHO Wuxi Farm website: LOHO Wuxibackground, LOHO Wuxi Chicken story, farmers‟profile & stories, LOHO food principles and Wuxi aseco-tourism destination

• Reality program of celebrities to LOHO Wuxi

Media

4646

• Food safety education programs for the public to build the trust and credibility of LOHO Wuxi as the

leading social enterprise on food safety and wellness

• Drive brand awareness of LOHO Wuxi as a premium brand of the highest quality, targeting affluent

customers

• “Taste of Pure Nature” sales campaign targeting affluent femalesCampaign

• LOHO Wuxi promotion corner in supermarkets with LCD TV showing LOHO Wuxi story, cooking demonstration/food tasting

• Distinctive, premium packaging with QR Code (traceability)

• New chicken dishes created jointly with celebrity chefs at high-end restaurants

Point of Purchase

Year 1 Promotion Plan

4747

• Membership discounts

• Membership points

• Exclusive in-store activities

• Newsletters and mail-in promotion

Store Membership

• Co-partnership campaign i.e. co-promotion, credit card discount, etc.

• Purchase of customer database from partner companies

Partnership Programs

Customer Relationship Management

48

Customer Relationship Management (CRM): to cross-sell and up-sell through database

and analytics. Have a CRM program assists in maintaining the relationship with

customers to create continuous sales and allows for cross-selling to untapped potential

customers.

48

Loyal customer programs can be rolled out in wholly owned LOHO Wuxi stores as well as

stores that carry the LOHO Wuxi products.

Digital marketing – LOHO Wuxi website

LOHO Wuxi website content:

• Health columns: education on the LOHO

way of life and food safety

• Discussion board: 2 way communication,

interactions – create awareness

• LOHO beyond organic: build LOHO as an

icon that is higher quality than organic

• Meet the LOHO‟s: farmers‟ stories and food

life cycle – connect with readers on an

emotional level

• LOHO projects: describe the ongoing

community culture and wellness projects

and ways to get involved

49

Create an informational and interactive website to communicate what the LOHO Wuxi

brand represents – create awareness in the virtual market.

• Recipes and cooking tips: all recipes will use LOHO Wuxi products as ingredients – increase

exposure as searching for recipes is the most popular food related online activity

Website promotional strategy:

• Keep website up to date with interesting activities and information

• Drive traffic to the website:

• Search engine optimization on Baidu, Google, etc.

• Use e-newsletter to update subscribers on new articles and promotions

• Include website in all marketing materials

• Marketing with regular updates that links back to website, on social media sites

such as Sina microblog

• Require members to also sign up as subscribers to enjoy membership benefits

• Form partnership with lifestyle websites and magazines as well as volunteer

opportunity websites to place ads, links, articles, etc. to increase exposure

• Place articles and features on the Wuxi government website, as there is already a

section on promoting local industries and work towards doing the same with the

Chongqing government website

Digital marketing – LOHO Wuxi website

50

Digital marketing

• Youku Channel

– Post video clips of the LOHO way of life and advertorial information on

Wuxi county

• Blog

– Written by a public person such as celebrity chef, food critique, Sheri, etc.

– Written by consumers for more credibility

• Social Media

– Kaixin, Sina Microblog

• Others

– Place QR code on product label to link to the brand

website, nutrition facts or farm tracking

51

Marketing Strategy Plan:

Cost Estimation for Year 1-5

52

A cost estimation of the implementation of a comprehensive marketing strategy. Multiple

strategies are utilized to more effectively raise awareness.

COST CATEGORY YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

ABOVE THE LINES

TVC 2,500,000 1,500,000 1,500,000 1,500,000 1,500,000

Radio 200,000 200,000 200,000 200,000 200,000

Newspaper 270,000 220,000 220,000 220,000 220,000

Magazine 500,000 320,000 320,000 320,000 320,000

BELOW THE LINES

In-store event 687,000 984,000 984,000 984,000 984,000

Website 450,000 150,000 150,000 150,000 150,000

Billboard 0 700,000 700,000 700,000 700,000

CRM Activities 100,000 200,000 500,000 600,000 600,000

Social network 50,000 50,000 70,000 70,000 70,000

Partnership program 0 300,000 400,000 400,000 400,000

Others

Media relation 150,000 380,000 100,000 100,000 100,000

Reserved for adhocs 193,000 196,000 176,000 176,000 176,000

TOTAL MARKETING

BUDGET (RMB) 5,100,000 5,200,000 5,320,000 5,420,000 5,420,000

Future Development Opportunities

Future business development opportunities lie in the

followings:

Eco-tourism (LOHO Wuxi learning package)

Handicraft, arts & culture

Product innovation (new top-end agricultural range & processed food)

Elderly-care program in Wuxi (retirement homes)

53

54

•Wuxi, origin of Wu(巫 ) culture is home to Chinese

ancient spirit as well as pristine nature

•Three LOHO pilot villages in Wuxi offer hands-on

experience programs while living in clean, unpolluted

farmlands.

•Visitors can learn about the LOHO philosophy and the

importance of organic food

•Sister Schools between Wuxi and Chongqing

LOHO WUXI Experience

In Wuxi organic LOHO villages

Eco-Tourism

54

55

Day 1

• Education on the LOHO philosophy and experiencing

LOHO dancing and the Wu(巫) culture

• Lodging in a traditional Wuxi house

• Day 2

• Visit the Daninghe free range chicken farm

• Experience cattle milking and feeding as well as make your

own cheese

• Day 3

• Lessons on how to make Wuxi handicrafts and organic

soaps

• Organic food cooking lessons in an authentic Wuxi

countryside kitchen

Activities for 3 day experience

Eco-Tourism

55

QUALITY CONTROL

STRATEGY

56

Overview of LOHO quality control

Having a consistent and standard quality control (QC) process starting from

breeding and production to distribution helps to ensure the end product meets

the customer’s expectation in terms of food safety and quality.

• Why LOHO QC?

• Overall QC strategy of Wuxi products

• QC of Wuxi agricultural products

• LOHO QC standards

• Certification

• Roles and responsibilities in securing quality

• QC budget

57

Why LOHO quality control process?

The LOHO quality control process is the key in upholding the proposed brand and meeting

customer expectations consistently and producing high quality agricultural products.

LOHO

standards

embedded in

production

Point of Departure

(as-is)

• Many small farmers farming on their own residential land (backyard)

• Low awareness and confidence in existing agricultural products as viewed by end customers

• Lack of knowledge on issues related to farming productivity

Point of Arrival

(to-be)

• Government endorse use of forest land to increase production capacity with central planning and distributed production

• Consistent production process according to the set standards

• Meet customer expectations on safe foods

• Understand root causes of poor productivity and provide mechanism to farmers to correct it

58

Overall quality control strategy of Wuxi

products

In order to deliver brand value of Wuxi products, product quality and process need to

be aligned with LOHO values.

Plan

production

• Plan the Wuxi product

pipeline for production

• Forecast supply based

on the demand

estimation

Develop key

criteria and set

up standards

• Define key criteria to

convey LOHO values

along the production

process

• Set up minimum

requirements to meet

the criteria

Manage

production

process

• Ensure LOHO values

criteria and standards

delivered in the

production process

• Continue to improve

and innovate to meet

customer expectation

59

Overview of existing Wuxi agricultural

product process

Hatchery FarmersDistributor /

Supplier

End

customer

• Sell chicks to

farmers

• Raise chicks

in accordance

to traditional

methods

• Buys

chickens from

farmers

• Small

retailers

• Individual

customers

Traditional Method (e.g. Chicken breeding)

• Lack of consistent quality control standards

• Environmental impacts are not considered

• Limited improvement to farmers’ livelihood

60

Overview of proposed Wuxi agricultural

product process

Farmers‟ Cooperative

Liaise with farmers and negotiate with SE

Buy breeding sources from SE and sell them to

farmers

Collect matured goods from farmers for selling

to SE

Provide assistance (e.g. financial) to farmers

Social Enterprise (SE)

Central breeding facility

Sell breeding sources to famers‟ cooperatives

Quality setting (Ensure quality)

Training

FarmersEnd

Customers

• Consistent quality control standards recognized and accepted by

customers

• Improvement to farmers’ livelihood

• Environmental impact is considered and therefore the impact is lessened

61

• Sell healthy chicks (immunized)

• Buys chickens from farmers at protective price• Monitor and educate farmers to ensure standards are met• Continue to improve and optimize standards whilst keeping in mind

the impact on the environment

Social Enterprise

• Purchase authorized chicks from Social Enterprise

• Raise chickens to prescribed weight of 2 – 2.5kg

• Adhere to identified feeding conditions and feeding activities

• Prevent diseases in accordance to standards

Farmers

LOHO quality control standards

Key responsibilities of each party in adhering to the LOHO

quality control standards

62

Underlying LOHO values driving

standards

China Organic

Food

Certification

Center/ OFDC

Unlabelled

LOHO

standard

Level of

Quality Control /

Confidence

Standards encompassing LOHO values can ensure the high food quality

by adopting wholesome criteria with the integration of material and spirit.

Soil

Water

Fertilizer

Seed

Environment

Pest and

Weed Control

Packaging

养殖规程Livestock

Guidelines

1 自然Nature

7 运输Transport

6 用药Medication

5 防疫Immunization

3 适量Moderation

2 平衡Balance

10 密度Density

4 饲养Feeding

12 卫生Sanitation

11 设施Facility

9 排泄物Waste

8 情绪Emotion

Plants cultivation/

livestock production guidelines

63

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Certification bodies on food quality

control standards

ECOCERT OIECOFCC OFDC

• Certified growers are in

more than 70 counties

and regions throughout

Europe, Asian, America

and Africa

• Since ‘98, has

cooperated with Beijing

Greenfield Ecological

Center and technical

support is provided by

China Agricultural

University ARI (Agro-

ecology Research

Institute)

• The World

Organization for

Animal Health

(OIE)

• Total 178 members

countries &

territories including

China

• China Organic

Food

Certification

Center (COFCC)

• Organic Food

Development

Center (OFDC)

64





Roles and responsibilities in securing

quality

Farmers’cooperatives:

Social

Enterprise :

Establishing

StandardsProduction Processing

• Set the standards

• Continuous research

to innovate

• Receive customers’feedback

• Train farmers on the

standards

• Monitor

• Document standards

and train the trainers

• Buy chicks and sell

to farmers

• N/A

Government :

• Ensure quality

• Ensure processing

facility comply with

set standards

• Provide required

support such as

liaison with external

organizations

Farmers : • Receive training • Comply with

standards

• Endorse use of

forest land

• Provide financial and

non financial support

for production

(facilities and etc)

• N/A

• Provide financial and

non financial support

for processing

(facilities and etc)

65

Cost Estimation for Year 1

Example: Potato Production

Calculations based on a production of 10,000 tons of potato per year

Cost Category Cost ItemOne

Time/RecurringUnit Cost Unit Total Cost/year

ProductionPotato Purchase

(Market Price)

Recurring;

1 batch per year1.5 per kg 15,000,000

ProductionPotato Purchase

(LOHO Premium)

Recurring;

1 batch per year0.5 per kg 5,000,000

Quality Control (incl.

Education of

farmers)

1* CTO Recurring 15,000 per month 180,000

Quality Control (incl.

Education of

farmers)

2* Technicians Recurring 2,000 per month 48,000

Feedback System e-commerce One Time 1 NA 15,000

Feedback System Hosting One Time 1 NA 6,000

Total Cost for Year 1 20,249,000

66


Example: Chicken Production

Calculations based on a production of 50,000 chicken per year

Cost Category Cost Item One Time/Recurring Unit Cost Unit Total Cost

Land Land Lending (subsidized by gov.) - 0 NA 0

Facilities

Factory (1200m2) One Time 150 m2 180,000

Internal Equipment (1200m2) One Time 55 m2 66,000

Breeding Center (1200m2) One Time 17.3 m2 20,760

Inventory System (1200m2) One Time 10 m2 12,000

ProductionBig Chicken Purchase Recurring; 5 batches per year 70 per chicken 3,500,000

Big Chicken LOHO Premium Recurring; 5 batches per year 7 per chicken 350,000

Quality Control

1*CTO Recurring 15000 per month 180,000

2*Technicians Payroll Recurring 2000 per month 48,000

5*Workers Recurring 1000 per month 60,000

Packaging

Slaughter Fee Recurring 1 per chicken 50,000

Packaging Recurring 1 per chicken 50,000

Immunization Recurring 1 per chick 50,000

Feedback Systeme-commerce One Time 1 NA 15,000

Hosting One Time 1 NA 6,000

Utility & Others Electricity & Others Recurring 0.46 per Kilowatt 460,000


67

SUPPLY CHAIN STRATEGY

68

Overview - Supply Chain

An integrated supply chain model is recommended to maximize the value of LOHO

Wuxi products from producers to market.

There will be two approaches for logistics based on product type: a dry chain model for

products with longer shelf life (potatoes, handicrafts etc.) to be transported through open

trucks and, a cold chain model for products with shorter shelf life (vegetables,

mushrooms, processed chicken etc.) which requires a temperature controlled

environment for transportation. These processes will be described in detail in this

section.

• Existing Supply Chain Model

• Proposed Supply Chain Model

• Budget for Proposed Supply Chain

69

70

COLLECTION

AT WUXI

TRANSPORTATION

FROM WUXI TO

CHONGQING

COLLECTION/

SLAUGHTERHOUSE

& DISTRIBUTION

IN CHONGQING

Farmers sell/deliver live

animals / vegetables to

cooperatives

Cooperatives transport live

animals / vegetables by

renting open trucks

PROCESS Cooperatives sell live animals /

vegetables to wholesaler and

return profits to farmers

- No standardized QC

- Lack of information to

match production with

demand

- Mismatch of truck capacity

vs supplied quantity

- No cold chain exists

- Highway is under

construction

ISSUES Cooperatives are unable to

capture higher value from

processing the produce therefore

cannot return as much back to

farmers.

Existing Supply Chain Model

PRODUCE ARE OWNED BY FARMER COOPERATIVES

PR

OD

UC

ER

S

MA

RK

ET

PRODUCE ARE OWNED BY

WHOLESALER

Farmer Cooperatives sell the livestock/raw products to be processed

further, giving more margins to wholesalers than farmers

COOPERATIVES CAPTURE DISTRIBUTION MARGIN WHOLESALER CAPTURES

MANUFACTURING AND

DISTRIBUTION MARGINS

70

Proposed Supply Chain Model

Social Enterprise buys

qualified produce from

cooperatives at

predetermined price

TRANSPORTATION

FROM WUXI TO

DISTRIBUTION

CENTER

DISTRIBUTION

TO

CHONGQING

MARKET

SLAUGHTER/

STORAGE

HOUSE

IN WUXI

PRICING:

• If Contract Price >

Market Price: Buy at

Contract Price

• If Contract Price ≤

Market Price: Buy at

Market Price

PR

OD

UC

ER

S

MA

RK

ET

COLLECTION/

SOURCING AT WUXI

INVENTORY MGT:

• Min. qty. per pick-up

to ensure economic

feasibility & demand-

supply matching

• FEFO/FIFO system

will be used

Packed meat is

transported via trucks

Produce is delivered to

customers via small

vans/trucks

DELIVERY POINTS

(END MARKET):

- public & private

schools

- hotels & restaurants

- supermarkets

- specialty stores

An integrated supply chain model is proposed to connect producer to

target market, therefore allowing community to reap more benefits

71

Proposed Supply Chain Model

TRANSPORTATION

FROM WUXI TO

DISTRIBUTION

CENTER

DISTRIBUTION

TO

CHONGQING

MARKET

PR

OD

UC

ER

S

MA

RK

ET

COLLECTION/

SOURCING AT WUXI

A cold chain model or dry produce chain model will be used

depending on product type

LOHO Values and Quality standards will be incorporated into every component of the supply chain

(standardized/hygienic material handling procedure)

INFORMATION SHARED ACROSS THE CHAIN:

Demand quantity

Temperature logs

Movement logs

COLD CHAIN (short shelf-life products) using refrigerated trucks & cold storage:

Chicken, pig, goat, easily perishable vegetables

DRY PRODUCE CHAIN (long shelf-life products) using ordinary trucks:

Potato, bean, rice, handicrafts, bottled honey etc.

PRODUCTS

INTEGRATION

OF LOHO

VALUES

INFO

MGT

SLAUGHTER/

STORAGE

HOUSE

IN WUXI

72


Example: Dry Supply Chain

Calculations based on a transportation capacity of 10,000 potato per year

Cost Item Units Cost per unit Annual Cost Remark

Wuxi Storage Center

1* Inventory Manager 1 1,800 21,600 Recurring

Transportation

Transportation cost from

Wuxi to Chongqing 1 6,000 2,160,000 Recurring

Chongqing Storage

Rental fee 1 20,000 20,000 Recurring

2* Loader 1 4,800 57,600 Recurring

Chongqing Distribution

Small van service fee 5 700 1,260,000 Recurring


COST PER KG 0.33 RMB

73


Example: Cold Supply Chain

Calculations based on a transportation capacity of 1,600,000 chicken per year

COLD SUPPLY CHAIN Units Cost per unit Annual Cost Remark

Slaughterhouse

1* Inventory Manager 1 1,800 21,600 Recurring

Transportation

Truck 2 258,000 516,000 One time

Fuel Wuxi-Chongqing 14 154 776,160 Recurring

Fuel Chongqing-Wuxi (empty) 14 126 635,040 Recurring

Truck Drivers 1 1,100 13,200 Recurring

Chongqing Cold Storage Center

Rent 1 60,000 60,000 Recurring

1* Inventory Manager,2* Loader 4,800 57,600 Recurring

Chongqing Distribution

Small van service fee 7 700 1,764,000 Recurring


COST PER KG 0.95 RMB

74

ORGANIZATIONAL

STRUCTURE AND KEY

RESPONSIBILITIES75

Overview – Organizational Structure

• Existing Framework

• Why Social Enterprise?

• Creation of the new JV Social Enterprise

• Criteria of Ideal investors

• New Concept : Impact Investment

• Proposed Ownership Structure

• Organization Chart

• Role of the Board

• Key roles and responsibilities

• Decision Making

• Talent Attraction Plan

• Organizational Budget

7676

Existing Framework:

LOHO Office and LOHO Association

77

Currently the LOHO Community Development Committee Office (CDCO) and the LOHO

Association were built to ensure that LOHO values are put into practice. However, in order to

maximize the potential of Wuxi agriculture product, a social enterprise needs to be set up so that

it can bring the products to the market and give back more benefits to the farmers.

Admin Commu

nity

Village

Supervis

ory

Publicity Commu

nication

General Office

LOHO Community Development Committee

Organization structure of LOHO office*

Governance Wellness Livelihood Stewardship Culture

Secretariat

Financial Department

President

Organization structure of LOHO association*

* LOHO office is operated under the Wuxi’s county Public Affairs department while LOHO

association operates at the grassroots level with the farmer’s association

77

Why Social Enterprise?

Definition:

A social enterprise is a business which competes to deliver products or services to the

market, but is driven by primarily social and/or environmental purposes. The profits a social

enterprise makes are primarily reinvested for the community it serves.

Goals of a social enterprise include:

- Meet the needs of the community

- Create jobs to socially vulnerable groups

- Build social capital

- develop and promote self-sustainable livelihood for the community

78

Take charge of the business operation (e.g.

quality control, sales and marketing etc.)

Responsible for the commercial success

Bring social benefits to community

Creation of JV Social Enterprise

Private Investor

Bring capital to the business

Provide know-how and management skill (e.g.

branding, sales and marketing)

Provide potential market access

GVB (New Entity) *

Provide the LOHO guidelines

Be responsible for providing the Quality Control

Framework

Leverage social resources (e.g. bring in external

partners / experts)

A commercial vehicle is needed to realize the goals of LOHO and the Wuxi Community.

The purpose of creating JV Social Enterprise is to balance the pursuit of both social

benefits and profits to the community

Social Enterprise

*Note: GVB needs to create a separate arm to be part of the owner of the social enterprise

79

Criteria of Ideal Investors

Criteria of ideal investors

• Believe in the LOHO values

• Interested in investments to create positive impact beyond financial return

• Willing to return part of the profit to local community

• Industry / background is not engaged in businesses which violates LOHO

principles (e.g. chemical factory)

• Capital is sufficient and commitment for long term investments

• Share professional expertise

Potential Investors

• Investors who are interested in “Impact Investment”

• Angel Investor

• Venture Capitalist

• High net worth Individuals

• Family owned businesses

80

New Concept: The Impact Investment

8181

Proposed Ownership Structure :

New JV Social Enterprise

82

Social Enterprise

GVB (New

Entity)Private Investor

Pros

• GVB could better control LOHO value and guarantee the

LOHO food quality

• Lower entry barrier for investors who have no experience

in agricultural sector

• Easier to attract those investors who seek for small

amount of impact investing

Cons

• GVB may not have the expertise to run the business

Option 1 – GVB as Majority Shareholder

Pros

• Investors could bring management / technical expertise to

the company

• Commitment for the investor could be more long term

Cons

• More difficult to ensure the implementation of LOHO

concept

Option 2 – GVB as Minority Shareholder

Ownership Structure

82

Organization Chart

CEO(New Hire)

Sales /

MarketingFinance

Supply Chain / Logistics

Production and Quality

ControlHR

BOARD(GVB, Investor, Government,

LOHO association, Independent Advisor)

LOHOCommunity

Sheri will be the

representative

from GVB onthe

board

Social

Enterprise

83

Role of the Board

Role of the Board:

1) Set the strategy and direction

2) Review financial results

3) Approve profit sharing scheme

4) Resolve conflicts between different stakeholders

GVB InvestorsWuxi

Government

LOHO

Association

Independent

Advisor

Provide subsidy

on land and

equipment for

this social

enterprise

Provide extra

Incentive (tax,

government

award for reco)

Provide advice

and technical

know-how

Help to promote

LOHO leveraging

his/her connection

and credibility

Potential target:

expert in

environment

protection,

principal in

vocation and

technical school

Provide the

LOHO

guidelines

Develop

business

standards

based on LOHO

values

Leverage social

resources (e.g.

bring in external

partners /

experts)

Bring capital to

the business

Provide know-

how and

management

skill (e.g.

branding, sales

and marketing)

Help the LOHO

Community

Manager to

ensure the

LOHO guideline

is well

implemented

84

Organization Structure :

Key roles and responsibilities

85

HR

Finance

Production and

Quality control

Supply Chain /

Logistics

Sales & Marketing

LOHO Community

• Chief Supply Chain Officer - manage the physical and information flow along the supply chain

in order to match supply and demand by integrating and organizing the logistics process of

collection, transportation and storage

• Marketing Manager - responsible for developing brand campaigns and marketing plans

including the company’s 4Ps marketing mix and also preparing the marketing budget and

managing and monitoring the marketing related activities. Explore and identify new market &

business opportunities by conducting marketing research and analysis.

• Sales Manager - responsible for company’s sales performance by enhancing sales volume

and monitoring sales

• Chief LOHO Officer - responsible for coordinating and working closely with the community

team to ensure the benefits are distributed to the entire community and ethical related issues

have been implemented by establishing programs and activities according to the LOHO

concept and monitoring/auditing the social environment impact

CEO• CEO - responsible for the commercial success of Social Enterprise and is the representative of

the company who will interact with the government, NGO, commercial enterprise, farmers, etc.

Will set the key strategic direction and also monitor day to day operation of the company

• Chief HR Officer - responsible for recruiting and retaining talents to run the company and

evaluate employee performances. In charge of allocating resources and outlining how

departments will interact. HR will also create a decision making process for each role.

• Chief Finance Officer - responsible for budgeting, financial reporting, profit sharing (investor,

farmer, etc), analyzing company cash flow , defining key financial metrics (ROI, IRR, etc.) and

forecasting the future scope and direction of operations in relations to the financial figures

• Chief P&Q Officer - responsible for monitoring and ensuring that the farmers produce the

product in accordance with LOHO standard. Will arrange training for the farmers by inviting

experts to increase the capability and ensure the farmers implement the knowledge in the fields

85

Decision Making:

Operational Business and LOHO

Operational Business

Governance Wellness Livelihood Stewardship Culture

LOHO Community

(Chief LOHO Officer)

BOARDCEO

HRSales /

Marketing

Supply

ChainProductionFinance

Community LOHO related issues

Note: The issues related to the operational business, those

department’s chief and/or manager will raise it directly to the CEO

and the Board (if required) to make decision

Note: The issues related to LOHO Values, the Chief LOHO Officer

(CLO) will raise them to CEO and the Board for voting. The CLO

can also go directly consult the Board on decision making matters of

LOHO’s grassroots level

Social

Enterprise

• Make decision by Voting

86

Talent Attraction Plan

Experts

Volunteers

Vocational and

Technical

School in Wuxi

• Experts who have experiences in

different areas (e.g., agriculture,

business operation etc.)

• Recruit volunteers from colleges inChongqing (especially agriculturecolleges) to do internship in Wuxiduring winter and summer holidays

Staff

• Recruit sales and marketing stafffrom Chongqing to be based inChongqing

• Recruit the back-office staff (e.g.HR, Finance, Logistics, Production)and to be based in Wuxi

• Design the program to focus on the

skills requirement for the company

(e.g. business administration, quality

control, supply chain, e-commerce)

Who are they Reasons to join

• Leverage GVB ’ s network to put

their expertise to a real impact

• Opportunity to learn about socialenterprise and rural developmentissues

• Creating a real social impact• On-the-job training

• Experienced sales and marketingstaff who buy into the LOHOphilosophy and is offered acompetitive package

• Back-office staff, target those whosehometown is Wuxi and offering thema comparable big city package

• Partnership with companies in the

value chain for high conversion rate

from internship to permanent

employment

87

Organization Strategy Plan:


Management Positions required Estimated Costs

Title Remark Cost Item Total Cost

CEO Based in Chongqing/Wuxi Management Salaries 420,000

CFO Based in Wuxi Travel 7,200

CMO Based in Chongqing/Wuxi Office Supplies 71,000

Supply Chain Based in Wuxi Communication 6,000

Production Based in Wuxi Wuxi Office Rent 6,000

HR Based in Wuxi CQ Office Rent

0

(leverage CQ Flagstore)

LOHO Officer Based in Wuxi

Total Cost for Organizational Structure 510,200

88

PILOT CASE: LOHO WUXI

CHICKENS

89

Unique selling proposition – LOHO Wuxi

chickens

Free range LOHO Wuxi chicken

It is a heritage bred of top quality chicken found only at high altitudes in pristine Wuxi. It

feeds on organic corn, vegetables and insects and lives free range in the natural forest on

the highlands.

LOHO quality control

Every LOHO Wuxi chicken is raised by traditional, small scale farmers in strict accordance

with the LOHO food principles, which means its meat is of the highest quality, taste and

untainted from pollution, just like the way it was in the days of our forefathers.

LOHO way of life

When you taste a LOHO Wuxi chicken, you not only enjoy a taste of pure nature, you will

also contribute to Life in Harmony movement to build a better livelihood for the traditional

farmers.

The LOHO Wuxi chicken story:

90

LOHO Wuxi chicken

LOHO Wuxi umbrella brand logo

LOHO Wuxi chicken logo

91

LOHO Wuxi Chicken: Marketing Strategy

• Positioning

• High end chicken sold at a premium for its health benefits, organic

origins and knowing that farmers benefit directly with each

purchase

• Competitive advantage is that their chickens are raised in

accordance to the LOHO values

• The value is in the brand, the trust that will be built with the end

consumers who will be willing to pay more to obtain higher quality

meats that come from LOHO Wuxi

• There are currently four other chicken hatcheries in Wuxi as direct

competitors who sell free range chickens but are not raised in

accordance to LOHOs value and not produced under a well known

brand

92

Farmers‟ Cooperative

Manage farmers and negotiate with SE

Buy chicks from SE and sell them to farmers

Collect chickens from farmers for selling to SE

Provide assistance (e.g. financial) to farmers

Social Enterprise (SE)

Set up hatchery

Sell chicks to famers‟ cooperatives

Quality setting (Ensure quality)

Buy chickens from farmers based on agreed guide price

FarmersEnd

Customers

LOHO Wuxi Chicken: Quality Control

93

End

Market

Social

Enterprise

Farmer

Cooperative

Social Enterprise

consolidates

customer quantity orders

and plans for inventory

stocking

Cooperative sells chicken

raised through LOHO

quality standards to

Social Enterprise

Social Enterprise collects live

chicken and brings to

Wuxi slaughterhouse

Social Enterprise pays

slaughterhouse for

processing cold meat

and delivers to

Chongqing through

refrigerated trucks

Social Enterprise stores

and sorts

at Chongqing cold

storage center and

prepares for delivery

Customer makes order

to company

Customer receives

chicken

LOHO Wuxi Chicken: Supply Chain

94

LOHO Wuxi Chicken: Sales

-

500,000

1,000,000

1,500,000

2,000,000

-

50,000,000

100,000,000

150,000,000

200,000,000

QTY SALES

QTY 1,052,308 1,157,538 1,292,727 1,486,637 1,709,632

SALES 88,741,038 102,368,570 120,645,375 145,515,761 175,522,221

Yr 1 Yr2 Yr3 Yr4 Yr5

Forecast to sell 1.1 millions chickens from first year with revenues of 88.7

millions RMB with CAGR 15%

Quantity Sales

95

Revenue & Cost

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

RM

B (R

eve

nu

e &

Co

st)

(2,000,000)

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

RM

B (

NI)

Sales Cost Net Income

Sales 90,845,654 102,368,570 120,645,375 145,515,761 175,522,221

Cost 87,657,634 99,466,461 120,894,513 138,168,046 162,198,977

Net Income 3,188,019 2,902,109 (249,138) 7,347,715 13,323,245

Yr1 Yr2 Yr3 Yr4 Yr5

LOHO Wuxi Chicken: Revenue, Cost, Net

Profit Before Tax

3 million RMB profit from the 1st year even with a 7 RMB per chicken

premium for the farmers

96

(10,000,000)

(5,000,000)

-

5,000,000

10,000,000

15,000,000

20,000,000

Years

Free

Cas

h Fl

ow

Free Cash Flow 16,507,930 2,902,109 (6,409,227) 7,347,715 13,323,245

Y r1 Y r2 Y r3 Y r4 Y r5

LOHO Wuxi Chicken: Free Cash Flow

Expected payback in 2 years with an IRR of 23% and a NPV of 13.43

million RMB

97

Sample of Profit Sharing Structure (needs to be approved by shareholder agreement)

• Establishing a Farmer Protection Fund (FPF) to secure income stability and to

provide support for medical expenses etc.

• Sample Approach: 25% of the Profits are transferred to the FPF until the fund has

the reserves of three average monthly incomes per farmer household

• The remaining profit is distributed between Investors and a Community Development

Fund (CDF) which finances projects for community benefits.

Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 3,188,019 2,902,109 (249,138) 7,347,715 13,323,245

25% Farmer Protection

Fund (FPF)797,004.87 725,527.33 - 1,836,928.66 3,330,811.13

Remaining Profit (for

Shareholders and CDF)2,391,014.60 2,176,582.00 - 5,510,785.98 9,992,433.38

Accumulated FPF Value 797,004.87 1,522,532.20 1,522,532.20 3,359,460.86 6,690,271.99

(Assumption: No payouts)

98

LOHO Wuxi Chicken: Organizational Structure Option 1 (In-House Hatchery)

Ownership

Social Enterprise

GVB (New

Enterprise)Private Investor

Majority

Shareholder

Minority

Shareholder

CEO(1)

Sales / Marketi

ng(8)

Logistics(2)

Finance

(2)

Quality Control

(1)

HR(1)

LOHOCommu

nity(1+5*)

Production(8)

Company’s ownership and organization structure model with In-House Hatchery

Organization Structure

Board

Note : the number in the bracket is the number of headcount

* Part-time staff

99

Headcount = 29

Ownership

Social Enterprise

GVB (New

Enterprise)Private Investor

Majority

Shareholder

Minority

Shareholder

CEO(1)

Sales / Marketi

ng(8)

Quality Control

(1)

Finance(2)

Logistics

(2)

HR(1)

Board

LOHOCommu

nity(1+5*)

Organization Structure

Company’s ownership and organization structure model with outsourcing

hatchery to Co-op

Note : the number in the bracket is the number of headcount

* Part-time staff

LOHO Wuxi Chicken: Organizational Structure Option 2 (No Hatchery : Outsource to Co-op)

100

Headcount = 21

RISK AND MITIGATION

101

Assessment of risk impact and likelihood

High Risk

Low Risk

0

1

2

3

4

5

6

7

8

9

10

0 2 4 6 8 10

Likelihoo

d (1 -

unlikely, 10 -

very

likely)

Impact Score (1 - smallest impact, 10 - biggest impact)

No slaugtherhouse (a)

No toll-free transportation (b)

Increased storage costs (c)

Decreased government support(d)

Unethical Behaviour (e)

Drop in Quality (f)

Pandemia (g)

Faking Brand (h)

Lack of Skills (i)

Farmers shift to new vendor (j)

Low Retention Rate (k)

Stakeholder Conflict (l)

102

Risk Outline & Mitigation Strategy

Specific Business Risk Mitigation Strategy

a) Slaughterhouse will not be builtTransport livestock to a slaughter house in the urban area of

Chongqing

b)Governments stops the toll-free policy for

agricultural transports

Maintaining an open communication channel with the government to be

informed about possible policy changes as early as possible

c)Fee increase for storage facility Strategic investment in one of the storage facilities

d) Decreased government support for the

LOHO philosophy

Maintaining a healthy relationship between all the stakeholders and the

government

e) Unethical behavior in the production process

that undermines the LOHO values of quality

control

External auditing of the quality control process, Non-scheduled

inspection of producers and distributors

f)Drop in product quality of agricultural

products

Education in the production process and award the qualified

communities, solid auditing system that does not accept inferior quality

g)Pandemic risk e.g.: bird flu, swine flu Establishing a broad range of products

103

Risk Outline & Mitigation Strategy

Specific Business Risk Mitigation Strategy

h) Competitors fake brand concept to sell

agricultural products

Flexible branding and advertising strategy which adopts to potential

threats and inform customers about faked products

i)Lack of professional skills and knowledge

Attracting experts who share the LOHO values and who are willing to

contribute to the project on a voluntary basis

j)Trained farmers stop following the LOHO

philosophy in order to maximize their own

benefits (free-rider)

Having contractual agreements between farmers and the LOHO

company (contract farming with fixed prices),offering income protection

through agricultural insurance, social recognition of outstanding villager

contribution according to LOHO values

k)Low retention rate, high staff turnover Recruiting candidates who are align with LOHO values

l) Conflict between stakeholders (investor,

government, GVB, farmers)

Establishing a transparent decision making process and efficient

communication between the different stakeholders

104

IMPLEMENTATION

105

Month 1 - 3 Month 4 - 6 Month 7 - 12

Business Entity Set

Up

• Raise funds

• Term of agreement sign off

• Register the JV company

• Set up business infrastructure

Start operating -

Human Resources • Recruit staff

• Rental office and set up facilities

• Prepare talent and training

development plan

• Launch staff training and

retention program

Business

Development and

Marketing

• Negotiation with potential

businesses partners and clients

• Coordinate with stakeholders

(GVB & private investors)

• Launch brand awareness

campaigns

• Above the line marketing

• Leverage off sponsored

media

Production and

Quality Control

• Set up R&D facilities

• Develop quality control standard

• Purchasing contract sign off

Step 1: Quality Control Step 2: Ongoing R&D

Supply Chain and

Logistics

• Logistics outsourcing sign off

• Cold Chain facilities set up

• Expand cooperatives

network to other villages

• Identify efficient

alternatives (products to be

transported back to Wuxi)

Finance

• Set up finance infrastructure

• Accounting and financial reporting

• Financing


• Financing

• Financial monitoring

Community• Organize farmers into

cooperatives• Provide ethical and quality standard training to farmers

Short Term (Year 1) Implementation Timeline

106

Year 2 Year 3 Year 4 Year 5

New Business

Development

• Education and

up-skilling

• Handicraft

• Technical up-skilling

• Food processing

industry

• Eco-tourism

Human

Resources

• Staff training

• Staff compensation, benefits and retention program

Sales and

Marketing

• Below the line

marketing

• Multiple distribution

channels

• Below the line

marketing

• Food safety re-

education campaigns

(public)

• Below the line

marketing

• E-business

distribution channels

• Below the line marketing

Production

and QC

• Quality control

• Ongoing R&D

Supply Chain

and Logistics Adopt technology to support timely information flow

Finance


• Financing

• Financial monitoring

Community

• Set up community

fund for wellness

program

• Ongoing wellness

program

• Set up community

fund for eco-tourism

readiness

• Set up community fund

for culture and arts

enrichment

Year 2 – 5 Implementation Timeline

107

CONCLUSION

108

Conclusion

• The LOHO philosophy and Wuxi community should be the core of the social

enterprise to create maximum value for all stakeholders

• LOHO Wuxi brand is the most effective way to communicate and reflect the value of

Wuxi products

• Creating awareness about safe food and LOHO Wuxi culture supported by targeted

marketing initiatives will be key to generating market demand

• The establishment of the LOHO Wuxi brand must be successful prior to being able to

sell any Wuxi products at a premium

• An integrated quality control model with a streamlined supply chain should

incorporate the LOHO philosophy

• An initial capital of 20 million RMB is required, which includes 6.7 million RMB for

Capex and 13.1 million RMB for first year operational expenditures

109

Appendices

• Chongqing: Municipality Background

• Transportation System from Wuxi to Chongqing

• Marketing Calendar Planning

• Key Financial Assumptions

• Assumptions for Supply Chain Strategy Budget

• Free Cash Flow

• P&L Statement

• Future Development Opportunities

• Community Benefits Plans

110

Chongqing: Municipality Background

Chongqing is a major city in Southwest China and one of the four municipalities directly

controlled by the People’s Republic of China. It is considered as the economic center in

Upstream Yangtze area and has jurisdiction over 19 districts, 17 counties and 4

autonomous counties.

GEOGRAPHY AND INFRASTRUCTURE

– Possessing a land area of 82,300 km2

– With the biggest inland river port in Western China

– A major transportation hub in south central China

DEMOGRAPHICS

– Population of 32.8 million people

– Fourth largest migrant destination in China with a migrant population of 9 million

ECONOMY AND NATURAL RESOURCES

– GDP: RMB 509.6 billion, with GDP growth of 14.3%

– GDP per capita: RMB 18,025

– Major industries: manufacturing, agriculture

111111

112

Current Transportation Infrastructure

1. Water way (Jun-Nov):

From Wuxi to CQ: 2 days

2. Express way:

By Yunyang Road to CQ: 6-8 hrs

By Wan Zhou Road to CQ: 8-10 hrs

By Shiya Road to CQ: more than 10 hrs

3. Airport: Wanzou and Chongqing; None in Wuxi

Planned Transportation Infrastructure

1. 2012: Highway - 5 - 6hrs from Wuxi to

Chongqing

2. 2015: Airport in Wushan (next to Wuxi)

Transportation System from Wuxi to

Chongqing

Future infrastructure development will provide better accessibility to Wuxi.

112

Marketing Calendar Planning

113

Marketing Strategy Cost Details

114

Production Costs Ad Fees Frequency

Above the Lines Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

TVC (30 sec) 500,000 500,000 per Gross Rating Point 4 2 2 2 2

Radio (30 sec) - 200,000 per wave (production included) 1 1 1 1 1

Newspaper (half pg) 20,000 50,000 per time 5 4 4 4 4

Magazine (1pg) 20,000 60,000 per time 8 5 5 5 5

Below the Lines

In-store events Fees

- own store 23,000 per time (production included)

- supermarket 80,000 per time (production included)

Website

- development 300,000 1 time

- maintenance 50,000 annually

- Internet Word of Mouth 100,000 annually (yr 2 onward)

Billboard

- production 300,000 1 time

- rental fee 400,000 3 months

CRM Activities fixed budgetannual budget for building database, customer insights, data collection, communication, customer activities

Social network fixed budget creating accounts on social networks, budget for activities such as prizes for participants

Partnership program fixed budget co-sponsor, buying lead generation

Media relations fixed budget building and maintaining relationship with the media for free advertisement/promotion such as press release, scoops, etc.

Yr. 2 is based on expectation that the transportation system will be completed. The Company may

consider taking the media to visit Wuxi.

Reserved for adhocs fixed budget Any unplanned activities

*** We also expect support from the Wuxi government. Therefore advertisement through different media maybe more frequent.

Assumptions for Supply Chain Strategy

Budget

115

Assumption

Wuxi - Chongqing distance 700 km

Average chicken weight 2.25 kg

Type of truck

Truck used for transportation of chicken & 5 year depreciation 10 ton

Truck used for transportation of potato 30 ton

One trip per day for chicken & one trip per day for potato

Trucks used for dry supply chain are rented for transportation. The cost

includes all fuel cost, driver cost, loading and unloading fee

Fuel cost for 10-ton truck

Full capacity truck 154 RMB per 100 km/ton

Empty truck 126 RMB per 100 km/ton

Transportation Capacity

Chicken 1,600,000 chickens

Potato 10,800 ton

115

Key Financial Assumptions – Chicken

Pilot Case

Key Assumption

Chongqing City Target Market for Class A & Class B 7,000,000

1st Year Penetration Forecast 1.5%

China Avg. Chicken Consumption per person per year 4.80

Class A Selling Price per KG 60 RMB

Class B Selling Price per KG 52 RMB

Class C Selling Price per KG 20 RMB

Initial Capital Requirement 20 millions RMB

Investment in additional capacity in Year 3 6.1 millions RMB

Inflation Rate 5%

Discount Rate 20%

Average Sales Growth Rate 10%

Marketing Cost 10%

LOHO Premium for farmers 7 RMB/chicken

Government Subsidy in first 2 years 2 RMB/chicken

116

Initial Capital Requirements – Chicken

Pilot Case

117

Capital Expenditure in Year 1 6,680,090

Production Facility (for 1.1 mn Chicken; 26,000 sqm)

Land Cost 26,400

Factory 3,960,063

Internal Equipment 1,452,023

Facilities 457,599

Inventory System 264,004

Total Capex Production 6,160,090

Supply Chain

Purchase of 2 Trucks 520,000

Total Capex Supply Chain 520,000

Operational Expenditure for Year 1 13,148,645

Working Capital requirements: 15% of Costs of Sales 9,246,654

Working Capital requirements: 15% of Administrative Costs 3,901,991

Total Initial Capital Requirements 19,828,735

Initial Capital Requirements Assumptions

– Chicken Pilot Case

118

Key Assumptions:

1. Constructing production facility in year 1 for 1.1 million chicken

2. Purchasing 2 trucks in year 1

3. 15% of Cost of Goods Sold and 15% of Administrative Costs are needed as capital to

finance these costs over the year

4. Marketing Cost (included in Administrative Costs) are in Year 1 10% of the revenues

Background Assumption for production facility

Plant & Equipment for 1000 sqm (41666 chicks)

Factory 150,000

Internal Equipment 55,000

Facilities 17,333

Inventory System 10,000

Chick Capacity 41,666

Building Area 1,000

RMB Projected Projected Projected Projected Projected

Organic Case Yr1 Yr2 Yr3 Yr4 Yr5

Revenue

Chickens 86,425,962 99,821,986 117,801,375 142,245,160 171,761,031

Chicks 2,315,077 2,546,585 2,844,000 3,270,600 3,761,190

Government Subsidy 2,104,615 2,315,077

Sales 90,845,654 102,368,570 120,645,375 145,515,761 175,522,221

Fixed cost

Marketing 9,084,565 10,236,857 10,858,084 11,641,261 14,041,778

Maintainance 26,000 26,000 26,000 26,000 26,000

Online Platform 21,000 10,000 10,000 10,000 10,000

Storage Rental 70,000 77,000 84,700 88,935 93,382

Office Equipment 126,000 - - - -

Office Rental 73,000 80,300 88,330 97,163 102,021

R&D 1,019,045 1,175,896 1,418,630 1,747,317 2,198,286

Total Fixed Cost 10,419,610 11,606,054 12,485,744 13,610,676 16,471,467

119

P&L Statement – Chicken Pilot Case

Variable cost

Cost of Sales 57,724,269 66,671,531 76,672,261 89,848,706 107,347,468

Processing Cost 3,920,089 4,471,996 5,275,494 6,341,366 7,772,948

Labor Cost 1,148,404 1,182,784 1,520,808 1,560,969 1,614,693

Transportation 2,291,068 2,772,192 3,506,823 4,301,276 5,362,096

Utiliy 8,106,138 8,511,445 14,292,613 15,007,244 15,757,606

Others 4,048,056 4,250,459 7,140,771 7,497,809 7,872,700

Total Variable Cost 77,238,024 87,860,407 108,408,769 124,557,370 145,727,510

Cost 87,657,634 99,466,461 120,894,513 138,168,046 162,198,977

Depreciation 534,666 534,666 777,945 777,945 777,945

Taxable Income (Loss)

Tax

Net Income 3,188,019 2,902,109 (249,138) 7,347,715 13,323,245

120

P&L Statement – Chicken Pilot Case

Free Cash Flow – Chicken Pilot Case

Projected Projected Projected Projected Projected

Organic Case Yr1 Yr2 Yr3 Yr4 Yr5

RMB RMB RMB RMB RMB

Revenue

Sales 90,845,654 102,368,570 120,645,375 145,515,761 175,522,221

Equity Financing 20,000,000

Total Revenue 110,845,654 102,368,570 120,645,375 145,515,761 175,522,221

Expenses

Production Plant 6,160,090 - 6,160,090 - -

Cost of Sales 61,644,359 71,143,527 81,947,754 96,190,073 115,120,416

Administrative Cost 26,013,276 28,322,933 38,946,758 41,977,973 47,078,561

Asset Purchased 520,000 - - - -

Total Expenses 94,337,724 99,466,461 127,054,603 138,168,046 162,198,977

Net 16,507,930 2,902,109 (6,409,227) 7,347,715 13,323,245

121

122

• Imsil, Southern part of Korea, a town famous for being

Korea‟s first cheese-making village

• It offers hands-on experience programs while living in a

clean and unpolluted farming area of the country

• The village is attracting the urban visitors who are

interested in experiencing rural life

• Good family outing with parents and young children for

educational purposes

Imsil Cheese Village in Korea

Village Experiences, Sightseeing and Plantations

Future Development Opportunities- Korean Case Study

122

123

Day 1

- Organic meals provided with handmade cheese

- Rice planting, goat feeding, and cheese making

- One night stay in the village lodging

Day 2

- Hiking trail, strolling in the village

- Cattle milking and feeding, rice milling

- Tractor riding, farm visiting and organic soap making

Activities for 2 day experience

Future Development Opportunities-Korean Case Study

123

Program:

Objective:

Recommendation:

Organize Farmers into Cooperatives

• Setup LOHO Community Department within the Enterprise

• Chief LOHO Officer to coordinate with government to build Farmer’s Co-operatives to

serve as distribution platform, middle man of farmers to social enterprise

• Coordinate with the cooperatives to provide sources for breeding (e.g., chicks, potato

seeds, etc.) according to LOHO quality standard to farmers

• In the future, farmer’s cooperative can serve as platform for micro-credit, micro-

insurance/income protection

To enable farmers to sell their farming products to marketplace at fair

price

Community Benefits Plan

124

Program:

Objective:

Recommendation:

Provide Ethical & Quality Standard Training to Farmers

• Training Model

• Appoint and engage related persons (e.g., Chief LOHO Officer, Quality Control Expert,

Farmers’ Representative) to prepare the training program by villages, by products.

Training subjects prioritized for the most economically affected products first)

• Farmers’ representative to recruit farmers to the training

To ensure farmers’ awareness of the ethical & quality standard issue,

and know how to comply with the enterprise’s quality control to be able

to sell their products at premium price to the high net-worth market

Enterprise Community / Co-Op

LOHO School Villagers

Quality

Control

Expert

Chief

LOHO

Officer

Represe

-ntative

Trainers Farmers

Production

Standard On-site field

training

Cc-ordination


125

Program:

Objective:

Recommendation:

Setup Community fund for Wellness Program

• Provide Training for the Awareness of “LOHO” health regimen for the villagers– The importance of food security

– Basic health and hygiene requirements

– Proper daily diet and exercise program for wellness of the villagers

– Regular exercise regimen for the villagers and for children in schools

– Coordinate with government to train the local paramedics to handle health contingencies

• Provide fund to setup the Village’s LOHO Center– Child care for migrant workers

– Health & Social services for women

– Elderly care by community

To ensure the wellness of the community, and holistic healthcare system is

applied in the community.


126

Program:

Objective:

Recommendation:

Setup Community fund for Eco-Tourism Readiness

• LOHO Department to run ‘ Wuxi LOHO Experience ’ sub program, to engage

representatives (e.g., senior villagers who would take responsibility), and to provide

training on the awareness of the eco-tourism opportunity to the villagers

• LOHO Department to work with the villagers to define which local product (e.g.,

handicraft) will be used to represent each village to attract tourists, and run the program

to pilot the first lot of production

• LOHO Department to run the sub program to promote Harmony with Nature Living

– Clean County Program (e.g., awards for every villages that keep environment clean up to the set

minimum standard)

– Free of Industry Pollution / Resource Recycling (e.g., provide training programs on how to use

recycled methane instead of non-bio gas consumption, organic fertilizer to reduce pollution)

To enable the eco-environment living in the community, and create

additional attraction drivers for Eco-Tourism.


127

Program:

Objective:

Recommendation:

Setup Community fund for Culture & Arts Enrichment

To enrich the heritage, culture & arts to make villagers’ life more colorful

• Provide funding and coordinate with the villagers to setup the social schools to create

an integrated “Social Curriculum” for the villagers.– Organize weekend training module for children for extracurricular activities e.g. painting,

performance, sports, handicrafts, gardening, other social activities.

– Train the villagers for handicraft manufacturing to propagate the Wuxi and LOHO culture and

heritage to the consumers.


128