We undertook a a detailed market demand forecast by areas and product type, Detailed analysis on consumer purchasing pattern, Analysis on overall competitive environment, Detailed information on competitor performance including sales, branding, pricing, channel mix and incentives, Key competitors’ COGS analysis, Strengths and weaknesses of each competitor group and the implications, High level recommendation on product mix, Brand positioning status and recommendations, Channel mix diagnosis and high level channel prioritization, Detailed breakdown comparison on costs, COGS in particular

1. Copyright © 2009 by Monitor Company Group, L.P.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying,
recording, or otherwise — without the permission of Monitor Company Group, L.P.
This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
COMPANY CONFIDENTIAL
SAN FRANCISCO SÃO PAULO SEOUL SINGAPORE TOKYO TORONTO ZURICHSHANGHAI
BEIJING CHICAGO HONG KONGCAMBRIDGE DELHI DUBAI JOHANNESBURG
PARISLOS ANGELES MADRID MUMBAI MUNICH NEW YORKMOSCOWLONDON
Developing a Winning Strategy for the
Microwave Oven Business in China
XXXX Tianjin Appliances Co., Ltd
Final progress review
May 9, 2009

2. 2Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE JOINT XXX/MONITOR TEAM HAS COMPLETED THE PROJECT
WITHIN 5 WEEKS
Modules Key activities
Market
Demand/Forecast
• Forecast potential market by segment through
refining market segmentation, understanding key
growth drivers, and modeling market growth
xxx performance
assessment
• Conduct internal data collection within XXX
• Develop sound understanding of value proposition
based on available market research including
branding and consumer survey
Strategic
development
opportunities
• Analyze different product mix options
• Gather information on branding and marketing
• Conduct channel diagnosis
• Analyze value chain costs
Competitor
• Develop competitive assessment for microwave
oven competitors
• Conduct interviews with distributors, retailers,
government agencies, competitors to collect
competitor information
Consumer
• Conduct consumer survey via external research
house in 6 specified cities and 1 rural area to
understand consumer purchasing behavior
End products
• Market demand forecast by areas and product type
• Current organization’s strengths and weaknesses
• Current processes and incentive systems strengths
and weaknesses
• XXXX aspirations for future growth
• High level recommendation on product mix
• Brand positioning status and recommendations
• Channel mix diagnosis and high level channel
prioritization
• Detailed breakdown comparison on costs, COGS in
particular
• Analysis on overall competitive environment
• Detailed information on competitor performance
including sales, branding, pricing, channel mix and
incentives
• Key competitors’ COGS analysis
• Strengths and weaknesses of each competitor group
and the implications
• Detailed analysis on consumer purchasing pattern

3. 3Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 35.5 million units in 2010. Primary regions
will be Central China, followed by South and Southwest China. Other regions should develop as income grows. Computer grill
and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and generic
buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards low-end products.
At the same time, reliable performance, ease of use, and good after-service are important across segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market. In
addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for all but the
lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on premium
products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now needs to choose
between a high growth strategy, with the objective of becoming the leading player and to reach breakeven in 2005, or to remain a
premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

4. 4Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 35.5 million units in 2010. Primary regions
will be Central China, followed by South and Southwest China. Other regions should develop as income grows. Computer grill
and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and generic
buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards low-end products.
At the same time, reliable performance, ease of use, and good after-service are important across segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market. In
addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for all but the
lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on premium
products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now needs to choose
between a high growth strategy, with the objective of becoming the leading player and to reach breakeven in 2005, or to remain a
premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

5. 5Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE MWO MARKET IN CHINA HAS GROWN TO 25.4 MILLION
SETS
2005 - 2008 China MWO retail sales volume
Thousand sets
2005 2006 2007 2008
Source: Light Industry Information Center, component manufacturers, Galanz, XXX , team analysis, SIC
Team estimation based on
component purchases minus
inventory and export volume for
Galanz
MWO management estimation
based on sales volume of
Galanz’ 20 largest distributors
21,800CAGR = 32%

6. 6Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
PENETRATION IS DRIVEN BY RISING INCOME
2008 penetration rate by region
RMB, percent
Penetration rate
Percent
Annual
disposable
income
RMB
Shanghai
Beijing
Guangdong
Chongqing
Source: China Statistic Yearbook

7. 7Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
AN 18% ANNUAL GROWTH RATE IS EXPECTED FOR THE MICROWAVE OVEN
MARKET IN THE NEXT 5 YEARS
Key assumptions
• Increase of penetration rate
in urban areas from 44% in
2008 to 60% in 2013
• Increase of urban
household numbers from
199 million in 2008 to 314
million in 2013
Total China microwave oven market forecast
Thousand units
Source: Monitor analysis
2008 2009E 2010E 2011E 2012E 2013E
CAGR =
18%
Low estimate =
45,464

8. 8Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
DEMAND FORECAST ANALYSIS SHOWS THE CENTRAL AND SOUTHERN
REGIONS WILL HAVE THE HIGHEST GROWTH
• China total urban
household numbers will
increase by 42% per
annum from
2010 - 2013
• Disposable income per
capita in total China
urban areas increase by
6% per annum from
2010 - 2013
Market size forecast by region
Thousand sets; percent
100% =
2009 2013E2011E
CAGR
PercentKey assumptions
Source: Monitor Analysis, China Statistic Yearbook
Beijing
Shanghai
Guangzhou
Shenyang
Wuhan
Chengdu
29,900 58,80041,700 18
17
12
23
19
34
20

9. 9Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
Market size of each region
Thousand sets
BEIJING, SHANGHAI AND WUHAN WILL BE THE LARGEST
MARKETS IN 2013
4,465
6,028
2009 2013
Chengdu region
2,453
7,983
2009 2013
Wuhan region
2,036
4,561
2009 2013
Shenyang region6,055
11,233
2009 2013
Beijing region
3,554
5,853
2009 2013
Guangzhou region
5,099
10,577
2009 2013
Shanghai region

10. 10Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
ALTHOUGH REGIONS OTHER THAN BEIJING ONLY ACCOUNT
FOR SMALL SHARE CURRENTLY, TREMENDOUS GROWTH
AND HEALTHIER MARGINS ARE EXPECTED THERE
2010 - 2015 growth potential
CAGR
Profitability
XXXX 2008 gross
margin
percent
Market size today
Shanghai
Beijing
Guang-
zhou
Chengdu
Shenyang
Wuhan
Source: XXXX, Monitor Analysis

11. 11Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
SALES FROM SINGLE FUNCTION PRODUCTS HAS SHIFTED TOWARDS
MECHANICAL GRILL PRODUCTS
*Estimated by
XXXX sales branches
Source: SIC
Total China sales
Thousand sets, percent
100% = 14,903 19,300 21,775 23,,032
Sensor
Computer grill
Mechanical grill
Single
2005 2005 2006 2007
Sales revenue
RMB 000’S , percent
100% =
38,629,680 42,728,891 46,592,880 50,707,582
Sensor
Computer grill
Mechanical grill
Single function
2005 2006 2007 2008
22.0
25,400
31.0
47.0
2008

12. 12Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
RECENT BUYERS TEND TO BUY MORE MECHANICAL GRILL
PRODUCTS THAN BEFORE
Type of MWO bought
Percent
Single function
Mechanical grill
Computer grill
Temperature**
control
Don't know
All owners Recent buyers*
* Those who purchased in past 12 months
** Part is subset of computer grill
Source: AMI customer survey

13. 13Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
PRODUCT TYPE MIGRATION RELATES MORE TO THE
PRICE DROP
2005 - 2008 product evolution
RMB Percent
Sales of mechanical grill products has increased a
lot due to the price drop. Computer grill products
are expected to grow quickly for the same reason
in near future
Price of mechanical grill
product
Price of single function
products
Percent of mechanical
grill to single function
products
0
400
800
1,200
2005 2006 2007 2008
Source: SIC

14. 14Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
DEMAND FORECAST ANALYSIS SHOWED THAT COMPUTER
GRILL PRODUCTS WILL HAVE THE HIGHEST GROWTH RATE
FOR THE NEXT FIVE YEARS
• Price of computer
grill products will
drop to RMB 1540
- 1560 in 2010
• Price of
mechanical grill will
drop to RMB 1470
- 1490 in 2010
• Price of single
function will drop to
RMB 1360 - 1380
in 2010
Market size forecast by product type
Thousand sets
100% =
1997 2008 2013E2012E2011E2010E2009E
Key assumptions
CAGR
Percent
Computer
grill
Mechani-cal
grill
Single
function
7,900 25,400 58,80049,20041,70035,50029,900 18
20
19
14
Source: Monitor Analysis, China Statistic Yearbook, Light Industrial Bureau Statistics

15. 15Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
WITH THE OVERALL PRICES DROP, MECHANICAL GRILL
PRODUCTS ARE GOING TO GAIN MORE IMPORTANCE
OVERTIME
2010 - 2013 growth potential
CAGR
Profitability
XXX marginal profit in
percent of sales
Market size
Single
function
Mechanical
grill
Computer
grill
Single function
products have little
room for further
price reduction,
with material cost
reduced by 5 %
p.a., thus having
improving
profitability

16. 16Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 58.8 million units in 2010. Primary
regions will be Central China, followed by South and Southwest China. Other regions should develop as income grows.
Computer grill and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and
generic buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards
low-end products. At the same time, reliable performance, ease of use, and good after-service are important across
segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market.
In addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for
all but the lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on
premium products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now
needs to choose between a high growth strategy, with the objective of becoming the leading player and to reach
breakeven in 2013, or to remain a premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

17. 17Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
MICROWAVE CONSUMER SURVEY DESIGN
Geography coverage
• Urban area sof Beijing, Shanghai, Guangzhou, Tianjin, Shenyang, Chengdu, Wuhan
Sample size
• Total 875 sample in urban areas who are decision makers for microwave overns
• In each location
– In Beijing, Shanghai, Tianjin: 100 MWO owners, 50 MWO potential buyers (in next 12
months) each
– In Guangzhou, Shenyang, Chengdu, Wuhan: 60 MWO owners, 40 MWO potential
buyers (in next 12 months) each
Methodology • Door-to-door random sampling
• Face-to-face interview
Field period
• August 9 - 16, 2009
Detailed explanation

18. 18Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
FOUR DISTINCTIVE CUSTOMER SEGMENTS ARE DERIVED FROM
THEIR RESPECTIVE KEY BUYING FACTORS
100% = 875 microwave oven owners plus potential buyers
Price sensitive
consumers take up more
than half of the market
Premium buyers
• Most care of performance, design
and quality
• Least price sensitive and has highest
incidence of using premium brands,
e.g., National and sophisticated
models, e.g., computer grill
1
Basic brand buyers
• Looking for reliable brand for quality
assurance
2
Rational technophiles
• Knowledgeable buyers who understand
what they need from a microwave oven
• Care less about brand, more price
sensitive, requiring a lot of product
information to make the purchase
decision
3
Generic buyers
• Buyers who are nervous to handle the
microwave oven
• Look for simple machine and need good
after-sales support
4
Source: AMI customer survey

19. 19Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
WHILE PRICE SENSITIVITY DIFFERS ACROSS SEGMENTS, RELIABLE
PERORMACE, EASE OF USE, AND GOOD AFTER-SALES SERVICE ARE KEY
FOR EACH SEGMENT
Ranking of KBFs
Reliable performance
Low price
Ease of use
Good after-sales
service
Famous brand
Lots of features
Nice appearance
Advanced technology
Word of mouth
Product promotion
Premium
buyers
Basic brand
buyers
Rational
technophiles
Generic
buyers
Top 5 KBFs
Source: AMI customer survey
Total
urban

20. 20Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
CUSTOMER DEMAND IS SKEWED TOWARDS LOW-END PRODUCTS
EXCEPT FOR PREMIUM BUYERS
MWO bought by current owners
Product type
Single function
Total urban
Premium
buyer Basic brand
Rational
technophiles
Generic
buyer
Mechanical grill
Computer grill
Temperature control*
Don't know
* Part is subset of computer grill
Source: AMI customer survey

21. 21Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 17.5 million units in 2010. Primary
regions will be Central China, followed by South and Southwest China. Other regions should develop as income grows.
Computer grill and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and
generic buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards
low-end products. At the same time, reliable performance, ease of use, and good after-service are important across
segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market.
In addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for
all but the lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on
premium products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now
needs to choose between a high growth strategy, with the objective of becoming the leading player and to reach
breakeven in 2013, or to remain a premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

22. 22Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
GALANZ IS THE LEADING COMPETITOR
• Company name: Guangdong Galanz Enterprise (Group) Co.
• Main products: microwave ovens, electronic rice cookers, air conditioners
• Year of establishment: Galanz was established in 1978 under the name “Guizhou Feathers & Down
Products Factory” and was engaged in the production and marketing of down products in China.
• Year of entering microwave oven market: The company changes its name
to "Guangdong Galanz Enterprise (Group) Co. in June 1992 and started to product microwave ovens in
July 1992.
• Paid-in capital: US$ 542.56 million
• Net assets: US$ 448.11million
• Turnover: US$ 2673.76 million
• Profit after tax: US$ 455.59 million
• Number of employees: 17,000
Source: Literature search, 2008 Galanz unaudited financial statements

23. 23Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
GALANZ HAS ALWAYS BEEN THE MARKET LEADER, WITH
ASTOUNDING GROWTH
2009 - 2012 Galanz sales volume estimation
Thousand sets
2009 2010 2011 2012
Source: Light Industry Information Center, component manufacturers, XXXX Galanz, SIC, Meam Analysis,
High estimate
Low estimate
28,400
CAGR = 33%

24. 24Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
GIVEN EXPANSION IS FINANCED BY SHORT TERM LIABILITIES,
GALANZ GROUP IS PROBABLY DROPPING PRICES AND LOADING
CHANNELS, WHICH MAY CONTINUE IN THE FUTURE
Current assets
2006 2007 2008
Balance sheet
RMB millions
Sales
2006 2007 2008
Income statement
RMB millions
Total liabilities
and owners'
equity
Long-term
investment
Fixed assets
Intangible and
deferred assets
Total assets
Current liabilities
Long-term
liabilities
Owners' equity
Earnings before tax
GOGS
Gross margin
Gross margin/sales
S&M
G&MA
Exchange loss
Operating profit
Other expense
(income)
Earnings before
tax/sales
Collection
problem
due to loading
channels
• Has been
financing
fixed asset
acquisition by
short-
term loans
• D/A ratio
almost 80%
in 2000
Profitability
impacted by fierce
competition
Does not
fully reflect
the financing
cost of short-
term loans
921 997 1,227
26 26 47
135 184 450
8 26 102
1,090 1,233 1,826
823 838 1,428
8 0 0
258 395 398
1,090 1,233 1,826
3,840 4,205 5,002
3,194 3,999 4,516
646 506 866
19% 17% 16%
79 152 242
46 72 90
49 22 53
672 960 1181
7 (2) 21
165 262 460
9% 9% 8%
Source: 2008 Galanz unaudited financial statements

25. 25Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
MIDEA HAS GROWN RAPIDLY SINCE ESTABLISHMENT
Source: SIC, AC Nielson, Monitor Analysis
Midea sales volume in 2008
Sets
2008 2009
Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2008 2009
Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Midea market share in 2008
Sets

26. 26Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE HIGH OVERCAPACITY WILL CONTINUE TO INCREASE
PRICE PRESSURE
Source: XXX, Literature search, China Light Industry Information Center, China Home Appliance Association, Galanz, Monitor
Analysis, component manufacturer
Players
Galanz
XXXX
Midea
Whirlpool
Samsung
Daewoo
Panasonic/National
Haier
Sharp
Mitsubishi
Total
Thousand sets
2008capacity* 2008 domestic sales 2008 over capacity
26,000 18,020
8,800 5,500
6,000 2,900
2,000
1,000
1,000
1,000
600
550
500
43,650
6,300
2,076
3,100
25,400
2008 export
1,200
1,224
0
N/A
N/A
159
1,600
500
850
199
7,532 13,518
600 2,742

27. 27Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
AS A RESULT, THE PRICE HAS BEEN DECLINING,
TRIGGERED BY MARKET LEADER, GALANZ
Single function
Industry CAGR
= -18%
Mechanical grill
Industry CAGR
= -17%
Computer grill
Industry CAGR
= -18%
• Single function product price has reached
the variable cost of Galanz plus 10%
channel mark-up
• Mechanical grill and computer grill product
price are expected to follow suit and thus
increase share and reduce profitability at
the same time
Average retail price in 2008
RMB
Industry
Galanz
XXX
Galanz 2000 variable
cost plus 10% channel
mark-up
Source: SIC,XXXX, Monitor Analysis

28. 28Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
WE EXPECT THE PRICE DROP TO CONTINUE IN THE FUTURE
* 2009 Jan price , 2009 XXXX cost structure
** Including material cost, utilities, gifts, logistics, rebate, and 10% of G&A
*** Including sensor for LG’s cost structure
Source: SIC, XXXX, Monitor Analysis
Product
type
Galanz
retail
Price
RMB
XXX's
retail
Price
RMB
XXXX's
price
to channels
(excluding
VAT)
RMB
XXXX's
variable
cost**
RMB
XXXX's
marginal
profit
Percent
Today*
Single
function
1419 1529**** 375 362 3.5
Mechani
cal grill
1597 146 544 469 13.8
Computer
grill***
1736 2,007 848 617 27.2
Product
type
Galanz
full
cost
RMB
Galanz
variable
Cost
RMB
XXX's
price
to channels
(excluding
VAT)
RMB
XXXs
variable
cost**
RMB
XXXX's
marginal
profit
Percent
5 years from now
Single
function
1335 288 288 - 335
Mechani
cal grill
1438 379 379 - 438
Computer
grill***
1496 433 433 - 496
286
351
419
1 - 15
7 - 20
3 - 16

29. 29Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 35.5 million units in 2010. Primary
regions will be Central China, followed by South and Southwest China. Other regions should develop as income grows.
Computer grill and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and
generic buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards
low-end products. At the same time, reliable performance, ease of use, and good after-service are important across
segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market.
In addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for
all but the lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on
premium products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now
needs to choose between a high growth strategy, with the objective of becoming the leading player and to reach
breakeven in 2013, or to remain a premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

30. 30Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXXX HAS BEEN EXPANDING RAPIDLY SINCE
ESTABLISHMENT . . .
Sales revenue
RMB millions
2005 2006 2007 2008
source: XXXX
2005 2006 2007 2008
Sales volume
Thousand sets
CAGR =
39%
CAGR =
21%

31. 31Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX IS CATCHING UP ON THE MARKET SHARE, AND HAS
BECOME SECOND LARGEST PLAYER IN CHINA
Overall market share by sales volume
Percent
XXXX
2005 2006 2007 2008
Galanz
Others
source: XXXX

32. 32Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
HOWEVER XXXXX NEEDS TO IMPROVE ITS PROFITABILITY
Earnings before tax
RMB thousands
2005 2006 2007 2008
Source:XXXXX
Earnings before
tax/sales
Percent
-111,581
-137,698 -137,137
-0.68
-7.4 -5.5
-1.5
XXX financial
statement
Incorporating all
S&M spending
-198,152 -193,798
-126,266
-178,046
2005 2006 2007 2008
N/A
N/A
-18.6
-13.9
-6.9

33. 33Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXXX HAS FOCUSED ON MULTIFUNCTION PRODUCTS
100% =
XXXX Galanz Midea
5,630,175 18,013,264 3,927,518 25,432,198
Industry
average
Sensor/
computer grill
Mechanical grill
Single function
2008 product mix for sales volume
Percent of total sales volume; Units in 000’s
Source: SIC, Monitor Analysis, AC Nielsen, XXXX, Monitor Analysis

34. 34Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX's PROFITABILITY IN PREMIUM PRODUCT IS MUCH
HIGHER THAN THAT ON OTHER PRODUCTS
Overall
Source: XXXX
Simple
function
Mechanical
grill
Computer
grill
Sensor
Gross margin
Earnings before
tax with all
S&M spending
2008 gross margin, earnings before tax, and marginal profit
in percent of sales
34.7
-6.9
15.1
-20.4
30.6
-12.1
40.4
-1.8
7.0
52.5
Marginal profit
17.9
3.4
13.8
22.7
31.6

35. 35Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX HAS DEVELOPED A STRONG PRESENCE IN
BEIJING
2.4
2.5 9.7
3.4 1.3
Hua Bei
(Beijing)
Hua Dang
(Shanghai)
Hua Nan
(Guangzhou)
Xi Nan
(Chengdu)
Dong Bei
(Shenyang)
Hua Chung
(Wuhan)
XXX
Galanz
Midea
Others 11.0
28.2 25.5
7.7 8.9 9.6
2008 market share in 6 provinces
percent of sales volume
1.3
XXX's practice
in Beijing and
Shenyang
should be rolled
out to other
rapidly-growing
regions
Source: XXX

36. 36Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX MICROWAVE OVEN MANAGERS BELIEVE LG COULD ACHIEVE 14.7
MILLION SALES VOLUME BY REDUCING PRICE ONLY BY 2013
20112008
• Market size
• Market share
• Sales volume
• Sales revenue RMB
• COGS RMB
• Gross margin RMB
• S&M RMB
• G&A/others RMB
• Earnings before tax
• Earnings before
tax/sales
XXX P&L
25.4 million
22.3%
5.65 million
8.475 Billion
6.830 Billion
1.645 Billion
1.150 Billion
450 million
-95 million
-1.7%
41.7 million
23.5%
9.79 million
14.685 Billion
11.432 Billion
3.478 Billion
2,620 Billion
790 million
-190 million
-1.3 %
2013
58.8 million
25%
14.7 million
22.155 Billion
16,.064 Billion
6,004 Billion
4.560 Billion
1.820 Billion
-354 million
-1.6 %

37. 37Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THERE ARE TWO OPTIONS FOR XXXX
Options Assumptions
Stay at current position as
a market follower
• Same cost structure as before
• Only focus on 25 largest cities
• Product mix towards premium types as before
Expand rapidly
to untapped
regions/channels with
basic models
• Same level of fixed S&M spending as Galanz
to replicate its channel/regional coverage
• Lower marginal profit per unit as a result of increasing
basic model proportion

38. 38Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
METHODOLOGY TO FORECAST XX's P&L EVOLUTION UNDER
TWO OPTIONS
Forecast market
trends
Activities
• Market size
PriceVolume
Revenue
UtilityMaterial
COGS
Other
MFG
cost Ad
Sales
personnel
Operating expense
Others
Decide XX's
strategy
Derive P&L evolution based on key drivers






  



Key
drivers
• Product mix
• Price trend
• Share
• Product mix
• Basic model
proportion
• Cost
reduction
• S&M resources
– Salesforce
– Advertisement

39. 39Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE EXPANSION STRATEGY REQUIRES 19.4 MILLION UNITS
SOLD TO BREAKEVEN IN 2013
19.4 million units
sold implies 33%
of total market
Key assumptions
• Market share
– Single function: 16% in 2008 25% in 2013
– Mechanical grill: 18% in 2008, 40% in 2013
– Computer grill: 28% in 2008, 45% in 2013
• Basic model proportion: the same as industry
• Price: the same as industry, based on Galanz
total cost
• COGS
– Material cost: reduce by 10% in 2010, by 5%
p.a from 2011
– Other MFG cost: increase less than volume
increase due to economies of scale
• Sales/promoter personnel
– Number of people matches Galanz’ current
level in 3 years and then stay
– Salary level increase by 8% p.a. for
salesperson and 3% p.a. for promoters
• Ad
– Magnitude/frequency match Galanz’ current
level in 3 years and then stay
– Price of ads increase by 3% p.a.
• Cost reduction target: 5% decrease p.a. for gifts,
promotion events, and logistics cost
• R&D: increase by 0.5 million p.a.
Cost analysis for 2013
Amount
RMB million
Revenue
Variable
cost
Fixed
cost
Sales volume
Thousand sets
24,882
240
19,419

40. 40Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX SHOULD BE ABLE TO REACH AT LEAST 30% MARKET SHARE
AND ABOUT TO TURN INTO PROFITABLE BY 2013
Scenario 2:
Price as Galanz
variable cost
Scenario 1:
Price as Galanz full cost
• Market size
• Market share
– Single function
– Mechanical grill
– Computer grill
– Total
• Sales volume
• Sales revenue
• COGS
• Gross margin
• S&M
• Earnings before tax
• Earnings before
tax/sales
Year 2013
XXX P&L
58.8 million
• 25%
• 40%
• 35%
• 33%
19.4 million
24,910 million
16,440 million
8,470million
8,420 million
49.82 million
0.2%
58.8 million
• 25%
• 40%
• 35%
• 33%
19.4million
21,440 million
14,150 million
7,290 million
7,540 million
-252 million
-11.8 %
Scenario 3:
Price as Galanz total
cost plus 3% margin for
mechanical grill and 5%
for computer grill
58.8 million
• 25%
• 40%
• 35%
• 33%
19.4 million
25,253 million
16,666 million
8,587 million
8,524 million
63.13 million
2.6 %

41. 41Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
HOWEVER, THE MKT FOLLOWER STRATEGY WOULD ONLY DETERIORATE
XXX’s FINANCIAL PERFORMANCE OVERTIME
Key assumptions
XXX 2009 - 2013 financial forecast
• Market share decrease due to lack of basic models
– Single function: 15% in 2000, 10% in 2005
– Mechanical grill: 14% in 2000, 10% in 2005
– Computer grill: 20% in 2000, 15% in 2005
• Basic model proportion: the same as XXXcurrent situation
• Price
– Single function/mechanical grill: the same as industry as it
is difficult to dictate price premium, based on Galanz total
cost
– Computer grill: decrease rate the same as the market from
current XX price point
• COGS
– Material cost: reduce by 10% in 2001, 5% p.a from 2002
– Other MFG cost: increase less than volume increase due
to economies of scale
• Sales/promoter personnel
– Number of people stay
– Salary level increase by 8% p.a. for salesperson and 3%
p.a. for promoters
• Ad
– Magnitude/frequency stay
– Price of ads increase by 3% p.a.
• Export volume: increase by 500K p.a. from 2.5 million sets in
2001
• Cost reduction target: 5% decrease p.a. for gifts, promotion
events, and logistics cost
• R&D: increase by 0.5 million p.a.
RMB millions, percent, million sets
Year
Market size
Market share
Earnings before
tax/sales
2009 2010 2011 2012 2013
29.9
15
-1.2%
35.5
14
-1.4%
41.7
13
-2.5%
49.2
12
-4.2%
58.8
11
-6.6%

42. 42Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
UNDER OPTION TWO, IT IS HIGHLY LIKELY FOR GALANZ TO CAPTURE
70% MARKET SHARE IN CHINA AND BECOME A GLOBAL LEADER
Galanz total
MWO sales in
2008
Volume increase from
market share in China
changed from 68% in
2008 to 70% in 2013
Estimated export
increase from 2008
to 2013 at 30% p.a.
Galanz total
MWO sales in
2013
17.7 - 18.1
3.4 - 3.9
18.9 41.0 - 43.1
Millions

43. 43Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TODAY's DISCUSSION
 The Microwave oven market in China will continue its strong growth and should reach 35.5 million units in 2010. Primary
regions will be Central China, followed by South and Southwest China. Other regions should develop as income grows.
Computer grill and mechanical grill should further increase their share as prices decline.
 Four customer segments are found from market research: Premium buyers, basic brand buyers, rational technophile, and
generic buyers. All segments, except premium buyers, are highly price-sensitive, thus skewing market demand towards
low-end products. At the same time, reliable performance, ease of use, and good after-service are important across
segments.
 The competition in China is intense and will continue to increase, as Galanz and Midea have huge ambitions in the market.
In addition, the severe overcapacity (about 45%) will continue to force prices downwards thus threatening profitability for
all but the lowest cost players.
 XXX has built a successful platform for growth, becoming #2 in China, although far behind Galanz, by focusing on
premium products and in the Beijing area. Faced with the issue of further growth and improving profitability, XXX now
needs to choose between a high growth strategy, with the objective of becoming the leading player and to reach
breakeven in 2013, or to remain a premium niche player for the foreseeable future.
 To achieve the aspiration of becoming a profitable #1 Player in China, XXX needs to launch 5 strategic initiatives:
1. Launch a three step regional expansion, first from Beijing to Wuhan,
2. Introduce entry products to cover all price points while continuing to introduce high end products to create margins,
3. Improve channel coverage by increasing the distributor network and the sales force resources,
4. Increase significantly advertising spending while optimizing media mix,
5. Reduce aggressively cost by leveraging economies of scale.

44. 44Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TO DEVELOP XXX MICROWAVE OVEN TO BE A LARGE SCALE PLAYER
IN CHINA, 6 STRATEGIC DECISIONS ARE REQUIRED
• The most attractive regions in terms of potential size and competition are Wuhan, then
Chengdu, followed by Guangzhou/Shanghai. XXX should develop an expansion strategy
sequenced in this order
Launch a three
step expansion
• Less expensive products will become the main stay in the future. In addition, XXX is not
proposing entry-level products in each of the product categories, thus not serving about
30% of the market volume, and limiting the store sales and the sales force productivity
Expand the
product line
• Currently XXX channel coverage is vastly inferior to Galanz. XXX needs to extend the
sales to distributors, as this seems to drive the share gains, and to roll out its practices of
Beijing to other regions, increasing sales resources in line with its regional expansion.
Finally, given the very large share of sales by hypermarkets and electronic appliances
store, XXX needs to develop the required key account management skills
Increase channel
coverage and
sales force
• XXX currently spends well below Galanz overall. However, in Beijing, where it spends
competitively with Galanz, this has enabled to reach substantial share. In order to fulfill
the regional growth, XXX will need to invest up significantly more advertising and to move
the mix to CCTV as it goes national
Increase
advertising with
an optimized
media mix
• Most of the Sales and Marketing cost will reduce on a per unit basis as volume increases.
Given the intense price pressure, XXX should continue to aggressively find ways to
reduce costs, in addition to leveraging economies of scale
Reduce costs
aggressively
• XXX’s sales organization is less responsive than Galanz mainly due to the long decision
making process. XXX should redesign sales organization and streamline the decision
making process to ensure timely reaction to market situation.
Redesign sales
organization to
improve sales
effectiveness

45. 45Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE SEQUENCE OF ATTACK ACROSS REGIONS IS BASED ON MARKET
ATTRACTIVENESS, COMPETITIVE INTENSITY, AND XX‘S CURRENT POSITION
Market size
2008
Thousand
2013
Thousand
CAGR
Percent
2008 XXX's
market share
Percent
Competitive
intensityRegion
Beijing
Shanghai
Wuhan
Guangzhou
Chengdu
Shenyang
Stay
3rd wave
1st wave
3rd wave
Stay
High
Low
Thousand sets, percent
6,055
5,099
2,453
6,554
4,465
2,036
11,233
10,577
6,983
7,853
6,028
4,561
17
12
34
23
20
19
34
15
14
11
11
28
2nd wave

46. 46Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE SAME METHODOLOGY SHOULD ALSO BE APPLIED TO
PRIORITIZE PRODUCT TYPES
Market size
2008
Thousand
2013
Thousand
CAGR
Percent
2000 XX's
market share
Percent
Competitive
intensityProduct Type
• Single function
• Mechanical grill
• Computer grill/
sensor
3rd wave
1st wave
Thousand sets, percent High
Low
1,731
1,496
1,134
3,384
3,600
2,850
14
19
20
20.5
24.8
21.5 2nd wave

47. 47Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
PRICE, ALONG WITH PERFORMANCE, AFTER-SALES SERVICE AND BRAND,
ARE THE KEY KBF’s FOR XXX TO IMPROVE
Source: AMI Consumer Survey
Reliable performance
High quality
Price
Good after-sales
service
Famous brand
Lots of features
Nice appearance
Advanced technology
Good word of mouth
Product promotion
xxx Galanz Midea Samsung National
Score difference from average

48. 48Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX LAGS BEHIND COMPETITORS IN PRICE-SENSITIVE SEGMENTS,
INCLUDING RATIONAL TECHNOPHILE AND GENERIC BUYERS
Premium buyers
Basic brand buyers
Rational
technophiles
Generic buyers
Total
market
XXXNationalGalanz

49. 49Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THE LACK OF BASIC MODELS SUGGESTS THAT XXX IS ALMOST
ABSENT IN ABOUT 30% OF THE MARKET
Single function product mix by
price range 2008
Percent
XXX Galanz Industry
,1200
1,200
Mechanical grill product mix by
price range 2008
Percent
XXX Galanz Industry
1,400
1,400
Computer grill product mix by
price range 2008
Percent
XXX Galanz Industry
1,200
1,600
1,200 –
1,400
1,400 –
1,600
XXX only has sporadic
presence in the low-priced
product segment

50. 50Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
INFERIOR SALES EFFECTIVENES IS MAINLY DUE TO LACK
OF BASIC MODELS
Source: SIC
Sales volume per coverage store in SIC audited stores, 2008
Sets
Product type Total
Price range
Single
function
600
Single
function
600
Mechani
cal grill
700
Mechani
cal grill
800
Comput
er grill
800
Computer
grill
800 -
1000
Computer
grill
1000 -
1,500
Computer
grill
1,500
XXX
Galanz

51. 51Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
THEREFORE, XXX‘S SALES FORCE PRODUCTIVITY IS LOWER
THAN GALANZ
2008 sales volume per salesperson*
Thousand sets
LG Galanz
2008 sales volume per promoter**
Thousand sets
Source:Literature search, XXX Sales Director, China Light Industry Information Center, Monitor analysis
LG Galanz
Low volume
estimates:
13.3 - 17.1
Low volume
estimates:
1.6 - 2.4
16.7 - 21.4
5.0 - 8.0

52. 52Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX SHOWS INFERIOR CHANNEL COVERAGE TO GALANZ
Overall channel coverage
Percent
Overall channel coverage
Percent
Overall channel coverage
Percent
2008 SIC audited stores2008 SINO-MR audited stores
xxx Galanz XXX Galanz
Increased dedicated sales personnel Is critical to increase channel
coverage
Source: SINO-MR, SIC

53. 53Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
GALANZ USES MORE DISTRIBUTORS THAN XX
2008 XXX channel mix 2008 Galanz channel mix
Percent of sales volume Percent of sales volume
• Department
store: 50%
• Hyper-
market: 26%
• Home
appliance
store: 24%
45.0%
55.0% 1st-tier
dis-
tributor
2nd-tier
dis-
tributor
95%
5%
XX
• Department
score
• Hypermarket
• Home
appliance
store
29.5%
70.5% 1st-tier
dis-
tributor
2nd-
tier dis-
tributor
Source: Monitor analysis based on information collected by xxx sales branches
Ga-
lanz
XX’s inferior channel coverage to Galanz might also be explained
by the percent of sales to distributors

54. 54Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
LOWER DISTRIBUTOR COVERAGE LIMITS XXX‘S POTENTIAL
SALES
Percent of sales volume
Overall Beijing Shanghai Guangzhou Chengdu Shenyang Wuhan
XX channel
mix by volume
2008
Sales through
distributors
Direct sales to
retailers
XXX market
share by
volume, 2008
23.3% 33.9 15.3 10.5 11.0 27.5 13.8
Source: Monitor analysis based on information collected by sales branches, SIC
XXX must increase its’ number of distributors

55. 55Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
HYPERMARKETS AND ELECTRONIC APPLIANCE STORES HAVE BEEN
GROWING RAPIDLY, REQUIRING XXX TO DEVELOP KEY ACCOUNT
MANAGEMENT SKILLS
Overall retail mix
Hyper-
market
Department
store
Home
appliance
store
XXX retail mix*
Hyper-
market
Department
store
Home
appliance
store
2006 2007 2008 2006 2007 2008
vs.
* Only survey urban areas in LGETA, Beijing, Chengdu, Sheyang, and Wuhan
Source: Monitor analysis based on information gathered from sales branches
Percent of sales volume, thousand units

56. 56Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
CUSTOMERS ALSO SHOW A PREFERENCE FOR MORE SPECIALISED
CHANNELS THAN BEFORE
Purchase outlet of
current owners
Purchase outlet of
potential buyers
Department store
Home appliance
center
Hypermarket
Specialty store
Other/can't recall
Department store
Home appliance
center
Hypermarket
Specialty store
Other/can't recall
Total urban
Premium
buyer Basic brand
Rational
technophiles
Generic
buyer
Percent

57. 57Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX OFFERS COMPETITIVE CONDITIONS, BUT HAS TO
SUPPORT CHANNELS MORE
Distributor
Value extraction*
of standard price
Home
appliance
store
Hyper-
market
Department
store
Overall
Payment
flexibility
XXX Galanz
Salesperson
resource
XXX Galanz
Long-term
relationship
XXX Galanz
Brand
building
XXX Galanz
Good
Poor
* Including price different and rebate
9.8
7.0
7.0
?
8.6
XXX
Galanz

58. 58Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
CURRENT XXX ORGANIZATION IS LESS RESPONSIVE THAN
GALANZ
GalanzXXX
Payment
flexibility
• Allows only payment upfront, except really large-
scale foreign hypermarkets, such as Carrefour
• Accepts payment on credit, in accordance
with channels' past payment histories
Salesperson
resource
• In most regions, XXXsalesperson resources
are diversified into different product lines
• Salesperson has less authority to make
decisions
• Only Carrefour enjoys key account
management
• Galanz salesperson focuses on MWO and
thus is more effective
• Most decision-making on salesperson's
discretion
Long-term
relationship
• Lack of focus
• Same offering price to all channels
• Flexible rebate offering for key accounts
Brand building
with channels
• XX has promoters to conduct large events during
weekend to enhance brand awareness in major
department stores
• Has small promotion events, such as
disseminating flyers and offering special price in
all kinds of retail channels
• Has small promotion events, such as
disseminating flyers and offering special
price in al kinds of retail channels
Key areas
of focus
Source: Interviews with channels and XXX salesperson

59. 59Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
BRAND IS AMONGST THE TOP KEY BUYING FACTORS
OF MWO IN URBAN CHINA
Source:AMI Consumer Survey
Beijing
Reliable
performance
Price
Model/size
availability
Famous brand
Good after-
sales service
100
Shanghai
Reliable
performance
Price
Model/size
availability
Famous brand
Good after-
sales service
100
Tianjin
Reliable
performance
Price
Model/size
availability
100
Shenyang
Reliable
performance
Price
Model/size
availability
Famous brand
Good after
sales service
Good after-
sales service
Famous brand
Lots of features
Chengdu
Reliable
performance
Price
Model/size
availability
Famous brand
Good after-
sales service
100
Guangzhou
Reliable
performance
Price
Model/size
availability
100
Good after-
sales service
Famous brand
Lots of features

60. 60Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
IN ORDER TO IMPROVE ITS BRAND IMAGE, XXX NEEDS
TO SIGNIFICANTLY IMPROVE ITS COMMUNICATION EFFECTIVENESS
*
Source: Monitor Analysis, AMI Research
From . . . To . . .
Ads content
• Not communicating the unique selling
points (USP), i.e., value for money,
reliability and quality
• Improve the effectiveness with clearer
communication of XXXs USP in advertisements
Ads
budgeting
• Not sufficient enough to achieve a high
(unaided) level of awareness which
impacts consideration and purchase
• Increase the ads budget to achieve better level of
awareness
Media mix
• Too focus on local print
• Too little spend on local TV and CCTV
• Use CCTV to improve the national reach and uplift
the overall brand image
• Use more local TV to improve the reach of XXX
MWO advertising

61. 61Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
SO FAR XXXX HAS FAILED TO COMMUNICATE ITS
UNIQUE VALUE TO CHINESE CONSUMERS
Source: AMI consumer survey
Overall market image
Leading
MWO maker XXX buyer image
• Famous brand
• Good value for money
• Reasonable price
• Good word of mouth
• Wide sales coverage
• Lots of advertising
• Has a lot of promotion
Galanz • Famous brand
• Good value for money
• Reasonable price
• Good word of mouth
• Wide sales coverage
• Lots of advertising
• Has a lot of promotion
• Famous brand
• Safe operation
Midea • Famous brand
• Suitable for modern life
• High quality
• Reliable brand
• Premium brand
• Brand with long history
• Advanced technology
National • High quality
• Famous brand
• Premium brand
• Brand with long history
• Famous brand
• Safe operation
Samsung • Famous brand
• Safe operation
• Suitable for modern life
• Detailed product information
• Lots of features
• Nice/premium appearance
XXX • Good value for money
• Good after sales service
• Fast testing
• Less noise
• Guarantee for long-time use
• Save energy
Consistent image
XXX does not
communicate well its
good value for money,
good service and
performance reliability

62. 62Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
AS A RESULT, XXX HAS DIFFICULT LYTRANSFORMING CUSTOMER
AWARENESS INTO REAL PURCHASE
Source: AMI Consumer Survey
. . . consideration and purchase are
quite low
Galanz XX Midea Haier National
Purchase to awareness ratio
Galanz XX Midea Haier National
Although XXX has high awareness. . .
Galanz XX Midea Haier National
Galanz XX Midea Haier National
98%
84 74 70
86
Brand awareness
Aided
Unaided
Percent
51%
Aided ad awareness Consideration to awareness ratio

63. 63Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX HAS TO FOCUS ON COMMUNICATING KEY IMAGE DISCRIMINATING
ATTRIBUTES TO ENSURE EFFICIENT S&M SPENDING
Good word of mouth
Reliable brand
High quality
Fast heating
Good value for money
Advanced technology
Detailed product information
Guarantee for long-time use
Reasonable price
Safe operation
Top 10 image discriminating attributes which drive brand preference
Source: AMI Consumer Survey

64. 64Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX'S AD SPENDING IS MUCH LOWER THAN
GALANZ'
2008 total ad spending on MWO
RMB millions
Galanz XXX Midea Haier
Source: AC Nielson

65. 65Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TO GROW NATIONALLY, XXX NEEDS TO INVEST MORE
OUTSIDE BEIJING, ESPECIALLY IN ADS ON CCTV
Source: AC Nielsen Media Audit Jan – Dec 2008
Share of voice (microwave oven)
Percent, RMB millions
Galanz
Midea
XXXX
Haier
118336 113 125100% =
Total CCTV Local TV Print
3
9
4 4
Others

66. 66Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
XXX'S COST PER UNIT FOR SIMILAR PRODUCTS IS HIGHER
THAN GALANZ‘, MAINLY FROM S&M EXPENSE DIFFERENCE
XX Galanz
COGS
S&M
G&A/others
1277
210
RMB
2008 cost per unit for mechanical grill products
RMB per unit
22
19
258
1089
1509
1366
Source: XXX, Monitor Analysis

67. 67Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
COGS per unit
RMB
XXX
GALANZ ALSO ENJOYS ECONOMIES OF SCALE ON
MANUFACTURING COST, BUT LAGS BEHIND XXX ON MATERIAL
COSTS
Galanz
Total Direct
labor
Utility Depre-
ciation
Overhead/
other
Materials
1277
19 21 29 31
1174
1229
8 9 12 13 1184
Volume
dependent
Source: XXX , Monitor analysis

68. 68Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
TO GO FORWARD, XXX NEEDS TO LAUNCH SIX STRATEGIC
INITIATIVES
Roll out
geographical
expansion
Develop the entry
range products
Revise
advertising budget
and strategy
Revise distributor
and key
account strategies
Redesign stores
coverage and
sales effectiveness
Continue to
reduce COGS
aggressively
Strategic decision
needed
Develop MWO into a
large scale player in
China
Strategic initiatives
needed