Yongye International Provides Update on Branded Store Network
BEIJING,Jan. 20, 2011 /PRNewswire-Asia-FirstCall/ -- Yongye International, Inc. (Nasdaq: YONG) ("Yongye" or the "Company"), a leading manufacturer, developer and distributor of "Shengmingsu" brand plant and animal nutrient products in China, today announced that the number of independently owned, Yongye branded stores selling the Company's Shengmingsu products reached 24,036 as of December 31, 2010, compared to 21,925 as of September 30, 2010, and 9,110 as of December 31, 2009.
Mr. Zishen Wu, Chairman and Chief Executive Officer, commented, "We have developed a well known brand name and a substantial distribution network for our Shengmingsu products in China. These independently-owned Yongye branded stores feature and prominently display our products inside their stores as well as in storefront messaging visible from the street. Having these branded stores in rural villages in China helps us to create satisfied customers and brand loyalty."
The following table provides a breakdown of the number of independently-owned Yongye branded stores by geographic region.
# of Independently-
# of County
Mr. Wu added, "We now have a presence in all provincial level regions in mainland China, with the only exception of Tibet, including over 800 stores in each of our 12 strongest provinces. We were able to achieve this extraordinary growth in our sales network in 2010 as a result of our scalable distribution network. We have established a systematic approach to identify distributors based on various performance metrics, such as market development capability, creditworthiness, and other criteria. Our distributors are incentivized to place Shengmingsu products on their priority selling list because of its solid profitability and the competitive credit terms available to them. Equally important is that Shengmingsu delivers good results for farmers so that distributors have full confidence in our product. Our significant investment in branding and marketing also makes it much easier for distributors to sell our product."
"Branded store development is a joint effort, but primarily driven by our distributors, leveraging their local knowledge. Yongye branded stores were existing agriculture stores in local villages. As such, no stores need to be 'opened.' These are existing stores recruited to join our distribution network. In addition to selling Yongye's products, these stores also carry other agriculture products such as seeds, pesticides, and fertilizers. The store recruiting work is primarily driven by thousands of staff from our various levels of distributors. The cost to paint a store, provide marketing and educational materials in rural villages in China is a few hundred dollars at most."
"The Company continues to expect to achieve at least a 50% annual growth rate in revenue in 2011 and 2012. The Company also announced that it expects a 2011 year-end target of at least 30,000 for the number of independently-owned Yongye branded stores selling Yongye's Shengmingsu products, which represents a 25% increase over the 2010 year-end figure of 24,036."
Mr. Wu concluded, "We see plenty of room for continued growth via increased penetration in our existing store network as well as via the addition of new stores to our network. China is a vast country with over 1.3 billion people. The 24,036 independently-owned Yongye branded stores in our network represent a very small percentage of the approximately 600,000 rural villages in China. China's agriculture industry is very fragmented, unlike in North America, and agriculture in China is a relationship based business. Multiple layers of distributors provide us with real local knowledge and a network to penetrate local markets. It also provides us with the advantage of directly working with a smaller number of provincial distributors, saving us the potential problem of collecting cash from farmers or branded store owners and other administrative costs."
"We are confident in our business prospects. We plan to strengthen our market leading position in our traditional strong sales provinces and significantly improve our presence in our newer geographic markets in 2011."
About Yongye International
Yongye International is a Chinese agricultural nutrient company headquartered in Beijing, with its production facilities located in Hohhot, Inner Mongolia, China. Yongye markets two lines of organic nutrient products: a liquid nutrient product which is sprayed on plants and a powder nutrient product which is added to animal feed. Both products are sold under the brand name "Shengmingsu," which means "life essential" in Chinese. The Company's patented and patent pending formulas and proprietary extraction processes allow it to create products that increase crop yields and improve the health of livestock. The Company sells its products primarily to provincial or regional level distributors, who then channel those products to a carefully selected network of independently owned Yongye branded stores in China. For more information, please visit the Company's website at http://www.yongyeintl.com.
Safe Harbor Statement
This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Ms. Kelly Wang
Finance Director – Capital Markets
Ms. Wendy Xuan – Business Associate
Phone: +86-10-8232-8866 x 8827
CCG Investor Relations
Mr. Athan Dounis
SOURCE Yongye International, Inc.
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