We are exposed to various risks in the operations of our business and we believe that risk management is important to our success.

Key operational risks faced by us include, among others changes in general market conditions and changes in the regulatory environment in the PRC Herbal industry, our ability to offer potential expansion into other regions in Greater Bay Area, availability of financing to fund our expansion and business operations and competition from similar quality of similar scale.

See the ‘‘Risk Factors’’ in this prospectus for disclosures on various risks we face. 

In addition, we also face numerous market risks, such as interest rate, credit and liquidity risks that

arise in the normal course of our business. Our Board of Directors is responsible and has the general power to manage the operations of in charge of managing the overall risks of our Group.

It is responsible for considering, reviewing and approving any significant business decision involving material risk exposures, such as our decision to expand our network into new geographic areas.