I Unit proposing the program:

Wuhan Tianhong Technology Development Co.Ltd

II Unit overview:

Wuhan Tianhong Technology Development Co.Ltd. was found in Dec.2002.It undertakes development, production, sales, system integrate, technology transfer ,consulting and services in the fields of mechanism, electronic products, computer software, hardware product, network and medical equipment devices.

III Products introduction:

1) Main functions

Measurement of electrocardiogram (ECG) signal; measurement of blood pressure; data transfer;

Result display and print;

2) Product value analysis

Social value: This program will separate operations of equipment, service and medical treatment. Users buy equipment home, equipment service centers provide service, and hospitals focus on medical treatment. For users, it is very convenient to use equipment measuring parameters of cardiogram and blood pressure and to transfer the results to the service center. It is not limited by time and certain place so that the physical changes can be precisely record down. Given users’ data, specialized service center first hand them to experts who will propose daily health status analysis report (if the parameters are normal) or medical advice report (if the parameters are abnormal). Then the service center will classify and reserve those data and reports and submit the reports to each individual user in time. For hospitals connected to the service center, doctors can conveniently check information provided by the daily measurement parameters of cardiogram and blood pressure, so as to understand their change. It will improve the medical treatment, solidify and enlarge the patients group.

Economic value: In a way that users paid for the equipments, the service center plans, manages and provide the customer service, it integrates service resources which were scattered in several hospitals to reduce service cost, improve service efficiency and provide more professional service. When the user base grows to a certain large scope, it will become important intangible assets to lay foundation for the enterprises’ development in more fields.

Home Health Care in US, Japan and EU is usually called ‘Home Health Care Engineering’ (HHCE). US, Japan and NATO all regard it as an important item in hygiene plan. HHCE can not only reduce medical treatment cost but also increase accuracy and efficiency of diagnosis because the patients do not have to leave home and stay in hospital. Along with the development of HHCE, the daily treatment and inspection of chronic diseases are posed new requirement which is to raise the efficiency of the daily inspection data and their collection, reservation and transfer.

According to some experts’ analysis, development and application of ‘Heart of the city’—home cardiogram & blood pressure monitor comply with the adjustment of purposes and molds of home health care. The company will prompt the products’ renovation while assuring the products’ quality to build a hi-tech manufacture industry that could suit both the recent target of medical treatment system revolution in China and the demand of global market, with combination of high technology and rational treatment.

3) Products current developments

‘Heart of the city ’ product and software facilitated have completed products technology standard registration ,product inspection by CHINA quality supervision & testing center for medical ultrasound equipment　,clinic trial in Asia Heart Disease Hospital and  Zhongnan Hospital. In Feb.5, 2004, it passed spot inspection of Wuhan Food and Drug Administration Bureau. In Mar.17, 2004, it was approved by Wuhan Food and Drug Administration Bureau and obtained production registration qualification of home cardiogram & blood pressure monitor to produce and market the products.

IV Market analysis

1) Customer base:

Heart disease and high blood pressure patients;

Middle aged and elder people who pay much attention to their health with stable high income (monthly family income above  1500RMB);

People who buy this product as gift to friends or relatives.

2) Market analysis

According to statistics of state sanitation departments (cited from Changjiang Daily, Oct.8, 2002),the number of current heart disease patients is over 0.1billioin which is about 10% of the total population. And this number is increasing at the rate of 3million people per year.

Shown by the material of the fifth census in China, the number of elder people above 60 years old is 0.132 billion, which is increasing at the rate of 3.2% each year.(cited from Life Daily)

Beijing Millenniums noble health management center in a health status report of community residents announced that high blood pressure and heart disease are listed in the top 10 fatal diseases, 27.96% of the surveyed population has those diseases; the number of people suffer from sub-state of mental health is rising year by year, 33.5% of the surveyed population had begun feel discomfort due to some disease.

A update survey conducted by Shanghai Civil Administration Bureau reveals that due to the particularity of family structure in China, shanghai has had more than 1million elderly people who live alone. With the increase of economy and improvement of people’s living, more than 80% elder people would like to live separately with their children.(cited from 《Economic Daily》July 9,2003)

According to Wuhan Statistics Yearbook2003, the number of elder people beyond 60 years old in Wuhan is 0.92 million, the number of middle aged people aging from 40-60 years old is 2.08million. The number of residents in central city zone accounts for 50% of the total population in Wuhan. Assuming that the incidence of heart diseases and high blood pressure in the population beyond 40 years old is 27.96%, heart diseases and high blood pressure patients in Wuhan will reach 0.42million.

Therefore, demands for this product in national market will be 18-30million which takes 15-30% of the total market share; the number of our customers will reach 63000-126000 which takes 15-30%of the market share in Wuhan. If take family structure in to account, the user will be 40000-80000.

3) Market competitions:

This product has no direct rivals in certain period and region, due to its uniqueness of its operation and that there is no similar products in domestic market. But our customer base overlaps the target customers of HOTER and Heart BP ,so that they are indirect rivals of our products.

However, our competitiveness is obvious brought by the low cost and the special service style. The essence of competition in this market is to compete service resources. In the regions we have established service channels ,we will regulate the market access and relevant aspects to obtain occupation and use right of service support resources while confines competition from the rivals.

This product will first enter market of Wuhan and then explore to other cities after acquired some market experiences. Mature operation model in Wuhan is strong advantage for us to enter competition in other regions. We could proceed more efficient with rich industry experiences and market resources when other rivals construct their products and service frameworks. Therefore, it is crucial to control commanding position of the market steadily and fast.

4) Operation strategies:

Trail operation period: 8 months, from Apri.2004 to Dec.2004

We first establish service center website, cooperate with a hospital to choose 30-50 users for products’ application and reliability inspection. Then, we cooperate with other 2-3 hospitals to testify feasibility and reliability of the products and the website on the basis of data collected from 100 users.

First we manage pilot sale in Wuhan aiming at 3000 products’ sales volume ,then extend to other 1-2 cities with similar scale of Wuhan.

Market cultivation period: 2 years, from 2005 to 2006

Sales volume in Wuhan reach 10000 products in 2005, 15000 products in 2006. The total product sales reach 28000 products.

We establish products sales center network, building sales and service center sub website in 4-8 key cities.Sales volume in each city reaches 20000 in two years. Total sales volume reaches 0.1millioin in 2006.

Market expansion period:3 years, from 2007-2009

We continue to build sales and service center sub website. Take in to consideration factors such as catching up of the rivals and the regional products saturation and ect., we aim to reach 0.3 million’s total sales volume in 2008.In 2009,products sales will total 0.5 million. 

V Product economic analyses:

Definitions of items in balance sheet:

1 number of newly built companies: number of subsidiary companies that should be set up this year.

2 total numbers of subsidiary companies: number of subsidiary companies that should be set up this year and number of subsidiary companies built last year.

3 numbers of users: number of users this year refers to the amount each subsidiary company should accomplish this year. Total number of users is the sum of the amount each subsidiary company should accomplish this year and products sales of the previous years.

4 service charge income: 400RMB/person for 2004-2006; consider 15% customer lose of the previous customers when accounting service charge income; 300RMB/person for 2007-2008; because the selling time is not the same, the service charge is accounted as 50% of the entire year.

5 sales revenue:1800 RMB per product for 2004-2006;1700 RMB per product for 2007 due to the reduction of the costs.

6 Total revenue: the sum of the sales revenue and service charge income of the current year.

7 Total profit of service charge: profit left after split the expenditures of service center. In 2004 which is the construction period of service center and related telecommunication networks, the expenditure is 2.98million RMB including products promotion fee for entering the market and cost of establishing service center network. 0.9million out of 2.98million is accounted in the products sales expenditures. In 2005-2006, expenditure of service center in each subsidiary company is 0.75million RMB. In 2007-2008, expenditure of service center in each subsidiary company is 1.2million.

8 Total product profit: profit left after split manufacture costs, sales expenditures and total tax. Product profit is 500 RMB per product.

VI Finance plan:

It is planned to finance 8million RMB to establish service center, sales network, websites, and conduct research of new products, regional expansion plan and ect.