Investors' Information
Chairman's Statement

On behalf of the Board of Crystal International Group Limited, I am pleased to present the annual results of the Group for the year ended 31 December 2018.

The annual results for 2018 represent the first full-year's performance of the Company since its been successful listed. I notice that both investors and market analysts expect the Group to achieve profit growth. In our view, those expectations indeed spurred the Group on, to develop innovative thinking, and work with an unconventional attitude, that the Group may maintain and strengthen its leading position in the industry and make the interests of customers and investors its priority. Firstly, I would like to express my gratitude to the directors for their continuing efforts and thank all of the management and staff for their dedication, supporting the Group to continue to overcome difficulties by putting their energies into grasping opportunities amid challenges and pursuing prudent growth, under the challenging business environment in 2018.


The challenges that we faced were mainly coming from the uncertainties arising from the rapid change in the global economies. The currency exchange rates continued to fluctuate in 2018, with the Renminbi appreciating sharply against the US$ in the first four months of 2018. On the other hand, of course, we must mention the trade wrangling between China and the US in 2018. The stagnation resulting from increasing tariffs does have an impact on the development of the entire industry, especially as since July 2018, the US government has officially re-imposed tariffs on goods from China.

At the time of writing this report, although the market is still looking forward to reach a consensus about the trade war negotiations. In the short term, the uncertainty caused by the conflicts between China and the US has already affected the business environment in China during the second half of 2018. This situation may or may not have adversely affected the global economic growth rate, but it has also slowed down noticeably.

I believe that the risk and opportunity are two sides of a coin, and the key is whether one can flip it to the right side. As the garment manufacturing industry is in the process of consolidation, some negative external factors should accelerate the elimination of uncompetitive players, such as companies with lower diversification in their production, whereas companies with solid foundations, will benefit from industry competition. Therefore, the uncertainties related to US-Sino trade disputes in 2018 will accelerate industry consolidation and will increase the opportunity to create breakthroughs in the long-term development of the Group. In fact, at 31 December 2018, only the denim business accounted for relatively more in proportion among the products we exported from China to the U.S.


As a leading player in the garment manufacturing industry, the Group has the advantages of solid business foundation and operational strategy. We also strive on establishing our deeply-rooted image in emphasising our quality and integrity, with also the compliment from the customers about our product development, technology development, overseas plant operation layout, etc. All of these positive matters make our strategic partners and suppliers a perpetual support to us. This accumulated goodwill has been the key to our long-term development. Leveraging our market advantage built from nearly half a century of hard work, we need to consistently enhance our competitiveness and maintain our leadership position, so that the Group will continue to be a beneficiary of industry consolidation. This was exactly my original intention for my determination to list the company.

We put the top priority to utilise the advantages of the Group to expand its business after listing, while also pay attention to our commitment to shareholders. Amid several external factors, the Group's annual sales in 2018 reached US$2.5 billion, an increase of 14.6% compared with 2017. Despite the adverse conditions prevailing, the Group's overall financial position remains resilient. As such the Board has recommended to pay the shareholders a final dividend of HK8.4 cents per ordinary share that, together with an interim dividend of HK4 cents per ordinary share, amounting a total dividend of HK12.4 cents per ordinary share for the full year.


To explain how to "win successfully", we must emphasise the prerequisite for the stability of the Group. The word "diversity" is the key. Firstly, our multi-country manufacturing platform has become one of the main reasons why we have always had an important position in our customers' minds. Since the 1970s, the setting up of factories overseas, and our accumulated operating experience has been fundamental to our success. The site selection mainly considers local infrastructure development, operating costs, trade policies, political stability, cultural affinity, labour supply and level of productivity. We have been able to maintain this level, so far, with the construction of production facilities in five countries, namely Vietnam, China, Cambodia, Bangladesh and Sri Lanka. Among them, we have ventured into Vietnam since 2003 and is now one of the largest foreign-invested enterprises in the country.

The Group has experienced nearly half a century of many different levels of international trade disputes during business operations, such as anti-dumping and trade embargos. Our multi-country manufacturing platform did help to combine the advantages of different places of origin for our customers, who can choose to make more effective use of the variety of the production areas to respond to the impact of export tariffs, and have a flexible approach to production. All of the above factors allow us to effectively work with customers to develop the best production strategy.

We produce ready-to-wear apparels for many leading apparel brands in the world. Some of them have established business relationships with us for at least 10 years, and some over 30 years. These relationships are a notable achievement for the Group and all of our colleagues. The unremitting efforts of our colleagues to overcome the ups and downs of business, as well as their long-term establishment of a credible professional attitude, engenders a reassurance in the minds of customers. In December 2016, we have entered the fast-growing sportswear and outdoor apparel market through acquisition. Not only further expanding the Group's business landscape, also creating a more diversified product portfolio. We believe our product categories are complementary to each other.

In addition, our customers have placed great value on the benefits of our "co-creation" business model, which cannot be easily replicated by other apparel manufacturers. It is definitely a significant, perhaps unique competitive advantage for the Group, in our industry.

We believe that the global apparel industry is frequently changing, and apparel brands naturally demand for a one-stop sourcing platform, that would allow them to acquire their right products at the right time at the right cost. As mentioned above, the "co-creation" business model between the Group and our customers, effectively reduces the set-up time and enhances the cost-effectiveness of products, from product development through industrial innovation, sample making, manufacturing to logistics and delivery, which allow us to understand the customer's demand for products. For the Group, maintaining close partnerships with customers can increase reliance and effectively improve profitability. It also helps us stay updated with fashion and market trends, creates cross-selling opportunities, and thus expands our market share. Our business continues to create favourable conditions by diversifying risks.

On the other hand, we are in the era of disruptive innovation known as 'Industry 4.0' and the 5G network. Considering the various processes within the company, there is absolutely room for applying artificial intelligence, machine learning, robots and the Internet of Things (IoT), and similar developments. We are making breakthroughs in the use of big data and new technology projects, focusing on product development and product efficiency.

In addition to caring for the needs of our customers, we never forget the importance of sustainable development and ensure that we will have a positive impact on the society and the environment in our business development. For instance, we have established our third 5-year plan for global environmental protection for the next 5 years, to strictly monitor our effectiveness in environmental protection.


Dear shareholders, I believe that 2019 will be a breakthrough year for the Group. We will work hard to find opportunities for positive change, to complement our existing strengths, and fully utilise the team spirit "For the Greater Good". In this way, we can create conditions to achieve further stability and continue our journey towards the vision to "becoming the world's no. 1 apparel manufacturer".

Lo Lok Fung Kenneth
Chairman of the Board

(Extract from 2018 Annual Report)