On 24 November 2016, the Company had entered into an investment agreement with Meicai (previously named Spruce) pursuant to which the Company agreed to subscribe for the newly issued convertible preferred shares of Meicai at a cash consideration of US$25.70 million. Meicai is a holding company incorporated in the Cayman Islands and provides supply chain related services including ingredient procurement, warehousing and distribution to small-and-medium sized restaurants in the PRC. It is the largest e-commerce platform in terms of gross merchandise volume in the area of supply chain for agricultural products in the PRC. By shortening the distribution process of agricultural products, improving the efficiency of agricultural products supply chain, and establishing large-scale warehousing and distribution system and the good quality control for the whole process, Meicai is able to provide economic and efficient services for farmers and restaurant customers in the PRC"s agricultural products supply chain. Meicai is an independent third party of the Group.
Meicai"s business focus in 2022 is to continue to expand into new cities to increase its market share, while reducing costs and increasing efficiency to improve the company"s profitability. In the future, Meicai will continue to increase its market share by shortening the distribution process of agricultural products and improving the efficiency of the agricultural supply chain to provide economical and efficient services to farmers and restaurant customers in the Chinese agricultural supply chain. The Company is also committed to continuously optimising its people and business lines, reducing overheads, optimising staff levels and reducing costs and efficiency. The Company is confident that Meicai will continue to grow its business at a satisfactory rate and become one of the leaders in the supply chain of agricultural products in China.