Unassociated Document

As filed with the U.S. Securities and Exchange Commission on September 29, 2010

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

CC JEWELRY CO., LTD.

(Exact name of Registrant as specified in its charter)

British Virgin Islands		3911		Not Applicable
(State or other jurisdiction of incorporation or organization)		(Primary standard industrial classification code number)		(I.R.S. Employer Identification Number)

186 Pingyang Road

6th Floor, Taiyuan City, Shanxi, 030006

People’s Republic of China

+0351-5602855

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

CT Corporation System

111 Eighth Avenue

New York, New York 10011

(212) 894-8940

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Christopher S. Auguste

Bill Huo

Ari Edelman

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, NY 10036

Tel: (212) 715-9100

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered		Proposed Maximum Aggregate Offering Price(1)(2)				Amount of Registration Fee
Ordinary Shares, par value $0.01 per share,		$	20,000,000			$	1,426.00

(1)Includes [ ] ordinary shares that the underwriters have an option to purchase to cover over-allotments, if any.

(2)Estimated solely for the purposes of determining the registration fee pursuant to Rule 457(o) promulgated under the Securities Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2010

CC JEWELRY CO., LTD.

Ordinary Shares

This is the initial public offering of ordinary shares, par value $0.01 per share, of CC Jewelry Co., Ltd. CC Jewelry Co., Ltd. is offering [ ] ordinary shares in this offering.

We expect the public offering price to be between $[ ] and $[ ] per ordinary share. Prior to this offering, there has been no public market for our ordinary shares. We are in the process of applying to list our ordinary shares on the Nasdaq Global Market under the symbol [____]

Investing in our ordinary shares involves risks.

Please read the risks under the section captioned “Risk Factors” beginning on page 10 of this prospectus.

	Per Ordinary Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to us	$	$

The underwriters have an option exercisable within [__] days from the date of this prospectus to purchase up to [ ] additional ordinary shares from us at the public offering price less the underwriting discount.

Neither the Securities and Exchange Commission nor any state securities commission or other relevant local authority has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver our ordinary shares to the purchasers on or about [ ], 2010.

The date of this prospectus is [ ], 2010.

TABLE OF CONTENTS

	Pages

Conventions Used in This Prospectus	ii

Prospectus Summary	1

Risk Factors	11

Special Note Regarding Forward-Looking Statements and Other Information	26

Use of Proceeds	28

Dividend Policy	29

Capitalization	30

Dilution	31

Exchange Rate Information	32

Enforceability of Civil Liabilities	33

Selected Historical Consolidated Financial Data	34

Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Corporate Structure and Organization	52

Business	56

PRC Government Regulations	68

Management	71

Beneficial Ownership	77

Certain Relationships and Related Party Transactions	78

Description of Share Capital	80

Shares Eligible for Future Sale	87

Taxation	88

Underwriting	93

Other Expenses of Issuance and Distribution	100

Legal Matters	101

Experts	102

Where You Can Find Additional Information	103

Index to Consolidated Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information or to make any representations about us, the securities being offered pursuant to this prospectus or any other matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us.

The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our ordinary shares. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and made available for delivery to the extent required by the federal securities laws.

CONVENTIONS USED IN THIS PROSPECTUS

Unless otherwise indicated or the context clearly implies otherwise, references to “we,” “us,” “our,” the “Company” and “CC Jewelry” refer to CC Jewelry Co., Ltd., formerly known as Super Champ Group Limited, or Super Champ, a company organized in the British Virgin Islands, and its subsidiaries, subsequent to the business combination referred to below. The “business combination” refers to the share exchange between Super Champ and the shareholders of Square. C Commerce Company Ltd., or Square C, resulting in the acquisition of all of the outstanding securities of Square C by Super Champ, which was consummated on September 10, 2010.

In addition, unless the context otherwise requires, in this prospectus:

“shares” or “ordinary shares” refers to our ordinary shares, par value $0.01 per share;

“China” or “PRC” refers to the People’s Republic of China, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan;

“RMB” or “Renminbi” refers to Renminbi yuan, the legal currency of China; and

“$”, “US$” or “U.S. dollars” refers to the legal currency of the United States.

For convenience, certain amounts in Renminbi have been converted to US dollars at an exchange rate in effect at the date of the related financial statements or the related event. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the relevant period.

PROSPECTUS SUMMARY

This summary highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information that you should consider before investing in our ordinary shares. You should read the entire prospectus and the registration statement of which this prospectus forms a part in their entirety, carefully, including the section captioned “Risk Factors” and the more detailed information in our consolidated financial statements and related notes appearing elsewhere beginning on page F-1 in this prospectus.

Overview

We are one of the leading fine jewelry retailers in China. Our sales volume was ranked number one in Shanxi Province in 2008 and 2009 by the Shanxi Jewelry and Gems Trade Association. Our headquarters are located in Taiyuan City, Shanxi Province, PRC. Our CC brand was named as a “famous brand in the China jewelry industry” by the Gems and Jewelry Trade Association of China in each of the last three years.

As of June 30, 2010, we operated an aggregate of forty seven fine jewelry stores and counters, which we refer to, collectively, as boutiques, located in several major cities in the PRC, including:

twenty one jewelry boutiques under our own CC brand;

seventeen jewelry boutiques under our own FENIX brand; and

nine jewelry boutiques under the Chow Tai Fook brand.

Currently, the majority of our boutiques are located in northern China. The remaining boutiques are located in other regions in China. We intend to expand our industry position in the fine jewelry market in China by strengthening our presence in northern China and continuing to expand from northern China into other regions in China.

As a fine jeweler, most of our jewelry products are constructed of 18 karat gold or platinum, with or without precious gemstones such as diamonds, jade and emerald, with significant emphasis on quality craftsmanship and distinctive design.

We employ six full-time designers who are responsible for designing approximately 15% of our CC and FENIX jewelry products in the aggregate. The remaining 85% are designed by diamond, gold, platinum and precious stone jewelry manufacturers. These designs are made exclusively for us, although some of the manufacturers own the intellectual property rights to these outsourced designs. All of our products are manufactured by third party suppliers.

Our Growth Strategy

Our goal is to become one of the dominant fine jewelry retailers in China. The principal components of the business strategy we implemented to attempt to attain our goal include the following:

expanding the coverage of our retail network;

enhancing brand awareness and

distributing additional high-end fine jewelry brands.

Competitive Advantages

We are taking advantage of industry trends.

We are a leading fine jewelry retailer in northern China that continues to expand.

We have rigorous quality control standards.

We have an experienced management team.

Our products have achieved brand recognition and are comprised of novel designs.

We have a sales channel advantage.

Our Risks and Challenges

We believe that the following are the most significant risks and uncertainties that may materially adversely affect our business, financial condition, results of operations and prospects:

Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of liquidity and working capital.

Our ability to maintain or increase our revenue could be harmed if we are unable to strengthen and maintain our brand image.

Our sales and profitability fluctuate on a seasonal basis and are affected by a variety of other factors.

Our retail expansion strategy depends on our ability to open and operate a certain number of new counters and stores each year, which could strain our resources and cause the performance of our existing operations to suffer.

We are subject to various risks and uncertainties that might affect our ability to procure high quality merchandise.

Our inability to manage our growth may have a material adverse effect on our business, results of operations and financial condition.

Jewelry purchases are discretionary, may be particularly affected by adverse trends in the general economy, and an economic decline may make it more difficult to generate revenue.

Competition in the jewelry industry could cause us to lose market share, thereby materially and adversely affecting our business, results of operations and financial condition.

Adverse changes in the economy of China may affect our business.

See “Risk Factors” beginning on page 10 and other information included in this prospectus for a detailed discussion of these and other risks, challenges and uncertainties.

Corporate Structure

Business Combination

On September 10, 2010, Super Champ and its sole shareholder entered into a share exchange agreement with Square C, a British Virgin Islands limited liability company organized on April 9, 2010 under the BVI Act, and the shareholders of Square C. Pursuant to the share exchange agreement, Super Champ acquired from the shareholders of Square C all of the issued and outstanding shares of Square C, in exchange for an aggregate of 7,000,000 newly issued ordinary shares issued by Super Champ to the shareholders of Square C. In addition, the sole shareholder of Super Champ sold all of the 5,000,000 ordinary shares of Super Champ that were issued and outstanding prior to the business combination, to the shareholders of Square C for cash, at a price of $0.03 per share. As a result, the individuals and entities that owned shares of Square C prior to the business combination acquired 100% of the equity of Super Champ, and Super Champ acquired 100% of the equity of Square C. Square C is now a wholly owned subsidiary of Super Champ. In conjunction with the business combination, Super Champ filed an amended charter, pursuant to which Super Champ changed its name to CC Jewelry Co., Ltd., changed its fiscal year end to December 31st, changed the par value of its ordinary shares to $0.01 per share and increased its authorized shares to 100,000,000. Upon the consummation of the business combination, we ceased to be a shell company.

Our Subsidiaries

Offshore Holding Company Subsidiaries

Square C, our wholly owned subsidiary, was incorporated on April 9, 2010 under the laws of the British Virgin Islands. We acquired all of the capital stock of Square C pursuant to the business combination on September 10, 2010. On June 25, 2010, Square C acquired all of the outstanding equity of Massfit Corporation Ltd., or Massfit, a limited liability company formed on March 17, 2010 under the laws of Hong Kong. On June 9, 2010, Massfit established a wholly owned subsidiary, Chongqing Yu Zhong Commerce Co., Ltd., or Chongqing, a wholly foreign owned enterprise formed under the laws of the PRC. Square C, Massfit and Chongqing are holding companies. As a result of these transactions, each of Square C, Massfit and Chongqing is a wholly owned subsidiary of ours. As described below under “Contractual Arrangements,” Chongqing controls Taiyuan Basic Points.

PRC Operating Companies

Taiyuan Basic Points is a PRC company formed on February 28, 2002. Our Chairman, Mr. Chen and his brother in-law Mr. Yu together own 100% of Taiyuan Basic Points, which operates all of our business operations in the PRC along with its subsidiaries. Mr. Chen owns 90% of Taiyuan Basic Points and Mr. Yu owns 10%.

The following table provides a description of each of the subsidiaries of Taiyuan Basic Points:

Name of Subsidiary		Operating activities
Shanxi Zhong Yao Commerce Co., Ltd.		Operating Chow Tai Fook brand and managing Chow Tai Fook counters and stores
Shanxi Bo Ye Commerce Co., Ltd.		Operating FENIX brand and managing FENIX counters and stores
Linfen Jimei Jewelry Co., Ltd.		Operating and managing CC counter in Linfen
Yangquan Daoming Commerce Co., Ltd.		Operating and managing CC counter in Yangquan
Shanghai Zhong Yao Commerce Co., Ltd.		Operating FENIX brand and managing FENIX counters and stores
Changzhi Kamei Commerce Co., Ltd. (1)		Operating and managing CC and Chow Tai Fook counters in Changzhi
Jincheng Kamei Commerce Co., Ltd. (1)		Operating and managing CC and Chow Tai Fook counters in Jincheng
Datong Kamei Commerce Co., Ltd. (2)		Operating and managing CC and Chow Tai Fook counters in Datong

(1) These subsidiaries were formed subsequent to our fiscal year ended December 31, 2009.

(2) This entity was acquired on April 30, 2010 for approximately $0.8 million.

Our Shareholders

Mr. Chen, our Chairman and Chief Executive Officer, owns 100% of the equity in Jin Fan Commerce Company Limited, a British Virgin Island company, which owned 67.5% of the equity of Square C prior to the business combination, and owns 67.5% of our equity since the business combination. Dan Yu, the brother in-law of Mr. Chen and general manager of Taiyuan Basic Points, owns 100% of the equity in Sail Start Commerce Company Limited, a British Virgin Islands company, which owned 4.5% of the equity of Square C prior to the business combination and owns 4.5% of our equity since the business combination. Yongxiang Chen, the brother of our chairman, Quanxiang Chen, owns 100% of the equity in Zong Fan Commerce Company Limited, a British Virgin Islands company, which owned 4.5% of the equity of Square C prior to the business combination and owns 4.5% of our equity since the business combination.

The holders of the remaining 23.5% of our shares are investors that are residents of the PRC and are unaffiliated with us.

Organizational Chart

The following chart reflects our organizational structure since the date of the business combination between Square C and Super Champ:

Corporate Information

Our principal executive offices are located at CC Jewelry Co., Ltd., 186 Pingyang Road, 6th Floor, Taiyuan City, Shanxi, 030006, People’s Republic of China. Our telephone number is +0351-5602855 and our fax number is +0351-7323989.

You should direct all inquiries to us at the address and telephone number of our principal executive offices set forth above. Our website is currently under construction. Our agent for service of process in the United States is CT Corporation System, 111 Eighth Avenue New York, New York 10011, (212) 894-8940.

The Offering

Price per ordinary share		We currently estimate that the initial public offering price will be between $[ ] and $[ ] per share.

Ordinary shares being offered by us		[ ] Shares

Ordinary shares outstanding before this offering		12,000,000 Shares

Ordinary shares to be outstanding immediately after this offering		[ ] Shares

Over-allotment option		We have granted to the underwriters an option, exercisable for [___] days from the date of this prospectus, to purchase up to an additional [ ]ordinary shares, at the initial public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions, solely for the purpose of covering over-allotments, if any.

Use of proceeds		We estimate that we will receive net proceeds of approximately $[___] million from this offering, assuming an initial public offering price of $[ ] per ordinary share. For the purposes of estimating net proceeds, we are assuming an initial public offering price of $[ ] per ordinary share, the midpoint of the estimated range of the initial public offering price set forth on the cover of this prospectus. We intend to use our net proceeds from this offering to open new boutiques in China and for working capital and other general corporate purposes. We currently have no plans, agreements or commitments with respect to any material acquisitions or investments in other companies.

Risk factors		See the section captioned “Risk Factors” and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ordinary shares.

Payment and settlement		Our ordinary shares are expected to be delivered against payment on [ ], 2010. The ordinary shares will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company, or DTC, in New York, New York. In general, beneficial interests in our shares will be shown on, and transfers of these beneficial interests will be effected only through, records maintained by DTC and its direct and indirect participants.

Listing		We are in the process of applying to have our ordinary shares listed on the Nasdaq Global Market under the symbol [_ _].

Unless stated otherwise, the information in this prospectus assumes:

an initial public offering price of $[ ] per ordinary share, the midpoint of the estimated range of the initial public offering price set forth on the cover of this prospectus; and

no exercise of the underwriters’ option to purchase up to [ ] additional ordinary shares from us to cover over-allotments.

Summary Consolidated Financial Data

The following selected financial information should be read in connection with, and is qualified by reference to, our consolidated financial statements and their related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is included elsewhere in this registration statement. The consolidated statements of operations and comprehensive income data for the fiscal years ended December 31, 2008 and 2009 and the balance sheets data as of December 31, 2008 and 2009 are derived from the audited consolidated financial statements included elsewhere in this registration statement. The consolidated statements of operations and comprehensive income data for the fiscal years ended December 31, 2005, 2006 and 2007 and the balance sheets data as of December 31, 2005, 2006 and 2007 have been derived from unaudited financial statements that are not included in this prospectus. Our historical results for any of these periods are not necessarily indicative of results to be expected in any future period.

	Statement of Income Year Ended December 31,
	2009 (Audited)			2008 (Audited)			2007 (Unaudited)			2006 (Unaudited)			2005 (Unaudited)

Revenue, net	$	58,920,419		$	59,767,770		$	32,435,935			18,486,338			12,379,178
Cost of goods sold		41,180,014			44,148,820			22,354,515			12,948,019			9,117,960
Gross profit		17,740,405			15,618,950			10,081,420			5,538,320			3,261,219
Operating expenses
Selling expenses		5,103,750			5,946,222			3,893,923			2,017,397			1,516,743
Advertising expense		1,216,275			1,591,568			730,849			333,795			147,791
General and administrative expenses		1,979,296			2,590,548			2,344,795			1,260,551			666,174
Total Operating Expenses		8,299,321			10,128,388			6,969,567			3,611,743			2,330,708
Income from operations		9,441,084			5,490,612			3,111,853			1,926,577			930,511
Other income (Loss)
Interest expenses, net		(957,643	)		(1,051,180	)		(474,202	)		(294,649	)		(232,875	)
Other expenses, net		(85,970	)		(47,048	)		2,351			25,858			105,131
Total other expenses		(1,043,613	)		(1,098,228	)		(471,851	)		(268,791	)		(127,744	)
Income before income taxes		8,397,471			4,392,384			2,640,002			1,657,786			802,767
Income taxes		(2,170,785	)		(1,179,861	)		(660,000	)		(414,447	)		(200,692	)
Net income		6,226,686			3,212,523			1,980,001			1,243,339			602,075
Other comprehensive income
Foreign currency translation adjustments		55,309			1,104,798			-			-			-
Comprehensive Income	$	6,281,995		$	4,317,321		$	1,980,001			1,243,339			602,075

Balance Sheets Data (at end of period)	December 31,
(in U.S. Dollars)	2009		2008		2007		2006		2005
	Audited		Audited		Unaudited		Unaudited		Unaudited
Cash and cash equivalents	$	1,540,673	$	759,785	$	783,825	$	958,156	$	70,547
Total current assets		44,142,294		35,310,639		26,610,366		14,566,855		8,246,523
Total noncurrent assets		6,626,162		5,529,073		4,213,475		902,938		450,085
Total assets		50,768,456		40,839,712		30,823,841		15,469,793		8,696,609

Total liabilities		23,247,067		19,936,729		13,863,728		251,897		(2,654,458	)
Total shareholders’ equity		27,521,389		20,902,983		16,960,113		15,217,896		11,351,066
Total liabilities and shareholders’ equity		50,768,456		40,839,712		30,823,841		15,469,793		8,696,609

RISK FACTORS

You should carefully consider the risks described below in evaluating our business before investing in our ordinary shares. If any of the following risks were to occur, our business, results of operations and financial condition could be harmed. In that case, the trading price of our ordinary shares could decline and you might lose all or part of your investment in our ordinary shares. You should also refer to the other information set forth in this prospectus, including our consolidated financial statements and the related notes and the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before deciding whether to invest in our ordinary shares.

Risks Related to Our Business and Our Industry

Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of liquidity and working capital.

Historically, we have spent a significant amount of cash on our operational activities, principally to maintain the adequate levels of inventory in our boutiques. We finance our operations primarily through cash flows from our operations, short-term loans from local banks in the PRC and interest-free notes from Mr. Chen, our Chairman and Chief Executive Officer. Our financing needs are greatest during the periods immediately prior to holidays and traditional Chinese festivals, as we purchase greater levels of inventory in anticipation of higher levels of sales during these periods. If we fail to continue to generate sufficient cash flow, particularly during the periods preceding holidays and traditional Chinese festivals, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected.

Our short-term loans are from Chinese banks and are generally secured by our inventories and/or guarantees by third parties. The term of almost all such loans is one year or less. Historically, we have rolled over such loans on an annual basis. However, we may not have sufficient funds available to pay all of our borrowings upon maturity in the future. Failure to roll over our short-term borrowings at maturity or to service our debt could result in the imposition of penalties, including increases in interest rates, legal actions against us by our creditors, or even insolvency.

If available liquidity is not sufficient to meet our operating and loan obligations as they come due, our plans include considering pursuing alternative financing arrangements, reducing expenditures as necessary, or limiting our plans for expansion to meet our cash requirements. However, there is no assurance that, if required, we will be able to raise additional capital, reduce discretionary spending or efficiently limit our expansion to provide the required liquidity. Currently, the capital markets for small capitalization companies are extremely difficult and banking institutions have become stringent in their lending requirements. Accordingly, we cannot be sure of the availability or terms of any third party financing. If we are unable to raise additional financing, we may be unable to implement our long-term business plan, develop or enhance our products, take advantage of future opportunities or respond to competitive pressures on a timely basis. In the alternative, if we raise capital by issuing equity or convertible debt securities, such issuances could result in substantial dilution to our shareholders.

Our ability to maintain or increase our revenue could be harmed if we are unable to strengthen and maintain our brand image.

We believe that some of the primary factors in facilitating customer buying decisions in China’s jewelry sector include price, confidence in the merchandise sold, and the level and quality of customer service. The ability to differentiate our products and service from competitors by our brand-based marketing strategies is a key factor in attracting consumers, and if our strategies and efforts to promote our brand, such as television and magazine advertising, fail to garner brand recognition, our ability to generate revenue may suffer. If we are unable to differentiate our products, our ability to sell our products at anticipated profit levels could be adversely affected. If we fail to identify or react appropriately or timely to customer buying decisions, we could experience reduction in consumer recognition of our products, a diminished brand image, higher markdowns, and costs to recast overstocked jewelry. These factors could result in lowering selling prices and sales volumes for our products, which could adversely affect our financial condition and results of operations.

Our sales and profitability fluctuate on a seasonal basis and are affected by a variety of other factors.

Our business is affected by the seasonal pattern common to most retailers. The primary factors that affect the seasonal changes in our business operations are holidays and traditional Chinese festivals. Historically, the months that generally generate the greatest revenues for us are October through January (approximately 36.4% in 2008 and 36.5% in 2009 of annual revenues), as a result of holidays and festivals that occur during those months. Retailers often experience increased sales due to the week-long public holiday for Chinese National Day, as well as Christmas and New Year’s Day. These months are also a peak season for marriages and the birth of newborns in China, which have historically resulted in higher sales.

Any significant decrease in net sales during the holiday or Chinese festival seasons would have a material adverse effect on our business, our financial condition and our results of operations. In addition, in order to prepare for these seasons, we must order and keep in stock significantly more merchandise than we carry during other periods during the year. This inventory build-up may require us to expend cash faster than we generate by our operations during these periods. Any unanticipated decrease in demand for our merchandise during this peak shopping season could require us to sell excess inventory at a substantial markdown, which could have a material adverse effect on our business and profitability.

Because of the briefness of these selling periods, the opportunity for sales to recover in the event of a disruption or other difficulty is limited, and the impact of disruptions and difficulties can be significant. For instance, adverse weather, a significant interruption in the receipt of products, or a sharp decline in mall traffic occurring during one of these selling periods could materially impact sales for the affected period and, because of the importance of each of these selling periods, commensurately impact overall sales and earnings.

Our retail expansion strategy will largely depend on our ability to successfully find sites for, and to open and operate, new retail locations. Our ability to open and operate new retail locations successfully depends on several factors, including, among others, our ability to:

identify suitable counter and store locations, the availability of which is outside our control;

purchase and negotiate acceptable lease terms;

prepare counters and stores for opening within budget;

source sufficient levels of inventory at acceptable costs to meet the needs of new counters and stores;

hire, train and retain personnel;

secure required governmental permits and approvals;

successfully integrate new counters and stores into our existing operations;

contain payroll costs; and

generate sufficient operating cash flows or secure adequate capital on commercially reasonable terms to fund our expansion plans.

Any failure to successfully open and operate new retail counters and stores could limit our ability to grow our revenues in the manner we desire. In addition, our proposed retail expansion program will place increased demands on our operational, managerial and administrative resources. These increased demands could cause us to operate our business less effectively, which, in turn, could cause deterioration in the financial performance of our overall business.

As we expand our operations, we may need to establish a more diverse supplier network for our materials. The failure to secure a more diverse and reliable supplier network could have an adverse effect on our financial condition.

We currently purchase almost all of our materials from a small number of suppliers. During 2008 and 2009, we purchased approximately 56.3% and 49.6%, respectively, of our finished merchandise, such as gold accessories, from our top five finished product vendors and almost all of our diamonds from our top five diamond suppliers. As we increase the scale of our retail operations, we may need to establish a more diverse supplier network, while attempting to continue to leverage our purchasing power to obtain favorable pricing and delivery terms. However, in the event that we need to diversify our supplier network, we may not be able to procure a sufficient supply of high quality diamonds and fine jewelry at a competitive price, which could have an adverse effect on our results of operations, financial condition and cash flows.

Furthermore, despite our efforts to control our supply of diamonds and fine jewelry and maintain good relationships with our existing suppliers, we could lose one or more of our existing suppliers at any time. The loss of one or more key suppliers could increase our reliance on higher cost or lower quality supplies, which could negatively affect our profitability. Any interruptions to, or decline in, the amount or quality of our diamond and fine jewelry supplies could materially disrupt our production and adversely affect our business, financial condition and financial prospects.

We are subject to various risks and uncertainties that might affect our ability to procure high quality merchandise.

Our performance depends on our ability to procure high quality merchandise on a timely basis from our suppliers. Our supplies are subject to certain risks, including availability of materials, labor disputes, inclement weather, natural disasters, and general economic and political conditions, which might limit the ability of our suppliers to provide us with high quality merchandise on a timely basis. Furthermore, for these or other reasons, one or more of our suppliers might not adhere to our quality control standards, and we might not identify the deficiency. Our suppliers’ failure to supply quality materials at a reasonable cost on a timely basis could reduce our net sales, damage our reputation and have an adverse effect on our financial condition.

Our inability to manage our growth may have a material adverse effect on our business, results of operations and financial condition.

We have experienced significant growth since we began operations in 2002. Our revenues have grown from approximately $12.4 million in 2005 to approximately $58.9 million in 2009.

We expect our growth to continue to place significant demands on both our management and our resources. This requires us to continuously evolve and improve our operational, financial and internal controls across our organization. In particular, continued expansion increases the challenges we face in:

recruiting, training and retaining sufficient skilled sales and management personnel;

adhering to our high quality and process execution standards;

maintaining high levels of customer satisfaction;

creating and managing economies of scale;

maintaining and managing costs to correspond with timeliness of revenue recognition; and

developing and improving our internal administrative infrastructure, including our financial, operational and communication systems, processes and controls.

Any inability to manage our growth may have a material adverse effect on our business, results of operations and financial condition.

Jewelry purchases are discretionary, may be particularly affected by adverse trends in the general economy, and an economic decline may make it more difficult to generate revenue.

The success of our operations depends, to a significant extent, upon a number of factors relating to discretionary consumer spending in China. These factors include economic conditions and perceptions of such conditions by consumers, employment rates, the level of consumers’ disposable income, business conditions, interest rates, consumer debt levels, availability of credit and levels of taxation in the regions in which we sell our products. Consumer spending on jewelry may be adversely affected by changes in general economic conditions in China or by changes in any one of the aforementioned factors, which in turn could harm our financial performance.

Competition in the jewelry industry could cause us to lose market share, thereby materially and adversely affecting our business, results of operations and financial condition.

The jewelry industry in China is highly fragmented and very competitive. We believe that the market may become even more competitive as the jewelry industry in China continues to grow. We compete with local jewelry retailers and large foreign multinational companies that offer products that are similar to ours. Some of these competitors have larger local or regional customer bases, more locations, more brand equity, and substantially greater financial, marketing and other resources than we have. Our inability to maintain or increase our market share in proportion to our competitors could materially and adversely affect our business, results of operations and financial condition.

Our sales are dependent upon mall traffic.

Our boutiques are located primarily in shopping malls and department stores throughout the PRC. Our success is in part dependent upon the continued popularity of malls and department stores, and particularly the malls and department stores in which our boutiques are located, as a shopping destination and the ability of these malls, their tenants and other mall attractions to generate customer traffic. Accordingly, a significant decline in this popularity, especially if it is sustained, would substantially harm our sales and earnings. In addition, even assuming this popularity continues, mall traffic can be negatively impacted by weather, gas prices and similar factors.

Any failure of our pricing and promotional strategies to be as effective as desired will negatively impact our sales and earnings.

We set prices for our products and establish product specific and store-wide promotions in order to generate store traffic and sales. While these decisions are intended to maximize our sales and earnings, in some instances they do not. For instance, promotions, which can require substantial lead time, may not be as effective as desired or may prove unnecessary in certain economic circumstances. If we implement a pricing or promotional strategy that does not work as expected, our sales and earnings will be adversely impacted.

If we are not able to adapt to changing jewelry trends in China, our inventory may be overstocked and we may be forced to reduce the price of our overstocked jewelry.

Our jewelry sales depend on consumer fashions, which can change rapidly. The ability to accurately predict future changes in taste, respond to changes in consumer preferences and carry the inventory demanded by customers at a high quality, all have an important influence on determining sales performance and achieved gross margin. If we fail to anticipate, identify or react appropriately to changes in styles and trends, we could experience excess inventories, higher than normal markdowns or an inability to sell our products.

If our inventory is lost due to theft, our results of operations would be negatively impacted.

We purchase large volumes of precious metals. Although we have security systems in place, we may be subject to losses due to third-party or employee theft. The implementation of security measures beyond those that we already utilize, which include security cameras and alarm systems, would increase our operating costs. Also, any such losses could exceed the limits of, or be subject to an exclusion from, coverage under our insurance policies. Claims filed by us under our insurance policies could lead to increases in the insurance premiums payable by us or the termination of coverage under the relevant policy.

Volatile gold prices can cause significant fluctuations in our operating results. Our revenues and operating income could decrease if gold or precious stone prices decline or if we are unable to pass price increases on to our customers.

Our principal materials are gold, platinum, diamonds and other precious stones. The gold industry as a whole is cyclical and, at times, pricing and availability of gold can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, industry, demand, inflation and expectations with respect to the rate of inflation, interest rates, gold sales by central banks, changes in investment trends and international monetary systems and the effect of changes in the supply and demand for gold in public and private markets. This volatility can significantly affect the availability and cost of gold materials for us.

When gold prices increase, competitive conditions will influence how much of the price increase we can pass on to our customers. To the extent we are unable to pass on future price increases in our gold materials to our customers, the revenues and profitability of our business could be adversely affected. When gold prices decline, customer demands for lower prices and our competitors' responses to those demands could result in lower sale prices, lower margins and inventory valued at the lower of cost or market adjustments as we use existing inventory. Significant or rapid declines in gold prices or reductions in sales volumes could result in us incurring inventory or goodwill impairment charges. Therefore, changing gold prices could significantly impact our revenues, gross margins, operating income and net income.

Our quarterly results may fluctuate because of many factors and, as a result, investors should not rely on quarterly operating results as indicative of future results.

Fluctuations in operating results or the failure of operating results to meet the expectations of public market analysts and investors may negatively impact the value of our securities. Quarterly operating results may fluctuate in the future due to a variety of factors that could affect revenues or expenses in any particular quarter. Fluctuations in quarterly operating results could cause the value of our securities to decline. Investors should not rely on quarter-to-quarter comparisons of results of operations as an indication of future performance. As a result of the factors listed below, it is possible that in future periods our results of operation may be below the expectations of public market analysts and investors. Factors that may affect our quarterly results include:

vulnerability of our business to a general economic downturn in China;

fluctuation and unpredictability of costs related to gold, diamonds, platinum and precious metal jewelry;

seasonality of our business;

changes in the laws of the PRC that affect our operations;

competition from our competitors;

our ability to obtain all necessary government certifications and/or licenses to conduct our business; and

development of a public trading market for our securities.

Our success depends in large part upon our senior management and key personnel and our inability to attract or retain these individuals could materially and adversely affect our business, results of operations and financial condition.

We are highly dependent on our senior management, including our Chief Executive Officer, Quanxiang Chen, our Chief Financial Officer, Xiaolin Mao, our Vice President, Human Resources, Xiaoguo Cui, and our Vice President, Brand Development, Yingyan Guo. Our future performance will be dependent upon the continued service of members of our senior management. Competition for senior management in our industry is intense, and we may not be able to retain our senior management and key personnel or attract and retain new senior management and key personnel in the future, which could materially and adversely affect our business, results of operations and financial condition.

One shareholder will own a large percentage of our outstanding stock after this offering and could significantly influence the outcome of our corporate matters.

Following this offering, Quanxiang Chen, our Chief Executive Officer will own approximately [___]% of our outstanding ordinary shares, thereby retaining a majority equity interest in our company. Currently, Mr. Chen beneficially owns approximately 67.5% of our outstanding ordinary shares. As our majority shareholder, Mr. Chen is, and will continue to be, able to exercise significant influence over all matters that require shareholder approval, including the election of directors to our board and approval of significant corporate transactions that we may consider, such as a merger or other sale of our company or its assets. This concentration of ownership in our shares by Mr. Chen will limit your ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us. In addition, sales of significant amounts of ordinary shares held by Mr. Chen, or the prospect of these sales, could adversely affect the market price of our ordinary shares.

Our business could be materially adversely affected if we cannot protect our intellectual property rights.

We have intellectual property rights that are of value to us. However, the legal regime governing intellectual property in the PRC is still evolving and the level of protection of intellectual property rights in the PRC may differ from those in other jurisdictions. Thus, it may be difficult to enforce our rights relating to our intellectual property. In the event of the occurrence of any unauthorized use of, or other infringement to, our intellectual property, potential sales of our products might be diverted to such unauthorized sellers and could cause potential damage to, or dilute the value of, such rights or our brand.

Any loss or limitations on our right to use intellectual property licensed from third parties could have a material adverse effect on our business, operating results and financial condition.

We have been granted an exclusive license to use two trademarks, both of which are registered trademarks in the PRC. The owner of the trademarks, Man Yu, is the wife of Mr. Chen, our Chairman and Chief Executive Officer. Pursuant to the licensing agreement between Mr. Yu and Chongqing, we have the exclusive right to these trademarks. While we are not aware of any disputes between the trademark owner and us or any third party, the trademark owner may determine not to protect her intellectual property rights that we license from her and we may be unable to defend such intellectual property rights on our own or we may have to undertake costly litigation to defend the intellectual property rights of the trademark owner. Upon the termination of the license agreement for this trademark, we may no longer continue to have proprietary rights to the intellectual property that we license from the trademark owner. Any loss or limitations on our right to use the intellectual property licensed from the trademark owner could have a material adverse effect on our business, operating results and financial condition.

Our inability to maintain appropriate internal financial reporting controls and procedures could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, and cause investors to lose confidence in our reported financial information.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. As a public company, we have significant requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and, for many companies, a report by the independent registered public accounting firm addressing these assessments. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

We cannot assure you that we will not in the future identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to comply with Sarbanes-Oxley and meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, and cause investors to lose confidence in our reported financial information.

Risks Related to Our Corporate Structure

The PRC government may determine that our corporate structure is not in compliance with applicable PRC laws, rules and regulations.

Our wholly owned subsidiary, Chongqing Yu Zhong Commerce Co., Ltd., or Chongqing, manages and operates our fine jewelry business through Taiyuan Basic Points Commerce Co., Ltd., or Taiyuan Basic Points, a PRC company owned by Mr. Chen, our Chairman and Chief Executive Officer, and his brother in-law, Mr. Yu, who is also the general manager of Taiyuan Basic Points. Chongqing operates Taiyuan Basic Points’ business pursuant to contractual arrangements with Taiyuan Basic Points and Messrs. Chen and Yu, which arrangements we also refer to throughout this report as the VIE Agreements. Almost all economic benefits and risks arising from Taiyuan Basic Points’ operations have been transferred to Chongqing under these agreements. Details of the VIE Agreements are set out below under the heading – Contractual Arrangements in the section entitled Corporate Structure and Organization.

There are risks involved in the operation of our business in reliance on the VIE Agreements, including the risk that the VIE Agreements may be determined by PRC regulators or courts to be unenforceable. If the VIE Agreements were for any reason determined to be in breach of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such breach, including:

imposing economic penalties;

discontinuing or restricting the operations of Chongqing or Taiyuan Basic Points;

imposing conditions or requirements in respect of the VIE Agreements with which Chongqing may not be able to comply;

requiring our company to restructure the relevant ownership structure or operations;

taking other regulatory or enforcement actions that could adversely affect our company’s business; and

revoking the business licenses and/or the licenses or certificates of Chongqing or Taiyuan Basic Points, and voiding the VIE Agreements.

Any of these actions could adversely affect our ability to manage, operate and gain the financial benefits of Taiyuan Basic Points, which would have a material adverse impact on our business, financial condition and results of operations.

Our ability to manage and operate Taiyuan Basic Points under the VIE Agreements may not be as effective as direct ownership.

We conduct our jewelry retail businesses in the PRC, and generate all of our revenues, through the VIE Agreements. Our plans for future growth are based on growing the operations of Taiyuan Basic Points. However, the VIE Agreements may not be as effective in providing us with control over Taiyuan Basic Points as direct ownership. Under the current VIE arrangements, as a legal matter, if Taiyuan Basic Points fails to perform its obligations under these contractual arrangements, we may have to (a) incur substantial costs and resources to enforce such arrangements and (b) seek legal remedies under PRC law, which we cannot be sure would be effective. Therefore, if we fail to effectively control Taiyuan Basic Points, such failure would have an adverse effect on our ability to achieve our business objectives and grow our revenues.

The shareholders of Taiyuan Basic Points may breach, or cause Taiyuan Basic Points to breach, the VIE Agreements.

Mr. Chen, the primary shareholder of Taiyuan Basic Points may breach, or cause Taiyuan Basic Points to breach, the VIE Agreements because his equity interests in Taiyuan Basic Points are greater than his equity interests in our company. As a result, Mr. Chen may breach a contract with us if he believes that such breach will lead to greater economic benefit for him. If the shareholders of Taiyuan Basic Points were to breach, or cause Taiyuan Basic Points to breach, the VIE Agreements for this reason or any other reason, we may have to rely on legal or arbitral proceedings to enforce our contractual rights, including specific performance, injunctive relief or claiming damages. Such arbitral and legal proceedings may cost us substantial financial and other resources, and result in disruption of our business, and we cannot assure you that the outcome will be in our favor.

The payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities.

We generate our revenues through payments that we receive from Taiyuan Basic Points pursuant to the VIE Agreements. We could face adverse tax consequences if the PRC tax authorities determine that the VIE Agreements were not entered into based on arm’s length negotiations. For example, PRC tax authorities may adjust our income and expenses for PRC tax purposes which could result in our being subject to higher tax liability.

Risks Related to Doing Business in China

Changes in China’s political or economic situation could harm us and our operating results.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have a negative effect are:

level of government involvement in the economy;

control of foreign exchange;

methods of allocating resources;

balance of payments position;

international trade restrictions; and

international conflict.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in a number of ways. For example, state-owned enterprises still constitute a large portion of the Chinese economy, and weak corporate governance and the lack of a flexible currency exchange policy still prevail in China. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the Chinese economy was similar to those of OECD member countries.

The PRC government exerts substantial influence over the manner in which we must conduct our business activities.

The PRC government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property, and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof.

Future inflation in China may inhibit our ability to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 5.9% and as low as (0.8)%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.

You may have difficulty enforcing judgments against us.

Our assets are located, and our operations are conducted, in the PRC. In addition, all of our directors and officers are nationals and residents of the PRC and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts because China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security, or the public interest.

Most of our revenues are denominated in Renminbi, which is not freely convertible for capital account transactions and may be subject to exchange rate volatility.

We are exposed to the risks associated with foreign exchange controls and restrictions in China, as our revenues are primarily denominated in Renminbi, which is currently not freely exchangeable. The PRC government imposes control over the convertibility between Renminbi and foreign currencies. Under the PRC foreign exchange regulations, payments for “current account” transactions, including remittance of foreign currencies for payment of dividends, profit distributions, interest and operation-related expenditures, may be made without prior approval but are subject to procedural requirements. Strict foreign exchange control continues to apply to “capital account” transactions, such as direct foreign investment and foreign currency loans. These capital account transactions must be approved by, or registered with, the PRC State Administration of Foreign Exchange, or SAFE. Further, capital contribution by an offshore shareholder to its PRC subsidiaries may require approval by the Ministry of Commerce in China or its local counterparts. We cannot assure you that we will be able to meet all of our foreign currency obligations to remit profits out of China or to fund operations in China.

On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or Circular 142, to regulate the conversion by foreign invested enterprises, or FIEs, of foreign currency into Renminbi by restricting how the converted Renminbi may be used. Circular 142 requires that Renminbi converted from the foreign currency-dominated capital of a FIE may be used only for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC unless specifically provided. In addition, SAFE strengthened its oversight over the flow and use of Renminbi funds converted from the foreign currency-dominated capital of a FIE. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Compliance with Circular 142 may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business.

Fluctuation in the value of the Renminbi and of the U.S. dollar may have a material adverse effect on investments in our ordinary shares.

Any significant revaluation of the Renminbi may have a material adverse effect on the U.S. dollar equivalent amount of our revenues and financial condition as well as on the value of, and any dividends payable on, our ordinary shares in foreign currency terms. For instance, a decrease in the value of Renminbi against the U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results, the value of your investment in our ordinary shares and the dividends we may pay in the future, if any, all of which may have a material adverse effect on the prices of our common shares. All of our revenues are denominated in Renminbi. Any further appreciation of the Renminbi against the U.S. dollar may result in significant exchange losses.

Prior to 1994, the Renminbi experienced a significant net devaluation against most major currencies, and there was significant volatility in the exchange rate during certain periods. Upon the execution of the unitary managed floating rate system in 1994, the Renminbi was devalued by 50% against the U.S. dollar. Since 1994, the Renminbi to U.S. dollar exchange rate has largely stabilized. On July 21, 2005, the People’s Bank of China announced that the exchange rate of U.S. dollar to Renminbi would be adjusted from $1 to RMB8.27 to $1 to RMB8.11, and it ceased to peg the Renminbi to the U.S. dollar. Instead, the Renminbi would be pegged to a basket of currencies, whose components would be adjusted based on changes in market supply and demand under a set of systematic principles. On September 23, 2005, the PRC government widened the daily trading band for Renminbi against non-U.S. dollar currencies from 1.5% to 3.0% to improve the flexibility of the new foreign exchange system. Since the adoption of these measures, the value of Renminbi against the U.S. dollar has fluctuated on a daily basis within narrow ranges, but overall has further strengthened against the U.S. dollar. In June 2010, the Chinese government announced its intention to allow the Renminbi to fluctuate within the June 2005 parameters. There remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation in the value of the Renminbi against the U.S. dollar. The Renminbi may be revalued further against the U.S. dollar or other currencies, or may be permitted to enter into a full or limited free float, which may result in an appreciation or depreciation in the value of the Renminbi against the U.S. dollar or other currencies.

China’s legal system is different from those in some other countries.

China is a civil law jurisdiction. Under the civil law system, prior court decisions may be cited as persuasive authority but do not have binding precedential effect. Although progress has been made in the promulgation of laws and regulations dealing with economic matters, such as corporate organization and governance, foreign investment, commerce, taxation and trade, China’s legal system remains less developed than the legal systems in many other countries. Furthermore, because many laws, regulations and legal requirements have been recently adopted, their interpretation and enforcement by the courts and administrative agencies may involve uncertainties. Sometimes, different government departments may have different interpretations. Licenses and permits issued or granted by one government authority may be revoked by a higher government authority at a later time. Government authorities may decline to take action against unlicensed operators which may work to the disadvantage of licensed operators, including us. The PRC legal system is based in part on government policies and internal rules that may have a retroactive effect. We may not be aware of our violation of these policies and rules until some time after the violation. Changes in China’s legal and regulatory framework, the promulgation of new laws and possible conflicts between national and provincial regulations could adversely affect our financial condition and results of operations. In addition, any litigation in China may result in substantial costs and diversion of resources and management attention.

Under the New Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders.

China passed a New Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. Under the New EIT Law, an enterprise established outside of China with de facto management bodies within China is considered a resident enterprise, meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the New EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. In addition, a circular issued by the State Administration of Taxation on April 22, 2009 clarified that dividends and other income paid by such resident enterprises will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders. This recent circular also subjects such resident enterprises to various reporting requirements with the PRC tax authorities.

Although all of our management is currently located in the PRC, it remains unclear whether the PRC tax authorities would require or permit our overseas registered entities to be treated as PRC resident enterprises. We do not currently consider our company to be a PRC resident enterprise. However, if the PRC tax authorities determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on offering proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the New EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as tax-exempt income, we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new resident enterprise classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC shareholders from transferring our shares.

Restrictions under PRC law on Chongqing’s ability to pay dividends and make other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.

PRC regulations restrict the ability of PRC subsidiaries to pay dividends and make other payments to their offshore parent company. PRC legal restrictions permit payments of dividends by PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of their registered capital. Allocations to these statutory reserve funds can be used only for specific purposes and are not transferable to us in the form of loans, advances, or cash dividends. Any limitations on the ability of Chongqing to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

The scope of our business license in China is limited, and we may not expand or continue our business without government approval.

Chongqing, our wholly owned subsidiary, is a Wholly Foreign Owned Enterprise, commonly known as a WFOE. A WFOE can conduct business only within the approved business scope that appears on the company’s business license. Chongqing’s business license permits it to design, manufacture, sell and market jewelry products to department stores throughout the PRC. Any amendment to the scope of Chongqing’s business requires further application and government approval. In order for Chongqing to expand its business beyond the scope of its license, Chongqing will be required to enter into a negotiation with the authorities for the approval to expand the scope of its business. We cannot assure you that Chongqing will be able to obtain the necessary government approval for any change or expansion of its business.

If the China Securities Regulatory Commission, or CSRC, or another Chinese regulatory agency, determines that CSRC approval is required in connection with our business combination or our contractual arrangement with Chongqing and its shareholders, we may become subject to penalties.

On August 8, 2006, six Chinese regulatory agencies, including the Chinese Securities Regulatory Commission, or CSRC, promulgated the M&A Regulation, which became effective on September 8, 2006 and was subsequently revised on June 22, 2009. This regulation, among other things, has certain provisions that require offshore special purpose vehicles formed for the purpose of acquiring Chinese domestic companies and directly or indirectly established or controlled by Chinese entities or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock market. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval. It is not clear how the provisions in the regulation regarding the offshore listing and trading of the securities of a special purpose vehicle apply to us. We believe, based on the interpretation of the regulation and the practice experience of our Chinese legal counsel, JunZeJun Law Offices, that CSRC approval is not required for the business combination between Super Champ and Square C or our contractual arrangement with Chongqing and its shareholders. There remains some uncertainty as to how this regulation will be interpreted or implemented. If the CSRC or another Chinese regulatory agency subsequently determines that the CSRC’s approval is required for this offering or our contractual arrangement with Chongqing and its shareholders, we may face sanctions by the CSRC or another Chinese regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, restrict or prohibit payment or remittance of dividends to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

We must comply with the Foreign Corrupt Practices Act.

We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from making prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time to time in mainland China. If any of our non-U.S. listed competitors that are not subject to the Foreign Corrupt Practices Act engage in these practices, they may receive preferential treatment and secure business from government officials in a way that is unavailable to us. Furthermore, although we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in illegal conduct for which we might be held responsible under U.S. law. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.

Because our funds are held in banks that do not provide insurance, the failure of any bank in which we deposit our funds could affect our ability to continue our business operations.

Banks and other financial institutions in the PRC do not provide insurance for funds held on deposit. As a result, in the event of a bank failure, we may not have access to funds on deposit. Depending upon the amount of money we maintain in a bank that fails, our inability to have access to our cash could impair our operations, and, if we are not able to access funds to pay our suppliers, employees and other creditors, we may be unable to continue our business operations.

If relations between the United States and China worsen, investors may be unwilling to hold or buy our ordinary shares and our share price may decrease.

At various times during recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China, whether or not directly related to our business, could reduce the price of our ordinary shares.

Risks Related to Our Ordinary Shares and This Offering

The market price for our ordinary shares may be volatile.

The market price for our ordinary shares is likely to be highly volatile and subject to wide fluctuations in response to various factors, including the following:

actual or anticipated fluctuations in our quarterly operating results and revisions to our expected results;

changes in financial estimates by securities research analysts;

conditions in the markets for our products;

changes in the economic performance or market valuations of companies specializing in our industry or our customers or their industries;

announcements by us or our competitors of new products, acquisitions, strategic relationships, joint ventures or capital commitments;

addition or departure of our senior management and key personnel;

fluctuations of exchange rates between the Renminbi and the U.S. dollar;

litigation related to our intellectual property;

release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares; and

sales or perceived potential sales of our ordinary shares.

In addition, the securities market has from time to time, and to an even greater degree since the last quarter of 2007, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ordinary shares. Furthermore, in the past, following periods of volatility in the market price of a public company’s securities, shareholders have frequently instituted securities class action litigation against that company. Litigation of this kind could result in substantial costs and a diversion of our management’s attention and resources.

The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.

Sales of substantial amounts of our ordinary shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our future ability to raise capital through offerings of our ordinary shares.

Your ability to bring an action against us or against our directors and executive officers, or to enforce a judgment against us or them, will be limited.

We are not incorporated in the United States. We conduct our business outside the United States, and substantially all of our assets are located outside the United States. Most of our directors and executive officers are non-U.S. citizens and residents, and substantially all of the assets of those persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under U.S. securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the British Virgin Islands or the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and executive officers. For more information regarding the relevant laws of the British Virgin Islands and the PRC, see “Enforceability of Civil Liabilities.”

We may not pay any dividends on our ordinary shares.

Under British Virgin Islands law, we may pay dividends if the directors declare that the company is able to satisfy the provisions of Section 57 of the BVI Act. Pursuant to this provision, the company, immediately after the distribution, must satisfy the solvency test, in so far as its assets exceeds its liabilities, and the company must be able to pay its debts as they become due. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. Even if we are able to pay dividends, we cannot give any assurance that we will declare dividends of any amounts, at any rate or at all in the future. We have not paid any dividends in the past. Future dividends, if any, will be at the discretion of our board of directors, subject to the approval of our shareholders, and will depend upon our results of operations, our cash flows, our financial condition, the payment of our subsidiaries of cash dividends to us, our capital needs, future prospects and other factors that our directors may deem appropriate. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

As the public offering price is substantially higher than the pro forma net tangible book value per share, you will incur immediate and substantial dilution.

If you purchase ordinary shares in this offering, you will pay more for your ordinary shares than the amount paid by existing shareholders for their ordinary shares on a per ordinary share basis. As a result, you will experience immediate and substantial dilution of approximately [ ] per ordinary share, representing the difference between our pro forma net tangible book value per ordinary share as of [ ], after giving effect to this offering and the assumed public offering price of [ ] per ordinary share. See “Dilution” for a more complete description of how the value of your investment in our ordinary shares will be diluted upon the completion of this offering.

We may use the net proceeds in ways with which you may not agree.

We intend to use the net proceeds from this offering to open new boutiques throughout China and for working capital and other general corporate purposes. However, our management will have considerable discretion in the application of the proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our ordinary share price. The net proceeds from this offering may also be placed in investments that do not produce income or lose value.

There has been no public market for our ordinary shares prior to this offering, and you may not be able to resell our ordinary shares at or above the price you paid, or at all.

Prior to this initial public offering, there has been no public market for our ordinary shares. We expect our ordinary shares to be approved for listing on the Nasdaq Global Market. If an active trading market for our ordinary shares does not develop after this offering, the market price and liquidity of our ordinary shares will be materially and adversely affected and you may not be able to resell our ordinary shares at or above the price you paid, or at all. The initial public offering price for our ordinary shares will be determined by negotiations between us and the underwriters and may bear no relationship to the market price for our ordinary shares after this initial public offering. An active trading market for our ordinary shares may not develop in a timely manner or at all, and the market price of our ordinary shares may decline below the initial public offering price. If the price at which our ordinary shares are traded after this offering declines below the initial public offering price, you will experience a decrease in the value of your ordinary shares regardless of our operating performance or prospects.

If we are classified as a passive foreign investment company, our U.S. shareholders may suffer adverse tax consequences.

Generally, if for any taxable year, after applying certain look-through rules, 75% or more of our gross income is passive income, or at least 50% of our assets (generally based on average value determined on a quarterly basis) are held for the production of, or produce, passive income, we may be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to our shareholders who are U.S. taxpayers, including gain realized on the disposition of our ordinary shares being treated as ordinary income rather than capital gain and in punitive interest charges being applied to such sales proceeds. Rules similar to those applicable to dispositions apply to amounts treated as “excess distributions.”

We do not believe that we will be a PFIC for our 2010 taxable year based upon our estimates of income, the expected composition of our assets and the expected value of our assets as determined based on our anticipated market capitalization after this offering. However, because PFIC status is based on the composition of our income and assets for the entire taxable year, it is not possible at this time to determine whether we will become a PFIC for our 2010 taxable year until after the close of the taxable year. Therefore, we may become a PFIC for our 2010 taxable year or in any future taxable year. U.S. shareholders should consult with their own U.S. tax advisors with respect to the U.S. tax consequences of investing in our ordinary shares if we were to become a PFIC. See “Taxation — U.S. Federal Income Taxation — Tax Consequences if We Are a Passive Foreign Investment Company.”

If equity research analysts do not publish research or reports about our company or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our company. We do not control these analysts. The price of our ordinary shares could decline if one or more equity analysts downgrade our ordinary shares or if they issue other unfavorable commentary, or cease publishing reports, about us or our company.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

We make “forward-looking statements” in the “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections and elsewhere throughout this prospectus. Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we “believe,” “expect” or “anticipate” will occur, and other similar statements), you must remember that our expectations may not be correct, even though we believe that they are reasonable. We do not guarantee that the transactions and events described in this prospectus will happen as described or that they will happen at all. You should read this prospectus completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. Except for events or circumstances which occur up to the date of our prospectus, we undertake no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made in this prospectus, even though our situation will change in the future. Forward-looking statements include statements about:

our ability to attract and retain customers;

the anticipated benefits and risks associated with our business strategy, including those relating to our current and future product offerings;

our future operating results;

the anticipated benefits and risks of our key strategic customer relationships and strategic acquisitions, joint ventures and alliances; and

the anticipated size or trends of the markets in which we compete and the anticipated competition in those markets.

Whether actual results will conform with our expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond our control, and reflect future business decisions that are subject to change. Some of the assumptions, future results and levels of performance expressed or implied in the forward-looking statements we make inevitably will not materialize, and unanticipated events may occur which will affect our results. The “Risk Factors” section of this prospectus describes the principal contingencies and uncertainties to which we believe we are subject, which include the following risks: