Tong Ren Tang Ltd., Tong Ren Tang Commercial and Baitu Information entered into the JV Contract, pursuant to which the parties agreed to establish the Joint Venture for engaging in the business of pharmaceutical e-commerce. The registered capital of the Joint Venture is RMB 50,000,000, of which the Company, Tong Ren Tang Ltd., Tong Ren Tang Commercial and Baitu Information agreed to contribute RMB 12,500,000, RMB 12,500,000, RMB 13,000,000 and RMB 12,000,000 respectively, representing 25%, 25%, 26% and 24% of the registered capital of the Joint Venture respectively. The parties shall make capital contribution to the Joint Venture in proportion to their respective shareholding within 30 days of the establishment date of the Joint Venture. The establishment of the Joint Venture can integrate the internal and external resources of the group system of Tong Ren Tang. It helps achieving optimal resource allocation and gradual formation of an integrated platform for Tong Ren Tang pharmaceutical e-commerce business, thereby expanding the brand influence and boosting online sales of products. This satisfies the Company's future business needs and further enhances the long-term development of the Company's business. The terms of the JV Contract have been arrived at after arm's length negotiations between the parties. The Directors (including the independent non-executive Directors) are of the view that the terms of the JV Contract and the transactions contemplated thereunder are fair and reasonable, in the ordinary and usual course of business of the Group, on normal commercial terms or better, and in the interests of the Company and the Shareholders as a whole.