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18 January 2013

Dear friends,

Thanks for your questions posted over the past week. I am happy to answer your questions online. I will repost the questions in blue italics followed by my comments in black.

Kenny the fish

Dear Ah Huat, you wrote:

Why are you going to Vietnam when everyone is going to Myanmar? Vietnam not doing well economically while Myanmar is just opening up.

Hi Ah Huat,

Happy New Year!

Qian Hu have been monitoring Vietnam for a while now. Our concerns are the high inflation, debt level and other economic issues that has deter foreign investor like us from investing in the country. We are still looking for the right opportunities to invest in Vietnam.

Myanmar has just opened up its door to the world. We have some business dealings with Myanmar. We will monitor the situation closely to see when we can invest in this emerging country.

Kenny the fish

Dear Jayster, you wrote:

The government is going to keep the foreign worker policy tight. Do you think the productivity drive is working? Is Qian Hu going to move its operation out of Singapore if the cost of operating in the country remains high due to rising labour and rental cost?

Hi Jayster,

Happy New Year!

Qian Hu has to innovate and raise its productivity in order to remain competitive in Singapore. Small medium enterprise like us have to find a way to increase productivity and make it work in order to survive in Singapore.

Qian Hu has not increased the size of its work force in Singapore for the past few years as we have invested in semi-automation systems using the latest technology to boost productivity. Rising rental and labour costs might not be the most challenging issues for us at the moment.

The length of the land lease from the government is a current challenge faced by Qian Hu. We are currently in active engagement with the government to have a clearer picture of the direction of the medium to long-term land usage programme for our industry.

Kenny the Fish

Dear David Tan, you wrote:

Your accessories business is doing well. What plans do you have to accelerate the growth of this line of business?

Hi David,

Happy New Year!

The potential of the accessories business is enormous. For every dollar our consumer spends on live ornamental fish, they will spend up to 5 dollars in accessories.

With our own innovative brands like the LumiQ series of aquarium, Qian Hu can market them to more countries globally and at the same time continue to expand the distribution networks for accessories in countries where our subsidiaries are located, such as China, Malaysia, Thailand, etc.

Kenny the fish

Dear Kelvin Ho, you wrote:

Instead of paying out dividend, why don't the company issue script dividend instead? It would help long-term investors who believes in the long-term prospect of Qian Hu by increasing their stake via script dividend.

Hi Kelvin,

Happy New Year!

The general feedback from our shareholders during the annual general meetings was they preferred dividend to be paid out in cash. I presumed many of our shareholders are retirees.

However, we are open to script dividend to reward our loyal shareholders in the future.

Kenny the fish

Dear Serene Chan, you wrote:

You have been talking about the China market for many years. Has the story changed? With a growing middle-class in the second largest economy in the world, what plans do Qian Hu has for China for the next 5 years?

Hi Serene,

Happy New Year!

The story has not changed. The growing middle-class in China is potentially an enormous market for Qian Hu and we are gaining momentum in our distribution in this country for our live ornamental fish and accessories.

Qian Hu's investment in China is currently sufficient. In the next 5 years, we will be concentrating in expanding our distribution network further into China.

Kenny the fish

Thanks again to all the investors who have posted their questions here. I hope I have answered them to your satisfaction. The next chance for us to correspond again will be the time when we announce our Half Year 2013 results. In the meantime, do feel free to visit our corporate website: http://www.qianhu.com/ and our IR website: http://qianhu.listedcompany.com/ for more information.

Take care and I look forward to our next online Q&A.

Kenny the fish