Maybe I missed it in earlier company announcements but I found...

Maybe I missed it in earlier company announcements but I found this statement in the latest quarterly to be very interesting:

”RLG has the exclusive rights to sell each brand into China both online and through traditional channels.”

So RLG is paid by its clients to market and sell their products in China AND is given an exclusive distributorship for the China market.

The significance of this should not be underestimated. RLG does not merely provide a middle man service in return for a measly fee. It actively participates in revenue and profit generation from the sales of its clients’ products in China. This explains the substantial top line growth that is being reported (ie. revenues capture the full value of gross product sales) together with the significant increase in inventories held and inventory purchase costs. At the same time RLG is paid certain fixed contractual amounts by its clients which covers (at least part of) RLG’s costs.

The implications of the above are that RLG stands to benefit massively from any of its brands that achieve success in the Chinese market, at relatively low risk or expense. Of course, the proof of the pudding is in the eating, and I believe we are already seeing these benefits come through.

All IMO and GLTAH.