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Competition / Competitors We sell all of our products in highly competitive markets. The principal bases of competition in the cosmetics direct selling industry are price, quality and range of product offerings. On the basis of information available to it from industry sources, management believes that there are a significant number of companies (including both direct sales and cosmetic manufacturing companies) that sell products that compete with our products. Several direct sales companies compete with us in sales of cosmetic products, and at least two such competitors, Mary Kay and Avon, are substantially larger than us in terms of total independent salespersons, sales volume and resources. In addition, our products compete with cosmetics and toiletry items manufactured by cosmetic companies that sell their products in retail or department stores. Several of such competitors are substantially larger than us in terms of sales and have substantially more resources. We also face competition in recruiting independent salespersons from other direct selling organizations whose product lines may or may not compete with our products. We believe that our senior management team with a strong direct selling track record, motivated direct sales force, prestige quality product lines, product development capabilities, geographic diversification, short delivery cycle, and manufacturing technology are significant factors in establishing and maintaining our competitive position.