Better Cotton Initiative Promote Sustainable Development in Cotton Supply Chain BCI China Country Manager Sherry Wu

1 figure represents 100 million people 1996: 5.6 billion Source: IMF More People 2016:7.2 billion Source: IMF 2

World GDP Per Capita Economic Growth Outpace Population Growth $8,264 Source: IMF $10,422 3

At the same time, Sustainability issues related to Social, Economic and Environmental development are facing more and more challenges. Sustainability and Traceability becomes more and more important to Brands/Retailers and Consumers. 4

Global Cotton Supply and Demand Balance Sheet Million MT2012/132013/142014/15 June 2014/15 July BeginningStocks Production Supply Consumption Ending Stocks Stock/Use Ratio84.3%92.7%91.5%94.9% Source: USDA 5

China Cotton Supply and Demand Balance Sheet Million MT2012/132013/142014/15 June 2014/15 July Beginning Stocks Production Import Supply Consumption Ending Stocks Stock/Use Ratio140.0%177.0%164.0%170.3% Source: USDA 6

SWOT Analysis of Cotton Supply Chain In China Strength 1. Complete cotton supply chain 2. Advanced cotton textile machinaries 3. Complete cotton product categories, has competitive advantage in middle- to-high end products. Weakness 1. Increasing production cost 2. Big price gap between imported cotton and domestic Chinese cotton 3. Continuous appreciation of RMB 4. Cotton textile order transfer to other countries Opportunities 1. Increased population and higher consumption in textile products. 2. New policy of cotton sussidies 3. Transfe of the industry and new market development Challenges 1. Increasing pressure on environment protection 2. Increasing requirments from brands/retailers on sustainability and traceability 3. Collaboration of the entire supply chain on innovation 7

Why Better Cotton? Sustainability Traceability Facilitate collaboration of the cotton supply chain for innovation 8

Better Cotton 6 Production Principles Use water efficiently and care for the availability of water Care for the health of the soil Conserve nature habitats Care for and preserve the quality of the fibre Promote Decent Works Minimize the harmful impact of crop protection practices 9

10 100% BC Bale Products with associated BCCU (Better Cotton Claim Units) BCI membership not required Ginner Monitoring Guidelines SEGREGATION MASS-BALANCE ADMINISTRATIVE BCI membership not required Retailer clients monitoring requirements Registered BCI membership required Membership Code of Practice Trader Chain of Custody Guidelines Membership Code of Practice BCI membership required 100% Seed BC Farmer Better Cotton Tracer Better Cotton Chain of Custody 10

Better Cotton Supply Chain Event 11

Better Cotton Tour 13

BCI China Wechat Message Code 14

15 BCI Brands/Retailers Member

16 Brands/RetailersPublic Statements Targeting 100% Sustainable Cotton by 2015, among which most are Better Cotton 50% of cotton will be sustainable by 2020, most are Better Cotton 100% of cotton will be sustainable by 2020, most are Better Cotton 100%of cotton will be sustainable by 2020, most are Better Cotton 100%of cotton will be sustainable by 2020, most are Better Cotton BCI Brands/Retailers Member Public Statements

17 * BCI China Members(Part)

WHERE DOES BETTER COTTON GROW? CMIA Agreement 18

CountryStatus Number of Better Cotton Farmers Better Cotton Acreage(Ha) Better Cotton Lint(MT) ChinaDirect15,00065, ,000 IndiaDirect251,000461, ,000 PakistanDirect122,000412,400358,000 CmiA*Benchmarking460,000350,000180,000 Mali Strategic Partnership47,100154,70063,400 BrazilBenchmarking214295,000474,800 MozambiqueStrategic Partnership100,00063,33110,000 TurkdyStrategic Partnership60014,45027,400 KenyaStrategic Partnership67511, SenegalStrategic Partnership3,7092,3001,405 TajikistanStrategic Partnership3409,0008,400 AustraliaBenchmarking2127,40059,300 USAPilot Project , Global DataPrediction1,000,0001,876,6001,734, Global DataActual762,9811,551,5001,070, Global Better Cotton Supply(Projection)

2014 Better Cotton Projects In China Addchance SH Guoxin LF and SH Huitong Nongxi SH Luthai LF Jintian LF Solidaridad Huafu LF Cotton Connect SH Solidaridad Zhongliang LF Taichang LF XPCC No.5 LF Solidaridad VF SH and LF 20

21 * Summary Better Cotton is not only cotton ， but also 1. A mainstream cotton commodity which is sustainable and traceable while all other properties remain the same as traditional cotton. A major choice of many international brands/retailers on raw materials. 2. A solution for collaboration of the entire cotton supply chain for innovation. A platform to integrate resources and to provide business/learning opportunities to multistakeholders of the cotton supply chain. 3. A progressive system to promote equlity, transparency, inclusive and innovation. Encourage multistakeholders to make collective efforts towards sustainablity.

Better Cotton Better Future Thank you ！ 22