Caroline Dong - Investor Relations Vincent Qiu - Chairman and Chief Executive Officer Beck Chen - Chief Financial Officer.

Eileen Deng - Deutsche Bank Monica Chen - Credit Suisse Binnie Wong - Merrill Lynch Hong Kong Joyce Ju - Citibank Cheng Li - CICC Nicky Ge - China Renaissance Billy Leung - Haitong International Ryan Roberts - MCM Partners Wendy Huang - Macquarie Tian Hou - T.H. Capital Beijing.

Hello, ladies and gentlemen, and thank you for standing by for Baozun's fourth quarter 2017 earnings conference call. At this time all, participants are in a listen only mode. After management's prepared remarks, there will be a question-and-answer-session. As a reminder today's conference call is being recorded.

I would now like to turn the meeting over to your host for today's call to Ms. Caroline Dong, Investor Relations Officer. Please proceed, Caroline..

Thank you, operator, hello everyone and thank you for joining us today. Baozun's earnings release was distributed earlier today and is available on our IR website at ir.baozun.com as well as on the Global Newswire Services. On the call today from Baozun are Mr. Vincent Qiu, Chairman and Chief Executive Officer; and Mr.

Beck Chen, Chief Financial Officer. Mr. Qiu will review business operations and company highlights, followed by Mr. Chen, who will discuss financials and guidance. They will be available to answer your questions during the Q&A session that follows.

Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terminologies such as will, expects, anticipates, future, intends, plans, beliefs, estimates, targets, going forward, outlook and similar statements.

Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law.

It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Mr. Qiu, please go ahead..

Thank you Caroline and thanks everyone for joining our earnings call today. We deliver another outstanding quarter of financial and operational results as we are increasingly benefiting from our long-term competitive advantage. Total GMV increased by 75% making the eight consecutive quarter that our GMV has grown by more than 50%.

Non-GAAP operating net margin was 12.1% more than double from a year ago. I believe this solid growth momentum is the direct result of our long term strategy to develop and innovative technologies, optimizing existing online store operating efficiency and the improved customer and the brand satisfaction.

We closed out the year with a number of front runners increasing to 152 from 133 as of the end of 2016. The newly added brands are mainly in apparel, cosmetics and home and furnishing categories, and we are predominantly under non-distribution business model.

Our business pipeline for 2018 remains strong and includes apparel, cosmetics, luxury products and FMCG brands as well as leading global sports preference, sportswear brands and the leading global home furnisher brand. To maintain healthy growth, we are consistently redeveloping new relationships with high-quality winning the partners.

Technology continues to play a central role in our strategy and it further solidifies our competitive advantage, improves brands satisfaction and the operational efficiency, and increase a significant variable entry for other players. The innovation center we established during the second quarter of 2017 continues to make solid progress.

We completed development of several standardized modules focused on analyzing big data, improving operational efficiency and the further integration all of our solutions. Trial operations will begin shortly where we will further optimize this module say progress through the various front or estimate.

We will continue to invest in technology, not only for growth our existing business, but also to nurture new and the innovative businesses and to solidify our long-term competitive advantages.

We will also further strengthen and expand our portfolio of omni-channel e-commerce solutions by further integrating all those solutions due to this social commerce tools and the developing products for emerging marketplaces.

We are committed to anticipating and to satisfying the needs of our brand partners and the rapid growth of new marketplaces has created new opportunities which were taking a full advantages of.

We continue to feel upon the progress of our digital marketing services made throughout the caller by continuing to develop highly relevant personalized content and the community driven experiences.

In that condition of our big data analysis capabilities and the in depths understanding of consumer behavior, we won three awards during the first Alibaba Databank competition and the several more at a Golden Wheat Award and fifth Mawardd, M-awards.

I believe these results demonstrate the enormous progress we have made in building out our high quality digital media business, which is on par was our global peers.

We will continue to strengthen our competitive advantages in digital marketing services which I am confident will help us to develop new relationships with brand partners and to deepen existing ones.

We are in the final stages of trial operations before launch of our warehouse in Chengdu, which we will further expand our logistics network in Western China. This new warehouse will focus on efficiently distributing to 10 provinces in Western China.

In addition to our warehouses in Suzhou, Hong Kong, Guangzhou, Beijing, the Chengdu warehouse will seamless s exists into our overall e-commerce logistic network in China. The geographic expansion of our warehouses we will provide our brand partners info resources to reduce transportation cost and the lead-time to core western cities.

Overall, I'm very pleased with our outstanding performance during the quarter. Our long-term strategy is to give these solid results and I look forward to further expanding our portfolio of services and the development [Audio Gap]. A few housekeeping items in advance.

We believe year-over-year comparisons are one of the most useful ways to judge our performance. All percentage changes that I'm going to give will be on that basis. Now let's start to review the financials. Total GMV during the quarter increased by about 76% to RMB8.4 billion.

Our focus remains on growing our non-distribution business, which saw GMV increased by 93% this quarter. We will continue to optimize our business model mix towards the non-distribution model going forward.

The increase of distribution GMV was primarily due to the strong same-store sales growth and the increasingly effective marketing the promotional campaigns, which were partially offset by the transitioning of the leading electronic brand business to the non-distribution model.

The total net revenues increased by 23% to RMB1.6 billion, breaking down further, products sales and revenue increases slightly by 1.5% to RMB783 million, in line with the distribution in GMV growth. Services revenue rose by 56% to RMB783 million during the quarter.

The increase was primarily attributable to the rapid growth of our consignment and service fee business model, and in particular, growth in sales of existing brands harness and addition of new brand harness in the apparel categories.

On an apple-to-apple basis excluding the costs of media procurements from services revenue in both Q4 2017 and Q4 2016, services revenue during the fourth quarter of 2017 grew by 69% on a year-over-year basis.

Total operating expenses were RMB1.4 billion, cost of products decreased to RMB630 million, primarily due to the transitioning of a leading electronics brand partners from our distribution model to the consignment model and the improvements in margin of product sales, which were partially offset by increased the product sales and revenue in the home appliance categories.

Product sales gross margin significantly increased from 11.9% to 19.5% during the quarter. Procurement expenses rose to RMB340 million mainly due to the increased in G&A cash distributing from our consignment model and the warehouse rental expenses.

Sales and marketing expenses rose to RMB343 million primarily due to the recruitment of online store operational staff and promotional and marketing expenses associated with our company operated online stores. Technology and the content expenses rose to RMB45 million.

The increase was primarily due to the increased investments in our technology team and newly established innovation center and the development of innovative technologies including recruitment of additional technology and focused staff, and the product manager.

G&A expenses grow to RMB33 million increased was net primarily due to an increase in administrative staff, corporate strategy experts and business planning experts. Income from operations increased to RMB176 million while operating margin improved significantly to 11.2%, compared with 4.9% in the same quarter of last year of last year.

Non-GAAP income from operations were RMB190 million an increase when compared to RMB72 million in the same quarter of last year, while non-GAAP operating margin improved significantly to 12.1% compared with 5.7% in the same quarter of last year.

In Q4, net attributable to Baozun ordinary shareholders rose to RMB147 million, an increase of 139 % from the same quarter of last year. Basic and diluted net income attributable to ordinary shareholders per ADS was RMB2.67 and RMB2.48 respectively compared to RMB1.20 and RMB1.11 respectively during the same quarter of last year.

Non-GAAP net income attributable to Baozun ordinary shareholders rose to RMB161 million an increase 128% compared with the same quarter last year.

And basic and diluted non-GAAP net income attributable to Baozun ordinary shareholders per ADS were RMB2.93 and RMB2.73 respectively compared with basic and diluted non-GAAP net income attributable to Baozun ordinary shareholders per ADS of RMB1.38 and RMB1.26 respectively, for the same period of 2016.

That completes the profit and loss statement for the quarter. As of December 31, 2017, the Company had RMB557 million in cash, cash equivalents in the short-term investment. A decrease from RMB957 million as of December 31, 2016 due to investments in our logistic based technology and higher accounts receivables.

Looking forward for the full year 2018, we expect GMV to grow to over RMB30 million and total revenues to increased over, to over RMB5.1 billion on a year-over-year basis. Turning to the specific revenue guidance for the first quarter of 2018, we expect total net revenue to be between RMB860 million and RMB890 million.

We started to provide growth guidance was services revenue last year as in September 2017, it begun transitioning a leading global electronics brand partner’s business around the distribution model to the consignment model. The impact from this transition will stretch another nine months into the third quarter of 2018.

And just as a reminder, under the distribution model, we recognize revenue on growth basis as product sales revenue because we take ownership of the inventory. Under the non-distribution model, we only recognize revenue on a net basis as services revenues.

So for the first quarter of 2018, we expect services revenue to increased by over 50% on a year-over-year basis, this concludes our prepared remarks. Operator, we're ready to begin the Q&A session, thank you..

Thank you. We’ll now begin our question-and-answer session. [Operator Instructions] The first question is from Eileen Deng at Deutsche Bank. You're line is open. Please go ahead..

My question is mainly regarding the guidance.

Wondering what the first quarter revenue implied a overall GMV growth rate? And my second question is on the progress of getting Adidas, Tmall and the JD storefront on board, want to check when is possible timeline and whether your 2018 full year GMV guidance has already included any expectation of Adidas GMV later this year?.

Thank you for the question Eileen. So for the first question we, naturally, we don't -- we don't guide at the Q1 GMV, we only guide the full year GMV as in the past.

So generally I think you can refer to the GMV growth rate for the full year as a reference for Q1 I think, and in terms of the bidding at what where brands we're in talks with, yes right now we are still in talks with them.

And for our GMV guidance we have given for the full year which is over RMB30 billion, we did not count a single dollar into the guidance. So and hopefully we can get the deals done as soon as possible, the overall GMV contribution will be additional to the total GMV amount..

The next question is from Monica Chen at Credit Suisse. Your line is open. Please go ahead..

I have a follow-up question on the 1Q guidance. So can management provide more break down on the 1Q GMV guidance like how much is contributed by our co-existing brands versus like the newly acquired brands? That's my first question.

My second question is regarding, I want to know like what is our top priority in our business for 2018 because we see in 2017 we launched a range of omni-channel marketing initiatives and we would set up in major innovation center for IT investments.

Just wondering whether it our priority strategy for this year?.

Okay, so Monic, let me take the first question first and Vincent should be able to answer your second question later on.

So for the first question, we believe that as in the past our current quarter is contributing whereas deal mainly coming from the existing brands same-store sales growth, which we have very tough then to gain the at least from the first from the first from that for us as two quarters, we have grown.

From the first two amounts we have closed this year and also from the explanation of March includes pretty well. So basically new brand mutually when we take new branding on board usually, it takes time for them to be contributed meaningful revenues or G&As..

Okay, Monica, this is Vincent. I will take your second question. As you may know actually to our businesses, there are two very important parts of business. Firstly, it's about this business, which is -- we have the existing brands working with us, and we are continued to develop new brands.

From the beginning of this year, we see this quite positive because we have healthy same-store growth means that these existing brands are quite healthy growing with us and also we have very healthy pipeline, which means that that we can expect more and more better brands to join Baozun's portfolio to work with us.

So that is always the first part means that we just continue to grow the existing business model. The second part will be more above create, we are actually creating more values, new services, through technology and then we want to inject all this kind of results into the existing business and trying to find a new way to do more in a market.

So generally there are two kinds of -- two sides of our business. So then I think the priorities still the first part growing the current business healthily and also going new brands onboard, so that is a priority..

Next question is from Binnie Wong at Merrill Lynch Hong Kong. Your line is open. Please go ahead..

So my first question is that related to the overall brand particularly from the service model is slight down this quarter right from 12% to around 10% this quarter.

Just wondering that, what are the reasons to receive it? Is this something that is more temporary? Or is this something that is going to be trend that we should expect? And then I have a follow-up question on the two initiatives that we have out and asked that last year on the NEBULA+ SaaS.

I remember we said that was an expansion of our existing NEBULA platform and that can help for some standardize the process to support the brands on their operations.

So I just wondered that how there has been progressing in terms of the number of brands they're adopting out upgraded SaaS using it? And how should expect in terms of the revenue contribution? And then our next question is on the margin trend.

Longer term, I think we constantly have been hearing about investor will be asking around in terms of undergo. How the Company expect the margin trend in terms of the operating leverage see as a service firm? And then just wondering that given this quarter's improvement here, how we should look at that going forward.

Thank you and then I also have a follow-up on the Databank, but can you just take those two questions first. Thank you..

Okay, let me address your first and the third question first, Binnie.

So for the blended take rate of the non-distribution model, basically I think it's temporary because we have the income strategy of this from distribution to non-distribution like the leading electronic brands which will -- partially which will dilute calculated blended take rate on paper, but generally we think for each category of each brand, they are growing healthy.

For the third question about the margin trend infusion operating leverage, as you can see in Q4 and also for the year of 2017 compared to the same quarter last year or compared to two year 2016, we’ve seen that and margin growth and operating leverage is there and in terms of the item for expense in the sale and the marketing sense is for the full year base we think.

We’re confident to achieve operating leverage in 2018 and but we were in that in technology expenses just we -- just as we have emphasized in the prepared remarks because we think technology is the future of the Company. So, we are dedicated to investing more for the operating profit on expenses.

So -- but for the other major benefit in margin, we think we have achieved four advantages there and operating leverages there. So for the second question, I will pass to Vincent..

Hi, Binnie, Vincent here. Talking about the new product and software releases will be always very exciting thing. Actually, we just internally announced the new release of NEBULA+SaaS and we're expecting a very good result from the intensive testing arena undergoing. So, we’re quite excited and very satisfied that this new version of the software.

So in new release, we have more modules, the software is more configurable and also more maintainable, which means much lower given cost. So this give us a very good possibility to deliver more and more, much more front side in the existing team and capacity.

So we make a lot of breakthrough in not only the functions but also the capacity of the software. We’re expecting the testing results but we’re quite confident that we can make a breakthrough investment of the software..

Just want to follow up here, is that in terms of anything quantitative that in terms of the partners or maybe you see potentially, what percentage of our client base would be willing to adopt this program? Or do you think is more incrementally new brand partner this time with us maybe some smaller size or smaller middle sized brands might be more preferably signing up with us? Just want to get some color on that in terms of the business development here?.

Again it's also very good question, and we actually divided the software in the two parts, one is for the largest brands and the other version is for smaller brands, which all based on the same foundation for the new clients, no matter it's big or medium sized or small, it will all goes to the new release, that is one thing.

The other thing is the existing brands, we are up to them and showcase the lower maintenance cost for them and a lot of new functions we are winning through them, so I believe that most of the plans we will have a very strong intention to start in to the new release of the software..

The next question is from Joyce Ju at Citibank. Your line is open, please go ahead..

I have two questions my first question is regarding our sales and marketing services. Of course Vincent early mentioned that we have won a couple of awards in the Databank, like the Databank competition.

So could you elaborate more what we have done currently with our clients? And any feedbacks and what kind of like potential financial impact we should we expect for Baozun? And what kind of like value add that we provided and which we believe will have business potential? And my second question is regarding the software product Vincent just introduced, wonder are we going to add any like specific like sell stuff just try to sell those software's to clients like operating clients or our existing clients? Is it going to cause like higher sales and marketing like revenue sharing maybe at the beginning and then because as a soft product they are later recovering revenue?.

The first one, marketing -- sales and marketing service, yes, we are working very closely with platforms like Hemo because cloud business are being conducted there, we just want to do it in a smarter way, so that's why we are working with Alibaba to develop jointly, some of the solutions as shop care or customer experience management, so we have the first batch out there, Databank concerting service team and also we deliver software to make the marketing more accurate than before.

So, that's majorly we are working with our brands and also Alibaba platform trying to bringing a better marketing efficiency to the clients.

So, talking about the financial impact, we are very satisfied with the results, the marketing teams have achieved throughout the year because firstly throughout the year we have built up a lot of capabilities as one thing which can help us, not only helping the brand, but also give us a better potential higher profit maintain capabilities as well.

So I think this already start to impact or financial results. But we believe that this year, the effect will be much more stronger than before. So value add of course, in the past 10 years on marketing has not been integrated with the sales activities yet.

But starting last year we combined to efforts very tightly to enable one-stop shopping for the brand e-commerce teams. So we make all the marketing dollar, supply chain, retail efforts much more efficient than before. So this one, we are achieving rapidly in the market.

The second question about the software, yes, we actually have a lot of different offerings not only besides the NEBULA+SaaS and a lot of other offerings. I think this all faced a much stronger research and development fee and also technology fee, they’re much stronger than before.

No matter about the technologies we are going, but also the engineering and the finished products, related services and consulting solution package. Or this kind of thing is delivering very good results. So I think in the future, we will see more and more at this kind of product solutions in the market.

We also have a new round of e-commerce submit this year. So in this year, in May, all sites the market were see a lot of technology and products announced and releases during the event..

Yes. Add more color, we started your higher some sales staff, sales team and that compare. We think the mix R&D is core of the software product. So compared to the R&D expenses sales expenses are very small..

Understood. Just one quick follow-up.

I wonder, have we ever helped any our brand customer already started to establish WeChat Mini Program store? Or is there any product in our technology teams like current development plan, which is something involved in Tenzing like e-commerce ecosystem?.

We keep putting a lot of efforts in the emerging markets, in the industries platforms, like yes, what you mentioned today, the WeChat Mini Program. We are doing a lot of different things with different brands on Mini Program platform. Just ask we did before in even [indiscernible] our other emerging platforms.

So in this case, we are working for the brands and on the mainstream that’s wants today, but also the potential other platforms. So you maybe not only together sales number, but also a good way to engage with consumer.

So yes, we are doing, we are maybe the most active player bringing the brands toward with new social media, social e-commerce platforms..

The next question is Cheng Li at CICC. Your line is open. Please go ahead..

Could management share with us more color in the development of our innovation center like, which stages are you in currently for new product development and when could we expect new products to come in to the market and make revenue contributions? And also could management share with us your thoughts about the competition landscape for this market, by focusing on those small to midsized brands after these new products coming out?.

Yes, as I mentioned we have much stronger R&D and engineering team than before, so that is a base we can keep developing and releasing new products. So it is not different, we have the full product line and a product roadmap.

So each of the product offerings are in different stages, some of them have already been released and you know in the stage of commercialization stage, others may be still in very stage in technology development stage.

So different products are in different stages, but you know --so it is a not a one-time effort this will be a very continuous efforts along with development of the Company. We have delivering a lot of products as we planned.

So the second question about the product offering, yes the product offering actually only evolves with the small medium brands or merchants.

We -- our product offering is the full range of product offering including all those of value added packages working for the plus 1000 brands, working to add value to the existing portfolio of our front runners and also they're some of the plans working you know with wide range of new customers including the small medium ones.

So we have a full range of product offerings as planned..

I just have a very quick follow-up.

Could management share with us, what do you think the competition landscape would be for those new products when they come into the market?.

Yes, so Baozun is not a pure software play, so we are strong in operating the brand and merchant's e-commerce business and also digital marketing services.

So all of our software in the services offering will strongly in line with the other services we are providing to our clients today including the operations, customer service, logistics and procurements all these kind of services.

So we believe by adding the technology into the combined technology offerings with the existing other service offerings, we can be more and more strong in helping the big or small medium sized brands to be more successful..

The next question is from Nicky Ge at China Renaissance. Your line is open. Please go ahead..

I have two questions here. Number on is that the take rate, actually, I think out take rate has been diluted in a cash especially number one by the electronic brands, strong corresponding electronic brand; and number two, by the other key brands model shift.

Going forward in the 2018 I guess there was I guess some impacts on the first of three quarters due to model shift to better because amendment share about the outlook for 2019.

Are we expecting a stabilized services revenue take rates from there that's? I remember one question and my second question is about the warehouse, we have newly rented in Chengdu.

What is the financial impact on the financials in the near term?.

So for your first question for 2019, we expect to generate the take rate for the full-year will bounce back, and we should not be impacted to the net of the impact by any venues transitioning in 2019.

and in the same time with more operating just like technology offerings and marketing offerings to provide to our brand partners our overgrowth value add -- our overload value added that to the brands will be larger than today. So that's why we believe over road the take rate will bounce back in 2019.

And in terms of the second question it's about the investments in Chengdu warehouse, for time being the Chengdu warehouse is the regional distribution center which is small compared to the current our centralized distribution center in Suzhou.

So, the investment in the single warehouse is not so much but we may cause usually for the first quarter it's relative being in terms of days volume it's lower to compare to the upcoming three quarters in the year. So it may take-- we may have some investments pre-investments in procurement expenses for this warehouse, but not so much..

Thank you, Beck. I have a follow-up on the housekeeping question.

What is the same-store sales growth for this quarter?.

The same-store sales growth for fourth quarter is 60%..

The next question is from Billy Leung at Haitong International. Your line is open. Please go ahead..

The first one is on the cash flow. The cash flow for this quarter was actually quite strong mainly do I get a public equity and sort of lack of investments. So I just wanted to get an idea of our outlook for our cash flow.

Is this going to be invested back into our business? Can management share, maybe the 2018 CapEx plan and where it will be spent? The second question is, just simply on Shopdog product. My understanding is that one of our major clients are using it.

Are there any more clients that are planning to sign up for Shopdog? And do expect Shopdog to be a major product for us in a meantime or anytime soon?.

Thank you, Billy. Let me take the first, in terms of outlook for the cash flow. In 2018 for CapEx, as you may know we have spent like $40 million in 2017 to purchase land use right and properties on that for the warehouse capacity and we don’t expect that to have in 2018.

And in terms of the general CapEx item including furnishes purchase and electronics and servers, generally we think that's in line with the year of 2016 and by a reasonable growth of our GMV. So this is just a general outlook..

Okay, about the second question about Shopdog, actually Shopdog is part of the offerings of our omni-channel solution. It is quite front end who cut this Shopdogs more likely a machine or a device plus software in store, in physical store. But this we can enable online, offline integration, so that is our Shopdog.

We actually start to have the plans with omni-channel solutions very early than the other players. So Shopdog has to be a part of that solution, so we developed this solution for them.

But right now in the market more and more of the new retails, new retail solutions are emerging so a lot of similar devices are how to say, from end devices I think developer.

So right now, our focus is always in very much middle ended or backend focus, so we work with Shopdog with major clients, and we can also work with other device suppliers for the physical store integration. By this, we can integrate a lot of very good, solution to gather to make the progress faster than before. So that is about the Shopdog.

Right now I think we have made -- we focus on the middle end and back end, and we make a lot of progress in the inventory management, order routing, supply chain efficiency, very big progress on that. So as whole solution, they bought this omni-channel solutions getting stronger and stronger..

The next question is from Ryan Roberts at MCM Partners. Your line is open. Please go ahead..

My question actually is on R&D CapEx spending, you've talked a lot of some of the initiatives that you’re pushing forward this year.

I’m sort of curious if you can give sense of how we should expect that to shape up kind as you looking to 2018 and product wise a bit I'd say product down the line?.

In terms of the R&D expenses, we expect the growth will be reaccelerating compared to the past several quarters of last year, so generally on the growth rate will be bigger than all of the other expenses items, like sales and the marketing, procurement expenses and the G&A, so this will be our major focus in the coming years..

And just kind of one quick follow-up, on the balance sheet which we saw receivables employed a little bit, sort of double check with those all employed after the quarter?.

Yes, you are right, so generally we have big quarter in Q4 and usually we need to settle with those brand partners and collect the money back in the first half of next year, so which is the first half of -- which is Q1 and Q2 of 2018, so generally it all include conditions..

And just one small kind of follow-up from me, could you please clarify I didn't quite catch it in your opening remarks, your breakdown kind of in the revenue guidance for Q2.

Could you please repeat that?.

For the -- okay, so for Q1 revenue we expect that the net revenues to be between RMB860 million and RMB890 million, and for the Q1 services revenue we expect to grow over 50% on a year-over-year basis..

That's five, zero, correct?.

Yes, five, zero, yes..

The next question is from Wendy Huang at Macquarie. Your line is open please go ahead..

Can you please give us some insights as to trends are, average value per contact or per client year-over-year base? And as we see more clients adopt full services model, Baozun is moving up the value chain, so we expect to see that margin expansion as a percentage of GMV, so with respect the margin expansion to accelerate this year, and if not, can we -- or can you elaborate the areas that you plan on accelerating the spending?.

So, Wendy, in terms of margin after procurement and sales and marketing expenses which is more directed to the general GMV businesses, we think we can keep the higher growth rate just like last -- just like 2017.

But as we mentioned and emphasized that we plan to invest in R&D expenses and technology and content expenses for the coming years, so which may certainly which may impact our earnings, not grow too -- so much fast, but still is fast but not so much fast, but we invest for the future and invest for the long term, so we think we need to keep to -- keep investing in technologies..

The next question is from Tian Hou at T.H. Capital Beijing. Your line is open please..

The question is related to your brand partner development. So in Q4, you did add brand partners and may we know who those newly additions were? So that’s the number one question. In your Q1 guidance, what is the brand addition in your assumption for your Q1 guidance? That is also the second one. The third is also related to brand partner.

In 2018, do you have a target? How many new brand partners, do you plan to develop. That's from my brand partner question. Thank you..

Okay. So, Tian Hou, so let me addresses two questions. So for the first question in terms of the brands addition in 4Q, Q4 2017 is mainly apparel, accessories, mother and baby products and the home furnishing products categories.

In terms of, your second question in general as with the, as the thing will disclose, so we expect for year 2018, we can have around 20 new brands on board. And then in terms of the new brands on board in Q1, I think generally, the pattern show the similar to the past years..

So Beck what’s the pattern? So in Q1, you will at less partners and in Q4 you add more is that the pattern?.

Net necessarily. So generally like, I think generally UK and estimate this like 3 to 4, around the 3 to 4 for Q1 and I think for more in Q2 and maybe less in Q3 or Q4..

As there are no further questions, I would like to hand it call over back to Ms. Caroline Dong for closing remarks. Caroline, please go ahead..

Thank you, operator. In closing, on behalf of the entire Baozun management team, we’d like to thank you for your interest and participation in today’s call. If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call..

This concludes our conference call. Thank you all for attending. You may disconnect..