In December 2010, the Company decided to outsource the operation and ownership of its direct sales stores to subcontractors who bear the risk of operations of the stores, and stopped selling third party products in such branded stores. As a direct result of above change, our gross margin rate increased to 69% in the first half of year of 2011, an increase of 31 percentage points from 38% for the comparable period of 2010.
We believe that the increase in sales in 2010 was primarily attributable to the successful implementation of our "New Agriculture-Generator" campaign, which was designed to expand our distribution network and to establish a closer relationship with farmers through agricultural cooperatives in the rural areas of China. To better facilitate our further development, we outsourced our direct sales stores beginning from December 2010. We will refer our super chain stores and outsourced stores together as "Xinsheng Shiji Branded Stores". We not only provide our products to these Xinsheng Shiji Branded Stores, but also provide training and other support services to establish customer loyalty and to attract new customers.