Mainland television direct shopping is seeing a surge in demand after the market was dragged down by two years of consolidation, says leading player Acorn International. The Nasdaq-listed firm reported a 251 per cent increase in net profit to US$8.5 million for the first quarter of this year as revenue surged 37.3 per cent to US$90.7 million. Last year, the company posted a net loss of US$25 million as revenue fell 4.37 per cent to US$250 million. Acorn chief financial officer Gordon Wang said growth in television direct shopping soared after it was introduced on the mainland in 2000, especially in the five years to 2007, when the market was worth 10 billion yuan (HK$11.35 billion). By then, more than 100 companies were offering goods on television, with about 33 per cent of them including Acorn operating nationally and the rest regional players. Other well-known companies included China Seven Star, Hunan-based HappiGo and Shanghai's Oriental CJ Home. Despite the growth, mainland television shopping accounted for only 0.12 per cent of the nation's total retail sales in 2007, compared with 10 per cent in the United States. Consumer confidence was severely dented as some of the smaller players were selling low-quality or fake goods. 'Those small players violated the rules by selling fake products, taking the money and then closing down before they could answer to disgruntled customers,' Mr Wang said. In some cases, the goods being offered were bogus medical products with exaggerated claims about how they could help customers lose weight or gain height. This strongly affected consumer confidence in the whole industry. 'It took 20 to 30 years for the overseas television shopping industry to establish a self-regulatory framework, and China is also under such a process,' Mr Wang said. To rebuild consumer confidence, Acorn has implemented a money-back guarantee policy on all products it sells and customers will get a refund if they have valid complaints. The company has 100 staff at the call centre to deal with product returns. Acorn, which holds 17 per cent of the mainland television shopping market, has a two-tier strategy to lure customers. The company partners well-known mainland brands such as Lenovo Group, Konka and Gionee to sell consumer electronic products. At the same time, it offers proprietary products under its own brand name to broaden its product line-up. Mr Wang said proprietary products contributed 60 per cent of total revenue last year and mainland brands made up the remainder. One of the best-selling products was Ozing, an electronic dictionary for learning English that generated US$47 million in revenue. Acorn expects strong sales from this product line with increased contributions from its touch-reader learning product series this year. The company also boosted its exposure to cosmetic products, which grew 33.8 per cent in the first quarter to US$9.6 million. The Cobor brand cosmetics line was a popular item and surged the most in sales, rising 72.6 per cent in the quarter. Each month, Acorn attracts about 100,000 customers who spend on average between 800 yuan and 1,000 yuan a time. Repeat customers form 15 to 20 per cent of total users. Acorn spends 25 to 30 per cent of annual revenue on buying television airtime slots across the nation.