Sales in the first quarter of 2011 generated only 15.3% gross margin, far below our target margin of 45%. In contrast, sales in the first quarter of 2010 generated 37.3% gross margin. The gross margin was adversely affected by the decline of our equipment business, which lost more than one dollar for every dollar of sales. However, margins from our printing business also remained far lower than optimal. Our business plan contemplates that gross margin from printing services will average approximately 45%, albeit within a range of 35% to 50%, depending on the components of the business. In recent periods, however, three factors caused margins from printing operations to fall below that standard: The disruption in the Chinese banking industry and the rise of strong competition in our field have forced us to price our products much more aggressively; we have experienced sharp increases in the prices of certain raw materials; and the reduction in our sales volume led to inefficient use of the new larger facility.
As the Chinese banking industry is moving towards stabilization, our expectation is that we will be able to revive our sales growth. The increase in competition and pressure from rising raw material costs, however, will challenge our ability to return our printing operations to the levels of profitability that they sustained prior to the international credit crisis.
Xinyinhai Technology today announced after passing strict evaluations, Harbin Golden Sea Technology Printing Co, Ltd., a subsidiary of Xinyinhai Technology, successfully won the national bid held by Agricultural Bank of China (ABC) on March 14, 2011, which will generate RMB 2 million (or $250,000) in sales income. Harbin Golden Sea has been specialized in the financial printing industry for more than ten years, boasting advanced printing facilities, production technology and enjoying a very good reputation among clients. All of these contributed to this successful biding of the company. This success will bring a 10% increase in company's sale volume for 2011.
ABC is one of the largest state-owned banks in China and has the most service stands in China. Its businesses cover most of the cities in China. Since its establishment, Harbin Golden Sea has been shaping a trustworthy image by providing high quality products. It has maintained very good cooperative relations with large financial agents in China, including Agricultural Bank of China. Harbin Golden Sea has won the bid and will enjoy an increase in both sales volume and market share. "Congratulations to the big success. We owe this success to the continuous great efforts of the staff. This also proves our strength. We are full of confidence in the future of our company. This success is just an excellent beginning for the year 2011."