At the 11th Meeting of the 4th Board of Directors, held on 18 Jul 2008, the following proposals were examined and approved:

1. a major related-party transaction
2. an Asset Swap Agreement signed on 16 Jul 2008 between Hong Kong Jialian Development Co., Ltd. and Shandong Hengli Hushan Machinery Science & Technology Co., Ltd., a subsidiary of the company.
Under the terms of the agreement, Hong Kong Jialian will use its 100% stake in Shandong Haisen Pharmaceutical Co., Ltd. with a contract value of RMB 28,330,454 as well as RMB 7.5 mln in creditor’s rights to Shandong Haisen, to repay a debt of RMB 24,233,844 owed to Shandong Hengli, while the shortfall will be made up by Hong Kong Jialian using its 20% stake in Xian Jiaoda Pharmaceutical (Group) Co., Ltd. based on a book value of RMB 11,596,609. It is also agreed that Hong Kong Jialian will be responsible for the gains and losses of the 20% stake in Xian Jiaoda prior to the completion of the asset swap, following which, the both parties will be free of debt.

3. personnel replacement of directors and senior managers
4. to hold the 1st 2008 Extraordinary General Meeting of Shareholders on 7 Aug 2008 to examine the above-mentioned proposals

Board of Directors
22 Jul 2008


Source: Shanghai Stock Exchange

Date: 22 Jul 2008

CN01/FL/SW/BT/KM