In order to improve the company's competitiveness in the LCD TV industry and improve the profitability of its LCD TV business, the company will invest RMB 886 mln in the LCM LCD model project with an annual output of 2.4 mln units per work shift, including eight LCM production lines. A project company, Konka LCD Models Co., Ltd. (tentative name), will be established with the company's own funds in cash. The registered capital of Konka LCD Models will be RMB 350 mln.

A related proposal was approved at the 14th Meeting of the 6th Board of Directors, held on 27 Aug 2008. The above-mentioned investment does not constitute a related-party transaction.

The above-mentioned investment can reduce the company's costs, improve flexibility in product design and diversify production range . The company has reached an agreement with LCD manufacturers on LCD supply and can thus effectively minimize risks in its supply chain.

Board of Directors
28 Aug 2008


Source: Securities Times

Date: 29 Aug 2008

CN01/ZZ/SW/BT/KM