Progress in Related-party Transactions

To date, progress in related-party private placement transactions is as follows:

1. Equity transfer
Transfer procedures were completed on 9 Sept 2008. Relevant announcements can be found in the Securities Times and on the China Info website, dated 31 May 2008.

2. Bearing R&D Institute Restructuring
Due to land ownership issues, the restructuring of Bearing R&D Institute was not completed prior to the end of September 2008 as scheduled. Consequently, it was confirmed by Bearing R&D Institute that the restructuring will be completed before the end of October 2008.

3. Relevant audits, assessments and profit forecast
Preliminary work on relevant audits, assessments and profit forecast has been completed. If the restructuring of the R&D Institute is completed prior to the end of October 2008, the auditing, assessment and profit forecast will be completed prior to 20 Nov 2008.

Board of Directors
7 Oct 2008


Source: Securities Times

Date: 7 Oct 2008

CN01/ZZ/SW/BT/KM