INTRODUCTION OF EAST HOPE

BACKGROUND

East Hope originated in 1982, and is one of the first-generation family businesses in the People’s Republic of China. The founders, Mr. Liu YongXing and his three brothers, accumulated 1,000 RMB and started a company called the “Hope Group.” The business consisted of raising quail and hatching chickens in the Sichuan Province. This original “Hope Group” was restructured in 1995, and now exists as four separate entities owned by Liu and each of his three brothers. Mr. Liu YongXing’s business is called East Hope, which includes the main holding company, East Hope Group Co., Ltd. and many other subsidiaries throughout China. In 1999, Mr. Liu relocated East Hope’s headquarters to Pudong, Shanghai.

AGRICULTURAL INDUSTRY

East Hope’s main business is in the agricultural field, with its primary focus in animal feed and its upstream. It is currently one of the largest feed producers in P.R. China, with 70 feed manufactories in China, two in Vietnam, and more on the way. In addition to continued international expansion, one of East Hope’s next strategic plans will be to vertically integrate its feed business with Lysine production.

The East Hope Group is currently one of the largest feed producers in P.R. China, with a team of nearly 10,000 employees and over 70 feed manufactories.

East Hope manufactures over 100 different kinds of animal feed, such as pig, chicken, duck, fish, shrimp, and cattle feed. In addition, East Hope has over ten well-known brands: XiWang (Hope), QiangDa (Strength), JinDou (Gold Bean), YongXing (Forever the Best), HongMen (Red Gate), etc. With these various brands, East Hope generates more than RMB 3 billion revenue annually, making it one of the leaders in the Mainland animal feed industry.

In 2000, East Hope began its overseas expansion. It currently has two animal feed plants in Vietnam and a fishmeal plant in North Korea. The next step for East Hope is to establish 100 new feed plants, half of which will focus on markets outside of China, such as in Southeast Asia, Latin America, and Africa.

A crucial component in animal feed is the amino acid Lysine. There are only a handful of companies in the world able to produce this essential ingredient for feed uses. One of East Hope’s next step strategic plans will be to vertically integrate its feed business with Lysine production. After a successful trial-production plant in Beijing, East Hope is in the process of building another Lysine plant in Inner Mongolia. This plant has a total investment of RMB 200 million, and will be one of the major Lysine projects in China. The Inner Mongolia plant is scheduled to be in operation in 2006, with an initial output capacity of 20,000 tons, and an annual production scale expected to reach 200,000 tons at full capacity.

HEAVY INDUSTRY

The East Hope’s secondary business focus is in heavy industry. Currently, East Hope operates two aluminum smelters, one in Shandong province and the other in Inner Mongolia, with a total annual aluminum output of 660,000 tons. In addition, East Hope is in the very last stage of building an alumina plant in Henan Provence.

In January 2002, the East Hope Group invested RMB 1.5 billion into a joint venture with the Shandong Xinfa Aluminum Company. The resulting aluminum manufactory produces 160,000 tons of aluminum annually, and has created thousands of job opportunities locally. At present, this is one of the largest “Glorious Cause” endeavors in China, and is highly supported by China’s Glorious Cause Association.

In December 2002, East Hope invested an additional RMB 10 billion into a second aluminum manufactory in Baotou, Inner Mongolia. The project will be completed in the year 2008, and is designed with an annual output of 500,000 tons. Currently, the plant has already reached a production level of 250,000 tons. In order to provide sufficient low-cost energy for these aluminum plants, East Hope has also built two thermal power generation plants with a total 1320 Megawatt Capacity.

Alumina is the raw material for producing aluminum. In June 2003, East Hope invested RMB 4.59 billion into an alumina production joint venture with overseas investors. This manufactory has a production capacity of 1.05 million tons of alumina a year. The first phase of the project will be in production in early 2006.

When these projects are completed, East Hope will likely to be one of the largest and most cost-efficient aluminum and alumina producers in the world. Needless to say, these enterprises will be making enormous contributions to the local economies and to the overall development of Western China.

FINANCIAL INVESTMENT

East Hop’s financial investments currently include managing portfolio interests in China MingSheng Banking Corp., Ltd. (MingSheng Bank), MingSheng Life Insurance Co., Ltd. (MingSheng Life), Shanghai Bright Dairy & Food Co., Ltd. (Bright Dairy), etc.

MingSheng Bank was founded in Beijing on January 12, 1996, mainly by non-state-owned enterprises. It listed its A-Shares on December 19, 2000 at the Shanghai Stock Exchange, under the stock code 600016. The Bank has already established 20 branches all around China, with the total number of banking outlets growing to more than 200 units. MingSheng Bank has also established correspondent banking relationships with 749 overseas banks, in 78 nations and regions around the world. As of June 2005, the Bank has reached total assets of RMB 512.335 billion, with RMB 1.977 billion in profit from major business lines, and a net profit of RMB 1.268 billion.

MingSheng Life was established in Beijing in 2002 with a total registered capital of RMB 873 million, pledged primarily by large private enterprises. After more than six years in the making, MingSheng Life finally obtained the formal permission of the China Insurance Regulatory Commission and was established as China's first private insurer.

Bright Dairy is a well-known brand in Shanghai - and throughout the country - with a history of more than 40 years behind it. Bright Dairy has advanced dairy processing equipment and technology, a first-class milking and constant-temperature refrigerating system, and the largest pastures in the Far East. The company also possesses the country's top milk output evaluation system, and technology and testing center. Bright Dairy churns out a host of dairy products such as fresh milk, pasteurized milk, yogurt, UHT milk, milk powder, and fruit juices, all of which have passed the IS09002 Quality Assurance System. Aiming to become a prominent, nationwide enterprise, Bright Dairy explores the national market with national resources. The company is setting up several milk-source bases and numerous urban fresh milk mills in Eastern and Northern China. Bright Dairy has achieved a successive growth rate of 30% in the past four years, and has a current annual output capacity of 500,000 tons.

COMPANY CULTURE

“Help the farmers succeed, meet the needs of city residents, and contribute to the country's development.”

East Hope’s success is firmly rooted in its progressive corporate culture. Its tremendous development, adaptability, and longevity rely heavily on the company’s core ideology: "Help the farmers succeed, meet the needs of city residents, and contribute to the country's development.” This enduring philosophy, initiated and implemented by the group since its founding, has created a company culture oriented towards social progress and has imparted a high sense of social responsibility in its employees. At the core of East Hope is the desire and determination to help the people of China attain prosperity and wealth, and to aid economic and social progress. The "Glorious Career" and "Help-The-Poor" programs, initiated and advanced by the Group, have gained great support from the government and received wide acceptance from farmers around the country.

In addition to being a business enterprise, East Hope views itself as an educational institution. It is a “school” where every individual has the chance to learn and grow, and the opportunity to cultivate his or her own unique abilities and skills. The company glorifies diligence in work and moral integrity, and encourages employees to integrate their personal goals with the development of their Hope Career. East Hope is both a warm, reliable family and an army capable of winning the hardest battle. Thus, the company consistently attracts a large number of talented individuals seeking to devote themselves to a career centered around the “Hope Philosophy” and to contribute their skills to the national feed industry.

The "Hope Phenomenon" has been defined by the Theory Research Circle as an important case-study on the economic development of private businesses in China. It has been the focus of much worldwide interest, and has been reported on by media from around the world.

Ultimately, East Hope strives to be a long-lived company, a long-lived name brand, and a successful, well-respected international enterprise.