Based on the Jiangsu Provincial document: SU ZHENG FA [2004] No. 54 《Circular of Jiangsu Provincial Government about Enhancing the Efforts on Intensive Utilization of Land》, development zones in Changzhou shall comply with an investment intensity normally no less than Rmb 2.50 million / mu.

The development zone performs the formalities for granting and/or transferring of the State-owned land use right with compensations, and encourages both local and foreign investors to conduct investment.

▲Both local and foreign investors shall follow the document《Provisional Rules Governing the Granting and /or Transferring of the State-owned Land Use Right in Urban and Town Areas of Changzhou City 》 in the utilization of land inside this zone. In maximum, the land use right grant will be valid for 70 years, in particular, for industrial use, cultural, education or health purposes, and etc., normally no more than 50 years; for commercial use, amusement, tourism, and etc., normally no more than 40 years; for real estate development, no more than 70 years.

▲the local enterprise can utilize its properly acquired State-owned land use right as its investment or condition in cooperation with foreign investors to jointly incorporate development company for the development.

▲The granted land use right, when properly acquired, can be transferred, donated, leased, mortgaged, and inherited by legitimate successor during the period of valid of the land use right grant contract.

▲The utilization of land shall comply with the overall planning of the development zone, the requirements on the environmental protection and the planning management over the zone industries.

The foreign investor’s qualification document ( business license / an equivalent document of the foreign investor, or the ID of a natural person) shall be issued by the competent authorities, notary or legal firm of the investor's original country. Said documents should be attested by Chinese Embassy in said country, provided said country does not have diplomatic relations with P.R.Chin.

The foreign investor’s original qualification and attesting documents submitted by the foreign investor to the approving and registry authorities shall include, among other things, complete shareholder(s)’ information with the corresponding current effective shares position.

Natural person of a foreign country coming to CND to invest, shall submit the passport (origin); Natural person from HK or Macau special administrative regions, shall submit the original permanent residence document and /or original HK/Macau Resident Certificate for Travel in the Mainland China; Natural person from Taiwan, shall submit the original Taiwan Compatriot’s Certificate; For overseas Chinese coming to make investment in CND, he shall submit the original passport and/or residence document issued by his residence country. In all of the above cases, there is no more need for notary process or attesting document.

Enterprises with foreign investment duly registered and established in China according to the Chinese laws have the status of the Chinese Legal Person. CND administration will accord with the Chinese laws to protect the legitimate rights and interests of the foreign investor including, but not limited to, his rights on ownership and disposal of his properties and proper earnings.

1.to protect his autonomous right on business management and operations and support the foreign investor to run enterprise according to the internationally accepted norm. The foreign-invested enterprise can independently develop its business and operative plans, raise funds for operations, purchase related materials, and sell its products.

2.to protect his autonomous right on workforce recruitment, developing its own organizational structures, staffing, and distribution schemes.

3.to protect his autonomous right on disposal or outward remittance of the after tax earnings, including legitimate net profits earned by foreign investors, funds distributed upon expiration or termination of the enterprise, and remunerations and other proper incomes of expatriates.

4.to protect foreign investors’ know-how, duly registered trademark, and his intellectual property right.

CND administration exercises an enclosed-management, any inspections or fees collection originated from external organizations shall funneled to CND administration, who will make unified arrangements so as to minimize burdens of enterprises ( the date 1 through date 25 of each month being designated to “tranquil operation days” of enterprises) in a bid to assist enterprises to beef up efforts on operations and profit making.

General Processes: pre-review of a name of newco – sign lease agreement and notarization – environmental impact assessment report of a construction project – application for approval of the Joint Venture Contract, Articles of Association – application for national wide organizational code Notice – obtainment of Approval Certificate on Establishment of Enterprise with Foreign Investment – apply of Business License from the Industrial and Commercial Administration – engraving the company’s seals by authorized entity – obtain the organizational code certificate – perform formality for taxation registration – perform formality for foreign exchange control registration and capital onward remittance permit – proceed with certificate of opening bank account – opening bank account – continue to do fiscal registration – first piece of paid-in-capital arrives at its account – proceed with the customs’ registration

Investor(s) shall effect respective payment of capital according to the stipulations in the Contract (and/or Articles of Association) and in compliance with the following requirements:

1．If the payment of the capital shall be effected in one time, investor(s) shall complete respective payments with 6 months starting from the issuance of the Business License.

2．If the payments of the capital shall be effected in installments, investor(s) shall make the first piece of capital payment no less than 15% of his respective shares with 3 months starting from the issuance of the Business License. The remaining amount of capital shall be paid in full within 2 years from the date of Business License.

From December 1st, 2007 the updated 2007 Version of Guidelines of the Foreign Investment Industries come into force, which comprises four categories: Encouraged status, Permitted industries, Limited sectors and Prohibited areas. If it is approved having the Encouraged status, this investment project will be entitled to enjoy import duty exemption and import related VAT exemption of those manufacturing equipment to be used by the project company itself within an amount of disposable foreign capital of said newco. Purchasing of equipment from the local market will allow for VAT refunding. Purchasing of equipment for special purposes dedicated to environmental protection, energy saving, water saving, and production safety will allow to off set the corporate income tax. The preferential policy is not applicable to any of those import commodities listed within prohibited areas for duty free treatment. Those industries listed among the prohibited areas will not allow for any foreign investment in China.

Enterprises involving foreign investment are realized mainly in following forms in China：

1.Sino-foreign Joint Venture Enterprise: It has the Chinese Legal Person status and is in the form of limited liability company. Foreign investor(s), who can be an existing company, enterprise, economic entity or a natural person, will make joint investment with China’s local partner(s), who can be an existing company, enterprise, or economic entity, jointly manage the business and operations, and share profits or risks proportionally according to their respective participations to JV, whose establishment shall be subject to the approval by the Chinese government.

2.Sino-foreign Cooperative Enterprise: Foreign investor(s), who can be an existing company, enterprise, economic entity or a natural person, will make investment into a local company, who can be an existing company, enterprise, or economic entity, and develop business and profit-risk sharing format based on mutual agreement by and between the partners. Its establishment requests the approval of the Chinese government.

3.Whole Foreign Owned Enterprise: WFOE can be set up in China with the whole investment from foreign investor (s), who can be an existing company, enterprise, or economic entity or a natural person. Its establishment requests the approval of the Chinese government.

4.Sino-foreign Stock Limited: It has the Chinese Legal Person status and is in the form of limited liability company. The company shall be liable for the risks within his maximum amount of its assets. The stocks can be subscribed and purchased by local and foreign investors alike.