Looking forward, we expect the industrial expansion in the PRC will continue to provide the driving force behind the growth in our industry:

Manufacturing activities in the PRC still growing strongly

The PRC has become the world's factory and production base for all forms of manufacturing, due mainly to its low operating cost advantage. As manufacturing activities grow in the PRC, the stamping industry will likely follow in tandem, as the stamping industry forms the backbone of many manufacturing industries, including automobile, hardware, electrical appliances and electronics.

Positive outlook for the automobile manufacturing industry

The burgeoning automobile industry will likely propel growth in the stamping industry because the automobile manufacturing and the automobile component manufacturing industries are among the largest users of stamping machines. Many automobile manufacturers, such as Volkswagen AG, Honda Motor Co. and General Motors Corp. already have manufacturing facilities in the PRC.

Continued industrial expansion from Guangdong, Shanghai, Jiangsu, Zhejiang and Fujian

These regions have been experiencing strong economic growth and they are the manufacturing powerhouses of the PRC. We believe our customer base in these areas will continue to grow due to the competitiveness and vibrancy of these regions. In particular, in 2004, Guandong's exports accounted for 32.3% of the PRC national total. Many world leading multinationals, such as IBM, Intel, Hitachi, Samsung, Nokia, Sony, General Electric, P&G, Amway, ICI, Ericsson, Siemens, Panasonic, Bosch, Toshiba, Sanyo, Nestle, Pepsi, Coca-cola and Mitsubishi, have established their presence in Guangdong.

Emerging markets in Central and North-Eastern PRC present opportunities

We have identified the central PRC region such as Hunan, Hubei, Sichuan, Chongqing as well as the north-eastern PRC region such as Shenyang and Dalian as emerging markets for our products. We anticipate demand for our products in these central and north-eastern PRC regions as the PRC government has been encouraging the expansion of the manufacturing industry in these regions.