Strengths

Cost competitive

Wheat straw is an essential raw material that we purchase in large quantities for the manufacture of wheat pulp. Wheat straw is available in abundance from farms in Shandong Province, PRC where our paper manufacturing facilities are located. Due to our proximity to these farms, transportation costs for the delivery of wheat straw to our paper manufacturing facilities are relatively low. As a result, we are able to obtain good quality wheat straw at relatively low costs. We are thus able to maintain the prices of our paper products at competitive prices. We believe that the competitive prices of our products equip us with a competitive edge over our competitors.

Vertically integrated production

We have an integrated paper manufacturing operation. We not only possess paper manufacturing facilities, we also possess paper chemical manufacturing facilities and are able to manufacture our own paper chemicals such as liquid chlorine and sodium hydroxide. To compliment our paper manufacturing process, we manufacture our own wheat pulp. In addition, we have a black liquor recovery plant which we utilise for the recovery of sodium hydroxide.

We believe that by having an integrated production process, we possess better control of the entire paper manufacturing process. Being equipped with our own manufacturing facilities for paper chemicals and wheat pulp enables us to better control our costs and reduce our reliance on our suppliers. Our integrated process also allows us to be more responsive to the needs of our customers.

Good sales and marketing initiatives

In PRC, we focus our sales and marketing activities in regions with high paper consumption such as Beijing, Shanghai, Jiangsu Province and Zhejiang Province, and we have established an extensive sales and marketing network within these regions. As at May 2004, we had approximately 180 sales and marketing staff who are dedicated to providing good service to our customers.

Each of our sales and marketing staff provides our management with monthly reports of our customers' feedback on the quality of our products, as well as updates on the market trends within various regions in PRC. The information in these monthly reports is consolidated and used to generate a monthly analysis of market conditions. Such information is also used to provide a forecast relating to sales and marketing trends of our Group, and will enable our Sales and Marketing Manager Mr Zeng Xianli to adjust our Group's monthly sales and marketing targets accordingly.

Experienced management team

We have an experienced management team with extensive industry experience. Our management team is familiar with the paper and paper chemical industries in PRC, has an indepth understanding of the local markets and comprehends our customers' needs and requirements. Our management team adopts a "hands on" approach in managing the paper and paper chemical manufacturing business and operations. Our management team constantly monitors the development in the trends of the paper and paper chemical industries, in order to formulate appropriate business strategies.

Ability to fulfill customers' requirements

We believe that one of our principal competitive strengths is our willingness and our ability to meet customers' differing requirements on our paper products. We are able to modify the characteristics of our paper products such as the weight, texture and quality of paper by varying our manufacturing processes for production of a specific type of paper product. Our commitment to satisfy our customers' needs coupled with our staff expertise in varying our manufacturing processes have equipped us with a competitive edge over our competitors.

Good customer relationships

Our Directors believe that we strive to the best of our ability to provide our customers with good service and high-quality products.

We take great pride in providing good before-sales and after-sales services to our customers. We have established a customer service department in order to provide our customers with after-sales services, manage our customers requirements as well as obtain feedback from our customers. We are able to react promptly to the needs of our customers as a result of our dedicated, committed and well-trained staff.

Through such efforts and as a result of our high standards of service rendered and high-quality products delivered, our Directors believe we have gained the satisfaction as well as trust of our existing customers, many of whom are loyal repeat customers who will continue to rely on us for the constant supply of products. Our existing customers promote our services and products to potential customers, and pursuant to such positive recommendations, we have been able to procure several new customers.

Our Directors believe that our commitment to our customers and our ability to deliver highquality products will place us at the forefront of our industry.

Staff training and development strategies

Our Directors recognise the importance of our staff and place great emphasis on training our staff as well as strategising on their development.

Our manufacturing plant and machinery are operated by our manufacturing staff working in various teams. Each team is supervised by senior manufacturing staff, and supported by junior manufacturing staff. We provide systematic and comprehensive training to all our manufacturing staff to equip them with the necessary skills and knowledge to carry out their job functions. In particular, our senior manufacturing staff provide comprehensive and continuous training to our junior manufacturing staff in order to upgrade their skills, further enhance their work performance and increase their job scope.

We have the ability to expand our manufacturing operations as our staff are well equipped with the necessary skills and are properly trained. Our staff are operationally ready to meet the challenge of increasing their job scope. Our junior staff who have been previously well-trained by the senior staff will be operationally ready to take on new responsibilities and supervise new teams of their own. These new teams will in turn operate any new manufacturing plant and machinery and production lines we acquire. As such, we have a continuous stream of well trained staff to operate our manufacturing plant and machinery.