Guangxi is abundant in marine fishery resources. Statistics show that Beihai produced as much as 750,000 tons of marine products in 1998. With the improvement of people's life, demand is growing for both quantity and variety of marine products. However, as Beihai is still backward in technique for aquatic processing and has a processing capacity of less than 100,000 tons of aquatic products per year at present, most marine products are sold unprocessed, making very low additional value. Therefore, processing of marine products will have great market potentials.

2. Construction Scale and Contents of the Project:

Building production lines respectively with a yearly output of 5,000 tons of fish oil , 30,000 tons of canned sea food and a 1,000--ton cold storage.

The major construction contents including civil construction of 8,000 m2, purchase of 2 production lines and related ancillary equipment.

3. Construction Conditions (including raw and processed materials, communications and transportation, telecommunications, power supply, water supply, site, coordination etc.):

The factory located inside the Beihai Fishery Base, covering an area of 156 hectares, with fishing port, oil depot and other ancillary facilities and with Beihai Avenue in the north to connect the downtown area, airport and railroad station. Power to be supplied by the Shawan transformer substation and water by the city waterworks. Ground having been leveled, and conditions for engineering proved to be good. The marine products needed for processing to be provided by Beihai Aquatic Company and Beihai Fishery Company.

4. Total Investment: USD 13,600,000.00, of which USD 6,000,000.00 is foreign capital to be used.

5. Mode of Cooperation: Equity joint venture

6. Expected Returns:

---- Construction time: 1 year

---- Internal returns on investment: 25%

---- Period for recovery of investment: 5 years

7. Construction Place: Beihai , Guangxi .

8. Progress of the Project Preparations: The written project proposals being worked on .

9. The Local Government Preferential Policy Applied to the Project:

9.1 The enterprise with foreign investment scheduled to operate for over 10 years will be exempted from income tax for the first 2 profit--making years; from the 3rd to the 5th year, exempted from half the income tax, and obtain a refund of payment from the financial department; from the 6th to the 10th year, half of income tax will be refunded by the local financial department after the full payment.

9.2 The enterprise with foreign investment engaged in aquatic product processing and development can enjoy the treatment in terms of agricultural specialties preference to obtain a refund of income tax after the full payment.

9.3 When the period of tax exemptions and reductions for product exportation conducted by the foreign--invested enterprise is over, the enterprise will pay only half of the income tax as stipulated in the tax law if its exported product output value makes up over 70% of the product output value the same year.

10. Project Sponsor's Conditions in Brief:

---- Registered capital (USD): 1,100,000.00

---- Original value of fixed assets (USD): 9,243,000.00

---- Net value of fixed assets (USD): 6,100,000.00

---- Factory area coverage (m2 ): 12,100

---- Factory building floorage (m2): 8,600

---- Number of staff and workers (person): 1,700

---- Number of technical personnel (person): 136

---- Present staple products: canned sea food, frozen prawn, ground fish products, fishing nets and ropes, ship building and repairing