CITACITA AEACAEAC

Shanghai AEAC Industrial Product Shanghai AEAC Industrial Product Service&Consulting Co., Ltd. Service&Consulting Co., Ltd.

CITACITA AEACAEACWhat is AEACWhat is AEAC

EstablishedEstablished ：： August 15August 15thth , 2005 , 2005 AddressAddress ：： Shanghai, ChinaShanghai, China CapitalCapital ：： RMB 1 million RMB 1 million StaffStaff ：： 7 people (until Sept. 30,2005)7 people (until Sept. 30,2005) OwnershipOwnership ：： PrivatePrivate

CITACITA AEACAEAC

Intermediary and Service Company lead by CITAIntermediary and Service Company lead by CITA Available services from the companyAvailable services from the company ：：

Facilitating purchasing from both domestic and interFacilitating purchasing from both domestic and international companiesnational companies

Quality control of industrial productsQuality control of industrial products Logistics servicesLogistics services Consulting on exporting and importing industrial proConsulting on exporting and importing industrial pro

ductsducts Consulting on investment in ChinaConsulting on investment in China

Here Is What Here Is What We Can Do For We Can Do For

YouYou

CITACITA AEACAEACCompany’s Company’s

OrganizationOrganization

CITA

AEACExpert Committee Suppliers Committee

CITACITA AEACAEACCompany’s Company’s Organization, Organization,

ContinuedContinued

CITACITA ：： Full Name: Powered Industrial Truck Institution Full Name: Powered Industrial Truck Institution

of Chinese Construction Machinery Associationof Chinese Construction Machinery Association Oversees the industryOversees the industry Membership includes all domestic fork lift truck maMembership includes all domestic fork lift truck ma

nufacturersnufacturers Membership also includes most of the parts supplieMembership also includes most of the parts supplie

rs, testing institutes, quality control institutes, and rs, testing institutes, quality control institutes, and design institutesdesign institutes

Facilitating between domestic and oversees compaFacilitating between domestic and oversees companiesnies

CITACITA AEACAEAC

Experts CommitteeExperts Committee Experienced specialistsExperienced specialists Very familiar with fork lift truck market and suppliers in ChinaVery familiar with fork lift truck market and suppliers in China Deep understanding of investment regulations in ChinaDeep understanding of investment regulations in China Li ZhongmingLi Zhongming ：： 10 years of professional experience in the fie10 years of professional experience in the fie

ld of exporting/importing forklift truck partsld of exporting/importing forklift truck parts Lai ZhengzhongLai Zhengzhong ：： 20 years of professional experience in the f20 years of professional experience in the f

ield of outsourcing and financial mattersield of outsourcing and financial matters Zhang YongZhang Yong ：： 10 years of experience as a purchasing manag10 years of experience as a purchasing manag

erer Luo JiandongLuo Jiandong ：： 20 years of professional experience in the fiel20 years of professional experience in the fiel

d of parts and machinery industryd of parts and machinery industry Ji YaweiJi Yawei ：： 20 years of professional experience in the field of f20 years of professional experience in the field of f

orklift trucks and partsorklift trucks and parts

Company’s Company’s Organization, Organization,

ContinuedContinued

CITACITA AEACAEAC

Suppliers CommitteeSuppliers Committee Established by CITAEstablished by CITA Consists of major parts suppliers for Consists of major parts suppliers for

industrial trucks, about 200 membersindustrial trucks, about 200 members Able to provide detailed information on Able to provide detailed information on

parts suppliers in Chinaparts suppliers in China

Company’s Company’s Organization, Organization,

ContinuedContinued

CITACITA AEACAEACCompany’s Company’s Organization, Organization,

ContinuedContinued

AEAC is lead by CITAAEAC is lead by CITA AEAC takes action based on Experts’ AEAC takes action based on Experts’

Committee recommendations Committee recommendations AEAC gets support and help from AEAC gets support and help from

Suppliers CommitteeSuppliers Committee AEAC, in turn, gives assistance to AEAC, in turn, gives assistance to

members of the Suppliers Committee members of the Suppliers Committee to further their business needsto further their business needs

CITACITA AEACAEACCompany’s Company’s Organization, Organization,

ContinuedContinued

President ： Xin Yuxiong

GM ： Qian Xiaogang

Vice GM ： Shen Peng

Honorable President:Su Enyi

Purchasing Dept. Technology and QC

Dept

Office Overseas Rep.

CITACITA AEACAEAC

Honorable PresidentHonorable President ：： Su EnyiSu Enyi General Secretary of CITAGeneral Secretary of CITA Member of safety technical committee for special equipment, Member of safety technical committee for special equipment, which directly under the General Administration of Quality which directly under the General Administration of Quality

Supervision, Inspection and Quarantine of  PRC Supervision, Inspection and Quarantine of  PRC Involved in the industry for many yearsInvolved in the industry for many years

PresidentPresident ：： Xin YuxiongXin Yuxiong Expert in Chinese engineering machinery Expert in Chinese engineering machinery Held the following positionsHeld the following positions ：：

Head of the Forklift Division of Beijing Handling Machinery InstitHead of the Forklift Division of Beijing Handling Machinery Instituteute

The first GM of Cascade ChinaThe first GM of Cascade China Director of Xiamen Forklift Truck FactoryDirector of Xiamen Forklift Truck Factory The first GM of Linde - XiamenThe first GM of Linde - Xiamen

Company’s Company’s Organization, Organization,

ContinuedContinued

CITACITA AEACAEAC

GMGM ：： Qian XiaogangQian Xiaogang 5 years of experience in purchasing forklift t5 years of experience in purchasing forklift t

ruck partsruck parts 8 years of experience as GM8 years of experience as GM EMBA degreeEMBA degree

Vice GMVice GM ：： Shen PengShen Peng 12 years of experience in sales of forklift trucks12 years of experience in sales of forklift trucks 4 years of experience as GM4 years of experience as GM

Company’s Company’s Organization, Organization,

ContinuedContinued

CITACITA AEACAEACCompany’s Company’s Organization,Organization,

ContinuedContinued

Purchasing DeptPurchasing Dept ：： 1-2 people1-2 people responsible for gathering & analyzing market dataresponsible for gathering & analyzing market data responsible for selecting suppliersresponsible for selecting suppliers ，， cost benefit analysiscost benefit analysis Technology and QC DeptTechnology and QC Dept ：： 2 people2 people responsible for cooperating with Purchasing Dept to oversee variresponsible for cooperating with Purchasing Dept to oversee vari

ous technical aspects; also responsible for cooperating with foreous technical aspects; also responsible for cooperating with foreign companies to ensure that suppliers can provide the high quaign companies to ensure that suppliers can provide the high quality parts required by foreign companieslity parts required by foreign companies

OfficeOffice ：： 1-2 people1-2 people responsible for setting up computer networksresponsible for setting up computer networks ，， logistics and hoslogistics and hos

ting visiting partiesting visiting parties OverseasOverseas ：： 1 person1 person responsible for connecting domestic and foreign companiesresponsible for connecting domestic and foreign companies

CITACITA AEACAEAC

Rapid growth of the Chinese marketsRapid growth of the Chinese markets ，， Sales of poSales of powered industrial trucks reached 59,676 units in 2004wered industrial trucks reached 59,676 units in 2004 ，，which is 31.2% growthwhich is 31.2% growth ；； sales of non-powered indusales of non-powered industrial trucks reached 1,353,210 unitsstrial trucks reached 1,353,210 units ，， which is 43.7which is 43.78% growth8% growth

All major overseas industrial truck manufacturers alAll major overseas industrial truck manufacturers already have their own factories in China.ready have their own factories in China.

Projected growth for the Chinese market in 2005 is 1Projected growth for the Chinese market in 2005 is 10%0%

Quality of parts supplied by domestic companies haQuality of parts supplied by domestic companies has steadily improved. There are already over 200 sups steadily improved. There are already over 200 suppliers in China. (see attachment 1) pliers in China. (see attachment 1)

Current State Current State of the Chinese of the Chinese

MarketsMarkets

CITACITA AEACAEAC

GDP growth rate is between 8 and 10 %GDP growth rate is between 8 and 10 % Lots of research and development centers Lots of research and development centers

have been established in Chinahave been established in China Every major city has at least 1 universityEvery major city has at least 1 university Private companies now play bigger role Private companies now play bigger role

than state owned companies in the Chinese than state owned companies in the Chinese economyeconomy

Chinese economy is integrating with the Chinese economy is integrating with the world economyworld economy

Situation in Situation in ChinaChina

CITACITA AEACAEAC

More transparency is still needed in the More transparency is still needed in the governmentgovernment

Better enforcement of lawsBetter enforcement of laws Better protection of intellectual propertyBetter protection of intellectual property There is a gap in development between There is a gap in development between

eastern and western parts of Chinaeastern and western parts of China

Potential For Potential For Further Further

Development Development of Marketsof Markets

CITACITA AEACAEAC

Different CultureDifferent Culture Language BarrierLanguage Barrier ConnectionsConnections Improving management techniquesImproving management techniques

Situation in Situation in China - CultureChina - Culture

CITACITA AEACAEAC

Not all suppliers have CAD softwareNot all suppliers have CAD software Negotiations are essential to get a good priceNegotiations are essential to get a good price Some suppliers have very limited knowledge Some suppliers have very limited knowledge

about foreign standards and technical about foreign standards and technical requirementsrequirements

Sometimes quality of parts is a problemSometimes quality of parts is a problem They are often more interested in big ordersThey are often more interested in big orders Before using any supplier, it is essential to do Before using any supplier, it is essential to do

a thorough background checka thorough background check

Situation in Situation in China - China -

SuppliersSuppliers

CITACITA AEACAEAC

Sometimes Chinese manufacturers use local Sometimes Chinese manufacturers use local standards that may differ between regions standards that may differ between regions in Chinain China

Not all raw materials are available in ChinaNot all raw materials are available in China Travel time considerationsTravel time considerations Small orders are often ignoredSmall orders are often ignored Sources of information are often not Sources of information are often not

trustworthytrustworthy Packaging standardsPackaging standards

Situation in Situation in China - OthersChina - Others

CITACITA AEACAEAC

Low labor costsLow labor costs Product quality has improved in ChinaProduct quality has improved in China Big ordersBig orders Products requiring specially design modules with Products requiring specially design modules with

lead times longer than 2 yearslead times longer than 2 years Transportation and warehouse costs are low in Transportation and warehouse costs are low in

ChinaChina Products intended for international markets can Products intended for international markets can

be attested in Chinabe attested in China Chinese companies can also make mouldsChinese companies can also make moulds

Situation in Situation in China – Positive China – Positive

ElementsElements

CITACITA AEACAEAC

Very familiar with local environment and Very familiar with local environment and import/export procedures , and how to protect import/export procedures , and how to protect company’s IPRcompany’s IPR

Big supplier network enables rapid access to Big supplier network enables rapid access to informationinformation

Excellent system for evaluating suppliers, and the Excellent system for evaluating suppliers, and the quality and reliability of offered productsquality and reliability of offered products

Facilitating communication between the purchaser Facilitating communication between the purchaser and supplier and supplier

Helps the supplier understand the purchaser’s Helps the supplier understand the purchaser’s standards and testing proceduresstandards and testing procedures

Benefits both the purchaser and supplierBenefits both the purchaser and supplier Intermediary Intermediary

Why Choose Why Choose AEACAEAC

CITACITA AEACAEACIntellectual Intellectual Property Rights Property Rights

in Chinain China

TrademarksTrademarks PatentsPatents Copyrights Copyrights Commercial SecretsCommercial Secrets OthersOthers

(See Attachment 2)(See Attachment 2)

CITACITA AEACAEACHow to Protect How to Protect

Your RightsYour Rights

Applicable Laws (See Attachment 3)Applicable Laws (See Attachment 3) Administrative Protections (See Administrative Protections (See

Attachment 4)Attachment 4) Court Proceedings (See Attachment 5)Court Proceedings (See Attachment 5) Protecting Yourself (See Attachment 6)Protecting Yourself (See Attachment 6)

CITACITA AEACAEACProtection Protection

Methods in ChinaMethods in China

Administrative ProtectionsAdministrative Protections Order to refrain from violationOrder to refrain from violation ApologyApology Seizure of income obtained through violationSeizure of income obtained through violation Seizure and destruction of violating products anSeizure and destruction of violating products an

d equipment use for manufacture of such produd equipment use for manufacture of such productscts

Imposition of fineImposition of fine

CITACITA AEACAEACProtection Protection Methods Methods in Chinain China

Court proceedingsCourt proceedings Court proceedings, in particular if compensCourt proceedings, in particular if compens

ation for damages shall be claimedation for damages shall be claimed Protection by criminal lawProtection by criminal law Protection through customs measuresProtection through customs measures

CITACITA AEACAEACProtection Protection Methods Methods in Chinain China

Protecting YourselfProtecting Yourself Register your rightsRegister your rights Establish the department dedicated to IPR Establish the department dedicated to IPR Establish the rulesEstablish the rules Frequently investigateFrequently investigate Careful drafting of contracts (e.g. license coCareful drafting of contracts (e.g. license co

ntracts)ntracts)

CITACITA AEACAEACProtection Protection Methods in Methods in

ChinaChina In case of violation:In case of violation:

Secure evidenceSecure evidence Examine possible measuresExamine possible measures Decide on administrative/court protectionDecide on administrative/court protection Evaluate costs of protectionEvaluate costs of protection

CITACITA AEACAEAC

(Flowchart) See attachment 7(Flowchart) See attachment 7

AEAC StructureAEAC Structure

CITACITA AEACAEAC

Supplier Survey Form (See Attachment 8)Supplier Survey Form (See Attachment 8) Supplier Technology Inspection Form (See Supplier Technology Inspection Form (See

Attachment 9) Attachment 9) Supplier Quality Control Inspection Form (See Supplier Quality Control Inspection Form (See

Attachment 10)Attachment 10) Supplier Evaluation Form (See Attachment 11) Supplier Evaluation Form (See Attachment 11) Quote Analysis FormQuote Analysis Form Major Parts List (See Attachment 12)Major Parts List (See Attachment 12)

AEAC AEAC Evaluation of Evaluation of

SuppliersSuppliers

CITACITA AEACAEAC

BlueprintsBlueprints BOMBOM SamplesSamples Standards (products/packaging)Standards (products/packaging) Testing StandardsTesting Standards Annual Order SizeAnnual Order Size Acceptable parts pricingAcceptable parts pricing Any special requirementsAny special requirements

Information Information Required By Required By AEAC from AEAC from CustomersCustomers

CITACITA AEACAEAC

Current situation of raw materials in ChinaCurrent situation of raw materials in China Exchange RateExchange Rate StandardsStandards （（ SAE/JIS/DIN/BS/GBSAE/JIS/DIN/BS/GB ）） Certification for specific productsCertification for specific products （（ CE/GS/3CE/GS/3

CC ）） Providing various choices in parts materialsProviding various choices in parts materials Interpreting/translatingInterpreting/translating

AEAC Role in AEAC Role in Purchasing Purchasing

ProcessProcess

CITACITA AEACAEAC

Membership FeesMembership Fees Associate MembersAssociate Members Regular MembersRegular Members VIP MembersVIP Members

Service FeesService Fees General ConsultingGeneral Consulting Specific ConsultingSpecific Consulting Turn-Key ConsultingTurn-Key Consulting

AEAC Fee AEAC Fee StructureStructure

CITACITA AEACAEAC

Develop an excellent network of Develop an excellent network of supplierssuppliers

Develop a web site Develop a web site Develop a database of standardsDevelop a database of standards Develop an investment databaseDevelop an investment database

AEAC – Future AEAC – Future StepsSteps

CITACITA AEACAEAC

Thank YouThank You ！！