Daniel KC LiuDaniel KC LiuManaging DirectorManaging Director

Dynamic Resources AsiaDynamic Resources Asia

Beijing, Guangzhou, Hong Kong, Shanghai, Vancouver, WuhanBeijing, Guangzhou, Hong Kong, Shanghai, Vancouver, Wuhan

DOING BUSINESS IN THE PRCHINADOING BUSINESS IN THE PRCHINA

SUMMARY OF PRESENTATIONSUMMARY OF PRESENTATION

(A)Entry Strategy of Enterprises(i) Business Starting Up (ii) Organization Management

(iii) Business Expansion (iv) Health Check

(B)China and its economy

(C) Q&A

RAPID GROWTH OF THE RAPID GROWTH OF THE COASTAL ZONECOASTAL ZONE

Chengdu •

Industry now upto1000mi inland eg Chengdu

Snow

Desert / Mountains

Suzhou

• Beijing• Tianjin

Shanghai•

Guangzhou

•

•

Hangzhou/Ningbo•

Hong Kong• Hangzhou/Ningbo is the new garment area

STATISTICSSTATISTICS

PopulationAverage Age

GDPGDP Growth

ReservesIncome per head

InflationSavings rate

1.4bn 32US$2tn7.7% (2013) 7.5%US$1.8tnUS$ 6770 (PPP basis)

4.0%40%

China

Representative Office (a lot of restrictions and limitations to business scopes) WOFE Wholly-owned Foreign Enterprise (Capital Injection, revised regulations wef March 1, 2014) Joint-Venture Transition through 3rd party

BUSINESS STARTING UP IN CHINABUSINESS STARTING UP IN CHINA

Options

Finance – funding, project finance, investment, taxation, compliance, etc.

Operations – System, Policy, Rules & Regulations, Accountabilities, Transparency.

People – Human Capital Costs, Localization, Leadership Development, Succession

ORGANIZATION MANAGEMENT ORGANIZATION MANAGEMENT

Generic – Geographic Acquisitions – Vertical/Horizontal Partnership – Overseas/Local Franchise

BUSINESSBUSINESS EXPANSIONEXPANSION

Options

Have legal entity & correct Licenses & Permits Infrastructure, Systems, Procedures, Ground Rules People: Talents Acquisition, Development Transparency Reward System Career & Succession Management Costs: Human Capital, Social Liabilities, Taxes Image: Branding, Marketing, Networking Ethical, Compliance, Governance Risk Management & Business Contingency

HEALTH CHECKHEALTH CHECK

CHINA 2009 - 2013CHINA 2009 - 2013

• Growth 7/8%!• 270m class buying luxury goods; cars etc• Reconstruction of Sichuan• Building 40000km of Roads;19800 km of Railway• Permitting Exporters to start to sell internally• China/SEA Trade – US$650bn• Large labor supply – Urban• More Industrial Parks – taxbreaks,rent free setup • High Tech & Bio Parks – half market rentals

CHINA 2009 - 2013CHINA 2009 - 2013

Suzhou wins the 2014 Lee Kuan Yew World City Prize The city of Suzhou in China clinches the biennial Lee Kuan Yew World City Prize for balancing sustainable economic development with cultural conservation, showing cities in China and other developing countries that urban challenges can be addressed responsibly.

CHINA 2009 - 2013CHINA 2009 - 2013

30 Nuclear Plants by 2020 (11 built) (Tech mostly from France which generates 70% elec from nuclear, and worlds safest)

Waste Water Treatment Plants – US$42bn

Energy saving technologies in China saw consumption drop- Steel: -6.49 %- Construction material producers: -7.84%- Chemicals: -5.17%- Power companies: -2.57 %

Reducing VAT (17%)rebates (13%) on low tech/high energy manufacturing eg Steel Pipe 0%; S/S Housewares 5%;

SALARIES IN CHINASALARIES IN CHINA

Management, Sales & Marketing, Manufacturing

HONG KONG SHANGHAI (7.8) (6.2)

HK$ Annual RMB Annual Gen Mgr – Country (sales focus) 10+yrs 1.3M- 2M 800K – 1.5M Reg Sales Dir 10/15 1M – 1.4M 600K – 800K Reg Sales Mgr 8/10 715K – 1.1M 250K – 700K

Marketing Dir 10/15 825K – 1.1M 600K – 1.2M Marketing Mgr 8/10 715K – 880K 300K – 1M

Tech Sales Mgr 5+ 495K – 990K 230K – 400K Manufact Dir 8/10 880K – 1.32M 500K – 900K Manufact Mgr 5/10 770K – 880K 300K – 500K Engineering Dir 10+ 880K – 1.1M 320K – 450K Engineering Mgr 4+ 660K – 770K 200K – 400K

SALARIES IN CHINASALARIES IN CHINA

Gen ManagerAsia (Regional) 10+yrs 1.5M – 2M 1.5M – 2M Hd of Procurement 10+ 920K – 1.7M 450K – 500KPurchasing Mgr 8+ 575K – 978K 250K – 350K Reg Quality Dir 10/15 920M – 1.38M 600K – 800K

Ops Director 8/15 880K – 1.32M 400K – 700K Plant Manager 10/15 880K – 1.32M 500K – 800K Logistics Director 15+ 920K – 1.38M 500K – 800K Logistics Mgr 7/10 575K – 920K 200K – 350K Supply Chain Mgr 8+ 920K – 1.38M 250K – 500K

Manufacturing & Industrial

HONG KONG SHANGHAI

HK$ Annual RMB Annual (7.8) (6.2)

SALARIES IN CHINASALARIES IN CHINA

Accounting & Finance

HONG KONG SHANGHAI HK$ Annual RMB Annual

(7.8) (6.2)CFO Small Firm 15+yrs 1.5M – 1.8M 600K – 800K Med/Lge Firm 15+ 1.6M – 3M+ 900K – 2M

Regional Finance Director Small Firm 12+ 900K – 1.2M 550K – 700K Med/Lge Firm 13+ 1.1M – 1.8M 650K – 850K

Regional Financial Controller Small Firm 12+ 600K – 800K 350K – 450K Med/Lge Firm 13+ 800K – 1.2M 500K – 800K

Finance / Accounting Manager Small Firm 8+ 350K – 450K 150K – 200K Med/Lge Firm 8+ 450K – 600K 200K – 350K

PopulationProfits Tax

Office RentsSalaries (see slides)

HotelsHousing

Co Set UpManuf IncentivesDuty Free Zones

Major PortsMajor Intl Airport

CurrencyDble Tax Agts

Air Cargo HubStock Mkt

Skill / Education Base

HK

6.8m17%100%100%100%100%10 daysMinimalYesHKYesConvertibleChina, Limited as

lo–tax)YesUS$1.8tnEntrepreneursProfessionalsCommercial

SHA

25m25%33%50 – 75%70%33%40 daysManyN/ASHA & NingboYesNon ConvertibleUSA, UK, EU, HK

YesUS$1.7tn IndustrialistsEngineersSkilled Labour

HONG KONG HONG KONG vsvs SHANGHAI SHANGHAI

Western legal system, robust More expensive than a lot of China cities More efficient than a lot of China cities Duty Free HK base provides access to S China China & HK have Double Tax Agreement CEPA (Closer Economic Partnership

Agreement)

Hong KongHong Kong

Chinese legal system Cheaper than HK Less efficient than HK Alternative of Ningbo (Cheaper than SHA!) Free Trade Zone (Duty Free Zone: Wai Gao Qiao) SHA/Ningbo base provides access to Central China China & HK have Double Tax Agreement Road & Air (Rail is more efficient)

ShanghaiShanghai

MINIMUM MONTHLY WAGESMINIMUM MONTHLY WAGES

MALAYSIA HONG KONG SHANGHAI GUANGZHOU/BEIJING

RM HK$ RMB RMB

900/800 5,280 1,820 1,560

Conversion to USD

280/248 676 293 251

Executive Search & Selection ServiceExecutive Search & Selection Service

Organization Development ConsultingOrganization Development Consulting

Business Management ConsultancyBusiness Management Consultancy

DYNAMICDYNAMICRESOURCESRESOURCES

Company ProfileCompany Profile Dynamic Resources Asia Limited (www.dynamic-resource.com ), a company of Dynamic Resources, Inc. has been founded in North America since 1996, is an established business management consulting firm legally registered in the Hong Kong SAR, Shanghai, Guangzhou and Vancouver with branch offices in Beijing, Chengdu, Wuhan and Shenzhen. Dynamic Resources’ professional service encompasses three major Business Units – Executive Search & Talents Selection, Organization Development Consulting and the Business Management Consultancy for servicing local enterprises and multi-national clients in the Greater China. Our Executive Search & Talent Selection Services Unit covers various levels of recruitment from middle management and technical specialists to senior directors. We realize that one of the most fundamental aspects of any assignment must be the consultants’ clear understanding of the client’s company background, culture, operating style and specific requirements. Each of our consultants has specialist knowledge in an industry segment, thereby having in-depth market knowledge and a unique ability to relate to the individual client.

Company ProfileCompany Profile

Our Organization Development Consulting Unit provides comprehensive human capital products in remuneration & fringe benefits, organization communication (team briefing & team building), performance management (MBO & KPIs), career outplacement, executive coaching and organization Change Management. The Business Management Consulting Unit offers a wide range of legal, accounting, taxation services through our expertise and professionals in respective areas. Dynamic Resources is a legal registered service provider of Employment and Payroll Outsourcing Agent, and the certified Pattern & Trademark Registration institution in the PRC. A one-stop-shop service is provided to enterprises for establishing brand new offices and product importation to China.

Dynamic Resources ConsultantsDynamic Resources ConsultantsThe Pan Pacific RegionThe Pan Pacific Region

(Beijing/Guangzhou/Hong Kong/Shanghai/Vancouver/Wuhan)(Beijing/Guangzhou/Hong Kong/Shanghai/Vancouver/Wuhan)

Consulting DirectorConsulting Director 55 Managing ConsultantManaging Consultant 88 Senior ConsultantSenior Consultant 1010 ConsultantConsultant 1515 Associate ConsultantAssociate Consultant 88 ResearcherResearcher 1515 Admin/IT/Finance/Counsel Admin/IT/Finance/Counsel 44 Total:Total: 6565

Executive Search & Selection ServiceExecutive Search & Selection Service

Organization Development ConsultingOrganization Development Consulting

Business Management ConsultancyBusiness Management Consultancy

DYNAMICDYNAMICRESOURCESRESOURCES