¡¡¡¡Project name and content:ª¥

¡¡¡¡1.Set up a textile mill with 100 thousand spindles and 600 jet loomsª¥

¡¡¡¡2.Cooperative form: EJVª¥

¡¡¡¡3.Total investment: USD 36.5 millionª¤

¡¡¡¡Brief introduction of undertaker:ª¥

¡¡¡¡Changde Yunjin Textile Co. Ltd, founded in August 2001, is a large private company reformed from the former state owned enterprise Changde Cotton Textile Mill.

The quality of pure cotton yarns produced in the company has reached 5-25 percent of the requirement in the USTER Communique, which means the world's most advanced level.  The storage ratio of best quality fabrics accounts for 98 percent. Its cotton yarns and fabrics are popular in domestic market and have gained highr eputation, 5-10 percent higher than the others in market price.The company has the fixed assets of RMB130 million and covers an area of about 20 hectares (290 Mu) with 57 thousand yarn spindles, 768 rotation-spinning spindles, 412 wide-broad looms, 280 medium-broad looms and 60 jet looms.The company passed the Quality Management System Certification of ISO 9000 in December, 2003.ª¤

¡¡¡¡Summary of the project:ª¥

¡¡¡¡It is planned to set up an advanced textile mill with 100 thousand run-spinning spindles and 600 jet looms, mainly producing yarn and fabric of pure cotton and differential fibre from 14.5 Tex to 7.3 Tex (40-count to 80-count yarn) to provide superior quality fabrics for high-grade garments, bed articles and ornaments.ª¥The spinning portion is designed according to 40¡ª80 count but calculated as per 9.7 tex (60 count), the annual capacity is 5810 tons, equivalent to 30000 tons of the standard products (20 count). The weaving portion includes 190-cm jet loom and 280-cm jet loom. The annual capacity of 300 sets of type 190 is 21.825 million meters and 200 sets of type 280 is 9.43 million meters (reference product: combed pure cotton 14.5/14.5 433/354 256.5 cm or 40 ¡Á 40, 110 ¡Á 90 101¡å)ª¥According to the project, most of the machines are equipped with national advanced machines, and some of the essential equipment will be imported from abroad. Saw-tooth shaped workshops with reinforced concrete will be built. The total investment is RMB300 million (land cost is not taken into consideration)The location of the mill is in Deshan Development Zone of Changde and about 20 hectares of land are needed, including 19.34 hectares for production area. Construction period is about 12 months.ª¤

¡¡¡¡Market prospect:ª¥

¡¡¡¡1.Domestic market analysis: Most of the textile companies from China can only produce primary products. It is reported that there is a irrational products structure in China textile industry. Dress products can not meet the individual demands of customers. The attached value from Chinese companies is lower than those from developed countries (the output value of fibre in developed countries is USD 20,000-30,000 per ton, and only USD 12,000 in China). Export-oriented companies import 50 percent of the garment materials from international market. For textile ornaments, there are fewer functions and varieties comparing products from other countries. For industrial textiles, none of quantity, quality, varieties, grade and technological level can meet the demand of Chinese economic development. In domestic market, 85 percent of the textiles are low- grade products, the great demand of superior quality fabrics made from individualized fibre is an excellent opportunity for investors.ª¥

¡¡¡¡2. International market analysis:In developing counties such as Pakistan, Indonesia and India, textile industry developed rapidly in recent years. In China, only 35 percent of the textile equipment were produced after 1990's.In Pakistan, Indonesia and India,however, the figures are 50 percent,50 percent and 44 percent respecively, this leads to a inferior quality compared with our competitors as awhole directly. As a result, the prices of textile products from China are lower than those from our competitors. In fact, some Chinese deals import yarns from  Pakistan instead of purchasing from domestic market.With development of the project which orients its products to the market demand of superior quality fabrics, we can produce 14.5tex-7.3tex combed yarns (40-count to 80-count yarn) and individualized fabrics, which means we will not rely on imported garment materials any longer, and at the same time, we can compete in international market.ª¤

¡¡¡¡Raw materials and other resources:ª¥

¡¡¡¡1. Raw materials: the raw materials the project needs are cotton style fibres in cluding cotton fibre, soybean fibre, modal fibre, tencel fibre and bamboo fibre. Its demand changes according to  the needed commodity varieties. If the textile mill produces only 9.7tex combed cotton yarns (60-count yarn), the estimated consumption of long-fibre cotton is 3,950 tons(mainly originating from Xingjiang Region) and thin-fibre cotton 4,000 tons (mainly from Changde city). Residue of the materials will be sold to the old company as materials of OE yarns on a market price.ª¥With a view to developing individualized yarns and fabrics, the demand varieties¡¡and quantities of commodities are changeable, the varieties and quantities of fibre are ever-changing figuresa.Soybean fibre: refined from soybean cake in which the main ingredient is protein. This is a new fibre processed with a special technology that was developed and industrialized by China with independent intellectual property right. The soybean fibre is a patent product (it is one of 13 patent gold prize projects). The annual output of soybean in China is 50 thousand tons. Some dealers  from the United States and Japan want to act as sole agents of these products such as soybean yarn series, soybean fabrics series and soybean garment series.The quality of the fabric made from pure soybean fibre or blended soybean fibre is as good as that of cashmere. With the successful development of soybean fibre, there is a tendency to diversify the varieties of the soybean fibre products. As a new textile material, garment made from soybean fibre show great potential in market, that is the reason it is chosen as one of the target products.Materia ls are available from domestic market.ª¥

¡¡¡¡b.Tencel fibre: Tencel is a kind of regenerated cellulose made with new solvent spinning technology. Some companies from Jiangsu and Zhejiang provinces have begun to use this material. Fabrics made from tencel fibre are similar to silk with the excellent feel after being dealt with bio-ferment, it is well accepted inpresent market. The blended tencel fabrics (together with cotton or other chemical fibre) are planned.Considering the technology is ripe for mass production and market demand is appearing, it needs no additional technology research. A great potential demand will appear within one year. The material is available in domestic market.ª¥

¡¡¡¡c. Modal fibre:Modal fibre is a kind of high-moisture modal cellulose fibre. Modal fibre is similar to soybean fibre in outward appearance and characteristics, and the price is lower. There are yarns, fabrics and garment already made from modal fibre in Chinese market.Technologies are also ripe for modal fibre production. Demand is also appearing, but large quantity of products have not been produced yet. The market of modal fibre products is developing. The material is available from market both at home and abroad.

¡¡¡¡d. Bamboo fibre: Bamboo fibre is a kind of cellulose fibre produced with improved basic technology of timber pulp viscose production. The bamboo fibre is similar to viscose, but some of its physical characteristics, outward appearance and feels are even better than those of viscose.  Some companies have developed the item a second time and have made successful experiences. Bamboo fibre is usually used in summer wears. With the earth getting warmer and warmer, bamboo fibre will certainly be well accepted by customers. The project also plans to promote the bamboo fibre a second time for a higher attached value.The materials of bamboo are available in domestic market.ª¥

¡¡¡¡e.Size: products under this project are mainly processed with modified amylom and some supplementary matters to satisfy the need of weaving.

¡¡¡¡f.Fuels:  steam needed for refrigeration and heating in workshops and sizing procedure lead to an annual coal consumption of 20 thousand tons (above 5,000 calorie). Coal mines in Changde will meet the demand of consumption.ª¤

¡¡¡¡Prices of water, power and other materials:

¡¡¡¡The price of water, power, coal and transportation in the first half of 2004 areas follows:ª¥Water for industrial use:RMB1.08/tonª¥Power for industrial use(10 thousand volt):RMB0.49/kilowatt-hour Coal (5,000-5500 calorie):RMB300/tonª¥Transportation:RMB0.28-0.3/ton.kilometer.

¡¡¡¡Location of the textile mill:

¡¡¡¡The location of the textile mill is in Changde Deshan Industrial Park based on low hilly lands at an average elevation of 59 meters, the detailed situation is longitude 110¡ã28¡ä 48¡åE, latitude 28¡ã24¡ä31¡åN.ª¥

¡¡¡¡1.Basic geological structure and topography:  the textile mill under this project is based on low hilly lands. The earthquake intensity is 7 degree on Richter scale in this area. And the buildings of this project are constructed to resist earthquake intensity 7 degree on Richter scale. The strength of the building  foot here for reference is 29.4N/M2

¡¡¡¡2.Basic climate indexes:  the average annual temperature is 16.7 degrees centigrade, the highest annual temperature and lowest temperature are respectively 40.1 degrees centigrade and 13.2 degrees centigrade. The average accumulated annual sunshine time is 1719.5 hours. The average accumulated annual precipitation  is 1,346.5 mm, 2020.4 mm in most abundant year and 927mm in dry year. Major wind direction in this area is NNE, average annual wind speed is 40 meters per second. Average annual barometric pressure is 1011.8 milli-bars. Average annual relative humidity is 81 percent.ª¥

¡¡¡¡3. Water supply system:  There are two water plants with the daily water supply capacity of 100 thousand tons and 300 thousand tons respectively. The water pressure is 0.2 mega-pa which can meet the daily water consumption of 3000 tons by the textile mill.ª¥

¡¡¡¡4.Power supply system: There are two 110 thousand volt transformer substations and a 220 thousand volt transformer substation that can meet the power consumption of 12016-kilowatt-hour by the textile mill.ª¥

¡¡¡¡5.Drainage systems: There are two drainages system in Deshan Industrial Park,one is rainfall drainage system, the other is industrial waste water drainage system. The rainfall is drained directly to Yuanjing River, industrial waste water is drained to Yuanjiang River after treatment.

¡¡¡¡6.Transporation: Deshan Industrial Park lies in the exit section of Changsha-Changde expressway and start point of Changde-Zhangjiajie expressway. Shimen-Shangsha railway which links Beijing-Guangzhou railway runs through the park. The Taohuayun

airport is only 10 kilometers away from the park. The Yuanjiang River, with a one-thousand-tonnage wharf, is only 2 kilometers away from the park.

¡¡¡¡7.History and social services: With the reform and opening to the outside world, the ancient Changde city has made a great success in economic and social development. It was awarded  the ¡° National Civilization City¡± and other honors. There are kindergartens, primary schools, junior middle schools, senior middle schools and colleges in Deshan district where the park lies in. The park is also equipped with residential areas, super markets, hotels, buses and other social service facilities. Being a subsidiary number of Changde No.1 Hospital, the Deshan hospital provides high level medical care with advanced equipment.ª¤

¡¡¡¡Favorable policies :ª¥

¡¡¡¡1.The land under this project is free.ª¥

¡¡¡¡2.Exemption of all charges during construction.ª¥

¡¡¡¡3.Income taxes will be collected by tax bureau and then refunded completely in the first 3 consecutive years, and 50 percent will be refunded in the second 3 consecutive years.ª¥

¡¡¡¡4.Land usage tax in the first 6 consecutive years will be refunded immediately after collection.ª¥

¡¡¡¡5.The 25 percent local tax of value added tax in the first 6 consecutive years will be refunded by the local government.ª¤

¡¡¡¡Revenue forecasting:ª¥

¡¡¡¡The total investment of this project is RMB 300 million and the estimated construction period is 10 months. Annual output value of RMB390 million, profit of RMB 124 million, annual net profit of RMB 83.3 million and profit rate of 27.76  percent can be achieved with the return period being 5.5 years.ª¤

¡¡¡¡Published by:Changde Yunjing Textile Co. Ltdª¥

¡¡¡¡Tel: 0086736-7300300    Fax:0086736-7712043ª¥

¡¡¡¡E-mail:gcydt@tom.comª¥

¡¡¡¡Website:www.changde.gov.cn