[ The following is an unofficial explanatory translation; for the purpose of These Provisions, the Translator italicized all the specially defined terms in the text; if there is any discrepancy, the original Chinese version shall govern. ----Translator's notes

Order No.53 of Tianjin Economic-Technological Development Area Administrative Commission

Provisional Provisions of Tianjin Economic-Technological Development Area on Promoting Development of High and New Technology Industries were deliberated and adopted at the 4th chairmen meeting of Tianjin Economic-Technological Development Area Administrative Commission on February 23rd, 2000 and are now hereby promulgated, which shall come into effect as of the date of promulgation.

Li Yong, Chairman of Tianjin Economic-Technological Development Area Administrative Commission

on February 23rd, 2000 ]

Provisional Provisions of TEDA on Promoting Development of High and New Technology Industries

Article 1: These Provisions are formulated with a view to promoting development of high and new technology industries in Tianjin Economic- Technological Development Area (TEDA) and accelerating the fulfillment of the strategic goals of building TEDA into a base of high and new technology industries.

Article 2: These Provisions shall apply to the high and new technology industry enterprises (hereinafter referred to as Enterprises--translator's note) and projects of industrialization of high and new technology achievements (hereinafter referred to as Projects--translator's note) homologated by TEDA Science and Technology Authority. The above mentioned Enterprises and Projects enjoy simultaneously relevant preferential policies of the State and Tianjin.

Article 3: TEDA Science and Technology Authority shall be responsible for organizing homologation of Enterprises and Projects and coordinating among relevant departments for project-filing, industrial and commercial registration, tax registration of Enterprises and Projects, and having incentive policies granted to them, collecting, releasing and popularizing the high and new technology achievements, establishing communicative channels between the scientific and technological circles on one side and the industrial circles and financial circles on the other, and organizing the information exchange of industrial, academic and research achievements.

Article 4: TEDA Science and Technology Authority shall homologate Enterprises in accordance with relevant provisions of the State and Tianjin Municipality, and Projects in accordance with the catalogue of high and new technology industries and technologies promulgated by TEDA Administrative Commission(TEDAAC).

Article 5: TEDA shall establish a committee of guidance on new and high technology and invite experts and specialists in the fields of science and technology, economy(finance), management, and law to participate in formulation of the program on development of high and new technology industry in TEDA and supporting policies, and in assessment, demonstration and recommendation of major Projects.

Article 6: TEDAAC shall allocate an amount equal to three percent of its annual financial income governable to establish TEDA Fund of Development of Science and Technology in its budget expenditure to support enterprises in research and development, industrialization of high and new technology achievements and the technical innovation after the industrialization.

Starting from the year 2000, TEDAAC shall allocate annually, in succession for five years running, an amount equal to two percent of its annual financial income governable to establish the Risk Fund of Science and Technology in TEDA in its budget expenditure to lead social funds to establish TEDA venture capital companies and venture capital funds to provide investment and financial service such as venture capital, investment consulting and so on.

Article 7: The Enterprises shall pay the enterprise income tax at a reduced rate of 15%.; and starting from the profit-making year, TEDA Fund of Development of Science and Technology will provide financial support equal to three-year's exemption of enterprise income tax, seven-year's 50% deduction of enterprise income tax; however, the total years for the enterprises to enjoy income tax privileges plus financial support may not exceed ten years.

The Enterprises enjoys, after the above-mentioned privileged period, a financial support equal to the part above the 10% of the enterprise income tax paid, from TEDA Fund of Development of Science and Technology, provided that their product export of the year exceeds 70% of their output value of the year.

Article 8: To the Projects, for a period of five years starting from the date of homologation, TEDA Fund of Development of Science and Technology shall provide a financial support equal to the amounts of business tax, enterprise income tax and of the part of the value-added tax remained for TEDA and paid each year on the part of the projects; for five years after the above-mentioned period, TEDA Fund of Development of Science and Technology will provide a financial support equal to 50% of the above mentioned amounts.

Article 9: Upon homologation by TEDA Science and Technology Authority, to the computer software development enterprises registered and operating in TEDA, for a period of five years starting from the date of homologation, TEDA Fund of Development of Science and Technology will provide a financial support equal to the amounts actually paid each year by the enterprises in respect of housing property tax, the value-added tax percentage to be retained by TEDA, business tax, and city construction tax ; for five years after the above-mentioned period, TEDA Fund of Development of Science and Technology will provide a financial support equal to the 50% of the above mentioned amounts.

To the computer software development enterprises registered and operating in TEDA, for a period of ten years starting from the date of homologation, TEDA Fund of Development of Science and Technology will provide a financial support equal to exemption of enterprise income tax.

Article 10: The technological service incomes earned in technology transfer, technical consultation, technical training, technical service and technical contracting by scientific and technical institutions, universities and colleges of higher learning, shall be exempted from enterprise income tax; to the enterprises engaged in development of high and new technology products, in case of transferring their own technically researched and developed achievements and technical consultation, technical service and technical training arising therefrom, TEDA Fund of Development of Science and Technology will provide a financial support equal to exemption of enterprise income tax.

TEDA enterprises, undertaking institutions, and individuals engaged in business of technology transfer and technical development, and the business of related technical consultation and technical service, shall be exempted from business tax on their incomes obtained from the above mentioned business.

The Enterprises and Projects shall be exempted from stamp tax on their signed technology contracts.

Article 11: The Enterprises and Projects shall be exempted from housing property tax on their newly built or purchased production and operation sites within five years starting from the date of construction completion or purchase.

The Enterprises and Projects shall enjoy a 50% deduction of their land use right transfer fees of their scientific research and production site land, and shall be exempted from deed tax on purchase of their production，operation premises，and from transaction procedure fees，property registration fees and related fees.

Article 12: TEDA shall encourage enterprises to establish engineering technical research and development centers and post-doctorate workstations. Upon their moving in and approval by TEDAAC, State level engineering technical research and development center (enterprise technology center), shall be entitled to a grant of five million RMB yuan as financial help from TEDA Fund of Development of Science and Technology; provincial level engineering technical research and development center (enterprise technology center), shall be entitled to a grant of three million RMB yuan as financial help from TEDA Fund of Development of Science and Technology. To doctors who enter and work in the post-doctorate workstations, TEDA Fund of Development of Science and Technology will provide them each with fifty thousand RMB yuan annually as expense subsidies to use at their own disposal.

Article 13: The Enterprises moving into TEDA International Incubation Center shall pay their rent at zero rate for office, experiment and production spaces for the first year, at the rates of 40% and 80 % for the second and third years respectively. The Enterprises moving into Tianjin University Scientific & Technological Park in TEDA shall pay their rent at favorable rates for their office, experiment and production spaces; at a rate of 50%, for the first year, and 80 %, for the second year. The rent balances shall be made up with TEDA Fund of Development of Science and Technology.

Article 14: The Enterprises moving into TEDA International Incubation Center or Tianjin University Scientific & Technological Park in TEDA shall pay their charges at the rate of 70% of the State tariff rates for use of CHINA NET after access. The remaining payment balances shall be borne jointly with TEDA Fund of Development of Science and Technology and by the telecommunication departments.

Article 15: TEDA encourages venture capital companies both at home and abroad to set up venture capital establishments in TEDA. Those (venture capital establishments--translator's notes) with an amount of investment put into the Enterprises or Projects homologated by TEDA Science and Technology Authority accounting for more than 20% of the capital of the invested enterprise （or the input of the projects--translator's notes） shall be entitled to exemption from the enterprise income tax on their profits on their equity or input shares, and enjoy a deduction amount equal to 50% of their profits on their equity or input shares of the profits taxable of the venture capital establishments, and a deduction of the enterprise income tax for three years running. Those registered in TEDA and their investment in the field of high and new technology industries of TEDA equal to or above 70% of their total investment may enjoy favorable tax and other policies in light of those for high and new technology enterprises. And an amount equal to 3% - 5% of their total business income (referring to the income of technology transfer, sales of technical products--translator's notes) may be drawn as risk compensation funds to make up the investment losses in the previous and current years. The surplus of the risk compensation funds may be carried forward annually, however the sum may not exceed 10% of the year-end assets of the establishments in the current year.

Article 16: The Enterprises or Projects, in process of transformation into the standard joint stock system, when inviting the famous world accounting firms, law firms, assets assessment firms or other intermediary agencies to provide the consultancy for their listing, upon homologation by TEDAAC, TEDA Fund of Development of Science and Technology will grant them a financial aid equal to 30% of their pre-listing expenses.

After the above-mentioned transformation, TEDAAC shall give priority in recommending their applications for stock or bond issuance abroad or at home.

Article 17: The Enterprises may draw the technical development expenses at a rate of 3%-5% of their sales amount. Those engaged in production of software, bio-technology and new material products may draw, at a rate of 5%-10%. In the case that the technical development expenses drawn in the year does not run out, the surplus may be carried forward to the following year.

The depreciation of equipment for production, and scientific and technical development of the Enterprises and Projects may be accelerated, if in conformity with the stipulations of the financial accounting system related to the trade formulated by the Ministry of Finance, by either the sum-of-the-years'-digits-method or the double-reducing-balance-method, so as to promote their equipment renewal and technical upgrading.

Article 18: The total payroll to be incurred by the new enterprise established through Projects may be drawn as what is actually incurred in accordance with relevant stipulations and shall not be confined by the amount allowed by tax authority to include in the costs.

The expenses to be incurred by the Enterprises in purchase of advanced technology, inventions, and patent rights may be entered as period charges. The various expenses to be incurred in the year by the Enterprises on research and development of new products, new technology and new processing arts may be entered as costs on one occasion or separate occasions. With the Enterprises having made profits, in case of the actual expenses in the year increasing above 10% (including 10%) more than those of the previous year, a direct deduction of the taxable income of the year may be allowed at the rate of 50% of the amount actually incurred.

Article 19: The enterprises, institutions and individuals in TEDA applying for various overseas and domestic patents shall enjoy a grant equal to 50 % of the patent application fee from TEDA Fund of Development of Science and Technology. In the case that the patent is industrialized in TEDA, TEDA Fund of Development of Science and Technology will give a grant equal to 50 % of the patent maintenance fee.

Article 20: The party who transfers the patent, or who licenses exploitation, upon verification by TEDA Science and Technology Authority may draw an amount no less than 30 % from the technical income to reward relevant R & D personnel, and the reward share of those who have made major contributions should not be below 50% of the total.

Article 21: The high and new technology achievements may be, in the form of intangible assets, contributed as equity in a corporate or non-corporate enterprise; the value of the high and new technology achievements may be assessed by qualified assessment agencies, and the assessed value shall be subject to approval by TEDA Science and Technology Authority.

Article 22: In the case of the high and new technology achievements being contributed as equity, the accomplisher (of non-work assignment--translator's note) shall be entitled to equivalent profit on equity. Within three years starting from the day of project implementation and on the basis of the value proportion of the high and new technology achievements in the registered capital, for projects fully-funded by the government, the equity profit of no less than 60% of the said portion shall be entitled (to him); and in the following three years, no less than 40% of the said portion shall be entitled (to him). In case of transfer of the high and new technology achievements, the accomplisher (of non-work assignment--translator's note) shall be entitled to no less than 20% of the transfer profit.

The equity profit and reward of the accomplishers of the high and new technology achievements and the technical and managerial personnel engaged in industrialization of the high and new technology achievements, in case of being put in as reinvestment in Projects, shall enjoy exemption of individual income tax. The salary income of the returned overseas students engaged in industrialization of high and new technology achievements may be regarded as the same as overseas income; in calculating the taxable income, it may apply to the provisions on additional expense deduction apart from deduction of the expenses stipulated.

Article 23: Among those whose household register are not of Tianjin Municipality, the scientific and technical personnel having brought to TEDA the high and new technology achievements and being engaged in industrialization of high and new technology achievements, and the special technical personnel and managerial personnel with academic background of graduation from a 4-year college or university or with intermediate professional rank qualification (or above)to be needed by the Enterprises and Projects, TEDA labor and personnel department and public security department shall complete formalities, within one year, on their work transfer and residential household register transfer to TEDA and those for their spouses and non-grown-up children as well. Before their residential household register transfer is done, the children of the said personnel shall enjoy the same treatment as those with TEDA residential household register on entering a local nursery or school.

TEDA provides the scientific and technical personnel having brought to TEDA the high and new technology achievements and being engaged in industrialization of high and new technology achievements with Senior Talents' Apartment free of charge and for a period of two years. TEDA provides low-rent apartments to the special technical personnel and managerial personnel needed by the Enterprises and Projects.

Article 24: TEDA encourages overseas students to bring science and technology achievements to TEDA and engage in development and production of high and new technological products. The enterprises to be established by those having acquired long term (permanent) residence abroad or having set up companies (enterprises) abroad may be registered as foreign funded enterprises, and the registered capital shall not be less than US$ 10,000. The enterprises to be established by other returned overseas students shall be registered as domestically funded enterprises.

Article 25: From the year of 2000, TEDA shall allocate a special fund from TEDA Fund of Development of Science and Technology to assist overseas students returning to TEDA in establishing high and new technology enterprises and in research and development of high and new technology projects, and encourage a certain number of excellent graduates with abilities in scientific and technological innovation from key colleges and universities to start up businesses in TEDA.

Article 26: TEDA labor and personnel department shall give the scientific and technical personnel having made outstanding achievements in the development of high and new technology industries priority in recommending them to the relevant State authority for conferring corresponding titles and government subsidies. TEDAAC shall confer "TEDA Scientific and Technological Contribution Award" on the scientific and technical personnel who have made exceptionally outstanding contributions in the development of high and new technology industries in TEDA and have brought about enormous economical benefits; the maximum award amount shall be 3,000,000 yuan.

Article 27: The role of the government purchase policy in supporting the Enterprises and Projects shall be brought into play. TEDAAC shall advise and encourage government departments, enterprises and institutions to give priority in their purchase of products from the high and new technology enterprises in TEDA as far as on equal terms.

Article 28: Encouragement to cooperate shall be given in respect to personnel, technology, factory buildings, equipment, product sale, mutual share-holding and asset restructure as well as between the high and new technology enterprises and enterprises of other types. Upon cooperation or restructuring, the enterprises which meet the requirements, may be regarded as new high and new technology enterprises, and may enjoy relevant preferential policies; any high and new technology enterprises that merge with State owned enterprises of this municipality may enjoy relevant State preferential policies concerning the merging of State owned enterprises.

Article 29: TEDAAC shall be responsible to interpret these Provisions.

Article 30: These Provisions shall be implemented as of the date of promulgation. The Provisions of Tianjin Economic-Technological Development Area on Attracting High and New Technology Enterprises to Move to Invest in the Area, the Supplementary Provisions of Tianjin Economic- Technological Development Area on Attracting High and New Technology Enterprises to Move to Invest in the Area and Provisional Provisions of Tianjin Economic-Technological Development Area on Management of Venture Funds of Science and Technology shall be annulled simultaneously as of the same date.