China American Commodity Trade Center

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CHINA· AMERICAN COMMODITY TRADE ENTER

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Content Background of ACTC Location & Environment of ACTC Functions & Business Mode of ACTC Advantages of ACTC Successful Cases

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Background of ACTC

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In the spirit of further promoting the Sino-US trade development so as to balance the trade deficit between the two countries, China Council for the Promotion of International Trade (CCPIT) has cooperated with the Shanghai Government in the creation of a trade platform. In accordance with the Memorandum of Understanding reached between CCPIT and the US Department of Commerce, a project, the American Commodity Trade Center (ACTC) will be launched earlier this year. Background

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Mission Introduce American Products to the Chinese Economy Develop Brand Identity of American Companies Create a larger Chinese-American Business Network Expand the market share of American Businesses in China Establish integrated market penetration

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Organization Chart China · American Commodity Trade Center Co,.LTD. President Intellectual Property Protection Department Business Consulting Department Marketing Department Network Information Service Department Brand Agency Department General Management Department Customer Service Department

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Location & Environment of ACTC

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Shanghai China ACTC Waigaoqiao FTZ Shanghai—Center of Economy, Trade, Finance and Shipping SHANGHAI

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The total investment on the Area where ACTC Building is located — 56.25 million USD ACTC Building

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Convenient Transportation

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Connected to big cities in surrounding provinces within 2 hours through 16 highways Convenient Transportation

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Australia America Europe Asia Waigaoqiao Port & Yangshan Port Waigaoqiao Port Pudong International Airport Hongqiao International Airport Lingang new city Inner ring line Yangshan Port Waigaoqiao Port Yangshan Port Convenient Transportation

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Competitive Investment Environment 89.7% From February to March in 2006, the Shanghai WTO Affairs Consultation Center and the Shanghai Association of Enterprises with Foreign Funds conducted a survey named “Shanghai’s investment environment for foreign investors”. Based on the analysis of 213 copies of returned valid questionnaires, they concluded as follows: Shanghai is the best choice for investment 70% Foreign-invested enterprises have already established and plan to establish their regional headquarters in Shanghai 75% The impact of Shanghai hosting the 2010 World Expo on foreign investment in shanghai is active and profound 87.3% The situation of the protection of intellectual property rights in Shanghai has been improved

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Approved by the Central Government in 1990 Special supervision and administration by Customs Covering an area of 10 square kilometers Adjacent to ports Passage to surrounding provinces The biggest Free Trade Zone in China －Shanghai Waigaoqiao Free Trade Zone Competitive Investment Environment

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Four Key Functions of FTZ Competitive Investment Environment

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Modernized neighborhood－（Biyun International Neighborhood、City Garden Neighborhood） Star Hotels－（Waigaoqiao Crown Plaza、Pudong Remada Hotel） Economical Hotels－（Motel168、Waigaoqiao Service Apartment ） Business club－（Changde Business Club） Chinese cuisine－（Merrylin、Shanghairenjia Restaurant、Sichuan Cuisine Restaurant、Waigaoqiao Fodd Courts） WGQ FTZ and matching facilities Fast Food－（Mcdonald） Cafes－（Starbucks、Golden Coffee、UBC Coffee） International school－（American school） Gyms－ （Megafit） Supermarkets－（Lotus、Carrefour） Competitive Investment Environment

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124 regional headquarters 130 investment companies 170 foreign-funded R&D centers established in Shanghai. More than 300 Fortune-500 companies have settled down in Shanghai, among which about 135 companies have invested in WGQ FTZ. Over 5000 US companies have invested in Shanghai, ranking sixth in terms of investment amount. ★ 135 of Fortune 500 Companies have settled in WGQ FTZ Foreign investors in Shanghai (To the year of 2005) Competitive Investment Environment

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Import volume: USD 25.6 billion( one forth of the total of that in Shanghai) Export volume: USD 9.67 billion By the end of 2005, there are 791 US enterprises, ranking third in terms of number in FTZ with a total investment amount of USD 1.76 billion，ranking second in terms of investment amount in FTZ. Trade volume of US imported commodities into China via FTZ in 2005 is USD 3.8 billion, an increase of 18.4% YOY. Types of US enterprises in FTZ Million USD Import & export volume in WGQ FTZ in 2005 and introduction of the US enterprises in the FTZ Competitive Investment Environment

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Famous US enterprises in WGQ FTZ Competitive Investment Environment

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Functions & Business Mode of ACTC

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(A) Demonstration and Promotion ACTC Chinese Buyers US Products Long-term bonded exhibition, demonstration and promotion activities Main Functions Customs Registration Visit

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(B) Domestic Trade ACTC Chinese Buyers Overseas products entering FTZ Overseas exhibits can be transferred to FTZ after attending short-term shows in other areas in China US Products Distribution Order Purchasing Main Functions

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(C) After-sales Service ACTC Training Repair Chinese Buyers FTZ Customs Testing Main Functions

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Exhibition management service Security Sanitation Maintenance Property lease Exhibition hall least Office lease Main Services (A) Matching services of demonstration

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ACTC Chinese buyers US suppliers Organization of promotion conference Assist in the organization of business meetings for the enterprises Participation in the exhibition outside FTZ Cooperate with exhibition companies to organize members of ACTC to attend Organization of short-term show Organize short-term show in the public exhibition hall of ACTC (B) Promotion services Main Services

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Exhibition Logistics Service Provide a series of logistics services, such as import & export agency, transportation, warehousing and so on for its clients Door-To-Door logistics service Warehousing、distribution、transportation (C) Logistics Services Main Services

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(D) International Trading Support Imp&Exp Agency Customs Clearance Automatic Import License Logistics Operation Warehousing Service Other Services Main Services

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Professional training Assist to organize professional training for enterprises, offer services like hotel reservation, transportation, traveling and etc. Training and conference rooms are also available inside ACTC Inspection and maintenance Assist enterprises to apply for “maintenance manual” and for the practice of Release before the custom declaration, do the declaration periodically and inbound custom in declaration. (E) After-sales services Main Services

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Business Consulting ACTC will become the platform of communication and service for American enterprises by providing American companies who are entering Chinese market with a series of business consulting service, such as investing policies, registration agency, customs policies, tax and foreign exchange management, business license modification consultation and related legal consultation, etc. HR service ACTC may consign the companies in FTZ to provide HR services for American companies, including recruiting agency, employment consulting, professional training and so on. Legal consulting service for IPR protection Trademark agency, consultation on patent, copyright and etc. (F) Support service for daily operation of enterprises in ACTC Main Services

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Financial services Offer consultation services on finance, accounting, tax policies and so on to enterprises, including book-keeping, tax declaration, annual inspection, year-end accounting statements. Recommendation for other properties except for ACTC property Recommendation for warehouses or workshops inside and outside FTZ Main Services

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Website and information service Providing Internet promotion service to members of ACTC by setting up a B2B business website, including services like virtual exhibition hall, business service, business forum, industrial information, supply and demand information and etc. Main Services

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Advantage of ACTC

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Advantages of Policies Customs Supervision To attend exhibitions out of the FTZ with Guarantee letter by ACTC or Guarantee deposit by ACTC Import license exemption during exhibition Industrial & Commercial Administration No category limits of commodities, except for official forbidden ones Companies are entitled to conduct international trade, transit trade, domestic trade, manufacturing and processing, warehousing, logistics, exhibition of bonded commodities as well as trade-related services like testing and maintenance (A) Preferential Policies of Waigaoqiao FTZ

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Inspection and Quarantine All exhibits of ACTC( except animal, plant and food ) can be exempted from inspection, and do it just when being sold afterward. Foreign Exchange Administration ACTC can make direct payment in foreign currency to the exhibitors Advantages of Policies

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(B) Preferential fiscal policies exclusive for ACTC Corporation Income Tax: Taxation ： The income tax is 15% (the income tax outside Pudong New Area is 33%) Fiscal supporting policies（From 2006-2010） The part of increased revenue and net income of ACTC, which forms the local fiscal revenue of Pudong New Area, may enjoy fiscal subsidy at the rate of 100% during the first three years, and at the rate of 50% during the other years. The part of personal income tax (of the senior managers), which forms the revenue of Pudong New Area, may enjoy fiscal subsidy at the rate of 100% during the first three years and at the rate of 50% during the other years. The part of operation revenue, which forms the revenue of Pudong New Area, may enjoy fiscal subsidy at the rate of 50% during the first three years. Advantages of Policies

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(C) Supportive policies for the IPR protection of ACTC Formulate concerning management regulations (trademark, potent, copyright and technology license trading) International trademark registration can be done through <Madrid Agreement> ACTC will also grant appropriate protections to the enterprises in terms of copyright, domain name and commercial secret, etc Advantages of Policies

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(A) On-spot governmental service, great support from WGQ Administration Committee, tailored service Waigaoqiao FTZ Administration Committee Provide specialized supports Customs Bureau Inspection & Quarantine Bureau Intellectual Property Bureau Foreign Exchange Bureau Tax Bureau Industrial & Commerce Bureau Others Advantage of Services

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(B) Professional Team Qualified staff of many years experience who are familiar with FTZ policies, operation procedure, organization of large-scale exhibition, providing high-quality service efficiently to the promotion of American products. Have participated in the projects of HP，IBM , Intel , Philips , Ricoh , etc. in WGQ FTZ Have offered import and export agency service to Kodak, 3M, HP, etc. Have offered agency of brand agency to Ball Watch and others. Advantage of Services

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Advantage of Cost Low initiative business cost No need to register since the business can be done via ACTC Cheap Rental

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Operational Cost Advantage of Cost

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(A) Support from CCPIT for marketing network of ACTC Combined with the rich resources of CCPIT, a widespread domestic marketing network will be developed for the US enterprises CCPIT has established about 50 local sub councils across the whole nation and 20 industrial associations in fields such as mechanics, electronics, metallurgy, spaceflight, chemicals, construction materials, logistics and etc with a total membership of 70,000. Advantage of Marketing Network

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(B) Long-term interactive cooperation with exhibition organizers outside FTZ Advantage of Marketing Network

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(C) Our Clients Advantages of Marketing Network

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Successful Cases

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AMT Shanghai Technology and Service Center is set up by American Machine Tool Industry Association in 2004 —6 member enterprises with 1000 m2 exhibition area. By the end of 2005, AMT has attracted 65 member enterprises with 2000 m2 exhibition area. Case 1 －The Association For Manufacturing Technology（AMT）Shanghai Technology and Service Center

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Business operation mode of AMT Members of the association don’t need to be registered as companies to attend demo AMT Shanghai Technology Service Center Member `s products Marketing &sales Training &after-sales service Products demonstration

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Cases of AMT members Enterprise A: entered AMT WGQ Center two years ago; sold 20 machine tools; sales volume amounted to USD 2.5 million; established trading company in Waigaoqiao Free Trade Zone. Enterprise B: entered AMT WGQ Center one and half years ago; sold 18 machine tools; sales volume amounted to USD 1.13 million; established trading company in Waigaoqiao Free Trade Zone. Up to 2005, the sales volume of enterprise of AMT has amounted to USD22.5 million。 (The above statistics only show the sales number of AMT Demonstration Center, not including the enterprise of company importing directly from overseas)

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Business Activities organized by us Inviting professional clients to visit AMT Organizing seminar, technical training and promotion activities Assisting in organizing AMT members to attend exhibitions outside FTZ

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High-quality service for AMT from us Exhibits logistics ( efficient customs, imp & exp agency ) Promotions ( advertisement nameplate, promotional activity ) Transportation service ( shuttle bus ). Information service ( cargo information, Internet links with relevant government departments )

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HP - 2005 import volume of HP reached USD 533 million and the sales volume of 2005 reached USD 711 million. Kodak - From April 2005 to June 2006, the value of products by Kodak VMI Project reached USD 250 million. The in/out-Bonded logistics Park bills reached 3669.The sales volume of 2005 reached USD201 million. 3M - 2005 import volume of 3M reached USD168 million and the sales volume of 2005 reached USD190 million Case 2 － Imp & Exp Agency (HP、Kodak、3M)

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We have established a widespread marketing network for Ball Watch through agency in China in the past years. To June,2006, the number of Ball Watch Franchiser across the whole nation has climbed to 55. In 2005, it realized the sales income of 1.27 million USD. 美国品牌，瑞士制造 Case 3 － Brand Agency (Ball Watch)

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Going to China? We know the way! Great support from Chinese and US governments Sufficient resources from China Council for the Promotion of International Trade (CCPIT) As center of economy, finance, trade and shipping, Shanghai’s magnetic economic effect spreads over the whole nation Summary

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Complete service chain in the FTZ after development of more than 10 years. Unique functions and preferential policies of FTZ create high cost-effectiveness Excellent service from a professional team Rich practical experience from the 2-year successful operation of AMT bonded exhibition project

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Looking forward to a win-win cooperation!