From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days.

2. From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days.

3. Propulsys Inc Holding Company

4. World Headquarters Hopkinsville, Kentucky, U.S.A.

5. Gerotor Hydraulic Motors Low speed High Torque A lot of power in a small package +/- 80% efficiency Hydraulic Brakes Integrated with the gerotor hydraulic motor Stand alone operation Production demands precision engineering Very tight tolerance machining typical 2/10,000 inch (40 times smaller than the thickness of a typical black human hair). Core Products

6. Hydraulic Gerotor Motors

7. Hydraulic Brakes & Integrated Motor Brakes

8. Where are these motors and brakes used? Mobile Equipment is the largest sector. It is hard to go through a day where our products have not had an impact on your life in some way.

9. Aerial Work Platforms

10. Agricultural Equipment

11. Concrete & Paving Equipment

12. Construction Equipment

13. Cranes, Winches & Utility Vehicles

14. Lawn Care Products

15. Chinese domestic demand: Already the largest market in Asia Forecasted to double in size in the next 5 years Industrial & Service infra-structure support Chinese competitors were already emerging Why China?

16. 4 key strategic reasons for Propulsys to opening a company in China: Participation Access Capacity Expected Propulsys – China Strategy

17. Acquire an existing Chinese company: Hard to find a good one that wants to sell right now! Who are the current owners? Takes a great deal of time and will not necessarily fit! Establishing a company in China

18. Form a Joint Venture partnership: Very difficult- many cross cultural issues cloud the opportunities We tried…… We established a supply agreement with a Chinese manufacturer. We established a good relationship… We greatly exceeded forecasts. 18 months of dedicated and supportive negotiations to establish a J/V to manufacture additional new products. Failed….January 17, 2005 Failed because the Chinese major stake holder did not want the control of the shares and votes and investment…. But, wanted control of his “destiny”…wanted to do it his way! Establishing a company in China

19. Create a new company in China Challenging in a country with such a long cultural history. Administrative challenges Language barriers But, we had learnt a lot Establishing a company in China

20. Critical factors to be considered : Resource availability: Industrial Land Skilled work force Good infra-structures Energy supplies Attitude of the local government to new businesses THIS MOST IMPORTANT Where do you begin?

21. Why RunZhou, Zhenjiang, Jiangsu?

22. Location of Zhenjiang City and the district of RunZhou.

23. Yangtze River delta is one of the machinery centers of both China and the world Runzhou Nanjing Shanghai

24. Zhenjiang has a population of 2.89Million

25. Zhenjiang a city with over 3,000 years of history.

26. Zhenjiang cultural heritage

27. Zhenjiang Infra-Structure Zhenjiang is pivotally located with a highly developed infra-structure, including a deep sea port.

28. Bridging north & south China across the mighty Yangtze River

29. UTILITIES ABUNDANT SUPPLIES of ELECTRICITY, GAS and WATER

30. Zhenjiang Education System 6 universities 9 professional colleges 14 adult education schools Annually: 20,000 qualified technical graduates 210,000 student graduates

31. Resource availability: Industrial Land Highly available and well located Skilled work force Plentiful & skilled at all levels Good infra-structures Good and getting better every day Energy Well planned energy resources, with daily availability. Attitude of the local government to new businesses We traveled China in search of the right location, Beijing…..Jinan…..Wuxi…..Suzhou..…Shanghai….. Ningbo….. Guangzhou…..Shenzhen and more. Zhenjiang & RunZhou Governments offered the BEST new business investment environment. Why Runzhou, Zhenjiang, Jiangsu?

32. The key to success in China Is not your investment Is not your products Is not your designs Is not your production techniques It is RELATIONSHIPS! 50% of your executive manager’s time will be absorbed in building and sustaining relationships If you learn nothing else from my presentation….please learn this!

33. Conclude negotiations with the Chinese authorities to: Establish a Wholly Owned Foreign Investment Enterprise. Target April 30, 2005 Maximize incentive and tax benefits for 5 years & beyond Target April 30, 2005 Obtain Business License Target April 30, 2005 Conclude Land Use Contract Target April 30, 2005 Establish bank accounts and financial relationship Target April 30, 2005 Selection and appointment of critical managers Target May 15, 2005 Take “possession” of the land Target May 31, 2005 Construction of 92,000 sq ft building to be completed by September 30, 2005 Commence production November 1, 2005 Key objectives established at 1st meeting with RunZhou District Government . Day 1 - January 24, 2005

34. White (China) Drive Products Co. Ltd. Business License issued April 28, 2005

35. Ground Zero May 2005

36. Foundation Stone Laying Ceremony June 8, 2005

37. Unshakeable Foundations… like the Great Wall of China

38. Progress….. Late August , 2005

39. The building contractors have gone……October 2005

40. WCDP Electrical Sub-station

41. Heat Treatment

42. Production EquipmentOperating 24/7

43. Wash, Dry and Paint Operation

44. QMS Equipment

45. Test Lab and R&D Center

47. The first BK10 Hydraulic Brake January 6, 2006

48. Cost of Operating in China

49. Utility costs Electricity: $0.05/kw/h Water: $0.28/m3 Gas: $0.30/m3

50. Typical savings versus the same or similar material in USA 45+% Because we are a Chinese company Material Costs