Dr. K.B. Chan Chairman and Managing Director Surface Mount Technology Ltd. November 21, 2005

1. Springboarding Technology for Commercial Success Dr. K.B. Chan Chairman and Managing Director Surface Mount Technology Ltd. November 21, 2005

2. China’s growth & major economic zones Opportunities - Automotive and electronics Partnership with Hong Kong Summary Content

3. Major Economic Zones Growth 2005>9% 05/10 > 7.5% Bohai Economic Zone 7+2 CHINA Yangtze River Delta (YRD) 6+1 Pan-Pearl River Delta (PPRD) 9+2

4. Strength of EconomicZones 1 Total 2,054 95% 1,207 93% 1 Includes eastern China, *Includes China, Hong Kong and Macao Source: China Statistics Bureau, Hong Kong Census & Statistics Dept, Macau Statistics and Census Service

5. Bohai Economic Zone – 7+2 • Diversified economy: • Political, culture, R&D center - Beijing • Export, manufacturing base - Tianjin • Major industries/sectors: • Heavy industry, machineries, steel, military • Central Government designates as Third Wave

6. Yangtze River Delta – 6+2 • Industry and investment-oriented: • Shanghai as the regional leader – banking and finance, industrial manufacturing, tourism • becoming more internationalized • Major industries: • Very diversified • Automotive & auto parts, electronics equipment and parts, textile, chemicals,

7. Pan-Pearl River Delta – 9+2 • Export-oriented: • external trade of Guangdong accounts for over 30% of China’s total • large numbers of foreign-invested manufacturers in Guangdong, with a high concentration of Hong Kong-invested companies> 60,000 • Major industries/sectors: • consumer goods, light Industries, petrochemical, • > 40% are electronic related

8. Opportunities : Automotive & Electronics Industry

9. China is Factory of the World Advantage – Low cost & huge domestic market Electronics market – forecast by 2007 300 Billion US$ 20% of world output Growth rate 12%, double of world’s Largest market – hand set, DVD, TV, Top 5 – PC, home appliance, Electronics Production in China Source: isuppli, 03/2004

10. Electronic is major industry, highest growth Electronics Output in MajorEconomic Zones 40% of PPRD GDP,Over 80% from Guangdong Source: China’s Electronic Information Industry Yearbook

11. EMS in China to Increase Source: iSuppli, June 2003

12. 2004World Ranking 4th largest producer 3rd largest market Automotive Industry in China 2003 Sales > 100 Billions US$ ; Vehicle Output (Units) Started > 200 thousand > 3 million > 5 million 1953 1971 1980 2000 2002 2003 2004 > 100 thousand > 2 million > 4 million Vehicle Sales (Million Units) 2005-2010 CAGR 16% Source: State Information Center – China Economic Information Network

13. Automotive Electronics in China 2000 - 2010 CAGR >30% Source: FOURIN China Auto Weekly

14. Automotive Output – could exceed 10 M vehicles by 2010 Automotive Components–over 30% growth Share of automotive electronic components in a car will increase from 10% to 30% by value Foreign/ JV auto makers to procure local low-cost and high quality parts and components Domestic brands increase from 25% to over 50% Trend in China’s Automotive Components Industry

15. Partnership with Hong Kong The Advantages

16. Major economic engine of the Pan-Pearl River Delta, finance and service center Over 40% of China’s Foreign Direct Investment - FDI is from Hong Kong HK companies operate more than 60,000 factories in Southern China - employing > 10 million workers 40% of HK Manufacturing GDP is electronics Position of Hong Kong Source: Hong Kong Trade Development Council

17. Advantages of Hong Kong • Cosmopolitan city – large number of foreign company • Excellent infra-structure, transportation, telecom • Sound legal and tax system, center for arbitration • Mature equity market • Efficient government with no corruption • Easy communication, English, Chinese • Risk Management • IP Rights protection • Currency management - RMB

18. HK - R&D – Technology Developments • Administer under ITC – Innovation & Technology Commission – Funding ~ 4Billion HK$ • 8 Universities • Establish 5 R&D centers from 2006 • Auto parts, logistics, textile, nano tech, IT & telecom • ASTRI – Apply Science and Technology Institute • HKScience & Technology Park – IC design, photonics • Cyber Port – Digital entertainment • HK Productivity Center

19. Guangdong/HK Technology Co-operation Funding Scheme • Joint funding efforts between the 2 Government to support R&D projects • 2004> US$ 40 m in 6 areas • RFID , Auto-parts, elctronics & IT, energy tech • new materials, precision equipments • 2005> US$ 67 m in 6 areas • communication, medical & bio tech, new materials • green manufacturing, agriculture,

20. HK Companies as Partners • Understand both International and Chinese cultures, acting as a bridge • Historic link with multinational companies, and foreign countries • Substantial business experience in China, know “what not to do” • Fast response • Strong business integrity

21. Summary • The 3 major economics zones will be China’s economy growth engine > 90% • Pan Pearl River Delta – Super Economic Zone • Bohai Economic Zone is the Third Wave • Electronics and automotive will be the leading industries • Partnership with Hong Kong companies for outsourcing or entering the China market

22. Thank You