COSCO (H.K.) GROUP

COSCO International owns 63.07% equity interest in each of COSCO Kansai Paint & Chemicals (Shanghai) Co., Ltd. and COSCO Kansai Paint & Chemicals (Tianjin) Co., Ltd. (collectively named "COSCO Kansai Companies"). The principal business of COSCO Kansai Companies is the manufacture and sale of container coatings and industrial paints. Due to the rising cost of raw materials in the global market and a thriving shipping market, there exists keen competition in the paint industry. The coating products manufactured by COSCO Kansai Companies adopt the same standards as those of Kansai Paint Co., Ltd., the largest paint manufacturer in Japan, in aspects including paint technology formulae, raw materials adoption, manufacturing procedures, products index and customer service. Currently, COSCO Kansai Companies ranked as the top ones in the container coatings market in China, and have been awarded as the best foreign investment enterprises for years.

To expand its coatings business in southern China, COSCO International entered into an agreement with Kansai Paint Co., Ltd. at the end of 2005 to set up a joint venture named COSCO Kansai Paint & Chemicals (Zhuhai) Co., Ltd ("COSCO Kansai (Zhuhai)"), in which 64.71% owned by COSCO International. Both parties had on the same day entered into a project agreement to build a coating production plant in the Zhuhai Harbour Industrial Zone, a heavy chemical production base in Guangdong Province. The plant is expected to be completed in July 2007 with a designed production capacity of 24,000 tonnes, which will be expanded to a maximum of 36,000 tonnes.