Tiangong Implemented "Humanized" Management

To safeguard the vital interests of all employees and enable them to truly regard Tiangong as their "second hometown" with a feeling of "being in a foreign land but better than home", Tiangong has implemented the following measures:

Tiangong has invested more than RMB 50 million to build nearly 1,800 married-couple dormitories for migrant employees. Since October 2004, migrant employees who have worked for Tiangong for two years (i.e., starting from January 2006) and meet the requirements have been exempted from housing fees.

2. Since 2004, Tiangong has selected 10 households of migrant employees as "Honorary Villagers of Qianxiang Village" every year. Both spouses of these households can enjoy the welfare benefits of Qianxiang Village, including 4 preferential policies: free annual grain rations, liquefied gas, cooperative medical care, and exemption from tuition and fees for their first child.

3. To enable migrant employees to reunite with their families during the Spring Festival (a traditional Chinese festival) and alleviate their homesickness, Tiangong has arranged more than 40 vehicles every year (for 18 consecutive years) to send employees from Anhui and northern Jiangsu back home for free before the Spring Festival. In 2006, due to continuous snowfall, the region encountered a rare snow and ice disaster in history. To help migrant workers return home on time, Tiangong seized the opportunity of improved weather, held a departure ceremony for "special buses for migrant workers to return home safely", carefully selected the best vehicles and drivers, and ensured that migrant employees returned home safely.

4. Children of employees living in married-couple dormitories at Tiangong can be admitted to Tiangong Kindergarten free of charge.

5. Tiangong has specially set up the "Seniority Award for Frontline Employees". For employees who have worked for Tiangong for more than two years (inclusive), an additional seniority reward will be given based on their total annual salary for each additional year of service. For employees who leave the factory after the 26th day of the 12th lunar month and return to work on time on the 7th day of the first lunar month, the Company reimburses the approved round-trip travel expenses. Employees who do not go home for the Spring Festival but return to work on time also enjoy the reimbursement of approved travel expenses. For employees who take the Company's chartered buses and return to work on time, the Company reimburses one-way travel expenses.

6. In 2002, Tiangong took the lead in implementing a new measure of providing pensions to the parents of non-Qianxiang Village cadres at or above the director level.

7. To guide consumption and help employees achieve a well-off life as soon as possible, Tiangong took the lead in implementing preferential policies to encourage cadres to purchase cars. For each car purchased, the enterprise provides a subsidy of RMB 30,000, and covers the "three fees" (road toll, vehicle insurance premium, and vehicle and vessel tax) for 5 years.

8. Tiangong holds an annual selection activity of "Top 100 Migrant Production Models of Tiangong". Migrant employees who are selected enjoy an additional monthly salary of RMB 50 and a one-time reward of approximately RMB 1,000 in gifts.

9. Tiangong has specially built nearly 500 low-cost housing units for employees, with a selling price of only RMB 600-1,000 per square meter. Each household receives a subsidy of approximately RMB 20,000 based on the cost price and about RMB 100,000 based on the market price. Employees only need to pay a down payment of RMB 10,000, and the remaining payment is deducted RMB 500 from their monthly salary. This enables employees to truly "have a stable home and a fulfilling career". At present, the construction of the second batch of nearly 300 low-cost housing units is in progress.