In order to keep abreast of technological advancement and our customers' requirements, we view research and development as an integral part of our work. For a given project, we assemble an ad-hoc research and development team, consisting of 2 to 3 members, who are engineers holding degrees or post-graduation qualifications . This research and development team caters to the design, development and improvement of a specific project and will disband after 3 to 6 months upon completion of their research and development activities. The costs of such research and development are not recorded as research expenses but are instead accounted for in the costs of each respective project.

We also conduct research and development to address technical faults arising from our projects after obtaining feedback from our teams working on each respective project. An ad-hoc research and development team, comprising 5 to 7 engineers, will be formed to work on specific research and development projects. We have also entered into collaboration arrangements with Wuhan University and Wuhan Zhongwei Electric Power and Technology Co., Ltd. to carry out tests on our resin separation and regeneration equipment to assess its suitability and effectiveness. The research and development costs incurred by our Group for the past three financial years ended 31 December 2003 are not significant.