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Richina Pacific Eyes Auto Leather Production

MEDIA RELEASE

Richina Pacific Eyes Auto Leather Production

Statement made by Richard Yan, Acting Chairman, Richina Pacific Limited

Richina Pacific has entered into a memorandum of understanding to manufacture and market automotive leather for the China and world markets from its Shanghai tannery operation.

Its partners in the venture are the United States-based Garden State Tanning Inc., one of the world’s leading suppliers of automotive leather, and Shanghai Light Industry Holdings (LIH), a company owned by the Shanghai Government.

The objective of the agreement between the three parties is for Richina’s subsidiary, Shanghai Richina Leather (SRL) to produce up to 50 million square feet of automotive leather a year within the next couple of years.

A key target for this leather will be China’s emerging automotive industry, the fastest growing market in the world, while Garden State Tanning will also market the production internationally through its existing sales network.

The memorandum of understanding was signed in Auckland on Monday, October 27, in the presence of New Zealand’s Minister of Trade, Mr Jim Sutton, and the Chinese Ambassador, Mr Chen Ming Ming and was approved today by Richina Pacific’s board.

The signing was timed to coincide with the visit to New Zealand of China’s President, Mr Hu Jintao. Also travelling to Auckland to take part in the signing were the President of LIH, Mr Lu Yong Jie, the President of Shanghai Leather Corporation, Mr Huo Jian Guo, our 5% partners in SRL, and the President and Chief Operating Officer for Garden State Tanning, Mr Mark D. Lecher.

“This memorandum represents a significant commercial opportunity for our China-based leather operation SRL, as it opens up to us an entirely new leather market of unlimited potential, and is a practical example of the business opportunities that exist for New Zealand companies once established in China” said Mr Yan.

Mr Lu said “We fully endorse this new venture and welcome the opportunity to contribute to the localisation of Chinese automotive components production. We will work closely together with Richina Pacific and Garden State to ensure the project receives the appropriate and necessary approvals from the relevant Chinese authorities.”

“This is an exciting opportunity for us to expand our automotive leather production capabilities in Asia, and to quickly have a meaningful impact on the Chinese automotive market. This is a significant step in expanding our international automotive leather leadership position and will enhance our production and service levels for our customers world-wide”, said Mr Lecher.

Involvement of all three parties is essential and provides a sound basis for future success.

Garden State Tanning includes amongst its customers manufacturers such as BMW, Chrysler, General Motors, Ford, Honda, Isuzu, Lexus, Lincoln, Mazda and Toyota.

Shanghai Light Industry Holdings is one of the largest state-owned companies in Shanghai with revenues exceeding US $5 billion a year. Its wholly-owned subsidiary SLC leases to SRL the property on and within which our Shanghai tannery operates, and possesses the licences that allows the tannery to operate. It is integral to the future success of the venture, and will work with us to achieve all necessary approvals to finalise the expansion plans for the Shanghai tannery.

These new facilities, due for completion in mid 2004, will triple our production capacity to over 200 million square feet of leather a year.

Over time, automotive leather will utilise up to 30% of our total capacity, with the remaining production being allocated to existing shoe, upholstery and garment leather manufacture.

SRL already employs close to 2000 people, and in the current financial year is forecast to achieve leather export sales of some US$ 105 million.

Richina Pacific also advises, that it has under active consideration new appointments to its board, and that it expects to be in a position to confirm these appointments within the next month.

End


Issued on behalf of Richina Pacific by Network PR [Dennis Lynch]

About Garden State Tanning [www.gstleather.com].


Garden State Tanning Inc., headquartered in Hagerstown , Maryland, is a division of Strategic Industries, LLC and US$800 million holding company owned by Citicorp Venture Capital. For over seventy years, Garden State Tanning has been the proud supplier of the world’s finest automotive leather. One luxury nameplate after another has turned to Garden State Tanning seeking the ultimate in leather quality, aesthetics and durability. A leader in innovation and development, Garden State engineers and other technical experts work hand in hand with customers to conceive, design and develop new generations of leather. Among the automobile plates currently carrying Garden State Leather are Toyota, Lexus, Acura, BMW, Chrysler, Ford, General Motors, Honda, Isuzu, Lincoln and Mazda.


W J – 28/10/03

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