I. Overview of the Project and Project Constructor
 Due to the decreasing land resources, the annual nationwide output of cars increasing by one million per year, etc, the National Development and Reform Commission plans to legislate the development of mechanical stereo garage so as to fundamentally solve the “parking difficulties”. According to statistics, the nationwide market demand can reach over RMB 100 billion Yuan in the next 10-15 years.
 Logistic Engineering Co., Ltd, a subsidiary of Shanghai Machinery Complete Equipment Group, is one of the first manufacturers that professionally manufacture mechanical stereo garages in China. Since 1992, it has been introducing technologies from such countries as Japan, Germany, etc. It has its own high-tech products and patented technologies, and has its own sales channels, design, R&D and installation teams. For its products, it has received a third-level science & technology award in China machinery industry - the highest award in the same industry. The Company owns the famous Shangcheng trademark and is approved by the qualification of production and manufacture and installation is approved by the General Administration of Technology and Quality Supervision, Inspection of the People’s Republic of China for manufacturing and installation. Its market share is 14.5% and it is an enterprise with core competitiveness and is the industry leader. But the shortage of funds restricts the company’s development. At the present, the Company’s projects under construction are Forte Elegant Garden, Zhonghuan Business Building and Jinling International Building. The projects that to be signed include Peace Real Estate and Rose Garden, etc. There are 8 key projects, 15 intention projects and 131 tracked projects.

II. Guideline for cooperation and strategy for future development
In order to meet the soaring needs for mechanical garages, the Company will use assets as links to develop markets for win-win, further strengthening and expanding the brand effect of Shangcheng Brand mechanical stereo garages, and struggle for building itself into a comprehensive group of enterprises.
The development strategy is divided into three steps. The first step is to rapidly expand the market share in Shanghai and take the key position in Shanghai market. The market share shall be increased to 18-20% and the annual output shall reach RMB 30 million Yuan after one year of technical research & development and market expansion. Meanwhile, expand to Yangtze River Delta as soon as possible mainly by building a strong marketing team and training local after-sales service teams. The market strategy is: routine products depend on brands, high-end products depend on technologies, rebuilding of old houses depends on garage types. The second step is to get ready to sell products in China, including the central and western regions of China, Beijing, Guangzhou, etc, and get ready to export products by developing the basic export policy to meet the needs of Europe, Japan, Australia and the other counties at any time; complete the nationwide network of agents, branch companies, offices, sales departments, etc, the annual output shall reach over RMB60 million Yuan. The third step is to, on basis of China’s 11th Five-Year Development Plan, establish the stereo garage sales outlets and production base in shanghai and even all over China, and develop the logistics equipment market needed by third party logistics. The annual production of stereo garages and stereo warehouses shall reach over RMB150 million Yuan. On this basis, complete the scale management and corporate integration that extends to two ends of the stereo garage industry, including investing in building stereo garages and tracking management, relentlessly developing the installation team, steel structure production, etc, and struggle to reach the goal of achieving an annual sales income of at least RMB two hundred million Yuan.

III. Means of Cooperation
There are three detailed means of cooperation:
The first is equity transfer. The equity transfer solves the shortage of funds of project parties based on the existing equity structure of the project parties. The investors and the project parties deliver and reorganize the assets, share interests and risks. The project parties transfer 30%-49% of the equity and invest RMB 10.5 million Yuan (accounting for 70% or 51% of the equity) in the forms of existing assets, high-tech technologies, patented products, Shangcheng trademark, producer qualifications and other intangible assets. Investors input RMB 4.5 million Yuan or RMB 7.35 million Yuan (accounting for 30% or 49% of the equity) in the form of money.
 After reorganization of both parties, the company name will be changed to: Sino-Foreign Joint Venture Shanghai Shangcheng Logistic Equipment Co. Ltd
The second is to adopt “Chinese-Chinese-foreign” cooperation. Project parties, investors and manufacturers jointly invest RMB100 million Yuan and realize reorganization on the basis of existing production factory and project unit to lay a good foundation for achieving the second-step development strategy. The proportion of investment can be discussed on basis of the 40% for project parties 25% for the manufacturer and 35% for the investor.
 The third step is to adopt the “Backdoor Listing” method. The investor can purchase the project parties through acquisition and buyout and then increase investment. In order to attract social capital, recover investment, the company will be listed in the name of the project party and the existing limited liability company will be changed to a joint-stock company.
 Other methods also can be negotiated.

IV. Use of funds
 Input funds will be mainly used to solve the lack of working capital of the project unit. If the plan provides RMB100 million Yuan, of which RMB6 million Yuan will be used for purchasing land, RMB 12 million Yuan for construction of factory, RMB 8 million for procurement of production equipment, RMB 2 million Yuan for establishing 8 nationwide sales outlets, RMB 10 million Yuan for downtown offices and exhibition halls, RMB 2 million Yuan for testing equipment, instruments and vehicles, RMB 1 million Yuan for network equipment for the CAD workstation, RMB 3 million Yuan for administration, living facilities, equipment installation and others, RMB 5 million Yuan for working capital

V. Business forecasting for the next 4 years (this project has 18 preferential policies, e.g. tax exemption, etc):

Investment recovery period for the project: 3 years and 1 month

VI. Contact
Contact: Elaine Liu
Tel: +86-21-62752200-872   Fax: +86-21-62751960
Address: RM1704, No.55, Lou Shan Guan Road, Shanghai, 200336 China
E-mail: investment@smert.gov.cn