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Overview
Our Vision
Our History
Organisation Structure
Management Structure
Industry Prospects
Future Plans
Prospects

Our Directors believe that we will continue to enjoy healthy growth in the demand for our products, namely, Guangzhao Fast Growing Poplar seedlings and saplings. Our growth is being driven by the following industry background and trends:

 
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The implementation of national policies of the PRC government promoting the expansion of forests in the PRC and the development of the country's forestry industry

On 25 June 2003, the PRC government announced its Decision on Accelerating the Development of the Forestry Sector (the "Forestry Sector Decision"). In the Forestry Sector Decision, the PRC government stated its recognition to expand the forest cover of the PRC, and the fragile nature of the PRC's forest ecosystem. The PRC government announced its intention to increase the forest cover in the PRC from 16.55% as at the date of the Forestry Sector Decision, to at least 19% in 2010, at least 23% in 2020 and at least 26% in 2050. In terms of actual area, our Directors estimate that this represents the following increases:

Year Increase in Forest Cover (sq km)

2010 By at least 200,000
2020 By a further 370,000
2050 By a further 280,000

The PRC government's stated policy of increasing the forest cover in the PRC represents a tremendous growth potential for our Group.

Forest cover helps minimise soil erosion, and consequently, has an effect on the frequency and severity of flooding of rivers as well as the occurrence of droughts in the PRC. We believe that there is an increasing public awareness of the impact of deforestation on flooding and droughts.

The PRC government has also taken efforts to reverse desertification in, amongst others, the northern, northeastern and northwestern regions of the PRC. On 1 January 2002 , the Law of Desertification Prevention and Control came into effect in the PRC.

This law requires local governments at all levels in the PRC in regions where there exists desertification to adopt measures such as afforestation and others. Our Directors believe the legal and policy framework presently existing in the PRC represents a favourable operating environment for the Group.
•

The domestic demand for paper pulp manufactured from wood fibre represents a potential market for our Guangzhao Fast Growing Poplar

The Company intends to sell our Guangzhao Fast Growing Poplar to paper pulp producers for use in the production of paper pulp. Paper pulp is used in the manufacture of paper and paper products.

The following industry trends favour our sale of our Guangzhao Fast Growing Poplar to paper pulp producers.

PRC's consumption of paper and paper products ranks amongst the top five in the world. Paper pulp, which is used to manufacture paper and paper products, can be manufactured from wood or from non-wood sources of fibre, such as straw, reeds and bamboo. Wood-based paper pulp is generally used to manufacture paper that is of a relatively higher quality.

In 2002, more than 30 million tons of paper pulp were consumed in the PRC, with paper pulp manufactured from wood sources comprising less than a quarter of this amount. The balance comprised paper pulp manufactured from recycled paper and non-wood sources of fibre. The demand in the PRC for paper of better quality is likely to increase in the future. This is likely to lead to an increase in demand for paper pulp manufactured from wood fibre.

In addition, our Directors believe that in 2002, the PRC imported more than five million tons of paper pulp, more than six million tons of paper and paperboard, and over six million tons of recycled paper. On this basis, the demand in the PRC for paper pulp, including wood-based paper pulp, cannot be satisfied through domestic sources of supply.


On 28 September 2002 , the State Economic and Trade Commission issued its Directions for the Short Term Development of Industries (the "Directions"). These Directions stated the PRC government's objectives to increase the proportion of wood fibre and recycled paper used in the manufacture of paper and paper products, and to promote the cultivation of trees intended for the production of paper pulp.

 
There will also be gradual increases in the selling prices of our seedlings and saplings in the short term arising from the healthy growth in the demand for our products spurred by the favourable industry trends described above, as well as increasing recognition amongst our customers of the fast growing characteristics of our Guangzhao Fast Growing Poplar, and the consistency in the quality of our seedlings and saplings.
 
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