REGULATIONS ON ENCOURAGEMENT OF FOREIGN INVESTMENT OF HUNAN PROVINCE

   Article 1. With a view to improve investment environment, absorb more investment from foreign corporations, enterprises and other economic organizations
and individuals (hereinafter referred to as foreign investors) and promote the province’s economic development, these regulations
are formulated in accordance with relevant laws and administrative regulations and with reference to the concrete conditions of the
province.

   Article 2. These regulations are to be put into effect by governments at the county level or higher.

The foreign economic relations and trade departments of governments at the county level or higher are in charge of the work of absorbing
foreign investment in areas under their jurisdiction. All departments concerned including those of planning, economic, taxation,
industrial and commerce administration, banks, foreign exchange control, customs, commodity inspections and insurance shall try their
best to help promote such a work within their assigned duties.

   Article 3. Apart from State-formulated preferential treatments, foreign investors shall enjoy additional preferences in the province in accordance
with these regulations and their legal rights and interests shall be protected by Chinese law.

Foreign investors in the province shall abide by Chinese laws.

   Article 4. Foreign investors may invest in all parts of the province.

Foreign investments are especially encouraged in:

economic and technical development zones and high and new technological development zones;

basic industries and infrastructure such as energy, communications and raw materials and development-oriented projects in agriculture,
forestry and animal husbandry in line with the national industrial policy;

export-oriented and technically advanced enterprises and technical renovations of existing productive firms.

   Article 5. Foreign investors may take the following forms in their investment:

a. To establish fully foreign-funded enterprises;

b. To establish Sino-foreign joint-equity or Sino-foreign cooperative enterprises;

c. To engage in processing and assembling with customer’s materials and parts and compensatory trade; and

d. To engage in State-permitted land development, enterprise leasing operation and other forms.

   Article 6. Foreign investors may contribute their respective investments in cash, kind, industrial property rights, proprietary technology and
other property rights.

   Article 7. Formalities for foreign investment application shall be simplified and such application shall be examined and approved timely. The
authority and procedures for such examination and approval are to be defined by the provincial people’s government.

   Article 8. Foreign-funded, Sino-foreign joint-equity and Sino-foreign cooperative enterprises (hereinafter referred to as foreign-funded enterprises)
which comply with Chinese regulations for legal person, upon approval by administrations of industry and commerce, shall obtain the
status of Chinese legal person.

   Article 9. Foreign investors may appoint their relatives or friends in China as their agents.

Foreign investors may recommend that their relatives or friends in China be employed in the enterprises where they invest.

   Article 10. Relevant departments shall preferentially arrange water and power supply, transport and telecommunications facilities needed by foreign-funded
enterprises for operation and charge them on a par with local State-owned enterprises. Fuel and raw materials which need to be supplied
by the Chinese partner will be preferentially provided by goods and materials departments.

   Article 11. Chinese partner of Sino-foreign joint-equity and Sino-foreign cooperative enterprises may apply for bank loans to make up for the
deficiency between its pledged investment and self-raised funds.

Short-term circulating loans and other necessary credits needed by foreign-funded enterprises in the process of production and circulation,
upon approval banks, may be extended in priority.

   Article 12. Machines, equipment, parts, vehicles for productive purposes and other goods and materials imported by foreign-funded enterprises
as investment are exempted from Customs duty and consolidated industrial and commercial tax in accordance with Chinese regulations.

Machinery, vehicles for productive purposes, raw materials, fuel, loose parts, parts, elements and components and supplementary parts
imported by foreign-funded enterprises to fulfill product export contracts are exempted from import licences, Customs duty and consolidated
industrial and commercial tax.

Apart from those controlled by the State, export products produced by foreign-funded enterprises are exempted from Customs duty and
consolidated industrial and commercial tax.

   Article 13. Productive foreign-funded enterprises with operational terms of more than ten years are exempted from local taxes for ten years and
non-productive ones for five years.

Enterprises engaged in energy, transport infrastructure and raw materials and enterprises established in economic and technical development
zones and high and new technological development zones are exempted from local taxes.

   Article 14. Export-oriented enterprises after the period of exemption of income tax in accordance with Chinese regulations, whose exports account
from more than 70% of the total output value in the year, may pay the enterprise income tax at half the going rate.

Technically advanced enterprises after the period of exemption of enterprise income tax in accordance with Chinese regulations may
enjoy reduction of half of their enterprise income tax in the ensuing three years.

   Article 15. Foreign-funded enterprises which invest in agriculture, forestry and animal husbandry or in less-developed outlying districts, after
the period of exemption of enterprise income tax in accordance with Chinese regulations, upon approval by national taxation departments,
may continue to enjoy a 15%-30% tax reduction for another ten years.

   Article 16. Foreign investors reinvest their profits made from the venture involving their investment to directly boost its registered capital
or start other enterprises for an operational term of no less than five years, upon application by the investors and approval by
the taxation departments, shall be returned 40% of the income tax payment on the amount reinvested. Those who reinvest in export-oriented
or technically advanced enterprises for an operational period of five years or more, upon application by the investors and approval
by taxation departments, shall be returned all income tax payment on the amount reinvested. Those who withdraw before the five years
term shall hand in the returned income tax.

   Article 17. Vehicles needed to be imported by foreign investors into the province for operations of processing with customer’s raw materials
are exempted from import licences; machinery for compensatory trade is exempted from import tax.

   Article 18. Export-oriented and technically advanced foreign-funded enterprises are exempted from land utility fees for five to ten years as
of the date of establishment and are charged at half the rates after the period of exemption.

Foreign-funded enterprises engaged in agriculture and animal husbandry are exempted from land utility fees for ten to fifteen years
as of the date of approval on use of the land; enterprises in forestry, for twenty to thirty years.

   Article 19. Export-oriented and technically advanced foreign-funded enterprises, except for paying labor insurance premiums, welfare expenses
and subsidiary housing fund for Chinese workers, are exempted from payment of other State subsidies for Chinese workers.

   Article 20. Foreign-funded enterprises which need to transfer forex into or out of the enterprises may do so through the provincial forex swapping
center. The forex transferred into the enterprises may be used to repay capital with interest, buy equipment and raw materials, remit
profits out of the country and pay the legitimate income of foreign staff.

Forex may be swapped among foreign-funded enterprises or between foreign-funded and Chinese enterprises under the supervision of forex
control departments.

   Article 21. Products of foreign-funded enterprises as imports-substitutes to be sold in China may be paid in forex upon approval.

Sino-foreign joint-equity and Sino-foreign cooperative productive enterprises, upon approval, may purchase Chinese products for export
to balance their forex earnings and expenditures in the year in accordance with Chinese regulations.

   Article 22. Foreign-funded enterprises have the right to work out their production and operational plans, collect and use funds, buy capital
goods and market their products within approval contracts.

Foreign-funded enterprises may, in accordance with the need of production and operations as well as with regulations of the State
and the provincial people’s government, independently determine the structure of offices and management, employment and dismissal
of staff, commendation and punishment, standards and forms of wages, bonuses and subsidies.

   Article 23. Boards of directors or joint administrative organizations of foreign-funded enterprises exercise their authority in accordance with
law. Chinese staff on the boards of directors or joint administrative organizations of Sino-foreign joint ventures or foreign-funded
cooperative enterprises shall not be changed at will in their terms of office.

   Article 24. Foreign-funded enterprises have the right to own, use, benefit from and dispose of the property of the enterprises in question in
accordance with law.

   Article 25. Foreign investors may remit overseas the profits and other legal income from their investment in the province in accordance with
law.

   Article 26. No organization shall be allowed to apportion expenses among foreign-funded enterprises or collect fees from them apart from taxes
and charges sanctioned by laws and regulations. Foreign-funded enterprises may refuse to pay charges outside of laws and regulations.

   Article 27. Those (excluding government staff who engage in attracting foreign funds) who introduce foreign investors to the province with success
will be awarded a bonus proportionate to the amount of foreign investment. Detailed rules are to be formulated by the provincial
people’s government.

   Article 28. Foreign investors or foreign-funded enterprises have the right to appeal to people’s governments and relevant departments against
acts that encroach on their legal rights and interests or take legal proceedings to people’s courts against such acts.

   Article 29. For investments in the province by compatriots from Hong Kong, Macao and Taiwan and overseas Chinese, these regulations serve as
a reference, in addition to “Regulations on Encouraging Investment by Overseas Chinese and Hong Kong and Macao Compatriots” and “Regulations
on Encouraging Investment by Taiwan Compatriots” promulgated by the State Council.

   Article 30. These regulations shall come into effect as of the date of promulgation.

These regulations shall apply where previous regulations of the province are not in accord with these regulations.