09:46     CHIA TAI ENT<00121> - Announcement (10)                             

    (16)   Taian Lotus Merchandise Supply Agreement                           
    Date   :   15th February, 2005                                            
                                                                              
    Parties   :   (i)   Taian Lotus as supplier (a CTEI                       
    Supermarket Subsidiary)                                                   
                                                                              
    (ii)   Shanghai Lotus as purchaser                                        
                                                                              
    Subject   :   Electrical appliances and clothing                          
                                                                              
    Term   :   With effect from 1st January, 2005 to 31st                     
    December, 2007                                                            
                                                                              
    Price   :   To be determined by reference to the                          
    prevailing market price and demand of electrical                          
    appliances and clothing in the PRC and the costs of                       
    purchase by Taian Lotus and no less favourable to this                    
    CTEI Supermarket Subsidiary than those available from                     
    independent third parties.                                                
                                                                              
    Payment terms   :   Credit terms of up to 60 days.                        
    Payment shall be made by telegraphic transfer,                            
    bank-issued bills payable within three months or other                    
    payment methods acceptable in the PRC.                                    
                                                                              
    The annual value of the supply of electrical                              
    appliances and clothing from Taian Lotus to Shanghai                      
    Lotus for the financial years ending 31st December,                       
    2005, 31st December, 2006 and 31st December, 2007 will                    
    not exceed HK$3,000,000, HK$3,300,000 and                                 
    HK$3,630,000 respectively. The caps have been                             
    determined by reference to (i) the aggregate value of                     
    electrical appliances and clothing amounting to                           
    approximately HK$1,134,000 supplied by Taian Lotus to                     
    Shanghai Lotus in 2004; (ii) the possible price                           
    increases in line with consumer prices in the PRC                         
    generally; and (iii) the possibility of the                               
    revaluation of RMB in the coming years.                                   
                                                                              
    REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS                         
    CTEI is an investment holding company whose                               
    subsidiaries are engaged in various business                              
    activities including, among other things, the                             
    operation of large scale cash-and-carry warehouse                         
    stores in the PRC; the provision of software solutions                    
    to the financial sectors in Thailand; and the                             
    investment in commercial properties in the PRC. The                       
    CTEI Supermarket Subsidiaries operate large scale                         
    cash-and-carry warehouse stores in different                              
    localities in the PRC.                                                    
                                                                              
    CPP and its subsidiaries are principally engaged in                       
    the trading of agricultural products, feedmill and                        
    poultry operations, the production and sale of                            
    motorcycles and accessories of automotives and                            
    property and investment holding. The CPP Subsidiaries                     
    are all engaged in the production of agricultural                         
    produce.                                                                  
                                                                              
    Shanghai Lotus is principally engaged in the operation                    
    of large scale cash-and-carry warehouse stores in                         
    Shanghai and other localities.                                            
                                                                              
    As a result of the increase of disposable income of                       
    both urban and rural residents, the living standards                      
    in the PRC continue to improve. In view of the aforesaid                  
    and based on CTEI's extensive experience and network                      
    in the PRC, the Directors intend to expand the CTEI                       
    Supermarket Subsidiaries' retail network in the PRC                       
    so as to capture the continuing increases in consumer                     
    spending cream in the PRC. The Directors are of the                       
    view that the purchases of the relevant merchandise                       
    from the CPP Subsidiaries and Shanghai Lotus enable                       
    the existing and future retail network of each of the                     
    CTEI Supermarket Subsidiaries to have a reliable                          
    source of merchandise with consistent quality at                          
    competitive prices. On the other hand, the supply of                      
    merchandise from Taian Lotus to Shanghai Lotus enables                    
    Taian Lotus to secure a substantial customer for its                      
    related merchandise.                                                      
                                                                              
    The Directors (excluding the independent                                  
    non-executive Directors whose views will be given                         
    after taking into account the advice of an independent                    
    financial adviser) consider that the terms of the                         
    respective Continuing Connected Transaction                               
    Agreements are on normal commercial terms, fair and                       
    reasonable and in the interest of CTEI and the                            
    Shareholders as a whole.