10:19     SHIMAO CHINA<00649> - Announcement & Resumption (12)                

    of the SPHL Group, the Suifenhe Shimao Development                        
    Project as well as other geographical markets outside                     
    Mainland China (including Hong Kong). The Group                           
    understands that SPHL and the Private Group do not                        
    currently have any projects in markets outside of                         
    Mainland China (and, as such, there is currently no                       
    competition in terms of actual projects), although,                       
    during 2004, the Private also pursued opportunities                       
    in South East Asia including Malaysia which has now                       
    been discontinued in view of the proposal to enter                        
    into the business delineation. But in view of the                         
    financial resources of SPHL, it is not inconceivable                      
    that, faced with the appropriate opportunities in                         
    overseas markets, SPHL could, absent the Undertaking,                     
    well readily go into such markets. Whilst the threat                      
    of competition would not, of itself, fully justify                        
    the Group from refraining from undertaking Mainland                       
    China projects, the Board considered and concluded                        
    that, on balance, the reasons set out in this                             
    announcement, including the clarity that the business                     
    delineation would achieve, the conditional                                
    acquisition of the Suifenhe Shimao Development                            
    Project (which is not conditional on the Undertaking),                    
    justify the entering into of the Undertaking as being                     
    in the interests of the Group to resolve such                             
    potential competition. On this basis, as the Group                        
    has decided to pursue a business strategy away from                       
    Mainland China for the reasons described above, the                       
    Undertaking serves to protect the Group's interests                       
    as it seeks to develop opportunities outside of                           
    Mainland China, whilst at the same time, agreeing not                     
    to continue its activities in a location from which                       
    the Group and other smaller developers are being                          
    driven away.                                                              
                                                                              
    In addition, the arrangements pursuant to the                             
    Undertaking are transparent due to the nature of the                      
    Group's business and the method of delineation                            
    adopted by the Undertaking. The business of the Group                     
    going forward and those of Mr. Hui and his associates                     
    have been determined based on geographical                                
    delineation under the Undertaking. Due to the fact                        
    that property development companies undertake only                        
    a limited number of projects at any given time and                        
    their activities are all "tangible", a geographical                       
    approach to delineation would be transparent, unlike                      
    non-competition arrangements which define a space                         
    according to defined market or product segments or                        
    target markets.                                                           
                                                                              
    (4)     The Suifenhe Shimao Development Project and the                   
    geographical delineation afforded to the Group                            
    demonstrate the strong commitment from Mr. Hui and                        
    his associates to develop the Group's international                       
    property development business under the "Shimao"                          
    brand                                                                     
    The Undertaking affords the Group a geographical area                     
    that underlines the strong commitment from Mr. Hui                        
    and his associates to develop the Group's                                 
    international property development business under                         
    the "Shimao" brand, for the following reasons:                            
                                                                              
    -      The Undertaking gives the Group a huge geographical                
    coverage area. Whilst the business delineation would                      
    restrict the Group from its activities in Mainland                        
    China, the geographical coverage of the Group's                           
    markets in which Mr. Hui and his associates are not                       
    permitted to enter are significant, as the Group will                     
    be able to enjoy the benefit of an undertaking from                       
    Mr. Hui and the relevant parties that they will not                       
    carry on any property business outside of Mainland                        
    China. Hong Kong, Macau and Taiwan are all potential                      
    markets available to the Group pursuant to the                            
    Undertaking.