09:42     WEIQIAO TEXTILE<02698> - Announcement (1)                           

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
                                                                              
                                                                              
                                                                              
    WEIQIAO TEXTILE COMPANY LIMITED*                                          
    (a joint stock limited company incorporated in the People's Republic      
    of China with limited liability)                                          
                                                                              
    (Stock Code: 2698)                                                        
                                                                              
    ESTABLISHMENT OF SHANDONG WEIQIAO CHUANGYE FINANCE COMPANY LIMITED        
    CONNECTED TRANSACTION                                                     
                                                                              
                                                                              
                                                                              
    Promoters' Agreement                                                      
    Pursuant to the Promoters' Agreement,the Company, Industrial Park (a      
    subsidiary of the Company), Weihai Weiqiao (a subsidiary of the Company), 
    Holding Company, Weiqiao Dyeing (a subsidiary of Holding Company), and    
    Weilian Print (a subsidiary of Holding Company) have agreed to be the     
    promoters for the purpose of establishing SWCF. Subject to approval by    
    China Banking Regulatory Commission, the scope of financial services to be
    provided by SWCF may include corporate finance services, credit           
    verification, insurance agency services, capital financing services       
    and provision of guarantee services.                                      
                                                                              
    Upon establishment, SWCF will be owned as to 6.25% by the Company,        
    3.75% by Industrial Park, 2.5% by Weihai Weiqiao, 68.75% by Holding       
    Company, 12.5% by Weiqiao Dyeing, and 6.25% by Weilian Print. Hence,      
    the Group is expected to own in aggregate 12.5% equity interests in       
    SWCF.                                                                     
                                                                              
    The Directors intend for SWCF to (a) provide flexibility to the           
    Group's financing means; (b) enhance the investment capability of the     
    Group; (c) reduce the Group's financing costs; and consequently (d)       
    enhance the efficiency of the Group's corporate fund management and       
    financing.                                                                
                                                                              
    Connected transaction                                                     
    Holding Company is one of the promoters and the controlling shareholder of
    the Company. It therefore constitutes a connected person of the Company.  
    Weiqiao Dyeing and Weilian Print are subsidiaries of Holding Company.     
    Hence, each of Weiqiao Dyeing and Weilian Print constitutes a connected   
    person of the Company. As certain applicable percentage ratios (as        
    defined in Listing Rule 14.07) are more than 0.1% but less than 2.5%,     
    the entering into of the Promoters' Agreement constitutes a connected     
    transaction of the Company under Listing Rule 14A.32. The Transactions are
    therefore only subject to the reporting and announcement requirements set 
    out in Chapter 14A of the Listing Rules. The Directors, including the     
    independent non-executive Directors, consider that the Transactions are on
    normal commercial terms and are fair and reasonable as far as the         
    Shareholders are concerned. Relevant details will be included in the next 
    published annual report and accounts of the Company in accordance with    
    Listing Rule 14A.45.                                                      
                                                                              
                                                                              
    Promoters' Agreement                                                      
    1. Date                                                                   
    17 March 2005                                                             
    2. Parties                                                                
    (a) Company                                                               
    (b) Industrial Park                                                       
    (c) Weihai Weiqiao                                                        
    (d) Holding Company                                                       
    (e) Weiqiao Dyeing                                                        
    (f) Weilian Print                                                         
    Set out below is a simplified corporate structure chart showing the       
    expected relationship between the parties to the Promoters' Agreement     
    immediately upon the establishment of SWCF:                               
    (For more details, please refer to the press announcement today.)         
                                                                              
                                                                              
    3.                                                                        
    Major terms                                                               
    The establishment of SWCF is subject to the obtaining of the              
    relevant approval of  (China Banking Regulatory Commission) and