10:25     HUALING<00382> - Announcement & Resumption (3)                      

    WHITEWASH WAIVER                                                          
                                                                              
    In the event that upon completion of the Rights Issue, no                 
    Qualifying Shareholders take up any Rights Shares, Midea                  
    International, as the underwriter of the Rights Issue, will be            
    required to subscribe for and take up all the Rights Shares that          
    are not subscribed for under the Rights Issue, which will result          
    in Midea International holding more than approximately 3,052              
    million Shares, representing more than approximately 76% of the           
    enlarged issued share capital of the Company upon completion              
    of the Rights Issue. Accordingly, the underwriting by Midea               
    International will trigger an obligation for Midea International          
    and parties acting in concert with it to make a mandatory general         
    offer under Rule 26 of the Takeovers Code for all the Shares              
    not already held by it and parties acting in concert with it.             
    An application will be made by Midea International to the                 
    Executive for the Whitewash Waiver pursuant to Note 1 on                  
    dispensations from Rule 26 of the Takeovers Code. The Whitewash           
    Waiver, if granted by the Executive, would be subject to, among           
    other things, the approval of the Independent Shareholders at             
    the EGM by way of poll. If the Whitewash Waiver is not granted            
    by the Executive, the Rights Issue will not proceed.                      
                                                                              
    EXECUTIVE'S CONSENT                                                       
                                                                              
    Midea International has applied to and obtained the consent of            
    the Executive under Rule 31.1(a) of the Takeovers Code. The               
    Executive's consent is conditional upon Midea International               
    successfully obtaining both the Whitewash Waiver and the                  
    relevant approval of the Independent Shareholders of the                  
    Whitewash Waiver being obtained at the EGM by way of poll.                
                                                                              
    SUSPENSION AND RESUMPTION OF TRADING                                      
                                                                              
    At the request of the Company, trading in the Shares on the Stock         
    Exchange was suspended from 9:30 a.m. on 13 May 2005 pending              
    the release of this announcement. The Company has applied to              
    the Stock Exchange for the resumption of trading in the Shares            
    with effect from 9:30 a.m. on 20 May 2005.                                
                                                                              
    GENERAL                                                                   
                                                                              
    The Company will establish an independent board committee to              
    advise the Independent Shareholders as to whether the terms of            
    the Rights Issue and the Whitewash Waiver are fair and reasonable         
    and whether the Rights Issue and the Whitewash Waiver are in              
    the interests of the Company and the Shareholders as a whole,             
    and to advise the Independent Shareholders on how to vote, taking         
    into account the recommendations of the independent financial             
    adviser. In this connection, the Company has appointed AMS                
    Corporate Finance Limited as the independent financial adviser            
    to advise the independent board committee and the Independent             
    Shareholders as to whether the terms of the Rights Issue and              
    the Whitewash Waiver are fair and reasonable and whether the              
    Rights Issue and the Whitewash Waiver are in the interests of             
    the Company and the Shareholders as a whole, and to advise the            
    Independent Shareholders on how to vote. A circular containing,           
    among other things, details of the Rights Issue, increase in              
    authorized share capital and the Whitewash Waiver, the                    
    recommendation of the independent board committee and the letter          
    from the independent financial adviser to the independent board           
    committee and Independent Shareholders together with a notice             
    convening the EGM will be despatched to the Shareholders within           
    21 days from the day of publication of this announcement.                 
                                                                              
    The Rights Issue Documents setting out details of the Rights              
    Issue will be despatched to the Qualifying