The application for purchasing assets by issuing shares and material assets reorganization [merger of Shanghai Bailian Group Co., Ltd., (“Shanghai Bailian”)] of Shanghai Friendship Group Incorporated Company (“Shanghai Friendship”) has been passed and approved on the 19th meeting of the M&A and Reorganization Committee of China Securities Regulatory Commission (“CSRC”) on June 23, 2011.

Shanghai Friendship proposes to merge with Shanghai Bailian by issuing A shares. After such merger, Shanghai Friendship will become the surviving company while Shanghai Bailian's qualification for listing and legal person will be removed. Shanghai Friendship has taken over all the assets, debts, interest, business and employees from Shanghai Bailian and intends to issue shares for purchasing 36% interest of Yaohan and 100% interest of investment company owned by Bailian Group.

The amount of A shares associated with such issue is up to 302,394,810 at the price of RMB 15.57 per share.

Grandall Shanghai Office has been retained as the Issuer’s Counsel. Mr. LIU Wei, Mr. XU Chen, Mr. ZHANG Juan and Ms. SUN Feiran are the key Grandall attorneys servicing Shanghai Friendship.

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