With China’s rapid and healthy economic growth and the increasingly acute energetic and environmental problems, the advantages of biodiesel, as a high-quality alternative to fossil fuel, have become more apparent as it is renewable, clean and safe. The Chinese government has been taking active efforts to provide a favorable market environment for the renewable energy industry. In 2005, Chinese president Hu Jingtao stated at the Beijing International Convention on Renewable Energy that China will keep attaching great importance to the development of renewable energy and that China will take the development and utilization of renewable energy as a major measure for the promotion of the nation’s socio-economic development. On April 20, 2006, Chinese premier Wen Jiabao convened the Second National Leadership Conference on Energy to consider the Medium and Long-term Development Plan for Renewable Energy, stating that equal emphasis shall be placed on development and conservation, and that stronger measures shall be taken to promote comprehensive energy conservation and to vigorously develop renewable energy. With the actualization of China’s Renewable Energy Law since January 1, 2006, the Chinese government has been accelerating the adjustment of the economic structure, switching to different economic growth methods, and further promoting the development of renewable energy by means of financial support, tax concessions and technology grants.

As the only leading biodiesel manufacturer in China, which uses waste animal and plant oils as raw materials and as a national key high-tech enterprise, China Biodiesel enjoys the advantages of high technologies and low production costs and will also enjoy rapid, healthy growth in this proactive regulatory environmental and the vast energy market. With the implementation of its development strategy, the Company will be able to constantly expand its biodiesel production capacity, and China’s market-economy system will also further improve. China is about to release a new product oil-pricing scheme, bringing pricing basis into line with the international norms. This will open up vast room of profitability and growth for China Biodiesel.

The five-year strategy (2006-2010) of the company is as follows:

(1) The first phase is to strengthen the industrial base in 2006 and 2007. The second plant, with 30,000 tpy in Longyan, was put into use in August 2007. The first production line in Xiamen plant with 50,000 tpy was accomplished and put into use in June, 2008. These two plants are the bases of the company for the future expansion and development. They will strengthen the company’s capabilities on several areas including techniques, human resource, and networks of supply and sale.

(2) The third plant with 100,000 tpy in Longyan city was on the plan and all the preparation jobs have begun since the end of 2007. The second production line with 50,000 tpy in Xiamen is also expected to start the construcion in near future.

(3) It will be possibly realized that a new plant with 100,000 tpy will be launched in a neighboring province, such as Guangdong Province, between 2009 and 2010. Then the total production capacity of China Biodiesel will be up to 350,000 tpy. During this period, the company will try to exert its all advantages, including scale, techniques, capital, market channels, management, and etc., to selectively carry out the further expansion scheme through mergence and acquisition.