COSCO SHIPPING Development Co., Ltd. — Proxy Solicitation & Information Statement 2006

Jan 26, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about any of the contents of this Circular, you should obtain independent professional advice.

If you have sold or transferred all your shares in China Shipping Container Lines Company Limited , you should at once hand this Circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this Circular, 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 Circular.

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(A joint stock limited company incorporated in the People’s Republic of China)

(Stock code: 2866)

DISCLOSEABLE TRANSACTION CONSTRUCTION OF VESSELS

• The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name and the English name “China Shipping Container Lines Company Limited”.

26 January 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Terms of the Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Finance Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reasons for the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information about the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Discloseable Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6

DEFINITIONS

In this Circular, unless the context otherwise requires, the following terms shall have the following meanings:

“Agreements”	four agreements dated 10 January 2006 entered into
	between China Vessel and Dalian Vessel (as the sellers)
	and the Company (as the buyer) for the construction
	of four 4,250 TEU container vessels
“associate”	has the meaning ascribed to such term under the
	Listing Rules
“Board”	the board of Directors
“Business Day”	a day other than Saturdays, Sundays and public
	holidays in the PRC
“China Vessel”	China Ship Building & Offshore International Co., Ltd.
“Company”	China Shipping Container Lines Company Limited (中
	海集裝箱運輸股份有限公司), a joint stock limited
	company established in the PRC, the shares of which
	are listed on the Stock Exchange
“Dalian Vessel”	Dalian Ship Building Industry Co., Ltd.
“Directors”	the directors of the Company
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“Latest Practicable Date”	20 January 2006, being the latest practicable date prior
	to the printing of this circular for the purpose of
	ascertaining certain information contained in this
	circular
“Listing Rules”	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
“Model Code”	the Model Code for Securities Transactions by Directors
	of Listed Issuers, as set out in Appendix 10 to the
	Listing Rules

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DEFINITIONS

“PRC”	the People’s Republic of China
“Rights”	units of share appreciation rights
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	The Securities and Futures Ordinance, Chapter 571 of
	the Laws of Hong Kong, as amended and
	supplemented from time to time
“Shareholders”	holders of share(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“TEU”	twenty-foot equivalent unit, a standard unit of
	measurement of the volume of a container with a
	length of 20 feet, a height of 8 feet and 6 inches and a
	width of 8 feet
“US$”	United States dollars, the lawful currency of the United
	States of America

The exchange rate adopted in this circular for illustration purpose only is US$1.00 = HK$7.76.

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LETTER FROM THE BOARD

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(A joint stock limited company incorporated in the People’s Republic of China)

(Stock code: 2866)

Directors: Legal address and principal Mr. Li Kelin place of business in the PRC: Mr. Jia Hongxiang 27th Floor Mr. Huang Xiaowen 450 Fu Shan Road Mr. Zhao Hongzhou Pudong New District Mr. Li Shaode[+] Shanghai Mr. Zhang Jianhua[+] the People’s Republic of China Mr. Wang Daxiong[+] Mr. Zhang Guofa[+] Principal place of business Mr. Xu Hui[+] in Hong Kong: Mr. Hu Hanxiang[++] Level 69 Mr. Gu Nianzu[++] The Center Mr. Wang Zongxi[++] 99 Queen’s Road Central Mr. Lam Siu Wai, Steven[++] Hong Kong

+ non-executive Directors

++ independent non-executive Directors

26 January 2006

To the Shareholders

Dear Sirs,

DISCLOSEABLE TRANSACTION CONSTRUCTION OF VESSELS

INTRODUCTION

On 10 January 2006, the Board announced that the Company (as the buyer) had entered into the Agreements with China Vessel and Dalian Vessel (as the sellers) for the construction of four 4,250 TEU container vessels.

The purpose of this Circular is to provide Shareholders with further details of the transaction.

• The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name and the English name “China Shipping Container Lines Company Limited”.

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LETTER FROM THE BOARD

GENERAL

On 10 January 2006, the Company (as the buyer) entered into the Agreements with China Vessel and Dalian Vessel (as the sellers) for the construction of four 4,250 TEU container vessels. The total cash consideration for the construction of the four vessels is US$230.8 million (equivalent to approximately HK$1,791.008 million). The entering into of the Agreements constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

Dalian Vessel is a Chinese shipbuilder and China Vessel is a ship trading agent of Dalian Vessel. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, China Vessel, Dalian Vessel and China Ship Building Industry Corporation, their ultimate beneficial owner, are independent third parties that are not connected persons of the Company, and are not connected with the Directors, chief executive(s) or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates.

The terms of the Agreements (including the consideration) were determined on an arm’s length basis, on normal commercial terms and with reference to the price quotations from other independent third party ship builders available to the Company and the Directors’ experience in the container shipping industry, and the Directors, including the independent non-executive Directors, consider them to be fair and reasonable and to be in the interests of the Company and the Shareholders as a whole.

TERMS OF THE AGREEMENTS

The price of each of the four vessels will be payable in Renminbi in five instalments. The first instalment for the four vessels, amounting to 20% of the total price (being a total sum of US$46.16 million (equivalent to approximately HK$358.2016 million)), is payable within 15 Business Days after the signing of the Agreements. The second, third and fourth instalments for the four vessels, each of which amounting to 20% of the total price (being a sum of US$46.16 million (equivalent to approximately HK$358.2016 million)), are payable at various stages of the construction of each vessel and within five Business Days of receipt of the relevant work progress report and invoice by the Company. The final instalment for the four vessels, amounting to 20% of the total price (being a sum of US$46.16 million (equivalent to approximately HK$358.2016 million)), is payable within five Business Days of the receipt of all the original documentation in relation to the completion of such vessels by the Company.

The first vessel is expected to be delivered on or before 30 September 2008 with the others to be delivered on or before 31 October 2008, 31 December 2008 and 31 March 2009 respectively.

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LETTER FROM THE BOARD

FINANCE TERMS

The Company intends to arrange for bank borrowings for approximately 70% of the total consideration for the construction of the four vessels with the balance to be funded by internal resources. It is expected that the financing will be finalized in the near future. Should such financing not be arranged, the full purchase price of each vessel will be funded from internal resources.

The Group’s fixed assets will increase by approximately US$240,000,000 following the delivery of the vessels, whilst current assets will decrease by the amount financed by internal resources and long-term liabilities will increase by the amount financed by bank borrowing. The effect of the construction of the container vessels on the earnings of the Group cannot be ascertained at present, which will depend on the conditions of the shipping market at the time of delivery of the container vessels.

REASONS FOR THE TRANSACTION

The Directors currently expect demand for container marine transportation in the Australian trade lanes and PRC domestic trade lanes will maintain their growing trend in the next few years. The Directors are of the view that the construction and ownership of the four 4,250 TEU container vessels will assist the Group in satisfying market demand, consolidating and expanding the Group’s market share and maintaining the Group’s continuous development and market competitiveness.

INFORMATION ABOUT THE GROUP

The Group is principally engaged in the operation and management of international and domestic container marine transportation.

DISCLOSEABLE TRANSACTION

Under the Listing Rules, the entering into of the Agreements for the construction of the four vessels constitutes a discloseable transaction of the Company. This document constitutes the circular which the Company is required to send to the Shareholders pursuant to the Listing Rules in respect of the construction of the vessels.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information contained in the appendix to this Circular.

By Order of the Board China Shipping Container Lines Company Limited Li Kelin

Chairman

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APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This Circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVES’ INTERESTS

9 Directors were granted Rights under the Rights scheme adopted by the Company’s shareholders on 12 October 2005. Details of the Rights scheme are set out in the Company’s circular to shareholders dated 26 August 2005. The interests of such Directors in the underlying H shares of the Company as at the Latest Practicable Date were as follows:

	Number of
	underlying	Capacity in	Percentage
	H shares	which underlying	figure in
Name of Director	involved	H shares were held	the H shares
Li Kelin	1,180,000	Beneficial owner	0.05%
			(Long position)
Jia Hongxiang	880,000	Beneficial owner	0.04%
			(Long position)
Huang Xiaowen	820,000	Beneficial owner	0.03%
			(Long position)
Zhao Hongzhou	720,000	Beneficial owner	0.03%
			(Long position)
Li Shaode	680,000	Beneficial owner	0.03%
			(Long position)
Wang Daxiong	300,000	Beneficial owner	0.01%
			(Long position)
Zhang Guofa	300,000	Beneficial owner	0.01%
			(Long position)
Zhang Jianhua	300,000	Beneficial owner	0.01%
			(Long position)
Xu Hui	200,000	Beneficial owner	0.01%
			(Long position)

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisors or chief executive(s) of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Directors, supervisors or chief executive(s) is taken or deemed to have under such provisions of the SFO) or which

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APPENDIX

GENERAL INFORMATION

was required to be entered in the register required to be kept by the Company pursuant to Section 352 of the SFO or which was otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code (which shall be deemed to apply to the Company’s supervisors to the same extent as it applies to the Directors).

Each of Li Kelin, Li Shaode, Zhang Jianhua, Wang Daxiong and Zhang Guofa was as at the Latest Practicable Date the President, a Vice-President, a Vice-President, a VicePresident and a Vice-President respectively of China Shipping (Group) Company, which was a company having, as at the Latest Practicable Date, an interest or short position in the Company’s shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

None of the Directors has entered into any service contract with the Company or any of its subsidiaries which is not determinable by the Company within one year without any payment of compensation, other than statutory compensation.

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

To the best knowledge of the Directors, none of the Directors or their respective associates has any interests in a business, which competes or may compete with the business of the Group.

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APPENDIX

GENERAL INFORMATION

5. SHAREHOLDINGS OF OTHER SHAREHOLDERS WITH NOTIFIABLE INTERESTS

As at the Latest Practicable Date, so far as is known to the Directors, supervisors or chief executive(s) of the Company, the following persons (other than a Director, supervisor or chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

		Number of		Percentage in	Percentage in
		shares/		the relevant		Percentage
Name of	Class of	underlying		class of		in total
shareholder	shares	shares held	Capacity	share	capital	share capital
China Shipping (Group)	Domestic	3,610,000,000	Beneficial owner		100%	59.87%
Company	shares	(Long position)
Li Ka-Shing	H shares	365,637,000	Interest of controlled		15.11%	6.06%
		(Long position)	corporation and
			founder of
			a discretionary
			trust
Li Ka-Shing Unity Trustee	H shares	365,637,000	Trustee		15.11%	6.06%
Company Limited		(Long position)
Li Ka-Shing Unity	H shares	362,637,000	Trustee and		14.99%	6.01%
Trustcorp Limited		(Long position)	beneficiary of a trust
Li Ka-Shing Unity Trustee	H shares	362,637,000	Trustee and beneficiary		14.99%	6.01%
Corporation Limited		(Long position)	of a trust
Cheung Kong (Holdings)	H shares	362,637,000	Interest of controlled		14.99%	6.01%
Limited		(Long position)	corporation
Hutchison Whampoa	H shares	241,758,000	Interest of controlled		9.99%	4.01%
Limited		(Long position)	corporation
Hutchison International	H shares	241,758,000	Beneficial owner		9.99%	4.01%
Limited		(Long position)

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APPENDIX

GENERAL INFORMATION

Save as disclosed above and so far as the Directors, supervisors or chief executive(s) of the Company are aware, as at the Latest Practicable Date, no other person had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company.

As at the Latest Practicable Date, so far as the Directors, supervisors or chief executive(s) are aware, each of the following persons, not being a Director, supervisor or chief executive of the Company or a member of the Group, were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

			Percentage of
Name of subsidiary(Note)	Name	of shareholder(Note)	shareholding
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Dailian Co., Ltd.	（中海集團投資有限公司）
（中海集裝箱運輸大連有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Guangzhou Co., Ltd. （中海集裝箱運輸廣州有限公司）	（中海集團投資有限公司）
China Shipping Container Lines	(i)	China Shipping Group Investment Co. Ltd.	10%
Hainan Company Limited		（中海集團投資有限公司）
（中海集裝箱運輸海南有限公司）	(ii)	China Shipping Agency Co., Ltd.	20%
		（中海船務代理有限公司）
	(iii)	China Shipping Hainan Logistics Co., Ltd.	30%
		（中海海南物流有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Qingdao Company Limited （中海集裝箱運輸青島有限公司）	（中海集團投資有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Shanghai Co., Ltd.	（中海集團投資有限公司）
（中海集裝箱運輸上海有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Shenzhen Co., Ltd	（中海集團投資有限公司）
（中海集裝箱運輸深圳有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Tianjin Company Limited	（中海集團投資有限公司）
（中海集裝箱運輸天津有限公司）
China Shipping Container Lines	China	Shipping Group Investment Co. Ltd.	10%
Xiamen Co., Ltd	（中海集團投資有限公司）
（中海集裝箱運輸廈門有限公司）
China Shipping (Yangpu) Refrigeration	(i)	China Shipping Logistics Co., Ltd.	30%
Storage & Transportation Co., Ltd. （中海（洋浦）冷藏儲運有限公司）	(ii)	（中海集團物流有限公司） Suzhou China Shipping Containers Lines	30%
		Storage and Transportation Co., Ltd. （蘇州中海集裝箱儲運有限公司）
China Shipping Container Lines	China	Shipping Agency Co., Ltd.	10%
(Haikou) Co., Ltd.	（中海船務代理有限公司）
（海口中海集裝箱運輸有限公司）
Shanghai Puhai Shipping Co., Ltd.	China	Shipping Container Lines Shanghai Co., Ltd.	10%
（上海浦海航運有限公司）	（中海集裝箱運輸上海有限公司）
Shanghai HaiXin YuanCang	(i)	Bermuda YuanCang International Co., Ltd.	40%
International Logistics Co., Ltd.		（百慕達遠倉國際股份有限公司）
（上海海興遠倉國際物流有限公司）	(ii)	Shanghai YiHua Enterprises Company （上海逸驊實業總公司）	20%

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APPENDIX

GENERAL INFORMATION

Note: The English names of certain companies referred herein represent management’s best efforts at translating the Chinese names of these companies as no English names have been registered.

Save as disclosed above and so far as the Directors, supervisors or chief executive(s) are aware, as at the Latest Practicable Date, no other person, not being a Director, supervisor or chief executive of the Company, were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

6. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

7. MISCELLANEOUS

• (a) The secretary of the Company is Mr. Ye Yu Mang. Mr. Ye graduated from Shanghai Maritime University in 1989 with a Masters degree in mechanical engineering and was the company secretary of China Shipping Development Company Limited from April 2001 to March 2003.

• (b) The qualified accountant of the Company pursuant to Rule 3.24 of the Listing Rules is Mr. Lau Wai Yip, who is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.

• (c) The Hong Kong H Share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The English text of this Circular shall prevail over the Chinese text in case of any inconsistency.

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