RemeGen Co., Ltd. — Proxy Solicitation & Information Statement 2007

Apr 3, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your licensed securities dealer or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Huali Holdings (Group) Limited (the “Company”), you should at once hand this circular with the enclosed proxy form to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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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HUALI HOLDINGS (GROUP) LIMITED

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

RENEWAL OF GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES

APPOINTMENT OF INDEPENDENT NON-EXECUTIVE DIRECTOR

RETIREMENT OF DIRECTORS AND RE-ELECTION OF RETIRING DIRECTORS

AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening an annual general meeting of the Company to be held on 26 April 2007 at 11:00 a.m. at Function Room – Cypress, InterContinental Hong Kong, 18 Salisbury Road, Kowloon, Hong Kong is set out on pages 14 to 18 of this circular. Whether or not you are able to attend the annual general meeting, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s principal place of business at Suite 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the annual general meeting. Completion and return of the proxy form will not preclude you from attending and voting in person at the annual general meeting, or any adjournment thereof, should you so wish.

3 April 2007

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**LETTER FROM **	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX I	– EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . .	7
APPENDIX II	– DETAILS OF DIRECTORS PROPOSED
	TO BE APPOINTED OR RE-ELECTED
	AT THE AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
NOTICE OF ANNUAL GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .		14

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“AGM”	the annual general meeting of the Company to be held on
	26 April 2007 at 11:00 a.m. at Function Room – Cypress,
	InterContinental Hong Kong, 18 Salisbury Road,
	Kowloon, Hong Kong;
“AGM Notice”	the notice convening the AGM set out on pages 14 to 18
	of this circular;
“Articles”	the articles of association of the Company;
“associates”	has the same meaning as defined in the Listing Rules;
“Board”	the board of Directors;
“Company”	Huali Holdings (Group) Limited, a company incorporated
	in the Cayman Islands with limited liability and the
	Shares of which are listed on the Stock Exchange;
“connected person”	has the same meaning as defined in the Listing Rules;
“Directors”	the directors of the Company;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China;
“Issue Mandate”	a general and unconditional mandate proposed to be
	granted to the Directors to exercise all powers of the
	Company to allot and issue Shares set out as resolution
	no. 5 in the AGM Notice;
“Latest Practicable Date”	30 March 2007, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information for inclusion in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange;

– 1 –

DEFINITIONS

“Repurchase Mandate”	a general and unconditional mandate proposed to be
	granted to the Directors to exercise all powers of the
	Company to repurchase Shares set out as resolution no. 6
	in the AGM Notice;
“SFO”	Securities and Futures Ordinance (Chapter 571) of the
	Laws of Hong Kong;
“Share(s)”	ordinary shares of HK$0.10 each in the capital of the
	Company;
“Shareholder(s)”	holder(s) of (a) Share(s);
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Takeovers Code”	The Hong Kong Code on Takeovers and Mergers; and
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong.

– 2 –

LETTER FROM THE BOARD

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HUALI HOLDINGS (GROUP) LIMITED

(incorporated in the Cayman Islands with limited liability) (Stock Code: 3366)

Executive Directors: Mr. Zheng Fan (Chairman) Mr. Ni Zheng Mr. Liu Danlin Mr. Zhou Guangneng

Non-Executive Director:

Registered Office: Clifton House 75 Fort Street PO Box 1350 GT George Town Grand Cayman Cayman Islands

Ms. Xie Mei

Independent Non-Executive Directors: Mr. Lee Kit Wah Mr. Chen Xiangdong Mr. Xiao Yongping

Head Office and Principal Place of Business: Suite 3203-3204, Tower 6 The Gateway, Harbour City Canton Road Tsim Sha Tsui Kowloon, Hong Kong

3 April 2007

To the Shareholders

Dear Sir or Madam,

RENEWAL OF GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES

APPOINTMENT OF INDEPENDENT NON-EXECUTIVE DIRECTOR

RETIREMENT OF DIRECTORS AND RE-ELECTION OF RETIRING DIRECTORS

AND

NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to: (i) provide you with details of the proposed Issue Mandate and the proposed Repurchase Mandate; (ii) furnish you details of the proposed appointment of Director and re-election of retiring Directors; (iii) set out an explanatory statement regarding the Repurchase Mandate; and (iv) give you notice of the AGM.

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LETTER FROM THE BOARD

GENERAL MANDATES TO ISSUE NEW SHARES AND REPURCHASE SHARES

The Company’s existing mandates to issue and repurchase Shares was approved by its Shareholders on 11 May 2006. Unless otherwise renewed, the existing mandates to issue and repurchase Shares will lapse at the conclusion of the AGM.

Ordinary resolutions will be proposed at the AGM to grant to the Directors new general mandates:

• (i) to allot, issue and otherwise deal with new Shares with an aggregate nominal amount not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the proposed resolution at the AGM; and

• (ii) to repurchase Shares with an aggregate nominal amount not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the proposed resolution at the AGM.

In addition, a separate ordinary resolution will be proposed at the AGM to add to the Issue Mandate those Shares repurchased by the Company pursuant to the Repurchase Mandate (if granted to the Directors at the AGM).

The Directors have no present intention to exercise the Issue Mandate or the Repurchase Mandate (if granted to the Directors at the AGM).

An explanatory statement containing information regarding the Repurchase Mandate is set out in the Appendix I to this circular.

APPOINTEMENT OF INDEPENDENT NON-EXECUTIVE DIRECTOR

At the AGM, an ordinary resolution will be put forward to the Shareholders in relation to the proposed appointment of Ms. Wong Wai Ling as an Independent Non-Executive Director for a term commencing on the date of the AGM which approves her appointment and ending at the conclusion of the 2007 annual general meeting of the Company to be held in 2008. Particulars of Ms. Wong are set out in Appendix II.

RE-ELECTION OF RETIRING DIRECTORS

Each of Mr. Lee Kit Wah, Mr. Chen Xiangdong and Mr. Xiao Yongping was appointed as an Independent Non-Executive Director on 2 September 2005. They will retire from office as Directors by rotation at the AGM. Due to personal reasons, Mr. Lee Kit Wah will not seek re-election at the AGM and will resign as an Independent Non-Executive Director with effect from the close of the AGM. The Board confirms that Mr. Lee Kit Wah does not have any disagreement with the Board and there is nothing to be brought to the attention of the Shareholders in relation to his resignation. Mr. Chen Xiangdong and Mr. Xiao Yongping, being eligible, offer themselves for re-election pursuant to article 108(a) of the Articles. Particulars of the Directors proposed to be re-elected at the AGM are set out in Appendix II.

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LETTER FROM THE BOARD

ANNUAL GENERAL MEETING

A notice convening the AGM to be held on 26 April 2007 (Thursday) at 11:00 a.m. at Function Room – Cypress of the InterContinental Hong Kong, 18 Salisbury Road, Kowloon, Hong Kong is set out on pages 14 to 18 of this circular for the purpose of considering and, if thought fit, passing the resolutions set out therein.

You will find enclosed a proxy form for use at the AGM. Whether or not you are able to attend the AGM, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon to the Company’s principal place of business at Suite 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the AGM. Completion and return of the proxy form will not preclude you from attending and voting in person at the AGM, or any adjournment thereof, should you so wish.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Article 72 of the Articles, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by: (i) the chairman of such meeting; or (ii) at least two shareholders present in person (or in the case of a shareholder being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or (iii) any shareholder or shareholders present in person (or in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy and representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the meeting; or (iv) any shareholder or shareholders present in person (or in the case of a shareholder being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Pursuant to Article 73 of the Articles, unless a poll is demanded and the demand is not withdrawn, a declaration by the chairman of the general meeting that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect made in the book containing the minutes of the proceedings of the Company, shall be conclusive evidence of the facts without proof of the number or proportion of the votes recorded for or against the resolution.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the granting of the Issue Mandate, the Repurchase Mandate and the extension to the Issue Mandate, the appointment of Director and the re-election of retiring Directors are in the best interests of the Company and the Shareholders. Accordingly, the Directors recommend that the Shareholders vote in favour of the relevant resolutions as set out in the AGM Notice at the forthcoming AGM.

By Order of the Board ZHENG Fan Chairman

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EXPLANATORY STATEMENT

APPENDIX I

This appendix includes an explanatory statement required by the Stock Exchange to be presented to the Shareholders concerning the Repurchase Mandate proposed to be granted to the Directors.

1. STOCK EXCHANGE RULES FOR REPURCHASES OF SHARES

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their shares on the Stock Exchange subject to certain restrictions.

The Listing Rules provide that all proposed repurchases of shares by a company with a primary listing on the Stock Exchange must be approved by shareholders in advance by an ordinary resolution in a general meeting, either by way of a general mandate or by a specific approval of a particular transaction and that the shares to be repurchased must be fully paid up.

2. FUNDING AND IMPACT OF REPURCHASES

Any repurchase will be made out of funds which are legally available for the purpose in accordance with the memorandum and articles of association of the Company, the Listing Rules and the applicable laws of the Cayman Islands. As compared with the financial position of the Company as at 31 December 2006 (being the date to which the latest audited accounts of the Company have been made up), the Directors consider that there would not be a material adverse impact on the working capital and on the gearing position of the Company in the event the proposed repurchases were to be carried out in full during the proposed repurchase period.

The Directors do not propose to exercise the Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital of the Company or the gearing position which in the opinion of the Directors are from time to time appropriate for the Company.

3. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders to have a general authority from the Shareholders to enable the Directors to repurchase Shares on the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or its earning per Share and will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders.

4. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 200,000,000 Shares.

Subject to the passing of the relevant ordinary resolutions to approve the general mandates to issue and repurchase Shares and on the basis that no further Shares are issued or repurchased between the Latest Practicable Date and the AGM, the Directors would be authorised to exercise the powers of the Company to repurchase a maximum of 20,000,000 Shares.

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EXPLANATORY STATEMENT

APPENDIX I

5. UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange to exercise the Repurchase Mandate in accordance with the Listing Rules, the applicable laws of the Cayman Islands and in accordance with the memorandum and articles of association of the Company.

6. EFFECT OF THE TAKEOVERS CODE

If as a result of a repurchase of Shares pursuant to the Repurchase Mandate, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purpose of the Takeovers Code. As a result, a shareholder or a group of shareholders acting in concert (as that term is defined in the Takeovers Code), depending on the level of increase of the shareholder’s interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, the following Shareholders had interests representing 5% or more of the issued share capital of the Company:

		**Approximately **	**Approximately **	%
		shareholding
				If
		As at the	Repurchase
		Latest	Mandate is
	Number of	Practicable	exercised in
Name of Shareholder	Shares held	Date		full
Pacific Climax Limited	134,370,000	67.185%		74.65%
Overseas Chinese Town (HK) Company
Limited (Note 1)	134,370,000	67.185%		74.65%
Overseas Chinese Town Group
Company (Note 2)	134,370,000	67.185%		74.65%
Polyfairz Group Limited (formerly
known as Polyfair Limited)	15,630,000	7.815%		8.683%
Zhang Zhi Lin (Note 3)	15,630,000	7.815%		8.683%
Tang Qin Mei (Note 3)	15,630,000	7.815%		8.683%

Notes:

(1) Overseas Chinese Town (HK) Company Limited is the beneficial owner of all the issued share capital in Pacific Climax Limited and therefore Overseas Chinese Town (HK) Company Limited is deemed, or taken to be interested in the 134,370,000 Shares which are beneficially owned by Pacific Climax Limited for the purposes of the SFO.

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EXPLANATORY STATEMENT

APPENDIX I

• (2) Overseas Chinese Town Group Company is the beneficial owner of all the issued share in Overseas Chinese Town (HK) Company Limited (Overseas Chinese Town Group Company holds 454,999,998 shares in Overseas Chinese Town (HK) Company Limited in its own name. Mr. Zheng Fan, an executive Director, and Mr. Guo Yubin hold one share each in Overseas Chinese Town (HK) Company Limited on trust for Overseas Chinese Town Group Company) and which is in turn the beneficial owner of all the issued share capital in Pacific Climax Limited and therefore Overseas Chinese Town Group Company is deemed, or taken to be, interested in the 134,370,000 Shares which are beneficially owned by Pacific Climax Limited for the purposes of the SFO.

• (3) Polyfairz Group Limited (formerly known as Polyfair Limited) is beneficially owned as to 90% by Mr. Zhang Zhi Lin and thus a controlled corporation of Mr. Zhang Zhi Lin, and Mr. Zhang Zhi Lin is deemed, or taken to be, interested in the 15,630,000 shares which are beneficially owned by Polyfairz Group Limited (formerly known as Polyfair Limited) for the purposes of the SFO. Ms. Tang Qin Mei is the wife of Mr. Zhang Zhi Lin. Under the SFO, Ms. Tang Qin Mei is taken to be interested in all the shares in which Mr. Zhang Zhi Lin is interested.

In the event the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate, the interests of each of the above Shareholders in the Company would be increased to approximately the percentages as set out opposite their respective names in the table above. On the basis of the aforesaid increase of shareholding held by the Shareholders set out above, the Directors are not aware of any consequences of such repurchases of Shares that would result in the Shareholder, or group of Shareholders acting in concert, becoming obliged to make a mandatory offer under Rule 26 of the Takeovers Code if the Repurchase Mandate were exercised in full. Moreover, the Directors do not intend to exercise the power to repurchase Shares to an extent which would render the aforesaid Shareholders or any Shareholder or group of Shareholders obliged to make a mandatory offer under Rule 26 of the Takeovers Code. As the exercise of the Repurchase Mandate in full would result in insufficient public float of the Company, the Directors have no intention to exercise the Repurchase Mandate to such an extent that results in a public shareholding of less than the minimum public float requirement of 25% of the total issued share capital of the Company.

7. DIRECTORS, THEIR ASSOCIATES AND CONNECTED PERSONS

None of the Directors nor, to the best of the knowledge and belief of the Directors, having made all reasonable enquiries, any of their respective associates has any present intention, in the event that the proposed Repurchase Mandate is granted, to sell Shares to the Company. No connected person of the Company has notified the Company that he/she/it has a present intention to sell Shares to the Company nor has he/she/it undertaken not to sell any of the Shares held by him/her/it to the Company in the event that the Company is authorised to make repurchases of Shares.

8. SHARE REPURCHASE MADE BY THE COMPANY

No repurchase of Shares has been made by the Company (whether on the Stock Exchange or otherwise) during the six months ended on the Latest Practicable Date.

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EXPLANATORY STATEMENT

APPENDIX I

9. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange in each of the previous twelve months up to the Latest Practicable Date were as follows:

	Shares
	Highest	Lowest
	HK$	HK$
2006
April	3.300	2.625
May	3.375	2.775
June	3.025	2.700
July	2.900	2.625
August	2.830	2.500
September	2.660	2.300
October	2.900	2.380
November	2.840	2.640
December	2.850	2.610
2007
January	2.820	2.560
February	2.800	2.450
March	3.640	2.550

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DETAILS OF DIRECTORS PROPOSED TO BE APPOINTED OR RE-ELECTED AT THE AGM

APPENDIX II

Set out below are the details of Ms. Wong Wai Ling who will be proposed to be appointed as an Independent Non-Executive Director at the AGM.

Ms. Wong Wai Ling

Ms. Wong Wai Ling, aged 45. She received a bachelor degree of Arts from The University of Hong Kong and a postgraduate diploma in Accounting and Finance from the London School of Economics and Political Science, University of London, in the United Kingdom. Ms. Wong is a fellow member of Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants. She has twenty years of rich experience in accounting, taxation and auditing. She had worked for more than seven years in major international accounting firms and major local accounting firms before she set up her own accounting firm in Hong Kong in 1994. Since then, she has been practicing as a Certified Public Accountant. Ms. Wong is also an independent non-executive director of a Hong Kong listed company – Galaxy Semi-Conductor Holdings Limited.

Save as the proposed directorship with the Company mentioned above, Ms. Wong does not hold any position in the Company or any of its subsidiaries. She is not connected with any Directors, senior management, substantial or controlling Shareholders of the Company, nor does she have any interests in the Shares of the Company which are required to be disclosed pursuant to Part XV of the SFO.

Save as disclosed above, Ms. Wong did not hold any other directorships in any other listed public companies in the last three years.

After obtaining authorization from the Shareholders at the AGM, the Board may fix Ms. Wong’s emoluments, which will be determined with reference to her qualification and experience, responsibilities undertaken, contribution to the Group, and the prevailing market level of remuneration for executives of similar position. If appointed, Ms. Wong will enter into a service contract with the Company for a term commencing on the date of AGM which approves her appointment and ending at the conclusion of the 2007 annual general meeting of the Company to be held in 2008.

Save as disclosed above, there are no other matters relating to the appointment that need to be brought to the attention of the Shareholders and there is no other information that should be disclosed pursuant to paragraph 13.51(2)(h) to (v) of the Listing Rules.

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DETAILS OF DIRECTORS PROPOSED TO BE APPOINTED OR RE-ELECTED AT THE AGM

APPENDIX II

Set out below are details of the Directors who will retire at the conclusion of the AGM and will be proposed to be re-elected at the AGM.

Mr. Chen Xiangdong

Mr. Chen Xiangdong, aged 48, joined the Group as an Independent Non-Executive Director in September 2005. Mr. Chen is general manager of China Printing (Group) Corporation. He has over 17 years of experience in the packaging industry. He joined China National Packaging Corporation in 1988 as project manager, and became deputy general manager of the company in 2001. Mr. Chen graduated from the Department of Automated Control of Northeast China Institute of Heavy Machinery (now known as Yanshan University) and obtained a bachelor degree in Engineering in 1983. Mr. Chen also obtained a master degree in Engineering majoring in Industrial Management Engineering at Harbin Institute of Technology in 1986.

Save as the directorship with the Company mentioned above, Mr. Chen does not hold any position in the Company or any of its subsidiaries. He is not connected with any Directors, senior management, substantial or controlling Shareholders of the Company, nor does he have any interests in the Shares of the Company which are required to be disclosed pursuant to Part XV of the SFO.

Mr. Chen did not hold any other directorships in any other listed public companies in the last three years.

The Director’s remuneration of Mr. Chen as an Independent Non-Executive Director of the Company was HK$1.00 for the year ended 31 December 2006. Except the Director’s remuneration, no other emoluments were received by Mr. Chen from the Company for the year ended 31 December 2006. After obtaining authorization from Shareholders at the AGM, the Board may fix Mr. Chen’s emoluments, which will be determined with reference to his qualification and experience, responsibilities undertaken, contribution to the Group, and the prevailing market level of remuneration for executives of similar position. If re-elected, Mr. Chen will enter into a service contract with the Company for a term commencing on the date of AGM which approves his appointment and ending at the conclusion of the 2007 annual general meeting of the Company to be held in 2008.

Save as disclosed above, there are no other matters that need to be brought to the attention of the Shareholders in connection with Mr. Chen’s re-election and there is no other information that should be disclosed pursuant to paragraph 13.51(2)(h) to (v) of the Listing Rules.

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DETAILS OF DIRECTORS PROPOSED TO BE APPOINTED OR RE-ELECTED AT THE AGM

APPENDIX II

Mr. Xiao Yongping

Mr. Xiao Yongping, aged 41, joined the Group as an Independent Non-Executive Director in September 2005. Currently, he is an arbitrator of China International Economic and Trade Arbitration Commission, and vice chairman of China International Private Law Association. Mr. Xiao obtained a doctoral degree in Law at Wuhan University in 1993. At present, he is a deputy director of the Law School of Wuhan University and a professor in the Law Faculty at Northwest University of Political Science & Law.

Save as the directorship with the Company mentioned above, Mr. Xiao does not hold any position in the Company or any of its subsidiaries. He is not connected with any Directors, senior management, substantial or controlling Shareholders of the Company, nor does he have any interests in the Shares of the Company which are required to be disclosed pursuant to Part XV of the SFO.

Mr. Xiao did not hold any other directorships in any other listed public companies in the last three years.

The Director’s remuneration of Mr. Xiao as an Independent Non-Executive Director of the Company was HK$120,000.00 for the year ended 31 December 2006. Except the Director’s remuneration, no other emoluments were received by Mr. Xiao from the Company for the year ended 31 December 2006. After obtaining authorization from Shareholders at the AGM, the Board may fix Mr. Xiao’s emoluments, which will be determined with reference to his qualification and experience, responsibilities undertaken, contribution to the Group, and the prevailing market level of remuneration for executives of similar position. If re-elected, Mr. Xiao will enter into a service contract with the Company for a term commencing on the date of AGM which approves his appointment and ending at the conclusion of the 2007 annual general meeting of the Company to be held in 2008.

Save as disclosed above, there are no other matters that need to be brought to the attention of the Shareholders in connection with Mr. Xiao’s re-election and there is no other information that should be disclosed pursuant to paragraph 13.51(2)(h) to (v) of the Listing Rules.

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NOTICE OF ANNUAL GENERAL MEETING

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HUALI HOLDINGS (GROUP) LIMITED

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 3366)

NOTICE IS HEREBY GIVEN that an annual general meeting (the “Meeting”) of Huali Holdings (Group) Limited (the “Company”) will be held on 26 April 2007 at 11:00 a.m. at Function Room – Cypress, InterContinental Hong Kong, 18 Salisbury Road, Kowloon, Hong Kong for considering and, if thought fit, passing, with or without amendments, the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. To receive and consider the audited consolidated accounts and reports of the directors and auditors of the Company and its subsidiaries for the year ended 31 December 2006.

2. To declare a final dividend for the year ended 31 December 2006.

3. To re-appoint KPMG as auditors and to authorise the board of directors of the Company to fix their remuneration.

4. (a) Ms. Wong Wai Ling be appointed as an independent non-executive director of the Company and the board of directors of the Company be authorised to fix her remuneration;

5. (b) Mr. Chen Xiangdong be re-elected as an independent non-executive director of the Company and the board of directors of the Company be authorised to fix his remuneration; and

6. (c) Mr. Xiao Yongping be re-elected as an independent non-executive director of the Company and the board of directors of the Company be authorised to fix his remuneration.

7. “ THAT :

8. (A) subject to paragraph (C) of this resolution below, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers,

– 14 –

NOTICE OF ANNUAL GENERAL MEETING

agreements and options (including warrants, bonds and debentures convertible into shares of the Company) which might require the exercise of such powers be and is hereby generally and unconditionally approved;

• (B) the Directors be and are hereby authorised during the Relevant Period to make or grant offers, agreements and options (including warrants, bonds and debentures convertible into shares of the Company) which might require the exercise of such powers during or after the end of the Relevant Period;

• (C) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors pursuant to the approval in paragraphs (A) and (B) of this resolution above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) the exercise of any options granted under the share option scheme adopted by the Company or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to subscribe for shares in the Company; or (iii) any scrip dividend scheme or similar arrangement providing for the allotment of shares in the Company in lieu of the whole or part of a dividend in accordance with the articles of association of the Company from time to time, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the time of passing this resolution and the said approval shall be limited accordingly; and

• (D) for the purposes of this resolution:

“Relevant Period” means the period from the time of the passing of this resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the laws of the Cayman Islands or the Company’s articles of association to be held; or

• (iii) the revocation or variation of the authority given under this resolution by an ordinary resolution of the shareholders of the Company in general meeting.

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares on the register of members on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange).”

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NOTICE OF ANNUAL GENERAL MEETING

1. “ THAT :

2. (A) subject to paragraph (C) of this resolution below, the exercise by the directors of the Company (the “Directors”) during the Relevant Period (as hereinafter defined) of all powers of the Company to repurchase issued shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission of Hong Kong and the Stock Exchange for this purpose, and that the exercise by the Directors of all powers of the Company to repurchase such shares are subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange, be and is hereby, generally and unconditionally approved;

3. (B) the approval in paragraph (A) of this resolution above shall be in addition to any other authorisation given to the Directors and shall authorise the Directors on behalf of the Company during the Relevant Period to procure the Company to repurchase its shares at a price determined by the Directors;

4. (C) the aggregate nominal amount of share capital of the Company repurchased or agreed conditionally or unconditionally to be repurchased by the Company pursuant to the approval in paragraph (A) of this resolution above during the Relevant Period shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the time of passing this resolution and the said approval shall be limited accordingly; and

5. (D) for the purposes of this resolution:

   • “Relevant Period” means the period from the time of the passing of this resolution until whichever is the earliest of:

   • (i) the conclusion of the next annual general meeting of the Company;

   • (ii) the expiration of the period within which the next annual general meeting of the Company is required by the laws of the Cayman Islands or the Company’s articles of association to be held; or

   • (iii) the revocation or variation of the authority given under this resolution by an ordinary resolution of the shareholders of the Company in general meeting.”

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NOTICE OF ANNUAL GENERAL MEETING

1. “ THAT conditional upon the passing of Resolutions 5 and 6 as set out in this notice convening the Meeting of which this Resolution forms part, the general mandate granted to the directors of the Company pursuant to Resolution 5 as set out in this notice convening the Meeting of which this Resolution forms part be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of share capital of the Company repurchased by the Company under the authority granted pursuant to Resolution 6 as set out in this notice convening the Meeting of which this Resolution forms part, provided that such amount shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution.”

By Order of the Board FONG Fuk Wai Company Secretary

Hong Kong, 3 April 2007

Notes:

1. Any member of the Company entitled to attend and vote at the Meeting shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at the Meeting. A proxy need not be a member of the Company. On a poll, votes may be given either personally or by proxy.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.

3. To be valid, the instrument appointing a proxy and (if required by the Board) the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, shall be delivered to the principal place of business of the Company at Suite 3203-3204, Tower 6, The Gateway, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

4. No instrument appointing a proxy shall be valid after expiration of 12 months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at the Meeting or any adjournment thereof in cases where the Meeting was originally held within 12 months from such date.

5. Where there are joint holders of any shares, any one of such joint holders may vote at the Meeting, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders be present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint holding.

6. Completion and delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the Meeting if the member so wish and in such event, the instrument appointing a proxy should be deemed to be revoked.

7. An explanatory statement containing the information necessary to enable the members to make an informed decision as to whether to vote for or against Ordinary Resolutions 6 as set out in this notice is enclosed in this circular.

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NOTICE OF ANNUAL GENERAL MEETING

1. The transfer books and Register of Members of the Company will be closed from 24 April 2007 to 26 April 2007, both days inclusive. During such period, no share transfers will be effected. In order to qualify for the proposed final dividend and attending the Meeting, all transfer documents, accompanied by the relevant share certificates, must be lodged with the Company’s branch share registrars in Hong Kong, Computershare Hong Kong Investor Services Limited whose share registration public offices are located at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on 23 April 2007.

2. Concerning agenda item 4 above, Ms. Wong Wai Ling is proposed to be appointed as an Independent Non-Executive Director of the Company. Mr. Chen Xiangdong and Mr. Xiao Yongping shall retire by rotation and, being eligible, offer themselves for re-election. The biographical details and interests in the securities of the Company (if any) of the above Directors proposed to be appointed or re-elected at the AGM are provided in this circular.

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