Smart Fish Wealthlink Holdings Limited — Proxy Solicitation & Information Statement 2004

Dec 31, 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker 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 China Electronics Corporation Holdings Company Limited (the “Company”), you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker 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.

CHINA ELECTRONICS CORPORATION HOLDINGS COMPANY LIMITED 中國電子集團控股有限公司[*]

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 0085)

CONTINUING CONNECTED TRANSACTION – REVISION OF ANNUAL CAP FOR 2004

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

ALTUS CAPITAL LIMITED

A letter from the independent board committee of the Company is set out on page 6 of this circular. A letter from Altus Capital Limited containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 7 to 10 of this circular.

31 December 2004

* For identification purpose only

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from Altus Capital Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11

• i -

DEFINITIONS

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

• “Approved 2004 Cap”

the maximum aggregate annual value of the sales of products by Sang Fei to the Philips Group for the year ending 31 December 2004 of RMB4,197,000,000, which was approved by the shareholders of the Company at the Company’s special general meeting held on 14 July 2004

• “Board”

the board of Directors

• “CEC”

China Electronics Corporation, the controlling shareholder of the Company holding 74.98% interest in the Company

• “Company”

China Electronics Corporation Holdings Company Limited

• “Directors” the directors of the Company

• “Group” the Company and its subsidiaries

“Independent Board Committee” the independent board committee, consisting of Messrs. Chan Kay Cheung, Wong Po Yan and Yin Yongli, the independent nonexecutive Directors, formed to advise the independent shareholders of the Company in respect of the Revised 2004 Cap

“June Circular”	the shareholders’ circular issued by the Company dated 21 June
	2004 containing details of the continuing connected transactions
	between Sang Fei and the Philips Group
“Latest Practicable Date”	29 December 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Philips Group”	Koninklijke Philips Electronics N.V., a company listed on the
	New York Stock Exchange and the Amsterdam Stock Exchange,
	together with its subsidiaries
“Revised 2004 Cap”	the proposed maximum aggregate annual value of the sales of
	products by Sang Fei to the Philips Group for the year ending 31
	December 2004
“RMB”	Renminbi, the lawful currency of the People’s Republic of China

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DEFINITIONS

“Sang Fei”	深圳桑菲消費通信有限公司(Shenzhen Sang Fei Consumer
	Communications Company Limited), a sino-foreign equity joint
	venture company established in the People’s Republic of China
	and owned as to 65% by the Company, 25% by the Philips Group
	and 10% by深圳市桑達實業股份有限公司(Shenzhen SED
	Industry Co., Ltd) as at the Latest Practicable Date
“Securities and Futures Ordinance”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	per cent.

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LETTER FROM THE BOARD

CHINA ELECTRONICS CORPORATION HOLDINGS COMPANY LIMITED 中國電子集團控股有限公司[*]

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 0085)

Directors:

Yang Xiaotang (Chairman)[†] Tong Baoan (Vice Chairman)[†] Fan Qingwu (Managing Director) Hua Longxing Chan Kay Cheung[††] Wong Po Yan[††] Yin Yongli[††]

• Non-executive Directors

• †† Independent Non-executive Directors

Registered office: Clarendon House 2 Church Street Hamilton, HM 11 Bermuda

Principal place of business in Hong Kong: Room 908, 9th Floor Sun Hung Kai Centre No. 30 Harbour Road Wanchai Hong Kong

31 December 2004

To the shareholders of the Company

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION – REVISION OF ANNUAL CAP FOR 2004

INTRODUCTION

On 20 December 2004, the Board announced that based on the Company’s unaudited management accounts for the first 11 months of 2004 and the projected sales figure for December 2004, the value of sales of products by Sang Fei, the Company’s principal operating subsidiary, to the Philips Group, a connected person of the Company by virtue of the Philips Group being a substantial shareholder of Sang Fei, is expected to exceed the maximum aggregate annual value for the year ending 31 December 2004 of RMB4,197,000,000, which was approved by the shareholders of the Company at the Company’s special general meeting held on 14 July 2004. The Company proposes to increase the annual cap for the year ending 31 December 2004 to RMB4,616,700,000, representing an increase of 10% over the Approved 2004 Cap.

The purpose of this circular is to provide you with further information relating to the Revised 2004 Cap. An Independent Board Committee has been established to advise the independent shareholders of the Company in respect of the Revised 2004 Cap.

* For identification purpose only

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LETTER FROM THE BOARD

The letter from the Independent Board Committee to the independent shareholders of the Company is set out on page 6 of this circular. The letter of advice from Altus Capital Limited, the independent financial adviser, to the Independent Board Committee and the independent shareholders of the Company is set out on pages 7 to 10 of this circular.

DETERMINATION OF THE APPROVED 2004 CAP AND THE REVISED 2004 CAP

As disclosed in the June Circular, Sang Fei manufactures and sells original equipment manufacturer products, or OEM products, to the Philips Group for Philips branded mobile phones. The prices of OEM products supplied by Sang Fei to the Philips Group are to be determined on a cost-plus basis. Details of the continuing connected transactions between Sang Fei and the Philips Group were set out in the June Circular. The shareholders of the Company have approved the continuing connected transactions between Sang Fei and the Philips Group and the respective annual caps at the Company’s special general meeting held on 14 July 2004.

As described in the June Circular, the determination of the Approved 2004 Cap was based on the budgeted sales of OEM products by Sang Fei to the Philips Group which in turn was determined by reference to Sang Fei’s communication with the Philips Group on their then latest estimated requirements for Philips branded mobile phones on a non-committed basis for 2004. The budgets and estimates were Sang Fei’s best estimates at the time the June Circular was issued based on information available then.

Subsequent to the date of the June Circular, Sang Fei has experienced an overall increase in the cost of production as more advanced accessories were built into handsets as well as a general increase in the cost of materials. In addition, Sang Fei has commenced manufacturing a new, higher end handset model for the Philips Group which was not contemplated in the calculation of the Approved 2004 Cap at the time when the June Circular was issued.

As a result of the circumstances set out above, the Company estimates that the total sales of OEM products by Sang Fei to the Philips Group for the year ending 31 December 2004 may exceed the Approved 2004 Cap. Based on the Company’s unaudited management accounts for the first 11 months of 2004 and the projected sales figure for December 2004, the Company proposes to increase the annual cap for the sales of products by Sang Fei to the Philips Group for the year ending 31 December 2004 to RMB4,616,700,000, representing an increase of 10% over the Approved 2004 Cap.

The sales by Sang Fei to the Philips Group are dictated by the demand of OEM products from the Philips Group, in both the number of orders and the specification of the OEM products ordered. Based on the current information from the Philips Group, the Company does not propose to revise the annual caps for the total sales by Sang Fei to the Philips Group for the years ending 31 December 2005 and 2006 as approved by the shareholders of the Company at the Company’s special general meeting held on 14 July 2004. The Company will monitor the annual caps and ensure that it will re-comply with the relevant provisions of the Listing Rules pursuant to Rule 14A.36(1) of the Listing Rules should the annual caps for the years ending 31 December 2005 and 2006 be exceeded.

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LETTER FROM THE BOARD

WRITTEN SHAREHOLDER’S APPROVAL

As the Revised 2004 Cap relates to the transactions between Sang Fei and the Philips Group only and that the Philips Group is only a connected person to the Company by virtue of the Philips Group being a substantial shareholder of Sang Fei (to the best knowledge of the Directors, the Philips Group has no shareholding in the Company), no shareholder of the Company is required to abstain from voting should a general meeting is convened by the Company for the purpose of approving the Revised 2004 Cap.

CEC, as the controlling shareholder of the Company holding 74.98% interest in the Company, has approved the Revised 2004 Cap by way of written approval. Pursuant to Rule 14A.53 of the Listing Rules, an application has been made to the Stock Exchange for a waiver from the requirement to convene a special general meeting for the approval of the Revised 2004 Cap by the independent shareholders of the Company.

RECOMMENDATION OF THE INDEPENDENT BOARD COMMITTEE

Altus Capital Limited has been retained as the independent financial adviser to advise the Independent Board Committee and the independent shareholders of the Company in respect of the Revised 2004 Cap.

The Independent Board Committee, having taken into account the advice from Altus Capital Limited, considers the Revised 2004 Cap and the sale of products by Sang Fei to the Philips Group to be on normal commercial terms and in the ordinary and usual course of business of the Group. The Independent Board Committee also considers the Revised 2004 Cap and the sale of products by Sang Fei to the Philips Group to be fair and reasonable and in the interests of the Company and its shareholders as a whole. The letter from Altus Capital Limited containing its advice and the principal factors and reasons taken into account in arriving at its advice is set out on pages 7 to 10 of this circular.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 6 of this circular, the letter set out on pages 7 to 10 of this circular from Altus Capital Limited, the independent financial adviser to the Independent Board Committee and the independent shareholders of the Company, setting out its advice in respect of the Revised 2004 Cap, and to the information set out in the appendix to this circular.

Yours faithfully

By Order of the Board

China Electronics Corporation Holdings Company Limited Yang Xiaotang

Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

CHINA ELECTRONICS CORPORATION HOLDINGS COMPANY LIMITED 中國電子集團控股有限公司[*]

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 0085)

31 December 2004

To the independent shareholders of the Company

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION – REVISION OF ANNUAL CAP FOR 2004

We have been appointed by the Board to advise you as to whether the Revised 2004 Cap is fair and reasonable and in the interests of the Company and its shareholders as a whole. Details of the Revised 2004 Cap are set out on pages 3 to 5 of the circular (the “Circular”) dated 31 December 2004 issued by the Company to its shareholders of which this letter forms part. The terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

We wish to draw your attention to the letter from the Board set out on pages 3 to 5 of the Circular and the letter of advice from Altus Capital Limited set out on pages 7 to 10 of the Circular.

The Independent Board Committee, after taking advice from Altus Capital Limited, concurs with the views of Altus Capital Limited and considers that the Revised 2004 Cap and the sale of products by Sang Fei to the Philips Group are on normal commercial terms and in the ordinary and usual course of business of the Group. We also consider that the Revised 2004 Cap and the sale of products by Sang Fei to the Philips Group are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Yours faithfully

Chan Kay Cheung Wong Po Yan Yin Yongli

Independent Board Committee

* For identification purpose only

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LETTER FROM ALTUS CAPITAL LIMITED

The following is the text of a letter received from Altus Capital Limited in respect of the Revised 2004 Cap prepared for the purpose of incorporation in this Circular:

ALTUS CAPITAL LIMITED

8/F Hong Kong Diamond Exchange Building 8 Duddell Street, Central

Hong Kong

The Independent Board Committee and independent shareholders of the Company

China Electronics Corporation Holdings Company Limited

Room 908, 9th Floor Sun Hung Kai Centre No. 30 Harbour Road Wanchai, Hong Kong

31 December 2004

Dear Sirs,

CONTINUING CONNECTED TRANSACTION – REVISION OF ANNUAL CAP FOR 2004

INTRODUCTION

We refer to the circular to shareholders of the Company dated 31 December 2004 (the “Circular”) issued by the Company of which this letter forms part and to our appointment as independent financial adviser to the Independent Board Committee and the independent shareholders of the Company in respect of the Revised 2004 Cap. Details of the Revised 2004 Cap are set out in the Letter from the Board contained in the Circular. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Circular of which this letter forms part unless the context otherwise requires.

An Independent Board Committee has been formed to advise the independent shareholders of the Company in relation to the Revised 2004 Cap. As stated in the Letter from the Board, no shareholder of the Company is required to abstain from voting at any general meeting convened by the Company for the purpose of approving the Revised 2004 Cap. China Electronics Corporation, as the controlling shareholder of the Company holding 74.98% interest in the Company, has approved the Revised 2004 Cap by way of written approval. The Company has therefore applied to the Stock Exchange pursuant to 14A.53 of the Listing Rules for a waiver from the requirement to convene a special general meeting for the approval of the Revised 2004 Cap by the independent shareholders of the Company.

BASIS OF OUR OPINION

In formulating our opinion, we have relied to a considerable extent on the information, statements, opinions and representations supplied to us by the Company and the Directors and we have assumed that all such information, statements, opinions and representations contained or referred to in the Circular

• 7 -

LETTER FROM ALTUS CAPITAL LIMITED

were true and accurate and, unless otherwise stated, complete at the time they were made and continue to be true at the date of the Circular, and we have relied on the same. We have also assumed that all statements of belief, opinion and intention of the Directors as set out in the Letter from the Board in the Circular were reasonably made after due and careful inquiry. We have also sought and obtained confirmation from the Company that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have been provided with all currently available information and documents which are available under present circumstances to enable us to reach an informed view and we have relied on the accuracy of the information contained in the Circular to provide a reasonable basis of our opinions. We have no reason to suspect that any material facts or information (which is known to the Company) have been omitted or withheld from the information supplied or opinions expressed in the Circular nor to doubt the truth and accuracy of the information and facts, or the reasonableness of the opinions expressed by the Company and its Directors which have been provided to us. We have not, however, carried out any independent verification on the information provided to us by the Directors, nor have we conducted an independent in-depth investigation into the business and affairs of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our advice with regard to the Revised 2004 Cap, we have considered the following principal factors and reasons:

1. Background

Sang Fei manufactures and sells original equipment manufacturer products, or OEM products, to the Philips Group for Philips branded mobile phones. Details of the continuing connected transactions between Sang Fei and the Philips Group were set out in the June Circular. The shareholders of the Company have approved the continuing connected transactions between Sang Fei and the Philips Group and the respective annual caps at the Company’s special general meeting held on 14 July 2004 and the Approved 2004 Cap is RMB4,197,000,000.

On 20 December 2004, the Board announced that based on the Company’s unaudited management accounts for the first 11 months of 2004 and the projected sales figure for December 2004, the value of sales of products by Sang Fei to the Philips Group is expected to exceed the Approved 2004 Cap. The Company therefore proposes to increase the annual cap for the year ending 31 December 2004 to RMB4,616,700,000, representing an increase of 10% over the Approved 2004 Cap.

2. Reasons for the increase

The prices of OEM products supplied by Sang Fei to the Philips Group are determined on a cost-plus basis. As described in the June Circular, the determination of the Approved 2004 Cap was based on the budgeted sales of OEM products by Sang Fei to the Philips Group which in turn was determined by reference to Sang Fei’s communication with the Philips Group on their then latest estimated requirements for Philips branded mobile phones on a non-committed basis for 2004. The budgets and estimates were therefore Sang Fei’s best estimates at the time the June Circular was issued based on information available then.

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LETTER FROM ALTUS CAPITAL LIMITED

Subsequent to the date of the June Circular, Sang Fei has experienced an overall increase in the cost of production as more advanced accessories were built into handsets as required by the Philips Group as well as an unexpected general increase in the cost of materials. In addition, Sang Fei has commenced manufacturing a new, higher-end handset model for the Philips Group which was contemplated when calculating the Approved 2004 Cap at the time when the June Circular was issued as the orders for the aforesaid new handset model were received from Philips Group after the Approved 2004 Cap was approved.

3. Effects of the Revised 2004 Cap

The Directors have confirmed that the basis of calculation of Sang Fei’s sale prices to the Philips Group is in accordance with the cooperation agreement entered into between Sang Fei and the Philips Group on 22 October 2001, the details of which were set out in the June Circular. That is, the prices of OEM products supplied by Sang Fei to the Philips Group are determined on a cost-plus basis. In other words, Sang Fei enjoys guaranteed profit margins in respect of sales to the Philips Group and will therefore not be disadvantaged by the increase in sales to be allowed under the Revised 2004 Cap. In turn, with the guaranteed profit margin, the increase in sales will result in increase in profit for the Group, which is in the interest of the Group and the shareholders of the Company as a whole. We are of the view that the terms of the aforesaid agreement, including its pricing basis, are fair and reasonable.

The increase in sales value of Sang Fei to the Philips Group is due to (a) an overall increase in the cost of production as more advanced accessories are used; (b) the commencement of the manufacturing of a new, higher-end handset model by the Philips Group; and (c) a general increase in cost of materials. The aforesaid factors are external and are not within the control of Sang Fei as (a) and (b) are generally dictated by the requirements of the Philips Group and (c) is dependent on the prices of materials in the global market.

Pursuant to the cooperation agreement, Sang Fei is the exclusive OEM manufacturer of Philips branded mobile phones designed and developed by the CEC and its subsidiaries (excluding Sang Fei) for the Philips Group. In order for Sang Fei to continue to maintain the exclusive relationship with the Philips Group, it is important that Sang Fei is able to accommodate the sales demand of the Philips Group. We believe that the Revised 2004 Cap is therefore necessary to facilitate this and is fair and reasonable to the shareholders of the Company.

4. The percentage increase of the Revised 2004 Cap

We have obtained extracts of the Company’s unaudited management accounts for the first 11 months of 2004 relating to Sang Fei’s sales to Philips Group and documents relating to the projected sales figures for December 2004. We have discussed with the Directors, who had confirmed that the pricing basis of the Revised 2004 Cap is the same as those under the Approved 2004 Cap and the Revised 2004 Cap represents an increase of 10% over the Approved 2004 Cap. According to the Directors, the 10% increase is determined after taking into account the aforesaid management accounts and the projected sales for December 2004, which are based on sale orders on hand. Based on the above, we are of the view that the basis of the Revised 2004 Cap, is fair and reasonable.

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LETTER FROM ALTUS CAPITAL LIMITED

5. Listing Rules requirements

The Directors informed us that the Company does not propose to revise the annual caps for the total sales by Sang Fei to the Philips Group for the years ending 31 December 2005 and 2006 approved by the shareholders of the Company at the Company’s special general meeting held on 14 July, 2004, even though the aforesaid annual caps have also similarly been affected by some of the factors which affected the Approved 2004 Cap. This is due to the fact that Philips Group has not indicated any changes in their estimated requirements for Philips branded mobile phones for 2005 and 2006 to Sang Fei and the trend of cost of materials in 2005 and 2006 remains unclear.

The Company will however continue to monitor the annual caps and ensure that it will recomply with the relevant provisions of the Listing Rules pursuant to Rule 14A.36(1) of the Listing Rules should the annual caps for the years ending 31 December 2005 and 2006 be exceeded.

CONCLUSION AND RECOMMENDATION

Having considered the above principal factors, we are of the opinion that the Revised 2004 Cap and the sale of products by Sang Fei to the Philips Group are conducted in the ordinary and usual course of business of the Group and are on normal commercial terms. We are also of the view that the sales to the Philips Group and the Revised 2004 Cap are fair and reasonable insofar as the independent shareholders of the Company are concerned and are in the interest of the Company and its shareholders as a whole.

Yours faithfully, For and on behalf of Altus Capital Limited Arnold Ip Sean Pey, Chang Executive Director Executive Director

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GENERAL INFORMATION

APPENDIX

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. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (including interests and short positions which they were deemed or taken to have under such provisions of the Securities and Futures Ordinance); or which were required, pursuant to section 352 of the Securities and Futures Ordinance, to be entered in the register referred to therein; or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange.

None of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group taken as a whole.

As at the Latest Practicable Date, none of the Directors nor any of their respective associates (as defined in the Listing Rules) had an interest in a business which competes or is likely to compete, either directly or indirectly with the business of the Group.

Since 31 December 2003, being the date to which the latest published audited consolidated financial statements of the Group were made up, up to the Latest Practicable Date, none of the Directors nor Altus Capital Limited had any direct or indirect material interest in any assets which had been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors or the chief executive of the Company, the following persons had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance:

			Percentage of total	Percentage of total
			issued	share capital
Name of shareholder	Number of shares held		of	the Company
China Electronics Corporation (BVI)
Holdings Company Limited (“CEC BVI”)	6,500,000,000			74.98%
CEC(1)	6,500,000,000			74.98%
Winsan International Holdings Limited
(“WIHL”)		731,372,870		8.43%
Chan Chak Shing		764,372,870(2)		8.81%

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GENERAL INFORMATION

APPENDIX

• (1) In light of the fact that CEC holds 100% interest in CEC BVI, the interests of CEC BVI are deemed to be interests of CEC.

• (2) This number of shares represents the aggregate of: (i) Chan Chak Shing and his family interest of 33,000,000 shares and (ii) corporate interest of 731,372,870 shares held by WIHL. As Chan Chak Shing holds 100% interest in WIHL, the interests of WIHL are deemed to be interests of Chan Chak Shing.

As at the Latest Practicable Date, so far as is known to the Directors or the chief executive of the Company, the following corporations were, directly or indirectly, interested in 10% or more of the issued share capital carrying rights to vote at general meetings of Sang Fei:

Name of shareholder

Interest held

Members of the Philips Group Shenzhen SED Industry Co., Ltd.[(3)]

25% 10%

• (3) Shenzhen SED Industry Co., Ltd. is a company established in the People’s Republic of China whose A shares are listed on the Shenzhen Stock Exchange and is indirectly owned as to approximately 54.69% by CEC.

Save as disclosed above, there is no person known to the Directors or the chief executive of the Company who, as at the Latest Practicable Date, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance, or, was, 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 member of the Group, or any options in respect of such capital.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, any service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2003, being the date to which the latest published audited consolidated financial statements of the Group were made up. Since 31 December 2003, the Company has acquired 65% equity interest in Sang Fei from CEC in consideration of the issuance of 6,500,000,000 shares of the Company to CEC. After the completion of the acquisition of Sang Fei on 24 September 2004, CEC became the Company’s controlling shareholder and the Company’s principal asset and business became that of Sang Fei, being the manufacturing and sale of mobile telephones, and the Company appointed Messrs. Yang Xiaotang, Tong Baoan, Fan Qingwu, Hua Longxing and Yin Yongli as Directors. The Company adopted its current name, China Electronics Corporation Holdings Company Limited, on 28 September 2004.

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GENERAL INFORMATION

APPENDIX

6. CONSENT AND QUALIFICATIONS OF EXPERT

Altus Capital Limited is a deemed registered institution for type 1, 4, 6 and 9 regulated activities under the Securities and Futures Ordinance. Altus Capital Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter of advice and references to its name in the form and context in which they respectively appear.

Altus Capital Limited is not beneficially interested in the share capital of any member of the Group and it does not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

7. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text.

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