Xi’an Haitian Antenna Technologies Co., Ltd. — Proxy Solicitation & Information Statement 2008

Jan 21, 2008

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 accountants or other professional adviser.

If you have sold all your shares in Xi’an Haitian Antenna Technologies Co., Ltd.* , 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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西安海天天�科技股份有限公司 XI’AN HAITIAN ANTENNA TECHNOLOGIES CO., LTD.[*] (A joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 8227)

DISCLOSEABLE AND CONNECTED TRANSACTION – AGREEMENT AMONG THE COMPANY, JIAZAI, HAITIAN HK AND DATANG MOBILE

Independent Financial Adviser

This document will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting.

22 January 2008

* For identification purposes only

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. GEM-listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

– i –

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . .	10
LETTER FROM KGI CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

– ii –

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

• “Acquisition” the acquisition of the Equity Interest by the Company from Datang Mobile

• “Agreement” the Agreement dated 22 December 2007 entered into between the Company, Jiazai, Haitian HK and Datang Mobile

• “Board” the board of Directors “Company” Xi’an Haitian Antenna Technologies Co. Ltd.* (西安海 天天�科技股份有限公司 ), a joint stock limited company incorporated in the PRC and the H Shares are listed on GEM

• “Datang Mobile” Datang Mobile Communication Equipment Co. Ltd.* (大唐移動通訊設備有限公司 ), established in the PRC in February 2002, is in possession of the core technology for TD-SCDMA development and is proposed to be engaged in the provision of 3G mobile communication equipment in the PRC. It is a core member of Datang Telecom

• “Datang Telecom” Datang Telecom Technology and Industry Group (大 唐電信科技產業集團), a large high-tech industry group of companies focusing on the research and d e v e l o p m e n t , p ro d u c t i o n a n d s a l e o f telecommunications equipment. Its members include Datang Mobile and Datang Telecom Technology Co., Ltd. (大唐電信科技股份有限公司 ), which is a limited liability company established in the PRC with its shares listed on the Shanghai Stock Exchange and whose principal business includes the development, production and sale of communications equipment and the provision of related technical services

• “Director(s)” the director(s) of the Company

• “Domestic Shares”

• ordinary shares in the share capital of the Company, with a nominal value of RMB0.10 each, which are subscribed for in Renminbi

• “Equity Interest”

• 35% equity interest owned by Datang Mobile in Jiazai

• For identification purposes only

– 1 –

DEFINITIONS

“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“Group”	the Company and its subsidiaries
“Haitian HK”	XAHT Antenna (Hong Kong) Limited, a wholly owned
	subsidiary of the Company
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“H Shares”	overseas-listed foreign shares in the share capital of
	the Company, with a nominal value of RMB0.10 each,
	which are listed on GEM and subscribed for and traded
	in Hong Kong dollars
“Independent Board Committee”	a committee of the Board comprising the independent
	non-executive Directors who are not interested in the
	Agreement
“Jiazai”	Jiazai Telecommunications Equipment Company
	Limited
“KGI Capital”	KGI Capital Asia Limited, the independent financial
	adviser to the Independent Board Committee and the
	Shareholders as regards the Agreement, a licensed
	corporation under the SFO to carry out types 1
	(Dealing in securities), 4 (Advising on securities) and
	6 (Advising on corporate finance) regulated activities
“Latest Practicable Date”	17 January 2008, being the latest practicable date prior
	to the printing of this circular for the purpose of
	ascertaining certain information for inclusion in this
	circular
“Manufacture Agreement”	the manufacture agreement dated 30 December 2005
	entered into between Jiazai and Datang Mobile
“PRC”	the People’s Republic of China
“SFO”	the Securities and Futures Ordinance (Chapter 571 of
	the Laws of Hong Kong)
“Share(s)”	ordinary share(s) of RMB0.10 each in the share capital
	of the Company
“Shareholders”	the holders of the Shares

– 2 –

DEFINITIONS

“Shenzhen Huitai” Shenzhen Huitai Investment Development Company Limited* (深圳匯泰投資發展有限公司 ), a limited liability company established in the PRC and a substantial Shareholder interested in 75,064,706 Domestic Shares, representing approximately 11.60% of the issued share capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “TD-SCDMA” Time Division Synchronous Code Division Multiple Access, one of the three recognized standards for 3G technology in the world

“TD-SCDMA Technology the technology licence agreement dated 30 December Licence Agreement” 2005 entered into between Jiazai and Datang Mobile “Tian An” Xi’an Tian An Investment Company Ltd.* (西安天安 投資有限公司), a limited liability company established in the PRC and a substantial shareholder of the Company interested in 180,000,000 Shares, representing approximately 27.81% of the Company’s issued share Capital

• “Xi’an Kaiyuan” Xi’an Kaiyuan Holding Group Company Limited (西 安開元控股集團股份有限公司 ) (formerly known as Xi’an Jiefang Group Joint Stock Co. Ltd. (西安解放集 團股份有限公司 )), a joint stock limited liability company established in the PRC and a substantial Shareholder interested in 100,000,000 Domestic Shares, representing approximately 15.45% of the issued share capital of the Company

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

The English name/translations of the companies established in the PRC, relevant authorities in the PRC and other Chinese terms used in this circular are only translations of their official Chinese names. In case of inconsistency, the Chinese names prevail.

* For identification purposes only

– 3 –

LETTER FROM THE BOARD

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西安海天天�科技股份有限公司 XI’AN HAITIAN ANTENNA TECHNOLOGIES CO., LTD.[*]

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

(Stock Code: 8227)

Directors:

Executive Directors Professor Xiao Liangyong (Chairman) Mr. Xiao Bing Mr. Zuo Hong

Non-executive Directors Mr. Xing Changling Mr. Luo Maosheng Mr. Sun Wenguo Ms. Wang Jing Mr. Li Wenqi

Independent non-executive Directors Professor Gong Shuxi Mr. Lei Huafeng Mr. Qiang Wenyu

Registered office:

No. 66 Jin Ye Road Xi’an National Hi-tech Industrial Development Zone Xi’an, Shaanxi Province PRC

Principal place of business in Hong Kong:

Rooms 2708–11, West Tower Shun Tak Centre 168–200 Connaught Road Central Hong Kong

22 January 2008

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION – AGREEMENT AMONG THE COMPANY, JIAZAI, HAITIAN HK AND DATANG MOBILE

INTRODUCTION

On 27 December 2007, the Company announced that it has entered into the Agreement with Jiazai, Haitian HK and Datang Mobile on 22 December 2007, pursuant to which (i) the Company agreed to acquire from Datang Mobile the Equity Interest at the consideration of approximately RMB45.46 million; and (ii) the TD-SCDMA Licence Agreement and the Manufacture Agreement were terminated.

* For identification purposes only

– 4 –

LETTER FROM THE BOARD

The purposes of this circular are to provide you with, among other things, (i) further information regarding Agreement; (ii) to set out the letter of advice from KGI Capital to the Independent Board Committee and the Shareholders in relation to the Agreement; and (iii) to set out the recommendation and opinion of the Independent Board Committee after taking into consideration of the advice of KGI Capital in relation to the Agreement.

THE AGREEMENT

Date

22 December 2007

Parties

The Company, Jiazai, Haitian HK and Datang Mobile

Effective Date

The Agreement shall take effect upon fulfillment of the following conditions:

• (i) the Agreement having been executed by the parties thereto;

• (ii) Datang Mobile and the Company having entered into an agreement in relation to the Acquisition;

• (iii) the obtaining of the approval of the Agreement from the board of directors of Datang Mobile; and

• (iv) the obtaining of the approval for the Agreement in general meeting of the Shareholders or the obtaining of the written approval of the Shareholders for the Agreement in accordance with the GEM Listing Rules (if required).

The form of the agreement referred to (ii) above was annexed to the Agreement, which principal terms are substantially same as the relevant terms of and formed part of the Agreement. Datang Mobile and the Company entered into the said agreement for the purpose of submission to the relevant authorities for approval.

ACQUISITION OF JIAZAI

Assets to be acquired

Reference is made to the announcement and the circular of the Company dated 16 November 2005 and 7 December 2005 respectively in relation to the establishment of Jiazai.

– 5 –

LETTER FROM THE BOARD

Pursuant to the Agreement, the Company agreed to acquire from Datang Mobile the Equity Interest, being 35% equity interest in Jiazai. Upon completion of the Acquisition, Jiazai will become a wholly owned-subsidiary of the Company.

Consideration

The consideration for the Acquisition is approximately RMB45.46 million. The consideration was arrived at after arm’s length negotiations between the parties taking into account the reasons set forth in the paragraph headed “Reasons for and Benefits of the Transaction” below and with reference to the valuation of Jiazai at approximately RMB122.48 million as at 30 June 2007 conducted by Shaanxi Tongren CPAs Co., Ltd.* (陝 西同人有限責任會計師事務所 ), an independent valuer. The consideration will be paid by setting off an equivalent amount payable by Datong Mobile to Jiazai upon termination of the TD-SCDMA Technology Licence Agreement.

Conditions precedent

The Acquisition shall take effect upon fulfillment of the following conditions:

• (i) the obtaining of the approval of the Acquisition from the board of directors of Datang Mobile;

• (ii) the obtaining of the approval of the transfer of the Equity Interest from Datang Mobile to the Company from the board of directors of Jiazai;

• (iii) the obtaining of the approval of the Acquisition from regulatory authorities of Jiazai; and

• (iv) the obtaining of the approval of the Acquisition in general meeting of the Shareholders or the obtaining of the written approval of the Shareholders for the Acquisition in accordance with the GEM Listing Rules (if required).

Termination of the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement

Reference is made to the announcement and the circular of the Company dated 23 August 2006 and 3 October 2006 respectively in relation to the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement.

Pursuant to the Agreement, Datang Mobile and Jiazai agreed that the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement shall be terminated upon the completion of the Acquisition. Datang Mobile shall return RMB60 million received under the TD-SCDMA Technology Licence Agreement, of which approximately RMB45.46 million shall be set off against the consideration payable by the Company for the Acquisition, approximately RMB10.54 million shall be set off against accounts receivable of an equivalent amount owed by Jiazai to Datang Mobile and the balance of approximately RMB4 million shall be paid by Datang Mobile to Jiazai within 10 days following the registration of the Acquisition with the Administration of Industry and Commerce.

• For identification purposes only

– 6 –

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE TRANSACTION

With reference to the unaudited financial statements of the Group for the nine months ended 30 September 2007, it is estimated that the completion of the Agreement will result in a gain of approximately RMB10.98 million, an increase in assets of approximately RMB0.44 million and a decrease in liabilities of approximately RMB10.54 million. The Directors do not expect the completion of the Agreement will result in any immediate significant impact on earnings of the Group.

INFORMATION ON THE PARTIES

The Company

The Company is a high-technology enterprise principally engaged in the research and development, manufacture and sale of base station antennas and related products. In connection with such principal business, the Company also provides technical support, system integration and installation services of base station antennas. The Company provides products and services to corporate clients comprising PRC’s mobile communication network operators and mobile communication equipment vendors/system integrators.

Haitian HK

Haitian HK is an investment holding company incorporated in Hong Kong and a wholly owned subsidiary of the Company.

Jiazai

Jiazai is a sino-foreign equity joint venture established and owned as to 53%, 12% and 35% by the Company, Haitian HK and Datang Mobile respectively. Jiazai has been engaged in research and development, manufacture, provision of consultancy and services in respect of TD-SCDMA systems and equipment, multi-media communication systems and wireless distribution systems.

The original acquisition cost of Datang Mobile in Jiazai comprised payment of capital contributions to Jiazai of approximately RMB45.46 million.

As at 31 December 2006, the audited consolidated net asset of Jiazai amounted to approximately RMB116,200,000. Jiazai was established on 30 December 2005, it had not recorded any profit or loss for the year ended 31 December 2005. For the year ended 31 December 2006, Jiazai recorded audited loss before tax and after tax of approximately RMB13,600,000. The financial information of Jiazai is prepared in accordance with Hong Kong Financial Reporting Standards.

– 7 –

LETTER FROM THE BOARD

Datang Mobile

Based on the information in its website, Datang Mobile, registered and established on 8 February 2002 in Beijing, the PRC, is one of the core members of Datang Telecom. Capitalizing on its research and development capability and regional advantage, Datang Mobile is mainly engaged in the production of TD-SCDMA infrastructure and terminal products and the development of relevant extended technologies and products. As extracted from its website, Datang Telecom is a large high-tech industry group focusing on the research and development, production and sales of telecommunications equipment. The flagship company of Datang Telecom is Datang Telecom Technology Co., Ltd., an enterprise established in the PRC with its shares listed on the Shanghai Stock Exchange and whose principal business includes the development, production and sale of communication equipment and the provision of related technical services in the PRC.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Group was informed by Datang Mobile that Datang Telecom has been undergoing a group restructuring. As part of the group restructuring, Datang Mobile intended to dispose of the Equity Interest and offered the Equity Interest to the Group.

Given that 3G standard of the PRC has not been launched and the timing of official release of 3G licences in the PRC is uncertain, there is a risk that Jiazai may incur further loss and hence affect the performance of the Group in future. Notwithstanding that, the Directors still remain optimistic about the tremendous opportunities that 3G will bring to the development of the business of Jiazai and the Group will continue to focus on developing 3G related products through Jiazai. Nevertheless, the Directors believe that the technology edge of the Group will be further strengthened by leveraging on the repeater and trunk amplifier technologies of Jiazai which were developed based on the TD-SCDMA mini-cellular base station technology. The Acquisition will benefit the Company and its subsidiaries as a whole in this respect.

Prior to the completion of the Acquisition, the Group had contributed in aggregate RMB82.80 million in cash and approximately RMB2 million of fixed assets, and Datang Mobile had contributed in aggregate approximately RMB45.46 million in cash to the registered capital of Jiazai. Since the consideration of the Acquisition will be satisfied by setting off against part of the amount to be returned by Datang Mobile arising from the termination of the TD-SCDMA Technology Licence Agreement, the Group will not require to use its internal resources to finance the Acquisition. Besides, the setting off of accounts receivables of Jiazai of approximately RMB10.54 million and the receipt of RMB4 million cash pursuant to the Agreement will improve the financial position of Jiazai as well as the Group as a whole.

The Directors (including the independent non-executive Directors) considers that the terms of the Agreement are fair and reasonable and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

– 8 –

LETTER FROM THE BOARD

GEM LISTING RULES IMPLICATIONS

The entering into of the Agreement constitutes a discloseable transaction for the Company under Chapter 19 the GEM Listing Rules. As Datang Mobile is interested in 35% of the equity capital of Jiazai, it is a connected person of the Company within the meaning of the GEM Listing Rules. As such, the entering into of the Agreement also constitutes a connected transaction for the Company and is subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

No Shareholder would be required to abstain from voting if the Company has convened a Shareholders’ meeting for the approval of the Agreement. Written approval has been obtained from Shenzhen Huitai, Tian An and Xi’an Kaiyuan. Shenzhen Huitai, Tian An and Xi’an Kaiyuan are a closely allied group of Shareholders having regarded to the factors set out in Rule 19.45 of the GEM Listing Rules and together hold 355,064,706 Domestic Shares, representing approximately 54.87% in the nominal value of the Shares. Tian An and Shenzhen Huitai are controlled by executive Directors of the Company, namely Mr. Xiao Bing and Mr. Zuo Hong, respectively. Professor Xiao Liangyong, father of and a party acting in concert with Mr. Xiao Bing, and Xi’an Kaiyuan are promoters of the Company since its establishment as a joint stock limited company in October 2000. Professor Xiao Liangyong is also the founder and the chairman of the Company and an executive Director. The Company has applied for and obtained a waiver from strict compliance with the requirements for approval of the Agreement at a general meeting of the Shareholders pursuant to Rule 20.43 of the GEM Listing Rules.

OPINION OF THE INDEPENDENT BOARD COMMITTEE

Your attention is drawn to (i) the letter from the Independent Board Committee which contains the opinion of the Independent Board Committee given to the Shareholders concerning the Agreement; and (ii) the letter from KGI Capital which contains the advice of KGI Capital given to Independent Board Committee and the Shareholders in relation to the Agreement.

ADDITIONAL INFORMATION

Your attention is also drawn to the information set out in the section headed “General Information” in this circular.

Yours faithfully By order of the Board,

Xi’an Haitian Antenna Technologies Co., Ltd.* Professor Xiao Liangyong

Chairman

* For identification purposes only

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter of recommendation from the Independent Board Committee which has been prepared for the purpose of inclusion in this circular.

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西安海天天�科技股份有限公司 XI’AN HAITIAN ANTENNA TECHNOLOGIES CO., LTD.[*]

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

(Stock Code: 8227)

22 January 2008

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION – AGREEMENT AMONG THE COMPANY, JIAZAI, HAITIAN HK AND DATANG MOBILE

We refer to the circular dated 17 January 2008 (the “Circular”) of Xi’an Haitian Antenna Technologies Co. Ltd.* (西安海天天�科技股份有限公司 ), of which this letter forms a part. Capitalized terms used in the Circular shall have the same meanings in this letter unless the context otherwise requires.

As independent non-executive Directors who are independent of the parties to the Agreement, we have been appointed by the Board to advise you as to whether, in our opinion, the terms of the Agreement are fair and reasonable so far as the Shareholders are concerned and the Agreement are in the interests of the Company and the Shareholders as a whole.

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 9 of the Circular, and the letter from KGI Capital, as set out on pages 11 to 22 of the Circular, which provide details of the Agreement and the opinions of KGI Capital in respect of the Agreement respectively. Having considered the advice given by KGI Capital and the principal factors and reasons taken into consideration by them in arriving at their advice, we are of the opinion that the Agreement is on normal commercial terms and entered into in the ordinary and usual course of business of the Company, and is in the interests of the Company and the Shareholders as a whole, and the terms thereof are fair and reasonable so far as the Shareholders are concerned.

Yours faithfully,

Independent Board Committee of

Xi’an Haitian Antenna Technologies Co. Ltd.*

Professor Gong Shuxi Mr. Lei Huafeng Mr. Qiang Wenyu Independence non-executive Directors

* For identification purposes only

– 10 –

LETTER FROM KGI CAPITAL

Set out below is the text of the letter of advice from KGI Capital Asia Limited, the independent financial adviser to the Independent Board Committee and the Shareholders, prepared for inclusion in this circular.

27/F, ICBC Tower, Citibank Plaza 3 Garden Road Central Hong Kong

Tel: 2878 6888 Fax: 2970 0080

22 January 2008

To the Independent Board Committee and the Shareholders Xi’an Haitian Antenna Technologies Co., Ltd. No. 66 Jin Ye Road, Xi’an National Hi-tech Industrial Development Zone, Xi’an, Shaanxi Province, The PRC

Dear Sirs,

CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Shareholders in respect of the connected transaction in respect of the Agreement entered into between the Company, Jiazai, Haitian HK and Datang Mobile, particulars of which are set out in the “Letter from the Board” (the “Letter”) contained in the circular dated 22 January 2008 (the “Circular”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

As referred to in the Letter, the Company has entered into the Agreement with Jiazai, Haitian HK and Datang Mobile on 22 December 2007, pursuant to which (i) the Company agreed to acquire from Datang Mobile the Equity Interest at the consideration of approximately RMB45.46 million; and (ii) the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement were terminated. As Datang Mobile is interested in 35% of the equity interest of Jiazai, it is a connected person of the Company within the meaning of the GEM Listing Rules. As such, the entering into of the Agreement also constitutes a connected transaction for the Company and is subject to the approval by independent shareholders under Chapter 20 of the GEM Listing Rules.

– 11 –

LETTER FROM KGI CAPITAL

An independent board committee, comprising Professor Gong Shuxi, Mr. Lei Huafeng and Mr. Qiang Wenyu, being the independent non-executive Directors, has been established to consider the terms of the Agreement and to advise the Shareholders thereon. We have been appointed by the Independent Board Committee to advise them as to whether or not the terms of the Agreement and the contemplated transaction thereto are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

No Shareholder would be required to abstain from voting if the Company convenes a Shareholders’ meeting for the approval of the Agreement. Written approval has been obtained from Shenzhen Huitai, Tian An and Xi’an Kaiyuan. Shenzhen Huitai, Tian An and Xi’an Kaiyuan are a closely allied group of Shareholders having regarded to the factors set out in Rule 19.45 of the GEM Listing Rules and together hold 355,064,706 Domestic Shares, representing approximately 54.87% in the nominal value of the Shares. The Company has applied for and obtained a waiver from strict compliance with the requirements for approval of the Agreement at a general meeting of the Shareholders pursuant to Rule 20.43 of the GEM Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the accuracy of the information and facts supplied, and the opinions and representations expressed to us by the Company, its Directors and management of the Company. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry and are based on honestly-held opinions. We have no reason to doubt the truth, accuracy and completeness of the information and representations referred to in the Circular and provided to us by the Company, its Directors and management of the Company. We have been advised by the Directors that no material facts have been omitted from the information provided to us and referred to in the Circular. We have also assumed that all statement of intention of the Company, its Directors and management of the Company as set out in the Circular will be implemented. We have assumed that all information and representations made or referred to in the Circular and provided to us by the Company, its Directors and management of the Company, for which they were solely and wholly responsible, were true, complete and accurate at the time they were made and shall continue to be true, complete and accurate at the date of the Circular.

In formulating our opinion, we have obtained and reviewed relevant information and documents provided by the Company and its Directors and management of the Company in connection with the transaction and discussed with the management of the Company so as to assess the fairness and reasonableness of the terms of the Agreement. Relevant information and documents, included, among other things, the Agreement, the TD-SCDMA Technology Licence Agreement, the Manufacture Agreement, the financial statement of Jiazai for the year ended 31 December 2006, the annual report of the Company for the year ended 31 December 2006, the interim report of the Company for the six months ended 30 June 2007, the third quarterly report of the Company for the nine months ended 30 September 2007 and the valuation report in connection with the valuation of

– 12 –

LETTER FROM KGI CAPITAL

Jiazai as at 30 June 2007 conducted by Shaanxi Tongren CPAs Co., Ltd. (陝西同人有限責任 會計師事務所 ) (the “Valuation Report”). We believe that we have reviewed sufficient information to enable us to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion regarding the terms of the Agreement. We have not, however, carried out any independent verification of the information and representations provided to us by the management of the Company and the Directors nor have we conducted any form of independent investigation into the businesses and affairs, financial position or the future prospects of the Company, Jiazai or Datang Mobile or their respective subsidiaries or associated companies. We have further assumed that all governmental, regulatory or other consents, waivers, authorizations, clearances and approvals necessary for the effectiveness and implementation of the Acquisition will be obtained without any adverse effect on the Group or the contemplated benefits to the Group as derived from the Acquisition.

Our opinion is necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations and opinions made available to us as of, the Latest Practicable Date. Our opinion does not in any manner address the Company’s own decision to proceed with the entering into the Agreement. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein, which may come or be brought to our attention after the Latest Practicable Date. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Shareholders in respect of the terms of Agreement, we have taken the following principal factors and reasons into consideration:

1. Background of the Acquisition

• (a) The Company and Datang Mobile

The Company is a high-technology enterprise principally engaged in the research and development, manufacture and sale of base station antennas and related products. In connection with such principal business, the Company also provides technical support, system integration and installation services of base station antennas. The Company provides products and services to corporate clients comprising PRC’s mobile communication network operators and mobile communication equipment vendors/system integrators.

Based on the information disclosed in its website, Datang Mobile, registered and established on 8 February 2002 in Beijing, the PRC, is one of the core members of Datang Telecom. Capitalizing on its research and development capability and regional advantage, Datang Mobile is mainly engaged in the production of TD-SCDMA infrastructure and terminal products

– 13 –

LETTER FROM KGI CAPITAL

and the development of relevant extended technologies and products. As stated in the Letter, Datang Telecom is a large high-tech industry group focusing on the research and development, production and sales of telecommunications equipment. The flagship company of Datang Telecom is Datang Telecom Technology Co., Ltd., an enterprise established in the PRC with its shares listed on the Shanghai Stock Exchange and whose principal business includes the development, production and sale of communication equipment and the provision of related technical services in the PRC.

(b) The establishment of Jiazai

Jiazai is a sino-foreign equity joint venture established on 30 December 2005 and owned as to 53%, 12% and 35% by the Company, Haitian HK (an investment holding company incorporated in Hong Kong and a wholly owned subsidiary of the Company) and Datang Mobile (as described above) respectively.

As at the Latest Practicable Date, the Group had contributed in aggregate RMB82.8 million in cash and approximately RMB2 million of fixed assets, and Datang Mobile had contributed in aggregate approximately RMB45.46 million in cash to the registered capital of Jiazai.

Jiazai has been established for engaging in research and development, manufacture, provision of consultancy and services in respect of TD-SCDMA systems and equipment, multi-media communication systems and wireless distribution systems.

• (c) The business and financial overview of Jiazai

On 30 December 2005, Jiazai entered the TD-SCDMA Technology Licence Agreement with Datang Mobile. Pursuant to the TD-SCDMA Technology Licence Agreement, Datang Mobile agreed to grant the non-exclusive licence to Jiazai for using its TD-SCDMA mini-cellular base station technology for manufacturing and sale of the TD-SCDMA mini-cellular base stations in accordance with the Manufacture Agreement.

On 30 December 2005, Jiazai entered the Manufacture Agreement with Datang Mobile. Pursuant to the Manufacture Agreement entered into between Datang Mobile as the purchaser and Jiazai as the supplier, Datang Mobile agreed to purchase and Jiazai agreed to sell the TD-SCDMA mini-cellular base stations manufactured by Jiazai on an exclusive basis.

According to the financial statement of Jiazai for the year ended 31 December 2006, Jiazai recorded loss before tax and after tax of approximately RMB13.6 million. For the year ended 31 December 2006, the total revenue of Jiazai was approximately RMB1.45 million, in which the revenue generated from TD-SCDMA mini-cellular base stations was nil. As at 31 December 2006,

– 14 –

LETTER FROM KGI CAPITAL

the consolidated net asset of Jiazai amounted to approximately RMB116.2 million. The financial information of Jiazai was prepared in accordance with Hong Kong Financial Reporting Standards. According to the unaudited management accounts of Jiazai, the unaudited consolidated net asset of Jiazai as at 30 June 2007 amounted to approximately RMB109.7 million.

According to the unaudited management accounts of Jiazai for the eleven months ended 30 November 2007 provided by the Company, Jiazai recorded unaudited loss before tax and after tax of approximately RMB11.6 million. For the eleven months ended 30 November 2007, the total revenue of Jiazai was approximately RMB5.85 million, in which the revenue generated from TD-SCDMA mini-cellular base stations was approximately RMB4.53 million.

2. Reasons for entering the Agreement

• (a) Potential of the 3G mobile telecommunication market in the PRC

According to the Letter, the Group was informed by Datang Mobile that Datang Telecom has been undergoing a group restructuring. As part of the group restructuring, Datang Mobile intended to dispose of the Equity Interest and offered the Equity Interest to the Group. Although 3G standard of the PRC has not been formally launched, the Directors are still optimistic about the tremendous opportunities that 3G will bring to the development of the business of Jiazai and the Group will continue to focus on developing 3G related products through Jiazai. Therefore, the Directors believe that the Acquisition would enable the Group to more efficiently control and manage Jiazai’s operations and business strategy and will increase the flexibility of the Company in formulating its future business strategy to fully capture the anticipated increase in demand on 3G related products through Jiazai, which will become a wholly-owned subsidiary of the Company upon completion of the Acquisition.

According to the third quarterly report of the Company for the nine months ended 30 September 2007, the unaudited turnover of the Group was approximately RMB101.4 million, in which the percentage of total sales of 3G series products increased to approximately 4% for the nine months ended 30 September 2007 from approximately 1% for the corresponding period in the year 2006. Taking into account the PRC government has not officially released the 3G licence yet, the Directors consider that there is further growth opportunity in the market of 3G related products in the future.

Based on the data provided in the website of the Ministry of Information Industry, the revenue generated from telecommunications operations and number of mobile users maintained the growing trends in recent years. Revenue generated from telecommunications operations increased by approximately 11.8% from approximately RMB579.9 billion in 2005 to approximately RMB648.4 billion in 2006. For the first half of 2007, it further grew by approximately 9.9% to approximately RMB351.62 billion as compared to the same period in year 2006.

– 15 –

LETTER FROM KGI CAPITAL

As at the end of 2006, there were approximately 460 million mobile phone users in the PRC, representing an increase of approximately 16.9% when compared to approximately 393.4 million mobile phone users as at the end of 2005. The number of mobile phone users in the PRC is estimated to reach approximately 520 million as at the end of year 2007. According to Research In China, more than 77% of existing Chinese mobile users are keen to buy 3G mobile phone when they become available.

The table set out below illustrates the increasing trend of the number of mobile phone users in the PRC from 2003 to 2007.

==> picture [258 x 149] intentionally omitted <==

----- Start of picture text -----

Number of mobile users (million)
Unit: million
600
520
460
500
393.4
400 334.8
268.7
300
200
100
0
2003 2004 2005 2006 2007
(estimated)
----- End of picture text -----

Source: Ministry of Information Industry

As released in Beijing Review No. 9 2005, TD-SCDMA is one of the three mainstream standards recognized by the International Telecommunication Union (ITU) for 3G mobile communication technologies. TD-SCDMA is one of the three potential 3G technology standards in the PRC. According to various news in the PRC in 2007, the PRC is expanding the TD-SCDMA network tests to prepare for 3G services.

Having considered the above that (i) the Acquisition would enable the Group to more efficiently control and manage Jiazai’s operations and business strategy and will increase the flexibility of the Company in formulating its future business strategy to fully capture the anticipated increase in demand on 3G related products through Jiazai; (ii) the market demand in the PRC for the 3G related products of Jiazai is expected by the Directors to be high once the schedule of official release of 3G licences in the PRC is confirmed; and (iii) the anticipated potential growth of the PRC mobile communication market in relation to TD-SCDMA technology, we concur with the view of the Directors of the potential growth opportunity of PRC mobile communication market in the future and we are of the view that the Acquisition represents a further development of the Company in this sector which is in the interests of the Company and the Shareholders as a whole.

– 16 –

LETTER FROM KGI CAPITAL

• (b) Termination of the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement

The TD-SCDMA Technology Licence Agreement and the Manufacture Agreement will be terminated upon the completion of Acquisition. As confirmed by the Directors, the planned production of TD-SCDMA mini-cellular base stations under the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement with Datang Mobile in 2006 and 2007 was not as smooth as previously expected. In addition, it is not unreasonable to have the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement being terminated under the circumstance that Datang Mobile is no longer a shareholder of Jiazai upon completion of the Acquisition. Moreover, after discussion with the management of the Company, the Group will focus on development of other 3G related products through Jiazai in order to capture the market opportunities once the 3G licence is officially released in the PRC. Therefore, we are of the view that the termination of the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement upon completion of the Acquisition is justifiable.

• (c) New products and related technologies developed during the joint venture period of cooperation with Datang Mobile

As discussed with the management of the Company, during the joint venture period of cooperation with Datang Mobile, Jiazai had shared the use of Datang Mobile’s technology and successfully developed other new 3G related products based on the TD-SCDMA mini-cellular base station technology, namely 3G repeater and trunk amplifier technologies (the “New Products & Technologies”). The Directors believe that the technology edge of the Group will be further strengthened by leveraging on the New Products & Technologies of Jiazai, and hence the Acquisition will benefit the Company and its subsidiaries as a whole in this respect.

In addition, we understand from the Directors that, besides the New Products & Technologies, the business focus of the Group in future will be diversified into the provision of the base station repairing services. Regarding the base station repairing services, we have reviewed a service provision contract of the Company on hand and the internal profit projections prepared by the Company, taking into account of the New Products & Technologies developed over the joint venture period, we therefore concur with the Directors’ view that the New Products & Technologies and the business diversification into the provision of base station repairing services would enhance the income stream of Jiazai upon the official release of 3G licence in the PRC, and hence we consider that the Acquisition is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM KGI CAPITAL

Having considered (i) the anticipated market potential of the 3G mobile telecommunication market in the PRC in the future; and (ii) the New Products & Technologies developed during the joint venture period of cooperation with Datang Mobile, we are of the view that the increase of the Company’s aggregated equity interest in Jiazai from 65% to 100% by entering into of the Agreement is in the interests of the Company and the Shareholders as a whole.

3. The terms and consideration of the Acquisition

• (a) Assets to be acquired

On 22 December 2007, the Company entered into the Agreement with Jiazai, Haitian HK and Datang Mobile, pursuant to which, the Company agreed to acquire from Datang Mobile the Equity Interest, being 35% equity interest in Jiazai. Upon completion of the Acquisition, Jiazai will become a wholly owned-subsidiary of the Company. The principal terms and conditions of the Agreement have been summarized under the section headed “The Agreement” in the Letter.

• (b) The basis of the consideration

According to the Letter, the consideration for the Acquisition is approximately RMB45.46 million, which was arrived at after arm’s length negotiations between the parties taking into account the reasons set forth in the section headed “Reasons for and the benefits of the transaction” in the Letter and with reference to the valuation of Jiazai at approximately RMB122.48 million as at 30 June 2007 (the “Valuation”) conducted by Shaanxi Tongren CPAs Co., Ltd. (陝西同人有限責任會計師事務所 ), an independent valuer (the “Valuer”).

As discussed with the management of the Company, besides the basis of the consideration is referenced to the Valuation, the consideration of the Acquisition is also with reference to net asset value of Jiazai and has been also taken into account the original payment of capital contributions of Datang Mobile to Jiazai of approximately RMB45.46 million; and the contemplated benefits derived from the New Products & Technologies as mentioned in the above paragraph headed “New products and related technologies developed during the joint venture period of cooperation with Datang Mobile” under the section headed “Reasons for entering the Agreement”.

In assessing the fairness and reasonableness of the consideration of the Acquisition, we have reviewed the Valuation Report and discussed with the Valuer on the methodologies adopted and the basis and assumptions used in arriving at the market value of Jiazai as at 30 June 2007. Following inquires to the Valuer, we understand that the Valuer has adopted the income approach by summing up the discounted values of all expected income to be generated by the existing products of Jiazai as at 30 June 2007, including, inter alia , the TD-SCDMA mini-cellular base stations manufactured under the TD-SCDMA

– 18 –

LETTER FROM KGI CAPITAL

Technology Licence Agreement and the Manufacture Agreement, with a discounted rate or a capitalization rate. In view of the fact that the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement will be terminated upon completion of the Acquisition, and hence TD-SCDMA minicellular base stations will no longer be manufactured by Jiazai after the Acquisition, we, therefore, are of the view that the reference value of the Valuation Report is low for reflecting the market value of Jiazai and the valuation may not be useful and appropriate for our evaluation of the transaction.

As advised by the Directors, besides the Valuation Report, the consideration of the Acquisition was arrived by taking into account the reasons set forth in the section headed “Reasons for and the benefits of the transaction” in the Letter. Although Jiazai recorded loss for the year ended 31 December 2006, the Directors expect Jiazai to have a positive development prospect as discussed in the section headed “Reasons for entering the Agreement” above and the Directors believe that the New Products & Technologies and the business diversification into the provision of base station repairing services would enhance the income stream of Jiazai upon the official release of 3G licence in the PRC.

In addition, we have also considered other commonly used valuation methods, namely net profit or price earnings ratio method and net asset value method. The price earnings ratio method determines the value of a subject company by multiplying its earnings by an average price earnings ratio of market comparables, which are engaged in similar businesses with the subject company. However, as Jiazai recorded losses for the latest financial year ended 31 December 2006, we consider that it may not be practicable and appropriate to use net profit or price earnings ratio method to determine the value of Jiazai.

Based on the net asset value of Jiazai of approximately RMB116.2 million as at 31 December 2006 and approximately RMB109.7 million as at 30 June 2007, the net asset value of Jiazai attributable to the 35% equity interest held by Datang Mobile amounted to approximately RMB40.67 million and approximately RMB38.40 million respectively, the consideration for the Acquisition of approximately RMB45.46 million is in effect at a premium of approximately 11.8% and 18.4% respectively, or approximately RMB4.79 million and approximately RMB7.06 million respectively in absolute amount, over the net asset values of Jiazai attributable to the Equity Interest as at 31 December 2006 and as at 30 June 2007 respectively. The Directors considered that the premium represents the value of the New Products & Technologies and the established presence of Jiazai in the market of communication systems and related products for the past two years. Having considered that (i) the premium of approximately RMB4.79 million of the consideration for the Acquisition over the net asset value of Jiazai attributable to the Equity Interest as at 31 December 2006 in absolute amount represents approximately 2.81% of the

– 19 –

LETTER FROM KGI CAPITAL

audited consolidated net asset attributable to equity shareholders of the Company as at 31 December 2006 of approximately RMB170.35 million (based on the annual report of the Group for the year ended 31 December 2006); and (ii) the premium of approximately RMB7.06 million of the consideration for the Acquisition over the net asset value of Jiazai attributable to the Equity Interest as at 30 June 2007 in absolute amount represents approximately 4.37% of the unaudited consolidated net asset attributable to equity shareholders of the Company as at 30 June 2007 of approximately RMB161.49 million (based on the interim report of the Group for the six months ended 30 June 2007), we are of the opinion that the consideration of the Acquisition with a premium over the net asset values of Jiazai attributable to the Equity Interest in absolute amount are not significant as compared to the consolidated net asset values of the Group.

Although the consideration of the Acquisition represents a premium over the net asset values of Jiazai attributable to the Equity Interest, however, after taking into account (i) the consideration of the Acquisition is arrived after arm’s length negotiation; (ii) the consideration of the Acquisition is the same as the original aggregate payment of capital contributions by Datang Mobile to Jiazai; (iii) the New Products & Technologies developed by Jiazai during the joint venture period of cooperation with Datang Mobile; (iv) the presence of Jiazai in the market of communication systems and related products for the past two years; (v) the potential growth opportunity of PRC mobile communication market in the future; (vi) the Company would enjoy the contemplated benefits from the Acquisition as described in the above section headed “Reasons for entering the Agreement”; and (vii) the absolute amount of the premium of the consideration of the Acquisition over the net asset values of Jiazai attributable to the Equity Interest are not significant as compared to the consolidated net asset value of the Group, we therefore consider that the consideration of the Acquisition is, in overall, fair and reasonable so far as the interests of the Company and the Shareholders generally are concerned.

(c) Terms of payment

Pursuant to the Agreement, Datang Mobile and Jiazai agreed that the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement shall be terminated upon the completion of the Acquisition. Datang Mobile shall return RMB60 million under the TD-SCDMA Technology Licence Agreement, of which approximately RMB45.46 million shall be set off against the consideration payable by the Company for the Acquisition, approximately RMB10.54 million shall be set off against an equivalent amount owed by Jiazai to Datang Mobile and the balance of approximately RMB4 million in cash shall be paid by Datang Mobile to Jiazai within 10 days following the registration of the Acquisition with the Administration of Industry and Commerce. Given the consideration of the Acquisition will be satisfied by setting off against part of the amount to be returned by Datang Mobile arising

– 20 –

LETTER FROM KGI CAPITAL

from the termination of the TD-SCDMA Technology Licence Agreement, the Group will not be required to use its internal resources to finance the Acquisition, and as such, we consider that the term of payment is in the interests of the Company and the Shareholders as a whole.

Pursuant to the TD-SCDMA Technology Licence Agreement, Jiazai has paid and shall pay in aggregate of approximately RMB60.86 million to Datang Mobile for granting the licence for using the TD-SCDMA mini-cellular base station technology, we note that there is a deficit of approximately RMB0.86 million from the return of approximately RMB60 million by Datang Mobile to Jiazai upon the termination of the TD-SCDMA Technology Licence Agreement. As advised by the Directors, the deficit of approximately RMB0.86 million is considered as a service fee of trainings which were provided by Datang Mobile to the staffs of Jiazai in respect of the relevant TD-SCDMA technology under the TD-SCDMA Technology Licence Agreement, in which the Directors understand that the New Products & Technologies are developed through such trainings. As such, we consider that the deficit of the return payment of approximately RMB0.86 million is justifiable and acceptable.

4. Financial effect

• (a) Working capital of the Group

Since the consideration of approximately RMB45.46 million for the Acquisition shall be set off against part of the return payment of RMB60 million payable by Datang Mobile to Jiazai upon the termination of the TD-SCDMA Technology Licence Agreement, there will be no need for the Group to use its internal resources to finance the Acquisition, and hence there is no cash outflow from the Group for the Acquisition. In addition, as a result of the Acquisition and the termination of the TD-SCDMA Technology Licence Agreement and the Manufacture Agreement, Jiazai will receive in cash a sum of approximately RMB4 million from Datang Mobile.

• (b) Net asset value and earnings of the Group

The Directors confirmed that, with reference to the unaudited financial statements of the Group for the nine months ended 30 September 2007, it is estimated that the completion of the Agreement will result in a gain of approximately RMB10.98 million in the books of Jiazai.

Before the Acquisition, Jiazai is beneficially owned as to an aggregate of 65% by the Company. Upon completion of the Acquisition, Jiazai will become a wholly owned subsidiary of the Company. The Directors confirmed that the financial results of Jiazai will be consolidated into Group’s financial statements before as well as after the Acquisition. As the Directors expect Jiazai to have a positive development prospect as discussed in the section headed “Reasons for entering the Agreement” above, the Group’s future financial performance

– 21 –

LETTER FROM KGI CAPITAL

may be improved upon the completion of the Acquisition should the development prospect be positively realised. However, in the view that the timing of official release of 3G licences by relevant authorities in the PRC is still uncertain, the Shareholders should note that there is a risk for Jiazai to make further loss in the future. As such, the Group may have to bear 100% of loss compared with that of 65% prior to the Acquisition.

Accordingly, after taking into account (i) a sum in cash of approximately RMB4 million shall be paid by Datang Mobile to Jiazai as described above; (ii) the Company would enjoy the contemplated benefits from the Acquisition as described in the above section headed “Reasons for entering the Agreement”; (iii) the completion of the Agreement will result in a gain of approximately RMB10.98 million in the books of Jiazai as confirmed by the Directors; and (iv) the Group’s future financial performance may be improved upon completion of the Acquisition should the development prospect of Jiazai be positively realised, all these factors together outweighed the risk of making further loss by Jiazai due to the uncertainty of official release of 3G licences in the PRC, we therefore consider that, on balance, the entering into of the Agreement is fair and reasonable so far as the interests of the Company and the Shareholders generally are concerned.

RECOMMENDATION

Given the abovementioned risk, the Shareholders should carefully note regarding the potential risks and contemplated benefits associated with the Acquisition under the Agreement. Nevertheless, having considered the above principal factors and reasons, we are of the view that, on balance, the terms of the Agreement are fair and reasonable so far as the interests of the Shareholders generally are concerned and are in the interests of the Company and the Shareholders as a whole.

Yours faithfully, For and on behalf of KGI Capital Asia Limited Laurent Leung Jimmy Chan Director Senior Vice President

– 22 –

APPENDIX

GENERAL INFORMATION

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information to the public with regard to the Group. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief:

• (a) the information contained in this circular is accurate and complete in all material respects and not misleading;

• (b) there are no other matters the omission of which would make any statement in this circular misleading; and

• (c) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVES’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors, Supervisors (as if the requirements applicable to the Directors under the SFO had applied to the Supervisors) and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) are 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 or short positions which he is taken or deemed to have under such provisions of the SFO); or (b) are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) are required, pursuant to rule 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by directors to be notified to the Company and the Stock Exchange, were as follows:

Long positions in the Domestic Shares of the Company

				Approximate	Approximate
				percentage in	percentage in
			Number of the	the total issued	the total
			Domestic Shares	Domestic Shares	issued share
	Type of		held in the	of the	capital of the
Name of Director	interest	Capacity	Company	Company	Company
Professor Xiao	Personal	Party acting in	180,000,000	37.09%	27.81%
Liangyong		concert	(Note 1)
(肖良勇教授)
Xiao Bing	Personal	Held by controlled	180,000,000	37.09%	27.81%
(肖兵)		corporation	(Note 1)
Zuo Hong	Personal	Held by controlled	75,064,706	15.47%	11.60%
(左宏)		corporation	(Note 2)

– 23 –

APPENDIX

GENERAL INFORMATION

Notes:

1. The Domestic Shares were held by 西安天安投資有限公司 (Xi’an Tian An Investment Company Limited*) (“Tian An Investment”), which is beneficially owned as to 60% by Mr. Xiao Bing and 40% by Ms. Yao Wenli. By virtue of the SFO, Mr. Xiao Bing was deemed to be interested in the same 180,000,000 Domestic Shares held by Tian An Investment. Professor Xiao Liangyong is the father of Mr. Xiao Bing and a person acting in concert with Mr. Xiao Bing and Ms. Yao Wenli. By virtue of the SFO, Professor Xiao Liangyong was deemed to be interested in the same 180,000,000 Domestic Shares held by Tian An Investment.

2. The Domestic Shares were held by 深圳市匯泰投資發展有限公司 (Shenzhen Huitai Investment Development Company Limited*) (“Shenzhen Huitai”), which is beneficially owned by Zuo Hong and Zhang Yinghua in equal share. By virtue of the SFO, each of Zuo Hong and Zhang Yinghua was deemed to be interested in the same 75,064,706 Domestic Shares held by Shenzhen Huitai.

SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS

As at the Latest Practicable Date, so far as is known to the Directors and chief executives of the Company, the persons or entities (other than the Directors, the Supervisors or chief executives of the Company) who/which have an interest or short position in the shares or 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 SFO, or, who/which are expected, directly or indirectly, to be 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 any other member of the Group, were as follows:

(A) Substantial shareholders of the Company

Long position in Domestic Shares of the Company

				Approximate
				percentage	Approximate
			Number	in the total	percentage
			of Domestic	issued	in the total
			Shares	Domestic	issued share
	Type of		held in	Shares of	capital of
Name of shareholder	interest	Capacity	the Company	the Company	the Company
Tian An Investment	Corporate	Beneficial owner	180,000,000	37.09%	27.81%
Yao Wenli (姚文俐)	Personal	Held by controlled	180,000,000	37.09%	27.81%
		corporation	(Note 1)
西安開元控股集團股份	Corporate	Beneficial owner	100,000,000	20.60%	15.45%
有限公司
(Xi’an Kaiyuan Holding
Group Limited*)
(“Xi’an Kaiyuan”)
(Note 2)

• For identification purposes only

– 24 –

APPENDIX

GENERAL INFORMATION

				Approximate	Approximate
					percentage	Approximate
			Number		in the total		percentage
			of Domestic		issued		in the total
			Shares		Domestic	issued share
	Type of		held in		Shares of		capital of
Name of shareholder	interest	Capacity	the Company	the Company		the Company
Shenzhen Huitai	Corporate	Beneficial owner	75,064,706		15.47%		11.60%
Zhang Yinghua (張英華)	Personal	Held by controlled	75,064,706		15.47%		11.60%
		corporation	(Note 3)
西安國際信託投資	Corporate	Beneficial owner	70,151,471		14.45%		10.84%
有限公司
(Xi’an International
Trust & Investment
Co., Ltd.*) (“XITIC”)
西安市財政局	Corporate	Held by controlled	70,151,471		14.45%		10.84%
(Xi’an Finance Bureau*)		corporation	(Note 4)
陝西保升國際投資	Corporate	Held by controlled	70,151,471		14.45%		10.84%
有限責任公司		corporation	(Note 4)
(Shaanxi Baosheng
International Investment
Company Limited*)

Notes:

1. The Domestic Shares were held by Tian An Investment, which is beneficially owned as to 60% by Mr. Xiao Bing and 40% by Ms. Yao Wenli. By virtue of the SFO, Ms. Yao Wenli was deemed to be interested in the same 180,000,000 Domestic Shares held by Tian An Investment.

2. The Company has been informed by Xi’an Kaiyuan that it has changed its name from 西 安解放集團股份有限公司 (Xi’an Jiefang Group Joint Stock Co., Ltd.) to 西安開元控股集 團股份有限公司 (Xi’an Kaiyuan Holding Group Company Limited) effective from 5 July 2007.

3. The Domestic Shares were held by Shenzhen Huitai, which is beneficially owned by Zuo Hong and Zhang Yinghua in equal share. By virtue of the SFO, each of Zuo Hong and Zhang Yinghua was deemed to be interested in the same 75,064,706 Domestic Shares held by Shenzhen Huitai.

4. The Domestic Shares were held by XITIC. By virtue of the SFO, Xi’an Finance Bureau and Shaanxi Baosheng International Investment Company Limited, which respectively holds more than one third of voting right of XITIC, were deemed to be interested in the same 70,151,471 Domestic Shares held by XITIC.

* For identification purposes only

– 25 –

APPENDIX

GENERAL INFORMATION

• (B) Other persons who are required to disclose their interests pursuant to Divisions 2 and 3 of Part XV of the SFO

Long position in Domestic Shares of the Company

				Approximate
				percentage	Approximate
			Number	in the total	percentage
			of Domestic	issued	in the total
			Shares	Domestic	issued share
	Type of		held in	Shares of	capital of
Name of shareholder	interest	Capacity	the Company	the Company	the Company
北京京泰投資管理中心	Corporate	Beneficial owner	54,077,941	11.14%	8.35%
(Beijing Holdings
Investment Management
Co., Ltd.*, “Beijing
Holdings”)
京泰實業(集團)有限公司	Corporate	Held by controlled	54,077,941	11.14%	8.35%
(Beijing Holdings		corporation	(Note 1)
(Group) Limited*)

Long positions in H Shares of the Company

				Approximate	Approximate
				percentage	percentage
			Number of	in the	in the total
			H Shares	total issued	issued share
	Type of		held in	H Shares of	capital of
Name of shareholder	interest	Capacity	the Company	the Company	the Company
Taicom Capital Ltd.	Corporate	Investment manager	13,004,000	8.03%	2.00%
			(Note 2)
Carlson Fund Equity Asian	Corporate	Investment manager	10,520,000	6.50%	1.62%
Small Cap			(Note 2)
Ms. Song Ying	Personal	Beneficial owner	8,800,000	5.43%	1.35%
			(Note 2)

• For identification purposes only

– 26 –

APPENDIX

GENERAL INFORMATION

Notes:

1. The Domestic Shares were held by Beijing Holdings. By virtue of the SFO, Beijing Holdings (Group) Limited, which holds more than one third of voting rights of Beijing Holdings, was deemed to be interested in the same 54,077,941 Domestic Shares held by Beijing Holdings.

2. The details of these shareholders of the Company were based on information as set out in the website of the Stock Exchange. The Company has not been notified by the relevant shareholders and has not received any Corporate Substantial Shareholder Notice from the relevant shareholders.

(C) Substantial shareholders of other members of the Group

Long positions in 嘉載通信設備有限公司 (Jia Zai Telecommunication Equipment Ltd.*)

				Approximate
			Amount of	percentage
Name of	Type of		equity interest	in the total
shareholder	interest	Capacity	held	registered capital
XAHT Antenna	Corporate	Beneficial	RMB19,200,000	12%
Technologies (Hong		owner
Kong) Limited_(Note)_

Note: XAHT Antenna Technologies (Hong Kong) Limited is a wholly owned subsidiary of the Company.

* For identification purposes only

– 27 –

APPENDIX

GENERAL INFORMATION

SERVICE CONTRACTS

Each of the Directors has entered into a service contract with the Company for a term valid until 19 May 2010 subject to renewal upon approval by the Shareholders for one or more consecutive terms of three years.

Details of the annual emoluments of the Directors as set out in their respective service contract with the Company are as follows:

Director	Annual emoluments (RMB)
Professor Xiao Liangyong	Nil*
Mr. Xiao Bing	Nil*
Mr. Zuo Hong	Nil*
Mr. Xing Changling	6,000
Mr. Luo Maosheng	6,000
Mr. Sun Wenguo	6,000
Mr. Li Wenqi	6,000
Ms. Wang Jing	6,000
Professor Gong Shuxi	36,000
Mr. Lei Huafeng	36,000
Mr. Qiang Wenyu	36,000

• Professor Xiao Liangyong, Mr. Xiao Bing and Mr. Zuo Hong do not receive any emoluments for serving as the executive Directors of the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or the management shareholders of the Company and their respective associates has an interest in a business, apart from the business of the Group, which competes or may compete, either directly or indirectly, with the business of the Group or has any other conflict of interest with the Group.

DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS

None of the Directors has any direct or indirect interest in any assets which have been acquired or dispose of by or leased to the Company or are proposed to be acquired or disposed of by or leased to the Company since 31 December 2006, being the date to which the latest published audited accounts of the Company were made up.

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APPENDIX

GENERAL INFORMATION

None of the Directors was materially interested in any contract or arrangement entered into by the Company subsisting at the Latest Practicable Date and which is significant in relation to the business of the Company.

LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known by the Directors to be pending or threatened against any member of the Group.

MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, being the date to which the latest audited accounts of the Company were made up.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to the Articles of Association of the Company, a resolution put to the vote of the general meeting shall be decided on a show of hands unless a poll is (before or after any vote by show of hands) demanded:

• (a) by chairman of the meeting;

• (b) by at least two shareholders present in person or by proxy for the time being entitled to vote at the meeting; or

• (c) by any shareholder or shareholders (including proxy) who, alone or together, representing one-tenth or more of the total voting rights of all shareholders having the right to vote at the meeting.

EXPERT

• (a) The following is the qualification of the expert who has given its opinion or advice which is contained in this circular:

Name

Qualification

KGI Capital A licensed corporation under the Securities and Futures Ordinance which engages in types 1 (Dealing in securities), 4 (Advising on securities) and 6 (Advising on corporate finance) regulated activities, the independent financial adviser to the Independent Board Committee and the Shareholders

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APPENDIX

GENERAL INFORMATION

• (b) As at the Latest Practicable Date, KGI Capital does not have any shareholding in the Company, nor does it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities of the Company.

• (c) KGI Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they appear.

• (d) The letter and recommendation given by KGI Capital are given as of the date of this circular for incorporation herein.

• (e) KGI Capital does not have any direct or indirect interest in any assets which have been acquired or disposed of by, or leased to, the Company or are proposed to be acquired or disposed of by, or leased to, the Company since 31 December 2006, being the date to which the latest published audited accounts of the Company were made up.

MISCELLANEOUS

• (i) The registered office of the Company is situated at No. 66 Jin Ye Road, Xi’an National Hi-tech Industrial Development Zone, Xi’an, Shaanxi Province, the PRC.

• (ii) The principal place of business of the Company in Hong Kong is at Rooms 2708–11, West Tower, Shun Tak Centre, 168–200 Connaught Road Central, Hong Kong.

• (iii) The Hong Kong share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited, Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai Hong Kong.

• (iv) The company secretary and qualified accountant of the Company appointed under Rule 5.15 of the GEM Listing Rules is Mr. Chan Pak Kin, Ken. He is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.

• (v) The compliance officer of the Company is Mr. Xiao Bing.

Mr. Xiao Bing , aged 41, is the son of Professor Xiao Liangyong, the founder and the Chairman of the Company and an executive Director. Mr. Xiao studied in the college of continuous education of Xidian University (西安電子科技大 學 ). He worked in Xi’an General Factory of Oil Instruments (西安石油勘探儀 器總廠 ) from 1988 to 1991 and was the deputy general manager of Xi’an Haitian Communications Equipment Company Limited (西安海天通訊設備有 限公司 ) from 1999 to 2000. He joined the Group as an executive Director and first assumed the post of president of the Company since October 2000.

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APPENDIX

GENERAL INFORMATION

• (vi) The Company has established an audit committee on 4 April 2003 with written terms of reference in compliance with the GEM Listing Rules. The primary duties of the audit committee are to review and supervise the financial reporting process and internal control systems of the Group. As at the Latest Practicable Date, the audit committee comprised Professor Gong Shuxi and Mr. Lei Huafeng, independent non-executive Directors, and Mr. Li Wenqi, a non-executive Director. Mr. Lei Huafeng was the chairman of the audit committee. Biographical details of the members of the audit committee are set forth below:

Mr. Lei Huafeng (雷華鋒先生 ) , aged 44, had obtained a MBA from Northwestern University (西北大學 ). Mr. Lei worked as vice general manager of Xi’an Property Rights Exchange Center (西安產權交易中心 ) in 1992 and general manager of Xi’an Zenith Assets Evaluation Co. Ltd. (西安正衡資產評 估公司 ) in 1997. He has been the chairman of Xi’an Zenith Assets Evaluation Co. Ltd. and Shaanxi Zenith Group (陝西正衡集團公司 ) since 2000.

In 2003, Mr. Lei was elected as the commissioner of the ninth session of CPPCC Shaanxi Committee (陝西省政協). Besides, Mr. Lei also holds various positions including the vice-chairman of Shaanxi CPA (陝西省註冊會計師協會 ); the member of Shaanxi Audit Committee (陝西省審計學會 ); the independent director of China Dairy Group (中國乳業 ), a company listed on the Singapore Stock Exchange; Tande Co., Ltd. (天地源股份有限公司), a listed company with its domestic A shares trading on the Shanghai Stock Exchange; and Xi’an Tourism Group (西安旅遊（集團）股份有限公司 ), a listed company with its domestic A shares trading on the Shenzhen Stock Exchange. He is the director of Cartell of Shaanxi Joint Stock Company Union (陝西省股份制企業聯合會 ); the vice-chairman of Xi’an System Reform Research Committee (西安市體制 改革研究會 ); and the counsellor of State-owned Assets of Supervision and Administration Commission of Xi’an Municipal Peoples Government (西安市 國有資產監督管理委員會).

Professor Gong Shuxi (龔書喜教授 ) , aged 50, graduated from Northwest Institute of Communications Engineering (西北電訊工程學院 ), now known as Xidian University, with a bachelor degree, and from Xi’an Jiantong University with master and doctorate degrees in electromagnetic and microwave technology and is a professor. Professor Gong became the professor in Antenna Research Institute of Xidian University in 1997. Since October 2000, he was elected as an independent non-executive Director.

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APPENDIX

GENERAL INFORMATION

Mr. Li Wenqi (李文琦先生 ) , aged 41, graduated from Shaanxi College of Finance and Economics (陝西財經學院 ), now known as Xi’an Jiaotong University (西安交通大學 ). He worked for Shaanxi Silk Import & Export Corporation (陝西絲綢進出口公司 ) (“Shaanxi Silk”), one of the substantial shareholders of the Company, as the deputy chief and manager of planning and finance department from October 1987 to April 1994 and from April 1994 to October 1997 respectively and the assistant to general manager and manager of planning and finance department from October 1997 to May 2001. He is an accountant and the chief accountant and manager of planning and finance department of Shaanxi Silk since May 2001. He joined the Company as a nonexecutive Director since October 2000.

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

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the office of Kirkpatrick Lockhart Preston Gates Ellis at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong within 14 days from the date of this circular:

• (a) the Agreement;

• (b) the TD-SCDMA Technology Licence Agreement;

• (c) the Manufacture Agreement; and

• (d) the service contracts referred to in the paragraph headed “Service Contracts” above.

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