Nine Dragons Paper (Holdings) Limited is the largest containerboard producer in China and one of the biggest in the world. The Group primarily produces linerboard, including kraftlinerboard, testlinerboard and white top linerboard, high performance corrugating medium and coated duplex board. The Group also participates in unbleached kraft pulp production.

ND Paper's operations enable it to serve as a one-stop shop for a broad range of high quality containerboard products. Due to the size, width, versatility and number of our paper machines, we are able to provide a diversified product portfolio. Multiple production lines allow for flexible configuration offering a diversified product mix in an efficient manner. Our five principal products are available in a variety of basis weights, sizes and type specifications.

The Group's technically advanced paper machines imported from Europe, North America and Japan have an annual aggregate designed capacity of 6.95 million tonnes in China, comprising 3.7 million tonnes of linerboard, 2.3 tonnes of high performance corrugating medium and 0.95 million tonnes of coated duplex board. These paper machines are located in Dongguan, Guangdong Province, in the Pearl River Delta and in Taicang, Jiangsu Province, in the Yangtze River Delta Region.

In an effort to fulfill diverse geographic demand, Nine Dragons has expanded its production bases into Chongqing. With its proximity to Hubei, Yunnan, Guizhou, and Sichaun, Chongqing serves as a regional hub in central-western China serving several markets. Industrial development in the region has experienced exponential growth in recent years which has driven demand for container paperboard. The strategic location of this new facility, coupled with the fact that existing containerboard production plants in Chongqing are primarily small scale facilities with inferior technology and limited production capacity, makes this a very attractive endeavor and an integral part of our future growth. The land reserve being planned in Chongqing will be capable of accommodating an annual production capacity of 5 million tonnes.

The fourth production base will be located in the Ninghe Economic Development Zone near the Tianjin port. Operations are expected to commence by 2009 with an initial annual production capacity of 800,000 tonnes. The base will enable the Company to acquire comprehensive geographical coverage of all major markets in China, so as to address potential divergent demand among domestic regions. It will also serve to provide better services to capture valuable potential customers.

In May 2008, the Group completed the handover of the operations and productions of high value specialty paper project and pulp project in Sichuan, expanding into the production of electric insulating paper and capacitor tissue paper. We plan to raise the current annual design capacity to 50,000 tpa for high value specialty paper and 150,000 tpa for wood pulp and bamboo pulp in 2010.

In May 2008, ND Paper entered Vietnam by acquiring 60% controlling interest in an existing mill in Vietnam. The Group will transfer delivery to Vietnam of one paper machine (400,000 tpa) originally ordered for a China base. Production commencement is expected before end of 2009.

In addition to our paper machines, Nine Dragons operates supporting facilities that provide the Group with power, steam, water treatment and excellent logistical support. The integration of these facilities provides cost savings and increases the Group's operational flexibility and control, while enabling the Group to facilitate best practices in terms of environmental protection.

The Group aims to become the world's leading containerboard product manufacturer in capacity, profitability and efficiency. We are able to increase our operational productivity and efficiency through economies of scale, technologically advanced equipment, and integrated production facilities. Nine Dragons will continue to pursue sustainable business growth going forward. In order to achieve this goal, we will expand our leadership position in China through enhancing operating efficiencies, broadening our geographic coverage, increasing product offerings and attracting high caliber employees.