Hong Kong – An Effective Platform For Launching Investments Into China Peter Yam Chairman Emerson Electric (China) Holdings Co., Ltd. “Hong Kong Forum” - November 12th, 2002

Agenda Introduction To Emerson Emerson‘s Investments In China The Role That Hong Kong Played Future Outlook

Emerson Corporate Overview Founded In 1890 Headquartered In St Louis, Missouri, USA One Of World’s Largest Industrial Companies 60 Industry-leading Divisions 300 Manufacturing Locations In 150 Countries 120,000 Employees Global Sales Exceed US$15.5 Billion In 2001 Mr. Charles F. Knight Chairman Emerson Electric Co.

2001 Sales By Business Group Electronics & Telecommunications 23% Process Control 21% HVAC 15% Industrial Automation 19% Appliance & Tools 22% ( $15.5 Billion In Total)

Earnings And Dividends Per Share Earnings Per Share – Declined In 2001, First Time In 44 Years Dividends Per Share – Continuous Increase In 45 Years USD

Emerson China Overview Started Doing Business In China In Late 1970s First Direct Investment Began In 1992 Today, China Is Emerson’s Biggest Business Partner In Asia Second Only To U.S. In Sales In ‘02 Current Infrastructure: 30 Legal Entities 27 Manufacturing Operations In 10 Locations (7 Joint Ventures, 20 Wholly-owned Subsidiaries) Over 12,000 Employees

The Role That Hong Kong Played Emerson’s Investment Decision Process: Data Collection And Comparative Analysis Site Visits And Interviews Strategy Formulation And Final Recommendation JV vs. Wholly-owned Planning And Implementation Timeline And Resource Allocation

Looking Back - What Did We Do Right Hong Kong As RHQ In Making Investment Decisions Vice-chairman Posted To HK - Speed Up Decision Process Shenzhen Chosen As 1st Investment Location With Support From HK Early Success Gave Us More Confidence Shenzhen Investment Worked As A Show Room, Helped To Attract Subsequent Projects Hong Kong Served As An Effective Launch Pad

Current Status Of Investments In China 27 Factories In Place, 12,000 Employees Hong Kong Served As IT Hub Connecting China To ROW Hong Kong Leads The Efforts In The Following Functions : Procurement And Logistics Treasury HR Lean Manufacturing, Six Sigma M&A IPR And Legal

Future Outlook WTO Is Bringing Changes, Competition And Opportunities Investment Strategies Are Changing Engineering And Development Centers In China Procurement And Logistics Human Capital China Strategy No Long A Standalone One Integral Part Of A Global Strategy Hong Kong Will Continue To Have A Key Role To Play

Thank you ！ Emerson. Consider It Solved