1 Strategies for Successful China Outbound M&A in the U.S.

2 “There are two winds in the world today, the East Wind and the West Wind… the East Wind is prevailing over the West Wind.” “There are two winds in the world today, the East Wind and the West Wind… the East Wind is prevailing over the West Wind.” Chairman Mao, 17 November 1957

3 Agenda I.China’s Outbound M&A II.Why should Chinese companies consider Outbound M&A? III.Why should a Chinese company choose the U.S.? IV.Steps of M&A Process V.Strategies for Success

4 I. China’s Outbound M&A  Chinese companies have been investing in foreign companies for more than 20 years.  According to People’s Daily, in 2009 China could invest $150 billion U.S. dollars overseas. This is three times more than last year’s figure of U.S. $52 billion.  China’s role in the global economy will shift from “manufacturer” to “capital exporter.”  Transactions in the energy, mining and utilities sectors continue to dominate Chinese M&A purchases abroad, accounting for 29 percent of the total outbound deal flow by volume since 2003.

5  Comprehensive revisions in 2008 and 2009 to China’s regulatory regime have made Chinese antitrust and M&A policies more comparable to those in North America and simplified the approval regime.  North American-based businesses have been preferred targets of Chinese acquirers over the 2003-Q32009 period, with some 106 acquisitions, accounting for 24% of the announced total.  Estimates indicate Chinese companies have invested US$15 - $20 billion in the U.S., including China Investment Corp.’s $5.0 billion purchase of a 10% stake in Morgan Stanley and the $3.0 billion deal for a 10% stake in Blackstone. China’s Outbound M&A, continued

6 Largest Chinese Mid-Market Deals into the U.S ~ 2009 by Disclosed Deal Value Date Deal Status Acquirer Value (US$M) % Acquired/S ought TargetTarget Sector Sep-07WHuawei Technologies Ltd Com CorpTelecommunications Oct-07CChina Minsheng Corp UCBH HoldingsFinancials Mar-08CChina Life Insurance Co. Ltd300N/AVisa, Inc.Financials Mar-08CMindray Medical International Ltd Datascope-Patient Monitoring Business Healthcare Jan-08CWuXi Pharmatech Inc AppTec Laboratory Services Inc. Healthcare Jun-09P Sichuan Tengzheng Heavy Industrial Machinery Co General Motors Corp. - Hummer Division Industrials Jun-09PCOFCO Ltd Smithfield Foods Inc. Industrials May-07C Jiangxi Greatsource Display Technology Co VOMagic Corp.High Technology Mar-09PBeijingWest Industries Co. Ltd Delphi Corp. - Brakes & Suspension Business Industrials Nov-07CSpreadtrum Communications, Inc Quorum Systems Inc. High Technology C = Completed P = Pending W = Withdrawn

7 II.Why Should Chinese Companies Consider Outbound M&A?  Buy or Build?  Cheaper  Faster  Time to Market  Accelerate business objectives  Leverage opportunities  Increase Market Share  “Survival of the Fittest”  Eliminate competition

8 Why Should Chinese Companies Consider Outbound M&A?, continued  Acquire Intellectual Property  Avoid potential infringement issues  Vertical or Horizontal Integration  Increase margins  Economies of Scale  Improve efficiencies  Synergies between products, markets or personnel  “Sum of the whole is greater than the sum of the parts”

9 III.Why Should a Chinese Company Choose the U.S.?  Lower valuation of U.S. targets  Strength of the RMB  Less Competition from U.S. buyers  Opportunity for Chinese companies to reposition themselves in the global marketplace

10 IV. Steps of M&A Process  Identify Target  Valuation  What price will Chinese company have to pay?  Letter of Intent  Outlines price and general structure of deal  Due Diligence  Exchange of information

11 Steps of M&A Process, continued  Definitive Agreements  Integration Planning  Transition Strategies  Regulatory Approvals  Closing

12 V. Strategies for Success  Devise sound M&A strategy  Define Objectives  Select proper target  Analyze financial impact  Strengthen internal M&A capabilities  Strong CFO  Thorough due diligence  Understand regulatory regime  Manage political or social concerns

13  Smooth transition  Identify and retain key employees  Implement necessary changes  Overcome geographical and cultural gaps  Develop strong corporate governance  Experience is critical  Learn from mistakes of others  Enhance internal and external communication  Integrate offices  Enhance interaction of key employees Strategies for Success, continued

14 Jeffrey A. Rinde Partner New York, NY v Jeffrey A. Rinde focuses his practice on corporate and securities aspects of cross-border business between the United States and Asia. Mr. Rinde represents clients in a wide range of industries including agriculture and food, alternative energy, healthcare, manufacturing, real estate, technology, media, and wholesale and retail, among others. Mr. Rinde also represents emerging and established Chinese companies, with particular emphasis on companies operating in Mainland China, in complex transactions to help expand their businesses, access capital, and list in the United States. Additionally, Mr. Rinde represents issuers and merchant and investment banking firms in public and private securities offerings, and buyers, sellers, and financial advisors in a wide variety of public and private business combinations.