1. CHARTS TEXT X.D. Yang Managing Director Foreign Investment in China: The Private Equity Perspective Carlyle Shanghai Office

2. CHARTS TEXT Favorite Destination Fasting Growing & 2nd Largest Market in Asia Private Equity Investment in ChinaPrivate Equity Investment Ranking FDI into China

3. CHARTS TEXT Favorable Trends for Private Equity Investing  Attractive macro-economic growth story  Structural changes - WTO  Privatization of SOEs  Private sector growth  Large technology based talent pool  More reasonable valuation  Exits become easier

4. CHARTS TEXT Trends: SOE Privatization Prompts Change in Ownership Gross industrial output value of SOE to total Percent Total number of State Owned Enterprises (SOE) in China = 340,000 Source: China Statistics Year Book SOEs to be kept – less than 200 SOEs to be privatized

5. CHARTS TEXT Trends: Growing Engineer Pool Fosters VC Talents 0 10 20 30 40 50 60 70 80 90 19751978 1981 1984 1987 1990 19931996 1999 2002 0 200 400 600 800 1000 1200 1400 1600 Engineering Post Graduates (LHA) Engineering College Graduates (RHA) (thousands) Source: CEIC, Morgan Stanley Research

6. CHARTS TEXT Trends: Valuation Has Come Down Source: Bloomberg

7. CHARTS TEXT Still…Challenges Like No Other Markets  Limited exit channel  Lengthy deal execution process  Difficult to gain control  Volatile industry dynamics with irrational competitors in SOEs  Lack of management talent pool  Unpredictable regulatory and legal environment

8. CHARTS TEXT Carlyle’s Investments Three Roads to China BuyoutVenture Real Estate A chain of nine department stores in China. World’s largest supplier of artificial Christmas trees. $45 mm $35 mm $300+ mm* Leading online travel information and reservation services company in China. Leading Lithium-ion polymer batteries maker in China. Leading Chinese Media Company Investments range $10-50 mm Commercial and Residential $400+ mm* Leading Chinese Insurance Provider * Transactions in progress Leading Chinese Construction Equipment Manufacturer Leading Chinese Media company with focuses on delivering advertisements through traditional and non-traditional media.