Competitive Advantages

We believe that our success in the past and future prospects are underpinned by a combination of competitive strengths:

Leading manufacturer of biodiesel in China with early-mover advantage.

We are the leading biodiesel manufacturer in China. Since our inception, we have engaged in biodiesel research and development, and have successfully developed cost effective proprietary manufacturing processes and have currently reached an annual production capacity of 240,000 tons of biodiesel. With our leading market position as an early entrant, proven track record, strong technical knowledge and established network of suppliers and customers, we believe that we have a significant competitive advantage in leveraging the shortage of energy supply and the increased environmental awareness in China to promote biodiesel as one of the best solutions for China’s energy needs.

Low-cost raw materials and production technology.

We enjoy significant advantages in our technology compared to other biodiesel producers. These advantages include our use of lower-cost raw materials and our ability to convert such raw materials to biodiesel.We have developed proprietary manufacturing processes which enable us to utilize relatively low cost feed stock, such as vegetable oil offal and used cooking oil, that are in abundance in China, thereby significantly reducing our production cost base. We consider our cost competitive strategy a key in maintaining our established market leadership position in China.

Proprietary and strong research and development capabilities.

We have focused on technological innovation in research and development since our inception. We have obtained an invention patent for our biodiesel manufacturing technology in China and we are continuously developing and applying for more patents. An invention patent, unlike utility model patents and design patents, has to go through substantive examination before it is granted by SIPO.We believe that these efforts will further strengthen our ability to innovate through the mutually beneficial collaboration of our senior engineers with some Institute’s scientists, further consolidate our technological position, and allow us to enhance our existing products and more rapidly develop new products in response to local and international trends.

Strong execution capabilities.

We have a proven ability to establish and quickly ramp up production at facilities in strategic locations across China. Our production technology can be replicated in multiple geographic locations, thereby enabling us to leverage our technological know-how to establish production facilities located across China. After commencing operations in Sichuan in 2001, we built a new production line in Sichuan in 2004, acquired Handan Gushan in 2005, completed a new production facility in Fujian in 2006 and completed another new production line in Sichuan in 2007. In Jan 2008, we opened the newest Beijing plant with 50,000 ton biodiesel production and increased our capacity to 240,000 tons per annum.We target to increase our annual production capacity to 400,000 tons by the end of 2008 with the expansion or addition of new production facilities in Beijing,Shanghai, Hunan and Chongqing.

Rigorous quality control standards.

Consistent with our continuing commitment to quality, we impose rigorous quality control standards at various stages of our production process. We concentrate our product focus on biodiesel related by-products with an emphasis on maintaining efficient manufacturing processes to ensure high-quality products. Since April 2004, our Sichuan plant has maintained ISO9001:2000, a certification of quality management systems maintained by the International Organization of Standardization and administered by certification and accreditation bodies. According to an August 2006 report of an independent inspection and testing company, biodiesel produced by us satisfied the European biodiesel standard, EN 14214, which is generally perceived as one of the most stringent standards in the world. We believe these testing results demonstrate our commitment to producing high-quality biodiesel as well as providing us with a competitive advantage over certain domestic competitors in the event China implements stricter fuel-quality standards in the future.

Experienced management and operations teams.

Our senior management team and key operating personnel have extensive management skills, operating experience and industry knowledge. Our executive Directors and senior management have extensive knowledge of the industry in which we operate and in several related industries. We believe our management team’s in-depth knowledge of the biodiesel market in China will enable us to take advantage of market opportunities to formulate sound business strategies and effectively execute them.

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