Press Release New Shareholder HK Sun Wah Hi-Tech of RedFlag Linux To Drive Homegrown Software and OS Development (October 11, 2000 – Hong Kong) Sun Wah Hi-Tech Group (“SWHT”) from Hong Kong today announced in Shenzhen it has become a strategic shareholder of RedFlag Software Co. Ltd. (“RedFlag”) to promote the homegrown software and OS industry internationally. The two parties have previously formed a strategic alliance through which SWHT was named the first RedFlag-authorized dealer in Asia, certified to run the first RedFlag Linux Training and Technical Centre in the region. SWHT will bring technological excellence to the partnership. Additionally, RedFlag will benefit from its other shareholders – NewMargin Venture Capital and Chengwei Ventures, two leaders in the PRC investment community. RedFlag, through this capital-raising plan, aims to develop in three ways. First, the company wants to improve market share by setting up sales points in Greater China. Second, RedFlag is looking to develop innovative homegrown software techniques. Third, it aims to propel this homegrown software onto the international market. Mr. Jonathan Choi, Chairman of SWHT, said, “We have confidence in RedFlag’s ability and its foresight. As a new shareholder, we are honoured that we are a part to help accelerate the development of the homegrown software industry. We are dedicated to modernizing this industry so it can compete internationally. We fully support RedFlag Linux’s development and technical-support service. RedFlag’s professionalism, together with SWHT’s technical know-how and well-established international network will help RedFlag Linux become widely accepted in the international arena.” Prof. Sun Yufang, Deputy Director of the Institute of Software and Chairman of RedFlag Software Co. Ltd. said, “The important element in RedFlag’s operational development plan is not capital raising, but a careful consideration of partners. SWHT, our new shareholder, is an expert in technology and finance. SWHT’s investment is valuable in the sense of the synergy created rather than the capital invested. SWHT’s expertise in finance and technology provide RedFlag with a variety of strategic consultancy services to aid its move to the international market. Meanwhile, SWHT’s investment has further confirmed the status and ability of RedFlag.” Mr. Winston Zheng, Vice President of NewMargin Venture Capital added, “We are glad to see that SWHT’s participation has strengthened RedFlag’s solid shareholding background. The deep-rooted connections and extensive marketing network of SWHT will prove advantageous in RedFlag’s global move.” Mr. Bo Feng, Director and Partner of Chengwei Ventures said, “SWHT and Chengwei have identical missions to fully support IT startups in China and worldwide. We hope that the respective strengths of SWHT and Chengwei can smoothly promote homegrown software development in the PRC. We do believe that SWHT can surely bring new elements and various advantages to RedFlag.” The simplified Chinese version of RedFlag Linux generated a great market response. According to the sales report of the leading PRC software chain store, 200,000 sets of different versions of Linux OS were sold last year. The sales exceeded the volume of Microsoft operating systems. RedFlag Linux has captured more than a 13.6% market share, growing continually since its launch. RedFlag and SWHT will soon officially launch the traditional Chinese version of Linux, their first cooperative project, which the market is expected to receive well. Sun Wah Hi-Tech Group Sun Wah Hi-Tech Group is the technology arm of the Hong Kong-based Sun Wah Group. Founded in 1965, Sun Wah Group is the flagship of the Choi family. With business investments and activities covering China, Hong Kong, Macau, Southeast Asia and North America, Sun Wah has a proven record of accomplishment in seafood, real estate, finance and high technology. As a fully integrated technology group of companies, Sun Wah Hi-Tech offers comprehensive solutions and services including system integration, portal and e-commerce enabling, software development, hi-tech strategic investment and asset management. As the holding company of investment technology under Sun Wah Group, Hong Kong-based Sun Wah Hi-Tech employs more than 500 technical experts focusing on the principal businesses of promoting e-commerce, providing Internet content, developing Internet software and investing in high technology projects. Backed by the solid foundation and strong financial background of its mother company, Sun Wah Hi-Tech aims to establish offices in commercial cities all over China, Southeast Asia and the US, to further expand its hi-tech business. The Company continues to seek strategic partnerships and develop commercial relationships in these cities. RedFlag Software Co. Ltd. The Institute of Software, under the CAS, and world-renowned Venture Capitals formed RedFlag Software Co. Ltd. With international standards in operation and management, and backed by the achievements of the CAS in theory foundation and applied science, the Company is committed to developing innovations in computer operating systems and relevant application software. As a high-technology company in the Internet era, RedFlag enjoys competitive advantages in capital, technical expertise and business operations. RedFlag Linux OS, a great achievement in China’s homegrown operating system development, was created by the Institute of Software of CAS and introduced in August 1999. As a powerful Chinese OS platform, RedFlag Linux has a comprehensive technical support service designed for both Intel and Alpha CPUs. The system is fully supported by leading local and overseas software vendors and system integrators such as Informix, Oracle and Sybase. For the latest news, please visit RedFlag's web site at www.redflag-linux.com NewMargin Venture Capital NewMargin Venture Capital is a V.C. fund-management company sponsored by Shanghai Alliance Investment Co. and the China Foundation of Science & Technology for Development, which was founded by the State Planning Commission, State Economic & Trade Commission, and Chinese Academy of Science. NewMargin manages a state-owned venture-capital fund investing primarily in high-growth hi-tech companies in China. Its investments encompass the industries of information technology, health care and biotechnology, new materials and environmental protection. NewMargin aims to maximize the value of its investment portfolio through industrial knowledge, superior management experience, significant local understanding and good business sense. Chengwei Ventures Chengwei Ventures seeks to build a strong venture-capital firm backing technology entrepreneurs in China and Chinese economies worldwide. The Company’s objective is to invest small amounts of capital in early stage businesses, and generate entrepreneurial returns on capital by adding direct and tangible value to these start-ups. Chengwei Ventures has a substantial amount of capital from prestigious U.S.-based institutional investors and a group of leading technology entrepreneurs and investors in Silicon Valley. This press release is issued by PR Concepts Co. Ltd, on behalf of Sun Wah Hi-Tech Group. For further queries, please feel free to contact us. Press Contacts: Mr. Andrew Fung Ms Chloe Chan PR Concepts Co. Ltd PR Concepts Co. Ltd Tel: 2520 2690 / 9464 0698 Tel : 2520 2810 / 9210 4324 Fax : 25278996 Fax :2527 8996 Email: andrewf@prconcept.com Email: chloec@prconcept.com