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.

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