Newsletter

Dear Customers, Relations and Friends,

First of all I would like to wish you all a successful, happy and above all healthy Chinese new year. This year will be the year of the Rat(Chinese Zodiac). For people interested please check http://www.chiff.com/home_life/holiday/chinese-new-year-rat.htm. Secondly I would like to thank you all for the support and fine cooperation which we enjoyed in 2007 and hope to continue and improve this over 2008.

For China Challenge, this year will have some exciting changes and expansion for our company. With that we will create the organization that is required to support our continuous growth, it helps us to bring the company to a higher level of service and support for the customers.

We are happy to inform that we have opened a subsidiary in the city of Ningbo, Zhejiang province. Zhejiang is one of the fastest developing provinces in China with an abundance of choice in suppliers of plastic injection tooling, casting and metal machining. Since we have ever more suppliers in this province opening an office there will enables us to increase the quality level of our project management and control of supplies. Secondly, Zhejiang factories can be more competitive at a similar quality level compared to Shanghai, since labor and overhead costs are several percentage points lower there.

Furthermore, in an effort to increase our services to our customers we will open our own assembly facilities within the three months. The assembly unit will comprise of office and factory facilities with a total floor space of 2000m2. The factory will have its own assembly lines, welding and surface treatment area, storage, quality control equipment and facilities. This development enables us to be better place to protect the intellectual property of customers, control the quality of the (semi-)finished product and improve our grip on lead time of sub suppliers. More information and details will be revealed to you after the opening of the factory.

Quite an exciting(at least we think) start of 2008, the Olympic year in China. We will keep you updated with new developments and interesting news. Please feel free to give us your comments, recommendations and support.

Warmest Regards

Gijsbert de Bruin

Director China Challenge Ltd