We are committed to R&D activities to improve the cultivation of potatoes and to develop new potato starch-based products so as to enhance our product quality and expand our product range.

We have set up two in-house R&D divisions, namely, the R&D Office for Potato Cultivation Technology and the R&D Office for Potato-based Products to carry out our R&D activities. The two R&D divisions are headed by our Executive Officer, Mr Wu Guolin, who specialises in the area of potato cultivation and has more than 40 years of experience in the R&D of new species of potatoes and new cultivation technologies including the enhancement of the quality of potatoes. As at 31 March 2005, our R&D department comprised of 13 R&D staff which included university graduates in various disciplines such as food engineering and agronomy.

Our R&D department is principally involved in the following:-

1. the research of new techniques in the cultivation of potatoes to improve their quality and shorten their maturity period;
   
   
2. the cultivation of imported species of potatoes with higher starch content;
   
   
3. the development of new potato starch-based products; and
   
   
4. the improvement of production technologies.

To tap into the expertise of external professionals and experts, our R&D department undertakes specific projects in the R&D of potatoes with the technical assistance of HLJ August First Land Reclamation University （黑龙江八一农垦大学）, the Vegetable Research Centre of Beijing’s Forestry and Science Institute （北京市林业科学院蔬菜研究中心）and the Potato Research Office of the Agricultural Science Institute of the Heilongjiang Province （黑龙江省农业科学院马铃薯研究所）. We would typically enter into agreements with the research institutes and the university on an ad hoc basis under which our R&D staff would work with the research institutes and the university and we would also provide the funds for specific R&D projects. The results of the R&D projects will be owned and utilised exclusively by us.

Some of the successful results from our R&D activities include the following:

1. In 2002, with the assistance of the Potato Research Office of the Agricultural Science Institute of the Heilongjiang Province, our R&D department successfully cultivated an imported species of potato in Daqing, PRC. The maturity period of this species of approximately 88 days is shorter than that of approximately 100 days for existing species in Daqing, PRC, and each acre of land can yield about 2.33 tonnes of this imported species of potato, compared to about 1.5 to 2.0 tonnes for existing species.
   
   
2. In 2002, our R&D department with the technical assistance of the Vegetable Research Centre of Beijing’s Forestry and Science Institute successfully developed our five-grain noodles.
   
   The main raw material that makes up our five-grain noodles is potato starch produced by us. Other ingredients include coarse grains such as buckwheat, green bean, sorghum, millet, soybean and corn in proportion and in accordance with our self-developed formula. Our five-grain noodles are produced by processing different kinds of nutritional substances contained in different kinds of coarse grains.
   
   Unlike noodles made from a single kind of coarse grain through pressing and deep-frying at a high temperature, our five-grain noodles are made from a refinement of coarse grains from the northeastern part of the PRC and processed at a low temperature to preserve the nutritional contents in the coarse grains and food fibres which are essential for good health. Our five-grain noodles are made from raw materials such as coarse grains which are rich in fibre and provide various nutrition to the body such as calcium, iron, potassium, magnesium, zinc, and vitamins A, B1, B2, C and E.
   
   
3. In 2004, with the assistance of HLJ August First Land Reclamation University, our R&D department successfully cultivated another imported species of potato in Daqing, PRC. The starch content of this species can reach a higher level of about 18% when compared to the average level of about 17% in existing species of potatoes in Daqing, PRC, and each acre of land can yield about 2.5 tonnes of this imported species of potato, compared to about 1.5 to 2.0 tonnes for existing species of potatoes in Daqing, PRC.

In August 2005, we completed market research on modified starch and in the same month, we entered into a one year agreement with a sub-contractor for the production of such products. Pursuant to the agreement, we will pay our sub-contractor an agreed fixed rate based on the amount of modified starch produced. Typically, when we receive a sales order from our customers, we will supply a certain quantity of potato starch to our sub- ontractor who will produce the amount of modified starch ordered by our customers. Our agreement with our sub-contractor is subject to annual renewal.We commenced sales of our modified starch in September 2005. The modified starch is sold to a number of our existing distributors.