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Strategy and Initiatives
Our principal objectives are to strengthen our position as a leading provider of wireless coverage products and services in China, to reinforce our leading position in China in the research and development of RF technologies, to actively commercialize our in-house RF technologies by continuing to expand our product breadth, and to seek additional growth markets outside mainland China. At present, we intend to achieve these objectives by implementing the following strategies:

Continue to develop and increase our RF product offerings and our sales to base station equipment manufacturers
Since the fourth quarter of 2005, we have focused on developing base station RF parts and components. RF parts and components are major building blocks of base station and also the most crucial step in the manufacturing of base stations. With rising production costs incurred by base station equipment manufacturers, more foreign base station equipment manufacturers have chosen to procure base station RF parts and components mainly in China in order to reduce their costs. We believe the demand for base station RF parts and components will grow rapidly, and our revenues from base station RF modules will become a major revenue contributor for us in coming periods.

Continue to invest in third generation wireless communication technology development in order to maximize our opportunities in this new technology
We believe that, if 3G licenses are issued in China, there is a likelihood of significant capital investment by PRC telecommunication operators to build 3G digital communication networks rapidly. We intend to continue to invest aggressively in 3G technology to compete for network coverage projects. Since February 2004,we have been researching and developing 3G products and to date have already completed our research and development and network application testing for certain major 3G network coverage equipment. We believe that our strong research and development capabilities, established reputation and existing network of coverage products across China will position us to be a major recipient of 3G network coverage contract awards

Capture more business opportunities by developing and marketing innovative wireless access products
We intend to utilize our RF technology expertise to develop new wireless access products to capture potential business opportunities that may emerge in the wireless communication industry in China. We have already developed a number of new products including W-LAN and 5.8GHZ wireless access equipment. We sell these system products to telecommunication operators, including the China Unicom group and the China Mobile group, and institutional users such as large corporations and universities. We have been doing extensive research and development on RF integrated circuits and multiple chip module technology and believe that our efforts will enable us to develop and market innovative wireless access products.

Expand our global customer base
We intend to expand the sales of our network coverage solutions and RF products overseas in a measured and careful manner. Our strategy is to utilize our domestic reputation, existing nationwide presence and cumulative experience in new products development, project design, installation and servicing to create new customer channels internationally. We recently established a sales office in Indonesia and agency relationship in the Philippines, and we believe that our product quality and low-cost base should provide us with a competitive advantage in these markets. Additionally, we have sold a limited amount of wireless network coverage equipment to a telecommunication equipment manufacturer in South Korea. We have also formed partnerships with distributors in Indonesia and the Philippines. We will remain attentive and flexible in our overseas expansion efforts and will pursue sales arrangements through a combination of original equipment manufactures, direct sales, agencies and distributors.

Maintain our strength in RF technology research and development by continuing to invest in technologies that enhance our primary products
We intend to continue solidifying our RF technology leadership by investing in key research and development efforts that complement or facilitate commercial application of our RF technologic. Examples of key initiatives include module miniaturization using RF integrated circuits and multiple chip module technology. We have also been investing in research and development in the power, efficiency and linearity of power amplifiers and low wastage and high selectivity filters that further improve the performance of RF parts and components. We will also continue to invest in our research and development infrastructure by seeking to recruit and retain high-caliber research and development professionals and by acquiring advanced research and development equipment.
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