September 9, 2008

China Wind Systems to Supply Wind Power Components to Hangzhou Advance

China Wind Systems, a supplier of forged rolled rings to the wind power and other industries, has signed a letter of intent to supply shafts and gear rims for use in 1.5MW gearboxes to the Hangzhou Advance Gearbox Group, a gearbox manufacturer in China.

Under the terms of the agreement, China Wind Systems will complete two shafts and five gear-rim prototypes based on Hangzhou Advance Gearbox Group's technical specifications. Upon successfully passing the inspection phase, the Hangzhou Advance Gearbox Group is expected to purchase shafts and gear rims from China Wind Systems in 2009 for use in its 1.5MW gearboxes.

The Hangzhou Advance Gearbox Group's current manufacturing capability is 500 gearboxes per year, and total tonnage of shafts and gear rims in a gearbox is approximately 30-35 tons.

The current average selling price per ton of forged products in a gearbox is RMB15,000. Orders under the letter of intent are contingent on successful delivery of the prototypes and subject to negotiation as to pricing, quantities and terms of delivery.

Jianhua Wu, chairman and CEO of China Wind Systems, said: "We look forward to fulfilling the Hangzhou Advance Gearbox Group's need for precision wind components by supplying the company with high-quality shafts and gear rims. We are very pleased with our progress in transitioning to a wind-power components manufacturer, and hope to enter into more purchase agreements as we complete our trial production phase."