Following an unexpected upsurge prices in March 2010, worldwide paper price had leveled and remained stable in April and May. Analysts attribute the slight fall to a technical market adjustment shortly after the price peaked.

The Hainan Mill of the APP Group, which is tipped to offer relief to the tight paper supply market, has yet to be fully commissioned.

As previously reported, the production capacity of 1010 Printing International Limited is enhanced by the addition of 2 brand new major production equipment, viz. the Heidelberg 8-color Perfector Printing Press, and the Kolbus Book Production Line BF-527. With both machines fully operational, we now operate a total of 13 presses and 3 hard cover casing-in production lines.

As a matter of general information, the going tax rates for import of capital equipment into China are: Import Tax 15% and VAT 17%.

There are delicate changes to the freight shipping scene. It has been noticed that sea freight transport is suffering slight but significant time delays as there seems be a tendency for shipping companies to reduce the sailing speed of their boats, apparently, for fuel economy. At the same time, less fuel efficient vessels are mothballed, hence further reducing the supply of vessels.

The minimum wage has been raised countrywide effective 1st May 2010. Under the new law, cities and towns are classified into 4 categories and to each category a mandatory minimum wage applies. For our town, Yuanzhou, the minimum wage is at RMB710, as compared to Shenzhen's RMB1,100.