assure you that we will not incur any damage or interruption caused by power outages, computer viruses, hardware and software failures, telecommunications failures, fires and other similar events to the information technology system in the future. If serious damage or significant interruption occurs, our operations may be disrupted and our financial condition and results of operations may be adversely affected. Furthermore, if our operations are disrupted by the introduction of a new information technology system, including migration from an existing system, our financial condition and results of operations may be similarly adversely affected.

# If we fail to attract and retain senior management and key technical experts, our production and other operational activities may be adversely affected.

We rely on experienced and talented senior managers and highly skilled technical personnel to operate our businesses and to develop our new passenger vehicles. We expect increased competition for senior managers and skilled technical personnel from other automobile companies in the future, driven partly by strong growth in the PRC automobile industry. We cannot assure you that we or our joint venture companies will be able to recruit suitable candidates or retain existing senior managers and technical personnel. High turnover of senior management could adversely affect our existing customer relationships, our operations and our development as well as hinder our future recruiting efforts. In addition, we must successfully integrate any new management personnel in order to achieve our operating objectives. Changes in key management positions may temporarily affect our operations as new management will need time and further effort to become familiar with our business and our operations. We expect to increase our effort to recruit more industry and technical experts to fulfill our future business plans. If we or ourj oint venture companies are unable to recruit and retain experienced senior management and key technical experts in the future, our business operations will be adversely affected.

# Non-compliance with environmental regulations in China may result in significant monetary damages, fines and other liabilities as well as negative publicity and damage to our brand name and reputation.

Our manufacturing processes generate noise, waste water, and gaseous and other industrial wastes and we are subject to national and local environmental regulations applicable to us in China. In addition, we are required to comply with the relevant emission standards applicable to our passenger vehicles. In the event of our non-compliance with present or future environmental regulations, we may be subject to governmental inspections or penalties, civil liabilities or business interruptions, and our management might be subject to relevant liabilities as well. We may also be subject to adverse publicity and damage to our brand name and reputation. In addition, if more stringent regulations are adopted in the future, the costs of compliance with these new regulations could be substantial.

# We may be subject to fines, penalties or other actions resulting from future examination by PRC regulatory authorities.

We are subject to a wide range of inspections by PRC regulatory authorities from time to time. Accordingly, we may incur fines, penalties or other actions as a result of examination by PRC regulatory authorities that could adversely affect our reputation, business, financial condition and results of operations. During the Track Record Period, we did not incur any fines or penalties as a result of examination by PRC regulatory authorities which had a material adverse effect on our results of operations and financial condition. However, we cannot assure you that we will not incur any material fines or penalty or be subject to other disciplinary or similar actions in the future.