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                                                                   EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is made and entered into this
24th day of March, 2004, effective as of October 1, 2003 (the "EFFECTIVE DATE"),
between American Oriental Bioengineering, Inc., a Nevada corporation with its
principal place of business located at No. 308 Xuefu Road, Nangang District,
Harbin, China 150086, and Unit E 26 Floor, CNT Tower, 338 Hennessy Road,
Wanchai, Hong Kong (the "COMPANY"), and Lily Li, residing at Haidian District,
Beijing, China (the "EXECUTIVE").

         WHEREAS, the business of the Company and its affiliates consists of the
development and production of bioengineered products and traditional Chinese
medicinal products that combine modern biotechnology and traditional Chinese
medical technology, and activities incidental thereto (the "BUSINESS");

         WHEREAS, the Company has expended considerable time, effort and
resources in the development of certain Confidential Information, as defined in
paragraph 9 hereinbelow, which must be maintained as confidential in order to
ensure the success of the Business;

         WHEREAS, prior to the Effective Date, the Executive has been employed
by the Company in the position of, and has been performing the services required
of, Chief Operating Officer of the Company;

         WHEREAS, the Executive and the Company desire to memorialize the terms
and conditions of the Executive's employment by the Company in the position of
Chief Operating Officer; and

         WHEREAS, the Executive has had, prior to the Effective Date, and will
continue to have, as of the Effective Date, access to such Confidential
Information, as defined in paragraph 9 hereinbelow.

         NOW, THEREFORE, in consideration of the covenants and promises
contained herein, the compensation and benefits received by the Executive from
the Company, and the access given the Executive to the aforesaid Confidential
Information, as defined in paragraph 9 hereinbelow, and for other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the Company and the Executive agree as follows:

         1. EMPLOYMENT PERIOD. The Company offers to employ the Executive, and
the Executive agrees to be employed by Company, in accordance with the terms and
subject to the conditions of this Agreement commencing on the Effective Date and
terminating the fifth anniversary of the Effective Date (the "SCHEDULED
TERMINATION DATE"), unless terminated prior thereto in accordance with the
provisions of paragraph 8 hereinbelow. The Executive affirms that no obligation
exists between the Executive and any other entity which would prevent or impede
the Executive's immediate and full performance of every obligation of this
Agreement.


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         2. POSITION AND DUTIES. During the term of the Executive's employment
hereunder, the Executive will serve in the position, and assume duties and
responsibilities consistent with the position of Chief Operating Officer unless
and until otherwise instructed by the Company. The Executive agrees to devote
substantially all of her working time, skill, energy and best business efforts
during the term of her employment with the Company. The Executive covenants and
agrees that for so long as she is employed by the Company, the Executive shall
inform the Company of each and every business opportunity related to the
business of the Company of which the Executive becomes aware, and that the
Executive will not, directly or indirectly, exploit any such opportunity for the
Executive's own account, nor will the Executive render any services to any other
person or business, acquire any interest of any type in any other business or
engage in any activities that conflict with the Company's best interests or
which is in competition with the Company.

         3. HOURS OF WORK. The Executive's normal days and hours of work shall
coincide with the Company's regular business hours. The nature of the
Executive's employment with the Company requires flexibility in the days and
hours that the Executive must work, and may necessitate that the Executive work
on other or additional days and hours. The Company reserves the right to require
the Executive, and the Executive agrees, to work during other or further days or
hours than the Company's normal business hours.

         4. LOCATION. The locus of the Executive's employment with Company shall
be the Company's office located at No. 308 Xuefu Road, Nangang District, Harbin,
China 150086, and Unit E 26 Floor, CNT Tower, 338 Hennessy Road, Wanchai, Hong
Kong. The Company may, in its sole discretion, require the Executive to travel
to and reside in, on a temporary, indefinite or permanent basis, in any other
location throughout the world in which the Company or any of its affiliates has
offices.

         5. BASE SALARY. During the Executive's continued full and satisfactory
performance of her duties and responsibilities hereunder, the Company shall pay
or cause to pay, and the Executive agrees to accept, during one year period
following the Effective Date (the "FIRST YEAR"), in consideration for the
Executive's services, PRO RATA payments, as earned and consistent with Company's
then-existing payroll practices, of the annualized salary of US$90,000.00, less
all applicable taxes and other appropriate deductions. Following the First Year,
the Executive's base salary shall be reviewed annually by the Board of Directors
of the Company. The decision to increase or decrease the Executive's base salary
and the amount of any such increase or decrease are within the sole discretion
of the Company's Board of Directors. Nothing contained in this paragraph 5 is
intended to be, or should be construed as, a promise or guarantee by the Company
to increase Executive's base salary. The Company reserves the right, in its sole
discretion, and the Executive hereby acknowledges the Company's right, to make
no such payments or make reduced payments in connection with any periods of
unauthorized or unjustified absence from work or in the event that the Executive
is unavailable or unable to perform the Executive's duties for the Company
without adequate justification, as determined by the Company in its sole
discretion.

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         6. STOCK OPTIONS. During the Executive's continued full and
satisfactory performance of her duties and responsibilities hereunder, and
subject to the provisions in paragraph 8 hereinbelow and subject to the adoption
of a stock option plan by the Board of Directors of the Company (the "STOCK
OPTION PLAN"), the Company shall award to the Executive, in four quarterly
installments on each three month anniversary of the Effective Date, options to
purchase shares of common stock of the Company pursuant to, and in accordance
with the terms and conditions of, such Stock Option Plan and any stock option
agreement entered into by the Company and the Executive. The exercise price for
each option granted to the Executive shall be US$2.00. Each quarterly grant
shall consist of the quantity of shares of common stock of the Company whose
aggregate market price at close of trading on the date of grant minus their
aggregate exercise price equals US$7,500.00. The Executive's right to receive
any quarterly grant of stock options is subject to and conditional upon her
status as a full-time employee of the Company at the time of such grant, and the
Executive shall not be entitled to any portion of any quarterly grant that has
not already been awarded to her prior to her last date of full-time employment
with the Company. Nothing contained in this paragraph 6 is intended to be, or
should be construed as, a promise or guarantee by the Company to adopt a stock
option plan.

         7. REIMBURSEMENT OF EXPENSES. During the term of this Agreement, in
accordance with the Company's expense reimbursement policy, the Executive shall
be entitled to reimbursement for reasonable expenses (including, without
limitation, reasonable travel expenses) paid or incurred by her, in connection
with and related to the performance of her duties and responsibilities hereunder
for the Company. All requests by Employee for reimbursement for such expenses
must be supported by appropriate invoices, vouchers, receipts or such other
supporting documentation in such form and containing such information as the
Company may from time to time require, evidencing that the Executive, in fact,
incurred or paid said expenses. The total amount of expenses to which the
Executive is entitled to payment and/or reimbursement hereunder shall not exceed
US$20,000.00 for each year period commencing on the Effective Date.

         8. TERMINATION.

         a. DEATH OR RESIGNATION. If the Executive dies or resigns during the
term of this Agreement, this Agreement shall automatically terminate on the date
of the Executive's death or resignation and, following the date of the
Executive's death or resignation, the Company shall have no further obligations
or liability to the Executive or her heirs, administrators or executors with
respect to compensation and benefits thereafter, except for the obligation to
pay the Executive (i) any earned but unpaid base salary through the Executive's
date of death or resignation, (ii) for any unused accrued and unforfeited
vacation, and (iii) subject to paragraph 7 hereinabove, for any unreimbursed
business expenses incurred by the Executive prior to her death or resignation.
The Company shall deduct, from all payments made hereunder, all applicable
taxes, including income tax, FICA and FUTA, and other appropriate deductions.

         b. DISABILITY. At any time during the term of this Agreement, the
Company may terminate this Agreement and the Executive's employment with the
Company because of the Executive's "Disability," by written notice to the
Executive. For purposes of this Agreement, "DISABILITY" shall mean, if at the
end of any calendar month during the term of this Agreement, the Executive, as a
result of mental or physical illness or injury, is or has been unable to perform
her duties under this Agreement, without or without reasonable accommodation,
for (i) the four (4) preceding consecutive calendar months, or (ii) any 180 days

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in the previous twelve (12) months. If this Agreement is terminated because of
the Executive's "Disability," the Company shall have no further obligations or
liability to the Executive or her heirs, administrators or Executors with
respect to compensation and benefits thereafter, except for the obligation to
pay the Executive (x) any earned but unpaid base salary effective at the time of
death or resignation through the Executive's date of death or resignation, (y)
for any unused accrued and unforfeited vacation, and (z) subject to paragraph 7
hereinabove, for any unreimbursed business expenses incurred by the Executive
prior to her death or resignation. The Company shall deduct, from all payments
made hereunder, all applicable taxes, including income tax, FICA and FUTA, and
other appropriate deductions.

         c. "CAUSE." At any time during the term of this Agreement, the Company
may terminate this Agreement and the Executive's employment with the Company, at
any time, for "Company Cause." For purposes of this Agreement, "COMPANY CAUSE"
shall mean: (i) the good faith determination by the Company's Board of Directors
that there has been continued neglect by the Executive of her duties hereunder,
or (ii) willful misconduct on the Executive's part in connection with the
performance of her duties hereunder, PROVIDED HOWEVER, that the Executive shall
have been given one (1) written notice of such determination by the Company's
Board of Directors of continued neglect or willful misconduct and thereafter the
Executive shall not have cured such neglect or willful misconduct to the
satisfaction of the Company's Board of Directors within fifteen (15) days of the
Executive's receipt of such written notice, (iii) the Executive is convicted of
or pleads guilty or no contest to a felony or other conduct involving moral
turpitude. If this Agreement is terminated for "Company Cause," following the
Executive's last date of employment with the Company, the Company shall have no
further obligations or liability to the Executive or her heirs, administrators
or Executors with respect to compensation and benefits thereafter, except for
the obligation to pay the Executive (x) any earned but unpaid base salary
effective at the time of death or resignation through the Executive's date of
death or resignation, (y) for any unused accrued and unforfeited vacation, and
(z) subject to paragraph 7 hereinabove, for any unreimbursed business expenses
incurred by the Executive prior to her death or resignation. The Company shall
deduct, from all payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions.

         d. TERMINATION BY THE CHIEF EXECUTIVE OFFICER. At any time during the
term of this Agreement, the Chief Executive Officer of the Company, in his sole
discretion, may terminate this Agreement and the Executive's employment with the
Company without "Company Cause" by delivering to the Executive written notice.
In the event that this Agreement and the Executive's employment with the Company
is terminated pursuant to this subparagraph 8(d), following the Executive's last
date of employment with the Company, the Company shall have no further
obligations or liability to the Executive or her heirs, administrators or
executors with respect to compensation and benefits, except for the obligation
to pay the Executive (i) any earned but unpaid base salary through the
Executive's last date of employment, (ii) for any unused accrued and unforfeited
vacation, (iii) her base salary in effect at the time of her termination in
accordance with paragraph 5 hereinabove through the Scheduled Termination Date,
and (iv) subject to paragraph 7 hereinabove, for any unreimbursed business
expenses incurred by the Executive prior to her last date of employment with the
Company. The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate
deductions.

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         9. CONFIDENTIAL INFORMATION.

         a. The Executive expressly acknowledges that, in the performance of her
duties and responsibilities relating to his employment with the Company, she has
been exposed and will continue to be exposed to the trade secrets, business
and/or financial secrets and confidential and proprietary information of the
Company, its affiliates and/or its clients or customers ("CONFIDENTIAL
INFORMATION"). The term "Confidential Information" means information or material
that has actual or potential commercial value to the Company, its affiliates
and/or its clients or customers and is not generally known to and is not readily
ascertainable by proper means to persons outside the Company, its affiliates
and/or its clients or customers, and includes, without limitation, and includes,
without limitation, the following, whether or not expressed in a document or
medium, regardless of the form in which it is communicated, whether or not such
information is on the Company's forms, memos, computer disc or tape, or
otherwise, whether or not such information is in written or verbal form, and
whether or not marked "trade secret" or "confidential" or any similar legend:
(i) sales information, (ii) operations information, (iii) financial information,
(iv) administrative information, (v) research information, (vi) customer
information, (vii) supplier information, and (viii) any other information
concerning the Company, its business, its properties or its affairs that the
Company deems to be confidential or that is confidential according to industry
practices.

         b. Except as authorized in writing by the Company's Chief Executive
Officer, during the term of this Agreement and thereafter until such time as any
such Confidential Information become generally known to and readily
ascertainable by proper means to persons outside the Company, its affiliates
and/or its clients or customers, the Executive agrees to keep strictly
confidential and not use or disclose, cause to be used or disclosed, or permit
to be used or disclosed, to any person or entity and/or for her personal benefit
or the benefit to any other person or entity, any Confidential Information.

         c. The Executive agrees that upon termination of her employment with
the Company for any reason, he will promptly return to the Company all
Confidential Information within her possession or within her power to control,
including, without limitation all copies of such Confidential Information, all
abstracts of such Confidential Information and any other information containing
such Confidential Information in whole or in part.

         d. The Executive affirms that she did not and does not possess, and has
not relied and will not rely, upon the protected trade secrets or confidential
or proprietary information of the Executive's prior employer(s) in providing
services to the Company.

         10. OWNERSHIP AND ASSIGNMENT OF INVENTIONS.

         a. The Executive acknowledges that, in connection with her duties and
responsibilities relating to her employment with the Company, the Executive
and/or other employees of the Company working with the Executive, without the
Executive or under the Executive's supervision, may have created, conceived of,
made, prepared, worked on or contributed to, and/or may create, conceive of,
make, prepare, work on or contribute to, the creation of, or may have been or

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may be asked by the Company and/or its affiliates or customers to create,
conceive of, make, prepare, work on or contribute to the creation of, without
limitation, lists, business diaries, business address books, documentation,
ideas, concepts, inventions, designs, works of authorship, computer programs,
audio/visual works, developments, proposals, works for hire or other materials
("INVENTIONS"). To the extent that any such Inventions related or relate to any
actual or reasonably anticipated business of the Company or any of its
affiliates or customers, or falls within, is suggested by or results from any
tasks assigned to the Executive for or on behalf of the Company or any of its
affiliates or customers, the Executive expressly acknowledges that all of her
activities and efforts relating to any Inventions, whether or not performed
during the Executive's or the Company's regular business hours, are within the
scope of the Executive's employment with the Company and that the Company owns
all right, title and interest in and to all Inventions, including, to the extent
that they exist, all intellectual property rights thereto, including, without
limitation, copyrights, patents and trademarks in and to all Inventions. The
Executive also acknowledges and agrees that the Company owns and is entitled to
sole ownership of all rights and proceeds to all Inventions.

         b. The Executive expressly acknowledges and agrees to assign to the
Company, and hereby assigns to the Company, all of the Executive's right, title
and interest in and to all Inventions, including, to the extent they exist, all
intellectual property rights thereto, including, without limitation, copyrights,
patents and trademarks in and to all Inventions.

         c. In connection with all Inventions, the Executive agrees to disclose
any Invention promptly to the Company and to no other person or entity. The
Executive further agrees to execute promptly, at the Company's request, specific
written assignments of the Executive's right, title and interest in any
Inventions, and do anything else reasonably necessary to enable the Company to
secure or obtain a copyright, patent, trademark or other form of protection in
or for any Invention in the United States or other countries. The Executive
further agrees that the Company is not required to designate the Executive as an
author of or contributor to any Invention or to secure the Executive's
permission to change or otherwise alter any Invention.

         d. The Executive acknowledges that all rights, waivers, releases and/or
assignments granted herein and made by the Executive are freely assignable by
the Company and are made for the benefit of the Company and its affiliates,
subsidiaries, licensees, successors and assigns.

         e. The Executive agrees to waive, and hereby does waive, for the
benefit of all persons, any and all right, title and interest in the nature of
"moral rights" or "droit moral" granted to the Executive in any country in the
world.

         11. NON-COMPETITION AND NON-SOLICITATION. Because of the nature of the
Business, and because, as a result of their employment with the Company, the
Executive and other present and former employees of the Company have been and
will continue to be exposed to Confidential Information, the Executive
acknowledges that the Company would sustain grievous harm in the event that he
or the Company's other present and former employees were to disclose
Confidential Information, engage in business activities that compete with the
Business, appropriate or divert business or customers of the Company or its

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affiliates and/or induce employees or consultants of the Company or its
affiliates to leave the employment of the Company or its affiliates. The
Executive acknowledges that the Company has a legitimate business interest in
protecting itself from the aforementioned harm and in the protection and
maintenance of the Confidential Information and of the good will and customer
relationships of the Company and its affiliates. Therefore, the Executive hereby
agrees and covenants to be bound by the non-competition and non-solicitation
restrictions set forth hereinbelow, which restrictions the Executive agrees and
acknowledges are reasonable and necessary and do not impose undue hardship or
burdens on the Executive.

         a. The Executive agrees that, during her employment with the Company
for a period of three (3) years following the termination of her employment with
the Company, she and her affiliates shall not directly or indirectly own,
manage, operate, control, be employed by, consult for, be a shareholder of, be
an officer of, participate in, contract with or be connected in any capacity or
any manner with any person or entity whose business activities directly or
indirectly (whether through related persons, entities or otherwise) compete with
the Business anywhere in the United States and the People's Republic of China
where the Company or its affiliates is engaged in the Business, PROVIDED
HOWEVER, that the Executive shall not be prevented from owning an interest in a
publicly traded company so long as the fair market value of such interest at the
date of acquisition is less than US$100,000.00.

         b. The Executive agrees that during the period of her employment with
the Company and for a period of three (3) years following the termination of her
employment with the Company, for any reason, she will not, within the United
States and the People's Republic of China where the Company or its affiliates is
engaged in the Business, directly or indirectly recruit, induce, divert,
supervise, employ, manage, hire or entice, or cause to be recruited, induced,
diverted, supervised, employed, managed, hired or enticed, any employee,
consultant or independent contractor of the Company or its affiliates to leave
or terminate the employment or other relationship thereof, for any reason.

         c. The Executive agrees that during the period of her employment with
the Company and for a period of three (3) years following the termination of her
employment with the Company, she will not, within the United States and the
People's Republic of China where the Company or its affiliates is engaged in the
Business, directly or indirectly appropriate, call on, induce, divert or
solicit, or assist another to appropriate, call on, induce, divert or solicit,
any actual or potential business or customer away from the Company or its
affiliates, or attempt to do any of the foregoing, or otherwise induce or
attempt to induce any actual or potential business or customer of the Company or
its affiliates, to terminate or adversely modify its relationship with the
Company or its affiliates, or to enter into a relationship with or conduct
business with the Company or its affiliates, which actual or potential business
or customer the Executive was involved with or had a relationship with or whose
identity became known to the Executive in connection with the Executive's
employment with the Company.

         d. If any of the restrictive covenants set forth in paragraphs 11(a),
(b) and (c) of this Agreement is held to be invalid, illegal or unenforceable
(in whole or in part), such restrictive covenant shall be deemed modified to the
extent, but only to the extent, of such invalidity, illegality or

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unenforceability, and a court of competent jurisdiction shall have the power to
modify, any such restrictive covenant to the extent necessary to render such
provision enforceable, and the remaining restrictive covenant shall not be
affected thereby.

         e. In the event of a violation of any of the restrictive covenants set
forth in paragraphs 11(a), (b) and (c) of this Agreement, if the Executive is
prevented by a court or arbitrator from committing any further violation,
whether by a temporary restraining order, injunction or otherwise, the time
periods set forth in paragraphs 11(a), (b) and (c) of this Agreement shall be
computed by commencing the periods on the date of the applicable court or
arbitrators' order and continuing them from that date for the full period
provided.

         f. The Executive shall have the right to request a waiver of all or
part of the restrictive covenants contained in paragraphs 11(a), (b) and (c) of
this Agreement by providing the Company with a written request for such a waiver
that contains all relevant details. The Company may, in its sole discretion,
waive all or part of the restrictive covenants contained in paragraphs 11(a),
(b) and (c) of this Agreement on such terms and conditions, and to such extent,
as it, in its sole discretion, deems appropriate. Such waiver must be in
writing.

         g. The parties acknowledge that this Agreement would not have been
entered into, that the benefits described in paragraphs 5 and 6 would not have
been promised to the Executive by the Company, in the absence of the Executive's
covenants and promises set forth in paragraphs 11(a), (b) and (c) of this
Agreement.

         12. DISPUTE RESOLUTION. The Executive and the Company agree that any
dispute or claim, whether based on contract, tort, discrimination, retaliation,
or otherwise, relating to, arising from, or connected in any manner with this
Agreement or with the Executive's employment with Company, shall be resolved
exclusively through final and binding arbitration under the auspices of the Hong
Kong Chamber of Commerce ("HKCC") in accordance with the commercial arbitration
rules and supplementary procedures for international commercial arbitration of
the HKCC. The arbitration shall be held in Hong Kong. There shall be three
arbitrators: one arbitrator shall be chosen by each party to the dispute and
those two arbitrators shall choose the third arbitrator. Each party shall
cooperate with the other in making full disclosure of and providing complete
access to all information and documents requested by the other party in
connection with the arbitration proceedings. Arbitration shall be the sole,
binding, exclusive and final remedy for resolving any dispute between the
parties. The arbitrators shall have jurisdiction to determine any claim,
including the arbitrability of any claim, submitted to them. The arbitrators may
grant any relief authorized by law for any properly established claim. The
interpretation and enforceability of this paragraph of this Agreement shall be
governed and construed in accordance with the United States Federal Arbitration
Act, 9. U.S.C. ss.1, ET SEQ. More specifically, the parties agree to submit to
binding arbitration any claims for unpaid wages or benefits, or for alleged
discrimination, harassment, or retaliation, arising under Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the National Labor Relations Act, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Executive Retirement Income Security Act, the Civil Rights of 1991, the Family
and Medical Leave Act, the Fair Labor Standards Act, Sections 1981 through 1988
of Title 42 of the United States Code, COBRA, and any other federal, state, or
local law, regulation, or ordinance, and any common law claims, claims for

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breach of contract, or claims for declaratory relief. The Executive acknowledges
that the purpose and effect of this paragraph is solely to elect private
arbitration in lieu of any judicial proceeding he might otherwise have available
to her in the event of an employment-related dispute between her and the
Company. Therefore, the Executive hereby waives her right to have any such
employment-related dispute heard by a court or jury, as the case may be, and
agrees that her exclusive procedure to redress any employment-related claims
will be arbitration.

         13. MISCELLANEOUS.

         a. Telephones, stationery, postage, e-mail, the internet and other
resources made available to the Executive by the Company, are solely for the
furtherance of the Company's business.

         b. All issues concerning, relating to or arising out of this Agreement
and from the Executive's employment by the Company, including, without
limitation, the construction and interpretation of this Agreement, shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to that State's principles of conflicts of law.

         c. The Executive and the Company agree that any provision of this
Agreement deemed unenforceable or invalid may be reformed to permit enforcement
of the objectionable provision to the fullest permissible extent. Any provision
of this Agreement deemed unenforceable after modification shall be deemed
stricken from this Agreement, with the remainder of the Agreement being given
its full force and effect.

         d. The Company shall be entitled to equitable relief, including
injunctive relief and specific performance as against the Executive, for the
Executive's threatened or actual breach of paragraphs 9, 10 or 11 of this
Agreement, as money damages for a breach thereof would be incapable of precise
estimation, uncertain, and an insufficient remedy for an actual or threatened
breach of paragraphs 9, 10 or 11 of this Agreement. The Executive and the
Company agree that any pursuit of equitable relief in respect of paragraphs 9,
10 or 11 of this Agreement shall have no effect whatsoever regarding the
continued viability and enforceability of paragraph 12 of this Agreement.

         e. Any waiver or inaction by the Company for any breach of this
Agreement shall not be deemed a waiver of any subsequent breach of this
Agreement.

         f. The Executive and the Company independently have made all inquiries
regarding the qualifications and business affairs of the other which either
party deems necessary. The Executive affirms that he fully understands this
Agreement's meaning and legally binding effect. Each party has participated
fully and equally in the negotiation and drafting of this Agreement. Each party
assumes the risk of any misrepresentation or mistaken understanding or belief
relied upon by her or it in entering into this Agreement.

         g. The Company and the Executive agree that the Executive's obligations
to the Company during the Executive's employment with the Company, as well as
any other obligation of the Executive under this Agreement, may be assigned to
any successor in interest to the Company or any division or affiliate of the

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Company in its sole discretion and without additional consideration or prior
notice to the Executive, but that nothing requires the Company to do so. The
Executive's obligations under this Agreement are personal in nature and may not
be assigned by the Executive to any other person or entity.

         h. The Company and the Executive acknowledge and agree that future
alterations to the Executive's work hours, working title, management or
supervisory responsibilities, number of subordinate Executives, sales or
promotional budgets, reporting relationships within the Company or with
businesses affiliated with the Company, management responsibilities or duties,
or similar changes or alterations may occur periodically during the Executive's
employment with the Company. The Company and the Executive agree that the
Company, in its sole discretion, may implement such alterations or adjustments
for any or no reason and that any such action shall not constitute a breach of
this Agreement so long as the Company continues to perform its remaining
obligations as provided by this Agreement.

         i. This instrument constitutes the entire Agreement between the parties
regarding its subject matter. When signed by all parties, this Agreement
supersedes and nullifies all prior or contemporaneous conversations,
negotiations, or agreements, oral and written, regarding the subject matter of
this Agreement. In any future construction of this Agreement, this Agreement
should be given its plain meaning. This Agreement may only be amended only by a
writing signed by the Company and the Executive.

         j. Notwithstanding the termination of this Agreement and of the
Executive's employment with the Company for any reason, paragraphs 9, 10 and 11
of this Agreement shall continue in full force and effect in accordance with
their terms following such termination.

         k. This Agreement may be executed in counterparts, a counterpart
transmitted via facsimile, and all executed counterparts, when taken together,
shall constitute sufficient proof of the parties' entry into this Agreement. The
parties agree to execute any further or future documents which may be necessary
to allow the full performance of this Agreement. This Agreement contains
headings for ease of reference. The headings have no independent meaning.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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THE EXECUTIVE STATES THAT SHE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS
AGREEMENT AND THAT SHE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF.
THIS AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
PARTIES.

                        UNDERSTOOD, AGREED, AND ACCEPTED:

LILY LI                                              AMERICAN ORIENTAL
                                                     BIOENGINEERING, INC.

Name: /s/ Lily Li                               By:   /s/ Shujuh Liu
      ----------------------                          --------------------------
      Lily Li                                         Name: Shujuh Liu
                                                      Title: Director and Chief
                                                      Executive Officer

Date:  March 24, 2004                           Date: March 24, 2004
       ---------------------                          --------------------------

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