PABST BLUE RIBBON BEER

The majority of the beer currently produced by Noble Brewery and Zhaoqing Brewery is Pabst Blue Ribbon beer. Zao Yang High Worth Brewery produces some Pabst Blue Ribbon beer as well as other local beer such as "Di Huang Quan" beer. In 2002, there are two products in the portfolio of the Pabst Blue Ribbon breweries: 11-degree light processed beer and draught beer. The 11-degree light processed beer is the primary products of the breweries, and is mainly packaged in 946 ml., 640 ml., 500 ml. and 355 ml. bottles and 355 ml. cans. The draught beer is sold only in kegs.

Pabst Blue Ribbon beer is marketed and sold as a premium beer in establishments such as restaurants, bars, alcohol and tobacco companies and retail stores. The Marketing Company will continue its efforts to consolidate and expand the distribution of these products in existing and new markets in China, subject to the limitations of the Company's ability to expand its market share in these markets, the competitive marketing strategies of other brewers, and the growth of the Chinese economy.

The Company's highest volume sales for Pabst Blue Ribbon beer have been in the province of Guangdong. The Company utilizes a network of regional distributors whose field sales force maintains customer contact and promotes customer satisfaction. Sales of Pabst Blue Ribbon beer were 131,035 metric tons or approximately 1,114,000 barrels in 2002, a 0.1% decrease as compared to 2001. The Company believes that the decrease was attributable, in substantial part, to a softening in demand for higher-priced foreign-branded premium beer in China, and the aggressive pricing and promotional strategies adopted by some major state-owned breweries. Sales of Pabst Blue Ribbon beer were 131,924 metric tons or approximately 1,120,000 barrels in 2001, a 23.4% decrease as compared to 2000.

DOMESTIC BRAND NAME BEER

Prior to the end of 1994, Zhaoqing Brewery produced beer exclusively under domestic brand names, such as "Zhaoqing" beer, "Dinghu" beer and "Xile" beer, all of which were non-premium beers which targeted customers in the low to middle economic range. Production of these local brand beers was completely discontinued in March 1995 when Zhaoqing Brewery commenced producing Pabst Blue Ribbon beer on an exclusive basis. However, beer that does not meet Pabst Blue Ribbon quality standards is generally packaged and distributed as local brand beer.

Zao Yang High Worth Brewery also produces domestic brand beer under the name "Di Huang Quan".

In late 2000, Noble Brewery launched a local brand beer under the name "Double V", which is priced to suit lower to middle consumer segments. Pabst Blue Ribbon beer is targeted at the premium beer market in China, while the domestic brand beer produced by Noble Brewery, Zhaoqing Brewery and Zao Yang High Worth Brewery is targeted at the low to middle (i.e., non-premium) market.

During 2002, the Company implemented a series of new sales programs to launch various newly developed or modified local brand beers into the market, including brands such as "Lanli", "Lancheng", "Lanshi", "Xile" and "Zhaopi". Together with the local brand beer "Di Huang Quan" produced by Zao Yang High Worth Brewery, the Company intends to increase its marketing efforts with respect to these new local brands. If the Company is unable to obtain a new sub-license to produce Pabst Blue Ribbon beer in China after November 7, 2003, these new local brands would be expected to become the main product lines and the major source of revenues for

High Worth JV and Zao Yang High Worth Brewery after the expiration of the Pabst sub-license on November 7, 2003. However, pursuant to the joint venture agreement of Noble Brewery, the Company will continue to manage the daily operations of Noble Brewery until the expiration of the joint venture on June 10, 2013. In May 1999, Noble China Inc. entered into a license agreement with Pabst Brewing Company granting it the right to utilize the Pabst Blue Ribbon trademarks in connection with the production, promotion, distribution and sale of beer in the PRC for 30 years commencing in November 2003. Accordingly, management currently believes that Noble Brewery will be able to obtain a sub-license from Noble China Inc., the 60% shareholder of Noble Brewery, to continue to produce and sell Pabst Blue Ribbon beer in China after November 7, 2003, although there can be no assurances in this regard.

DISTRIBUTION

Delivery of Pabst Blue Ribbon beer to retail markets in Guangdong Province and to the rest of China is accomplished through a network of regional distributors which sell to tobacco and alcohol companies, bars, restaurants and retail stores. The Marketing Company has over 400 distributors and sub-distributors throughout China. New customers or customers without collateral but with material transaction volume are required to issue bills of exchange from their respective banks to secure payment on the due date. The Marketing Company typically appoints only one distributor in each region (except for a large region in which more than one distributor may be appointed) to ensure that such distributor devotes adequate efforts and resources to the development of a broad-based retail distribution network for Pabst Blue Ribbon beer in that distributor's region. These distribution arrangements include flexibility for the Marketing Company to replace distributors or modify its arrangements with existing distributors. No single distributor accounted for more than approximately 5% of barrel sales in 2002.

During the year ended December 31, 2002, approximately RMB 79,665,545 was allocated to promotional advertising for Pabst Blue Ribbon beer and approximately RMB 55,791,465 was allocated to other specific promotional activities and incentives to distributors. In addition, approximately RMB 1,170,000 was allocated to advertising and promotional activities for other local brand name beer in 2002. Advertising media includes television, radio, billboards, magazines and newspapers. The Marketing Company also provides its distributors with promotional gift items, sales incentive bonuses and volume discounts, and special lucky draw and specific promotional campaigns are held during the year. In 2002, 2001 and 2000, certain promotional sales incentives and sales bonuses given to distributors for their specific promotional activities amounting to RMB 31,669,780, RMB 46,745,947 and RMB 19,121,816, respectively, have been accounted for as a reduction in net sales, pursuant to EITF 01-9, "Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products)".