SORL Auto Parts, Inc. (the “Company”) , through its 90% ownership of the Ruili Group Ruian Auto Parts Co., Ltd., a sino-foreign joint venture (the “Joint Venture”), develops, manufactures and distributes automotive air brake valves and related components to automotive original equipment manufacturers, or OEMs, and the related aftermarket both in China and internationally. Installed on the chassis, air brake valves include a collection of various air brake components using compressed air and functioning as the execution device for service braking and parking braking. The Company’s products are principally used in commercial vehicles weighing over three tons, such as trucks and buses. Air brake valves are critical components that ensure driving safety.

The Joint Venture is the largest commercial vehicle air brake system manufacturer in China. In general, our customers are divided into three groups: OEMs in China, aftermarket distributors in China, and international customers, accounting for approximately 37.4%, 27.1% and 35.5%, respectively, of the Company’s annual sales for 2008.

The Joint Venture has established long-term business relationships with most of the major automobile manufacturers in China. The Joint Venture sells its products to 62 vehicle manufacturers, including all of the key truck manufacturers in China. In addition to heavy-duty trucks, the valves are also widely used in air brake systems for buses. Typically, bus manufacturers purchase a chassis from truck chassis manufacturers which already have incorporated the Joint Venture’s air brake valves

The Joint Venture has established sales networks of 28 authorized distributors covering the 7 regions nationwide. The 28 authorized distributors sell only “SORL” products and in turn channel the products through over 800 sub-distributors.

Management views the export market as an important growth area. We have signed agreements with 3 distributors in UAE, Australia, and USA, and begun to supply our products to local OEMs in India. The Company also actively participates in international trade shows including more than ten international exhibitions as Automechanika in Frankfort Equip Auto in Pairs, Automotive Aftermarket Products Expo in Las Vegas, Automechanika Middle East in Dubai and China Import and Export Fair in Guangzhou, to acquire new customers and new orders. In 2008, export sales accounted for 35.5% of total revenue. Products are exported to more than 101 countries and regions in the world. Total export sales in 2008 increased by 6.9% compared to that in 2007.