XING

Qiao Xing Universal Telephone, Inc. (Qiao Xing), incorporated on December 6, 1994, is engaged in the sale of telecommunication terminals and equipment, including cord and cordless telephone sets, in Mainland China. It is also engaged in the production and sale of mobile phones and accessories. As of June 20, 2006, the Company owned 80% of Qiao Xing Mobile Communication Co. Ltd. (QX Mobile), an international business company. QX Mobile owns 90% of CEC Telecom Co., Ltd. (CECT). Qiao Xing classified its products into two core business segments: mobile phones and indoor phones. The Company also owns 100% of Qiao Xing Communication Holdings, Ltd., which owns 90% of Hui Zhou Qiao Xing Property, Ltd. (QX Property), and 90% of Hui Zhou Qiao Xing Communication Industry, Ltd. (HZQXCI), a People's Republic of China joint venture.

Chippewa Partners owned shares in XING last year. The stock has moved up from where we exited the position. We don't feel bad about giving up on a name that has zero financial transparency. In fact, financial transparency is a joke with Chinese stock listings. The country dishes out as much propaganda as Wall Street. The stock dive in China last week should serve as a reminder that investors should let professionals spread their risk in foreign stock exposure and keep an eye on their level of exposure to foreign markets. They are hungry for capital in Beijing and cook the books in a nanosecond to extract more US investment. Just wait.