Updated August 2, 2004
Powerful Synergies Created Through Combination of China World Trade Membership and Turnkey Travel Services Provider Expected to Result In 2005 Sales Turnover Exceeding $200 million
China World Trade Corporation (OTCBB:CWTD) announced today that it has completed the acquisition of a 51% equity interest in the New Generation Group (the operating arm of Guangdong Huahao Group), a leading Chinese travel company, for a total consideration of approximately $10 million. The New Generation Group is believed to be the largest airline ticketing agent in Southern China. The purchase price was paid for via a combination of cash and approximately 4 million shares of restricted common stock.
This acquisition marks a very significant component in China World Trade Corporation's strategy to have the capability to provide premium turnkey travel services to its members all over the world as well as regular travel services to other clients. New Generation Group is believed to generate about one quarter of the revenues of Ctrip.com International Ltd and about one half the revenues of Elong Inc., a Beijing travel company which recently sold a 30% stake to InterActiveCorp. for $60 million.
China World Trade now expects to generate total value of transactions for the year ended December 31, 2004 of over $60 million (as a result of the pro-rata recognition of only 5 months operation results of the New Generation after the completion of the acquisition in mid of the fiscal year) and significant cash flow. For 2005, China World Trade estimates that it will generate approximately $250 million in total value of transactions, which represents 12 months of operations and additional synergies from capitalizing on marketing opportunities from China World Trade's existing business with New Generation's travel services.
"This acquisition, together with our operating business clubs in the major cities of China, significantly increases the value added options for both our international and domestic members," said Chi Hung Tsang, Chairman of China World Trade Corporation. This acquisition significantly increases the size of our company, revenue base and creates powerful synergies between the businesses."
About Guangdong Huahao Group and the New Generation Group:
Established in October 1997, Huahao is the pioneer and one of the market leaders in the travel agency businesses through the operations of its 10 subsidiaries in Southern China in ticketing sales for international and domestic flights as well as inbound business travel. Being one of the leading consolidators of hotel accommodations and airline tickets in China, New Generation has already acquired the necessary licenses to operate as a ticketing and travel agent in the PRC. These licenses include 26 licenses as a ticketing agent for international and domestic flights for both cargo and passengers issued by the Civil Aviation Administration of China ("CAAC") and the International Air Transport Association ("IATA") and 3 licenses as a domestic and international travel agent issued by the Administrative Bureau of Tourism of China. In addition, New Generation is also an authorized/licensed insurance agent in China to provide, in particular, accidental and life insurances. New Generation also provides premium "red carpet" airport based services to prestigious clients and will participate in the opening of the new airport in Guangzhou, the PRC.
New Generation has registered the trademark Network Travel Service (NTS) (or in Chinese "Zhong Heng Tian Di'' meaning "travel around the world'') for its brand name and logo in 36 out of the 43 recognized industries in China. In addition, New Generation has set up a call center to handle nationwide reservations. Customers are able to make reservations for hotel and air ticket simply by dialing 4008168168 anywhere in the nation. In addition, the distributors of New Generation are provided with internet booking authorization for making reservation thru the website 4008168168.com. New Generation also serves and retains a portfolio of reputable corporate clients, including China Telecom and regional offices/branches of multinational companies of Coca Cola, Nippon Steel, Matsushita Electric, Sanyo, and Hitachi.
New Generation begins to implement its strategic development program by acquiring control of unique historical tourism resources and scenic points in China. One of its recent acquisitions is of the Chengzhou Shaolin Tourism Services Limited, which runs the "500 Arhats Temple" of the kung fu legendary place, the Shaolin Temple. New Generation's operations include sales and marketing of the Buddhist Craft in the temple and the representation of the Shaolin Temple to organize cultural exchange activities.
About China World Trade Corp.
China World Trade Corp. ("CWTC") is devoted to the building of the World Trade brand in China. CWTC's objective is to open and operate business clubs in the major cities of China in association with the World Trade Center Association, in order to position the company as the platform to facilitate trade between China and the world market. CWTC currently operates the Guangzhou World Trade Center Club, consisting of over 4,000 square meters, and The Beijing World Trade Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing PRC, and consisting of 730 square meters. China World Trade Corporation, thru its subsidiary, formed a partnership with one of the four largest banks in China, the Agricultural Bank of China to offer co-branded credit cards for its members.
The recent acquisition of CEO Clubs China Limited will complement China World Trade's offerings by targeting higher profile leadership from larger companies than those normally associated with China World Trade. CEO Clubs has thirteen chapters in the US and China. It focuses on recruiting CEO's of companies with annual sales exceeding $2 million as members. The average club member has $20 million in annual sales.
China World Trade has consolidated companies in industries of trade, travel and finance. These companies and acquisitions form a group which has the capability to provide value added services and strong cross-marketing opportunities for its members .
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