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Impact Products Announces Plans To Open Two New Offices in China

South and Central Mainland Poised for Explosive Growth

HONG KONG, Sept. 15, 2005 - Do these Chinese provinces sound familiar? Guangdong. Jiangsu. Zhejiang. If they don't, they will within the next few years.

As China continues its rapid advancement toward world superpower, manufacturers in little known provinces are quickly becoming the superstars of Chinese manufacturing. So says Bill Quarless, president and CEO of Impact Products (www.impactproducts.com), an American-owned and Hong Kong-based company with an extensive network of manufacturing assets in Asia. For this reason, Impact plans to open two new offices in South and Central China within the next year, Quarless said.

"This goes beyond expanding our manufacturing network, which of course we are always looking to do," he explained. "It's about being at the forefront of the next wave of explosive manufacturing growth that's about to happen in China. The southern and central regions of China, in particular, are vastly underutilized. Yet these are exactly the areas where quality is highest and costs are lowest."

Impact's new offices will be in the two leading manufacturing regions of China - the Pearl River Delta and the Yangtze River Delta - in the cities of Shenzhen and Shanghai. Shenzhen is in the southern province of Guangdong, which has the largest GDP of all Chinese provinces, accounting for 11.7 percent of the national total. Shanghai, situated in central-eastern China, is within hours of the Jiangsu and Zhejiang provinces - the second and fourth largest industrial provinces, respectively. Labor costs in these regions are approximately 20 percent lower than those in other areas of China.

These regions in particular have experienced meteoric growth since China joined the World Trade Organization (WTO) in 2001 and subsequently lifted most of its quotas and trade restrictions. As a nation, China did almost $600 billion in exports in 2004, a 35 percent increase from the previous year. Along with this growth has come the rapid maturation of previously underdeveloped areas of the Chinese mainland. Quarless cited Yongkang in the Zhejiang province as just one example. Located 80 miles south of Hangzhou, it is now one of the largest producers of metal cookware in the world.

For Quarless, being on top of this trend is the only way for him and his U.S. clients to stay ahead of the competition. "By the time other companies and their clients realize these mainland regions are the place to be, we will have further established our operations on the ground," he said. "In this business, you need staff on location within hours of any manufacturing facility. As manufacturing shifts from outlying mainland regions to interior regions, flying from Hong Kong every time there's an issue or point of negotiation just won't be practical."

Many U.S. companies have already been surprised by the speed with which things can change in China. The lifting of a U.S. import restriction on Chinese textiles in January 2005 caused imports of certain cotton products, such as cotton pants, to surge 1,500 percent in just four months. Yet many U.S. companies are still importing inferior-quality textiles from less cost-efficient countries like Pakistan, Quarless said.

The phenomenon is by no means limited to textiles. High-tech companies such as Dell, IBM and Nokia are increasingly turning to China to source parts and products that demand sophisticated technology and considerable R&D - gradually abandoning powerhouses such as Japan and Taiwan that once seemed unbeatable. Chinese exports of even everyday plastics and metal items are on the rise. Wal-Mart, for example, is the largest single company to procure goods from China. Its imports were worth a staggering $15 billion in 2003.

In other words, "sourcing from China isn't a choice anymore for most U.S. companies," Quarless said. "It's a necessity With low cost labor, a strong work ethic, higher efficiency - including lower costs for land, facilities and equipment - and the ability to change rapidly, Chinese manufacturers offer an unbeatable competitive advantage to U.S. companies."

Better yet, U.S. companies can create a bidding environment to lower costs even further. "People think that working with a Chinese factory directly is preferable, but that couldn't be further from the truth," Quarless explained. "You want a broker in China that has no allegiances or fixed factory overhead because when factories compete, clients benefit."

About Impact Products

Impact Products is a complete supply chain management firm specializing in international trading, product development and OEM contract manufacturing. The company has an extensive network of Asian partners that gives it the ability to manufacture a wide variety of items, from toys and electronics to household and kitchen products. In addition, Impact can source virtually any existing product. Impact Products is wholly owned by Bill Quarless.

For more information on Impact Products contact the Hong Kong office at (852) 2139-3961, via e-mail at info@impactproducts.com or visit www.impactproducts.com.