China-Biotics, Inc. Signs Agreements with Four Additional Food Manufacturers

Under the one-year agreements, China-Biotics will provide probiotics and related technical consulting. The initial orders include lactobacillus casei, lactobacillus bulgaricus and streptococcus thermophilus.

15/01/09 China-Biotics, Inc., a leading Chinese firm specializing in the manufacture, research, development, marketing and distribution of probiotics products, announced it has signed contracts with four food manufacturers -- Shanghai Yuejia Food Co., Ltd., Shandong Huwa Dairy Industry Co., Ltd., Qinghai Xuefeng Yak Dairy Industry Co., Ltd. and Shaanxi Yulin Dairy Product Co., Ltd. -- to supply probiotics as bulk additives for yogurt and beverage products.

Under the one-year agreements, China-Biotics will provide probiotics and related technical consulting. The initial orders include lactobacillus casei, lactobacillus bulgaricus and streptococcus thermophilus.

"We have made steady progress in building up commercial orders as we prepare for the completion of our production capacity expansion later this spring," said Mr. Jinan Song, China-Biotics' Chairman and Chief Executive Officer. "These latest announcements demonstrate the appeal of our strong product quality and prompt technical support, which should enable us to increase our market share in China as we cultivate long-term relationships with additional commercial partners."

To date, the Company has established an array of business relationships with commercial customers located in Beijing, Qinghai and Shanghai cities and Jiangsu, Jiangxi, Shaanxi, Shandong and Zhejiang provinces. These growing companies are among the leaders in the baked foods, dairy and pharmaceutical industries. The Company's existing manufacturing facility, with current annual manufacturing capacity of 12 metric tons of probiotics for use as bulk additives and capsules, will supply the initial orders for these and previously announced agreements. The Company has increased the number of shifts and will optimize the product mix of retail capsules and commercial bulk additives, in preparation for the Chinese New Year peak retail sales season.

The Company also announced that it has experienced an unexpected delay in the construction of its new facility. The new plant needs to be certified by two local government bureaus, which are State Food and Drug Administration and Shanghai Municipal Bureau of Quality and Technical Supervision, each of which requires a different certification standard for our manufacturing facility. Management has been working closely with these agencies to resolve which standard will be required for the new facility. As a result of this delay, the Company has slowed down the installation process at the new facility. The Company expects that a consensus will be reached shortly. We will resume installation after the Chinese New Year, and plan to commence trial production in April. The trial phase should be completed in approximately three months.

"We are eager to begin production at our new facility and look forward to a fair resolution of this issue," Mr. Song said. "In the meantime, we continue to pursue new commercial bulk additives agreements, as well as our Shining retail outlet expansion."