Zongshen Industrial Group Co., Ltd. announces acquisition of control of
34,776,548 common shares of Zongshen PEM Power Systems Inc.

CHONGQING, CHINA, July 5 /CNW/ - Zongshen Industrial Group Co., Ltd. ("ZIG") announces that On July 2, 2010 ZIG acquired control, through Hong Kong VAS International Development Limited (the "Vendor"), an entity which the ZIG controls and invests in tandem with, of 34,776,548 common shares of Zongshen PEM Power Systems Inc. ("ZPP") as partial payment for the purchase by ZPP of the equity interest in the two-wheel gas motorcycle business of ZIG from the Vendor (the "Transaction"). An additional 34,776,548 common shares of ZPP were issued in the name of the Vendor on closing of the Transaction, but are being held in escrow pending certain income targets being met (the "Escrow Shares"). Pursuant to the terms of an escrow agreement the Escrow Shares are not to be voted until they are released to the Vendor.

As a result of the Transaction ZIG acquired control of an additional 35% of the current issued and outstanding common shares of ZPP, or 52% of the ZPP's current outstanding common shares if all of the Escrow Shares are eventually released to the Vendor.

Immediately following the Transaction ZIG exercises control or direction over an aggregate of 62,637,976 common shares, or 63.45% of ZPP's outstanding common shares, and up to 97,414,524 common shares, or 72.97% of the ZPP's outstanding common shares (assuming no other common share issuances) if all of the Escrow Shares are eventually released to the Vendor.

ZIG acquired control of the common shares as partial payment for the purchase price pursuant to the terms of an equity purchase agreement dated December 31, 2009 and amended May 31, 2010 relating to the Transaction (the "Equity Purchase Agreement"), whereby the value of each common share was deemed to be CAD$1.00 and the deemed value of the consideration paid for the common shares, including the Escrow Shares is CAD$69,553,096.00.

Additional information relating to the foregoing is set out in an Early Warning Report filed by ZIG on SEDAR under ZPP's issuer profile and available at www.sedar.com.

For further information: concerning the foregoing or a copy of the Early Warning Report referred to above, please contact Mr. Li Yao at 011-86-23-6637-2815