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(Hong Kong, 22 May, 2000) -- Leading audio-visual ODM and OEM manufacturer Tonic Industries Holdings Limited ("Tonic") celebrated the Grand Opening of its eighth factory block in Dongguan, the People's Republic of China (the "PRC") today.

In order to meet with the escalating demand for the MD and other audio products, the Group invested approximately HK$100 million to build an additional factory building (Building #8), purchase of machinery and installation of new production lines. The factory block is located within the main factory complex of Tonic in Tong Xia, Dongguan, PRC with a total floor area of 320,000 square feet. The new factory consists of 4 new production lines, automation and other supporting departments will increase the factory's capacity by 25%. With the new additions, the total production lines will reach 26. With the completion of the decoration and installation process in the next two months, the total production area of the entire factory will reach 1,350,000 square feet, employing more than 8,000 employees.

Mr. Ling Siu Man, Simon of Tonic said, "I am pleased to see the completion of our eighth new factory which will enable us to meet the continuous growth in demand for MD products, enhance existing production for audio products and leave room for the development of new products."

Mr. Ling continued, "We have invested HK$100 million in the construction of this new facility, 70% for machinery and 30% for construction. We are confident that the Return on Investment will be high and that the investment will be paid off in 3-5 year's time. This additional production capacity will be absorbed by our existing orders."

The new factory #8 is principally engaged in the manufacturing of a wide range of consumer AV products. These include portable MDs, CDs, cassette recorders, radios and mini Hi-fi systems. Products are sold on an ODM and/or OEM basis to overseas customers.

Tonic has its factory in China starting from 1983 and was first established in Dongguan in 1990. In the past decade, the Group has grown with the support and helpful environment fostered by the provincial government. With the maximization of resources and the establishment of relationships with the government departments, the Group has been able to stay competitive and to grow. Based on this successful history, the Group will proceed with the construction of Factory #9 and a new dormitory at the end of 2000.

With the addition of this new and well-designed facility, the Group will continue with its diversification plan to upgrade its product mix and to generate higher value margin products, such as home appliances, Internet set-top boxes, satellite receivers and DVDs.

Despite severe competition in the audio products industry, Tonic has continued to maintain and enhance its market position as a competitive supplier by developing and manufacturing new products through its strong design and development capacity. With a team of over 100 designers and engineers including consultants from Japan, Tonic is able to anticipate and cater for changes in consumer trends as well as technical innovations.