The healthcare industry in China has been growing rapidly since its economy took off in 1980s. National healthcare expenditures was found to increase robustly at 15% in compound annual growth rate ("CAGR") from approximately RMB 215 billion in 1995 to RMB 866 billion in 2005. Per capita healthcare expenditure, in overall, increased by 2.72 times from RMB177.9 in 1995 to RMB662.3 in 2005, while the per capita growth in urban areas was 1.8 times during the same period.

Per Capita Healthcare Expenditure (RMB)	1995	2000	2003	2004	2005
Overall	177.9	361.88	509.5	583.9	662.3
Urban	401.3	828.6	1108.9	1261.9	1122.8
Rural	112.9	209.4	274.7	301.6	318.5

The chart below shows the national healthcare expenditures of China from 1980 to 2005:

Under the past centralized planning system, virtually all hospitals and healthcare facilities in China were invested, owned and run by government or state-owned business entities. As of year 2000, there were 16,318 hospitals in the PRC, of which most were built during 1950s and 1990s with common defects in design and engineering. Major defects are characterized by incomplete functional layout, little consideration of hospital safety systems, lack of environmental friendly concept, deficiency in patient-first philosophy as well as poor installation and use of medical equipment and hospital management system. Such shortcomings are far too outdated to effectively help combating emergency medical crisis and safeguard human life.

Hospital construction market has demonstrated itself a fast growing sector in China. During 1950 and 2000, China built an average of 270 hospitals per year and about 488 hospitals per year from 2000 to 2006. SARS directly caused an economic lost of RMB300 billion in China, which was partially attributed to the poor and outdated design and planning of existing healthcare facilities, and is believed an important contributor to the improved market growth. Over the past 10 years, the number of hospitals was found to increase at a CAGR of 2%, from 15,833 hospitals in 1996 to 19,246 hospitals in 2006, of which specialized hospitals increased at a CAGR of 10% from 2,271 in 2003 to 3,022 in 2006. Obstetric & Gynecologic (“OB/GYN”) hospitals represented a high growth sub-sector, increasing by 29.5% in CAGR from 81 in 2003 to 176 in 2006 due to the general rise in birth rate and growing health awareness of women in China.

Type / Year	1950	1980	1990	1996	2000	2003	2004	2005	2006
General Hospitals	2,692	7,859	10,424	11,696	11,872	12,599	12,900	12,982	13,120
Traditional Chinese Medicine Hospitals	4	678	2,080	2,405	2,591	2,518	2,611	2,620	2,665
Specialized Hospitals	85	694	1,362	1,473	1,543	2,271	2,492	2,682	3,022
Hospitals in Total	2,803	9,902	14,377	15,833	16,318	17,764	18,393	18,703	19,246
Medical Institutions in Total	8,915	180,553	208,734	322,566	324,771	291,323	297,540	298,997	308,969
Obstetric & Gynecologic Hospitals	na	na	na	na	na	81	103	127	176

The medical service market in China is still primitive in the sense that public medical institutions lack competent manpower, financial resources, material resources, and generally lag behind in medical technologies. The situation seems improved a lot as the industry gradually open to the world after China's accession to World Trade Organization (WTO). In 2005, the industry revenue was estimated at RMB 480 billion with annual growth of over 10%, making it a lucrative market that has tempted investments from different parts of the world. Consequently, massive inflow of capital has in turn triggered new changes in the medical system of the country.

The niche market for high quality, patient-oriented medical services in China, though remains small at the moment, is found to have encouraging growth over the past years. It is estimated, so far, about 1% to 2% of the Chinese population can afford top-end Western medical care. As the standard of living gradually improves, more people are willing to spend for quality medical services. According to a survey by China Association of Branding Strategy (CABS), about 175 million or 13.5% of Chinese consumers can afford a variety of luxury brands. China, being the world's largest consumer of high-end luxury goods, accounted for about 12% of global luxury sales in 2005, already a dominant contributor of global luxury market when compared with developed countries like Japan (41%), the United States (17%) and the European countries (16%). Large hospitals in China are on the move to deliver high quality medical services so as to meet the increasing demand from affluent middle to upper classes. Star-class hospital environment, warm and personalized care services, patient safety and privacy, quality management as well as other indicators of quality services become the keys to out-compete in this niche market.

Shanghai – the most important economic and financial center in China, has already incubated a huge population of affluent class. The Chiangjiang delta that houses Shanghai, Nanjing, Wuxi, Suzhou, Changzhou, Zhenjiang, Nantong, Taizhou, Hangzhou and Ningbo, represents one of the most affluent and populous regions in China, generating great demand for premium medical services given its high living standard and strong consumption power.

A summary of the medical environment in the Chiangjiang delta region is shown as follow:

City	Population (M illion )	No. of Medical & Healthcare Institutions	No. of Public Hospitals	No. of Beds	No. of bed per 1000 people
Shanghai	17.42	Na	500	Na	na
Nanjing	6.4	1,335	10	23,059	3.60
Wuxi	5.5	1,051	21	Na	na
Suzhou	3.7	1,354	71	19,000	5.14
Changzhou	2.08	769	15	11,393	5.48
Zhenjiang	2.9	790	32	7,889	2.72
Nantong	7.8	Na	281	Na	na
Taizhou	5.04	965	27	11,592	2.30
Hangzhou	6.29	1,492	419	Na	na
Ningbo	5.69	1,263	48	14,653	2.58
TOTAL	62.82

 

** Forward Looking Statements

This website contains “forward-looking statements,” as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this website that are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, that the recent listing will attain a higher level of corporate visibility of enable better value assessments, the incorporation of additional hospitals or clinics or the pursuit of strategic acquisitions, new talent and expanded sales and marketing.

Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, China Health Care Corporation’s ability to access additional capital, expand its facilities and operations, the ability of the services to gain market acceptance, and the difficulties faced by an early stage non-governmental health care company operating in China. These forward-looking statements are made as of the date of these materials inclusion onto the website, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although the Company believes that the beliefs, plans, expectations and intentions contained in this website are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in the Company’s recent current report on Form 8-K, and other periodic and current reports filed from time to time with the Securities and Exchange Commission.