HONG KONG, August 19 /Xinhua-PRNewswire-FirstCall/ -- Xinhua Far East
China Ratings (Xinhua Far East), the pioneering undertaking to rank credit
risk among Chinese corporations using international standards, today assigns
the issuer credit rating BBB+ (pi) to Beijing UFSoft Co Ltd ("UFSoft" or "the
Company", SH A 600588). The rating outlook is stable. In 2003, UFSoft's share
of the management software market and ERP (Enterprise Resource Planning)
software market reached 17.6% and 21.7% respectively, topping both areas in
China.
    In Xinhua Far East's opinion, the BBB+(pi) issuer credit rating for UFSoft
is mainly due to the Company's cutting edge research & development strength
and project execution capability in China's domestic software market, as well
as the bolster offered by favorable government industry policies. These
internal and external advantages will help UFSoft fend off intensifying
competition, and impel the Company to explore China's management software
market where massive potential exists. UFSoft's strong financial profile, with
ample capital and unleveraged balance sheet also underpins its rating.
    China's fast moving economy is providing huge development potential in the
domestic management software market, where UFSoft is well placed to capitalize
upon. However, due to the software industry's rapid globalization, the China
software market is opening up to more competition. In recent years,
international software companies such as SAP, Peoplesoft and Infosys have
entered the China market. Although UFSoft's cost advantage and strong local
knowledge give it comparative advantages of client servicing and project
execution in China market, they are gradually overshadowed by international
rival's comparative advantages of human resources, research & development,
capital and proficiency in IT project consultation and management amid the
improving environment for implementation of ERP and the increasing use of
platform software in China. Furthermore, certain international software
suppliers gradually penetrate into the medium and low-end market while
reinforcing their dominance in the high-end sector. Therefore, competition in
the management software market is intensifying. In addition, Xinhua Far East
is concerned that China may be vulnerable to external stress to adjust its
supportive industry policies favoring local software suppliers, as a result of
its accession to the WTO. This imposes additional pressure on the Company's
rating.
    Xinhua Far East believes that under current circumstances, the Chinese
Government's support for its local software industry, including government
procurement contracts and favorable tax treatment, as well as UFSoft's own
efforts to open up new services and to implement its expansion strategy, will
ease the competitive impact of international peers on the Company, helping to
maintain the Company's leading position in the market. How successfully UFSoft
strengthens its core competitiveness against these international giants, by
exploiting its current market and policy advantages, will be an important
factor driving the future development of Company's ratings.
    Given UFSoft's leading position in China's management software market and
its extensive customer base, and Xinhua Far East's anticipation that the
domestic management software industry still has vast expansion potential, the
rating outlook for UFSoft is stable.
    UFSoft's business scope includes software & hardware, technology
development, corporate management and consulting, of which its major business
is the distribution and servicing of ERP software and financial management
software.
    The Company is a mid cap company in the Xinhua/FTSE China A 400 Index. As
of August 18, 2004, the total market cap of UFSoft accounted for 3.289 billion
yuan (USD 0.398 billion) with the investible market cap of 0.987 billion yuan
(USD 0.119 billion).

    For the rating report summary, please visit
http://www.xinhuafinance.com/creditrating.

    Note to Editors:
    About Xinhua/FTSE China A 400 Index
    Xinhua/FTSE China A 400 Index is the mid cap index in the Xinhua/FTSE
China A Share Index Series and includes the 400 companies in China ranked
after the top 200 by market cap. It is calculated in real-time every minute.
For daily data and further information, see http://www.xinhuaftse.com.

    About Xinhua Far East China Ratings
    Xinhua Far East China Ratings (Xinhua Far East) is a pioneering venture in
China that aims to rank credit risks among corporations in China. It is
engineered by the strategic alliance between Xinhua Financial Network and
Shanghai Far East Credit Rating Co., Ltd. Shanghai Far East became a Xinhua
Finance company in 2003 and the first China member of The Association of
Credit Rating Agencies in Asia in December 2003.
    Capitalizing on the synergy between Xinhua Financial Network and Shanghai
Far East, Xinhua Far East's rating methodology and process blend unique local
market knowledge with international rating standards. Xinhua Far East is
committed to provide investors with independent, objective, timely and forward
looking credit opinions on Chinese companies. It aims at helping investors
differentiate the credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information disclosures and
transparency in China market. For more information, see
http://www.xinhuafinance.com/creditrating.

    About Xinhua Finance Limited
    Xinhua Finance is an independent financial information and services
company providing financial news and information, as well as a broad array of
financial products and services unique to the China markets. Xinhua Finance
provides real time coverage of Chinese and Asian equity markets, delivering an
integrated platform of China-specific indices, financial news feeds, credit
ratings, and investor relations services to global financial institutions and
re-distributors via leased line, internet, and satellite technology.
    Founded in 1999, Xinhua Finance is owned by a group of international
shareholders and managed by a team of experienced business professionals
recognized for their industry knowledge and pioneering role in accelerating
efficiencies and transparency within China's rapidly expanding capital
markets.  Headquartered in Hong Kong, Xinhua Finance has offices in Beijing,
Shanghai, Shenzhen, Seoul, Taipei, Tokyo, Singapore, and New York.  For more
information, see http://www.xinhuafinance.com.

    About Shanghai Far East Credit Rating Co., Ltd
    Shanghai Far East Credit Rating Co., Ltd. is the first and leading
professional credit rating company with comprehensive business coverage in
China. It is an independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally accepted standards
of capital market in China. The company is a pioneer to conduct bond-rating
business in China. For years, it has been recognized by the Shanghai branch of
the PBOC to do loan certificate credit rating.
    Since establishment, it had rated over 1,000 corporate long-term bonds and
commercial papers, based on the principles of objectivity, fairness and
independence. The company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three consecutive years. With
its strong local presence and knowledge, it provides investors the most
insightful and unique credit opinion. For more information, see
http://www.fareast-cr.com .

     More information:
     Ms Joy Tsang
     Xinhua Finance
     +852 3196 3983
     +852 9486 4364
     joy.tsang@xinhuafinance.com

     PR Contact in the US:
     Mr. Jason Rando
     The Ruth Group
     +1 646 536 7025
     jrando@theruthgroup.com

     Gregory Tiberend
     The Ruth Group
     +1-646-536-7005
     gtiberend@theruthgroup.com

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