CCI acquires water rights and increases shares outstanding

China Continental, Inc. has acquired water rights through the purchase of a 100% interest in Famous Goal International Ltd. for the equivalent of U.S. $25.37 million.

HONG KONG, Jan. 8, 2001 (PRNewswire) — China Continental, Inc. (CCI) (OTC Bulletin Board: CHCL) today announced acquisition of water rights through the purchase of a 100% interest in Famous Goal International Ltd. for the equivalent of U.S. $25.37 million — representing a 43% discount on the valuation as determined by Vigers Hong Kong Limited. Purchase terms include restricted common stock, cash and the Company's minority interest in Weifang Great Dragon Chemical Fibre Limited.

Famous Goal's primary assets are 2.6 sq. km of land with two water resources located in Wulagai Development District in the northwest of Xi Lin Gol Meng. Total water flow is over 6,000 cubic meters/day with a daily extraction limit of 3,000 cubic meters. The water resources have been tested and meet the Chinese GB8537-95 Standard for "Potable Natural Mineral Water."

Shang Jiaji, Chairman of China Continental stated, "We are very pleased that this acquisition will provide CCI with the first step in the development of water resources while expanding and diversifying our activities. The current drought in China has been the worst in decades in some areas of the country and water quality is not improving. Accordingly, we see significant demand in providing quality water to meet the demands of the growing population. Phase two will be to joint venture with a marketing and distribution company and to build a bottling plant. Construction of the plant is expected to be initiated in the later part of this year, with commercial production projected in the third quarter of 2002."

The purchase price of $25.37 million is comprised of 131 million shares of restricted CHCL shares priced at the negotiated price of $0.0908 per share, with the balance in cash and the Company's 30% interest in Megaway Development Limited. The 30% interest in Megaway represents an 18% interest in Weifang Great Dragon Chemical Fibre Limited. The current issued shares, as of December 31, 2000, are 230 million. The new shareholder, Mr. Tsang Yiu Chung will not serve on the board nor will he have a management position.

Proposed Bottling Plant

The first phase of the proposed plant will include building a structure to house six production lines. The second phase calls for four additional production lines. Management expects that each production line will have a capacity of 100 million bottles at 600ml/bottle per year or 200 Cubic meters per day of water.

Potable Water Market

The availability of water for urban residents in China is worsening daily. Because of the continuing dry conditions in the north of China, many cities have taken measures to restrict water consumption. Because many local water sources are seriously polluted, the quality of water supplied in many of the larger cities is reduced. Ninety percent of China's water sources have become polluted to various degrees. These factors provide opportunities to develop drinkable mineral water. There are areas in China that are rich in mineral water resources and have great potential for development. The current opportunity is in bottling and transporting these resources to the cities where it is needed.

China saw rapid development of its bottled mineral water production beginning in the mid 80s, along with the gradual improvement of people's living standards and with the implement of a "Potable Natural Mineral Water" National Standard. In the mid 90s, mineral water production rapidly developed, with improved quality and annual production increasing at a rate of 30-40%. In 1998, the volume of bottled mineral water was approximately 2.5 million tons with more than 1,000 manufacturers. It is estimated that in 2000, the output volume will exceed 3 million tons.

Water Source

The water source is surrounded with a vast natural prairie, a pure natural environment without industrial pollution. The mineral water exists in the pyroclastic rock crevice from the Jurassic Period. Rainfall seeps along the rock crevice into the soil, dissolves the microelements and micro-components in rocks through deep circulation, and then rises through crevices to the surface, thus forming natural mineral water. The high-grade natural mineral water meets the GB8537-95 Standard for "Potable Natural Mineral Water." It can be used to produce bottled or tubbed potable natural mineral water or mineral water drinks.

About China Continental
China Continental, Inc. has traded on the OTC Bulletin Board market since 1995. The Company's focus is on agricultural genetics and the development of water resources to meet the demands of the growing population in China. Company activities are centralized in the Inner Mongolian Province of China at its 406 square kilometer farm, Dongwu. For additional information, please go to .

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