SOURCE: Yasheng Group

July 27, 2010 08:00 ET

Vegetable Prices up 20 to 30% in China During the First Part of 2010, According to Yasheng Group

REDWOOD CITY, CA--(Marketwire - July 27, 2010) -  Yasheng Group (PINKSHEETS: YHGG) continues to expand its production bases and innovate with investments into cold storage & packaging, transportation logistics, and product branding to meet the growing food demands of the Chinese consumer while remaining prepared for market fluctuations due to natural disasters.

Surging food prices are blamed for driving up China's CPI growth rate this April. Vegetable prices alone rose 30 percent and the continuously rising commodity prices reached a new high in April 2010. A vegetable wholesaler commented, "Vegetable prices were much higher this April than last year. For example, tomato prices used to be just over 1 yuan per 500 grams. Now they are more than 3 yuan."

Wholesale market figures show that in April of this year, average vegetable prices are up as much as 20 to 30 percent from a year ago. Extreme weather was likely one of the causes with warm weather coming later than normal and drought conditions in southwestern China also affecting farm produce. Dry weather has been ravaging southwest China for months, affecting 61.3 million residents and 5 million hectares of crops in Guizhou, Yunnan, Sichuan, Chongqing, and Guangxi. Many vegetable prices have more than doubled. In addition, this January many parts of China were hit with extreme freezing temperatures with some areas seeing some of the worst snowstorms and cold fronts in a half-century which has also caused prices to rise.

Food Costs in general are higher as a result of the increasing demands of a rising Chinese middle class and their proclivity for higher quality and better food safety with vegetables and other food commodities. There is also pressure at the retail level too where shoppers keep finding themselves paying more at the counter.

Experts point out a variety of other key factors contributing to rising food prices, such as wide spread problems from intensive farming practices which further deplete malnutrition soils; limited availability of arable land and scarcity of clean water as a result of population & industrial growth; and the utilization of agriculture land for the production of Bio-Mass for bio-fuels which is in direct competition with land for food based crops.

Analysts are warning that food prices are expected to rise further, based on the recent rebound in wholesale pork prices, which are a leading indicator in China for food prices. Many vegetable prices alone have more than doubled.

Yasheng Group remains one of the best positioned companies in its space with tremendous long term growth opportunities. The Company continues to innovate with new initiatives to meet the growing demands of an expanding middle class with rising incomes which is demanding improved quality and better food safety with higher end food and vegetable products.

The company has taken a balanced approach with its agriculture base by expanding industrial style farms and green house capabilities with modern sustainable agriculture practices. Yasheng Group has also finished several new projects relating to cold storage and packaging houses which will improve the Company's overall logistics and storage capabilities. And the company continues to maintain its beam focus on product development, Sales & Branding, and transportation logistics to bring the Company's products more directly to wholesale houses in major cities as well as directly to the end user.

The North West GanSu Province climate, where Yasheng has the majority of its agro operations, has long sunny days and short nights during the growing seasons allowing better yields then other areas. The days are very warm and nights very cold giving the agro products a more rich flavor. The air is dry with very little humidity, greatly reducing the threat from pests and reducing the need for pesticides. The soil is highly aerated and the chemical balance is suitable making it very favorable for growing without heavy uses of artificial fertilizers. Land in the region is abundant and manufacturing industry presence is low reducing exposure to pollution. Much of Yasheng's Agro bases are fed by the glaciers of the Qilian Mountains and the upper reaches of the Yellow river -- a very clean, pollution free water source when compared to other parts of China.

The company's Founder & Chairman Zhou Cheng Sheng said, "Yasheng Group continues its enduring commitment to the production of core strategic food staples and the expansion of its high end specialty food product portfolio to meet its goal of continually improving the quality and standard of life for the middle class consumer. Quality, consistency, and food safety have been our key principles for success over the past 30 to 40 years. We will continue to utilize Yasheng Group's access to great natural resources and abundant labor to grow the company in a sustainable way."

About Yasheng Group:

Yasheng Group (PINKSHEETS: YHGG) is a diversified agriculture conglomerate incorporated in California, operating in hi-tech agriculture as its core business with advantages in rich land, advanced irrigation technology, strong R&D, agro and biotechnology capabilities, as well as a vast experienced workforce. The company product portfolio contains 6 major agro segments: field crops, vegetables, fruits, specialty crops, seeds, and poultry. With total assets of approximately $1.5 billion USD and over 15,000 employees, Yasheng Group has 155,097,355 shares issued and outstanding as of December 31, 2009.

Further information concerning Yasheng Group can be found on the corporate website: http://www.yashenggroup.com/

Forward-Looking Statements:

Certain statements contained in this press release are forward-looking statements that involve risks and uncertainties. The statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.

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