Our company, formerly known as Pastiche Investments Limited, was incorporated as an international business company under the International Business Companies Act of the British Virgin Islands on December 6, 1994. As of July 8, 2008, we owned 69.9% of Qiao Xing Mobile Communication Co. Ltd. ("QX Mobile"), an international business company incorporated in the British Virgin Islands on January 31, 2002. QX Mobile owns 96.55% of CEC Telecom Co., Ltd., a limited liability company established in China ("CECT"). We also own 100% of Qiao Xing Communication Holdings, Ltd., an international business company incorporated in the British Virgin Islands on May 21, 2002 ("QX Communication Holdings"), which owns 90% of Hui Zhou Qiao Xing Property, Ltd. ("QX Property"), a PRC joint venture, and 90% of Hui Zhou Qiao Xing Communication Industry, Ltd. ("HZQXCI"), a PRC joint venture.

The remaining ownership of each of QX Property and HZQXCI is owned by Qiao Xing Group Limited, a PRC company owned by Rui Lin Wu and his eldest son Zhi Yang Wu. Messrs. Wu and Wu are two of our executive officers and directors.

Through the fiscal year ended December 31, 2002, we were principally engaged in the design, manufacture and sale of telecommunication terminals and equipment in the PRC, including primarily in-house corded and cordless telephone sets under the trademark of "Qiao Xing". According to the National Statistic Bureau of the China Technology Progress Information Centre, we were the largest in house telephone manufacturer by number of sales units in the PRC in 1999. For 2000, 2001 and 2002, we ranked as the second largest in house telephone manufacturer in the PRC by number of sales units. We believe that we are a leading player in the in-house telephone market.

In May and June 2002, our then wholly-owned subsidiary QX Mobile entered into two sale and purchase agreements for acquisition of an aggregate equity interest of 65% in CECT for an aggregate consideration of Rmb 312,750,000 (the "Acquisitions"). CECT is a limited liability company established in China and is principally engaged in production and sales of mobile phones and accessories in China. In February 2003, the Acquisitions were approved by all the appropriate governmental authorities, including the Ministry of Information Industry, the State Development Planning Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce. The process of obtaining new business licenses was finally completed and a new business license for the new entity was granted.

Pursuant to one agreement dated May 23, 2002, QX Mobile acquired a 25% equity interest in CECT from Tianjin Taida Company Limited (Tianjin) for cash consideration of Rmb 108,750,000.

Pursuant to a second agreement dated May 23, 2002 and a supplementary agreement dated May 23, 2002, QX Mobile acquired a 40% equity interest in CECT from China Electronics Corporation (CEC) and other group companies of CEC for cash consideration of Rmb 204,000,000.

In August 2004, we announced that our subsidiary HZQXCI was purchasing a 25% equity interest in CECT from CEC. As of June 2005, the acquisition had been approved by Beijing Commercial Bureau of PRC. Subsequently, HZQXCI assigned and transferred to QX Mobile the 25% shareholding in CECT and the transfer was approved by Beijing Commercial Bureau in September 2005.

In July 2006, QX Mobile further increased its ownership stake in CECT to 93.4% through a cash capital injection into CECT in which the other CECT shareholder did not participate.

Qiao Xing Group Limited acquired the remaining 6.6% equity interest in CECT in December 2006 from the last of the original CECT shareholders.

In May 2007, QX Mobile reached an agreement with CECT and Qiao Xing Group Limited to increase the paid-up capital of CECT by US$50 million. According to the terms of the agreement, the US$50 million will be contributed in full by QX Mobile and will be used to fund the expansion of CECT in China. The capital injection was completed in June 2007 and QX Mobile's equity interest in CECT increased from 93.41% to 96.55%, and the equity interest held by Qiao Xing Group Limited was reduced from 6.59% to 3.45%.

On August 20, 2002, QX Mobile entered into a subscription agreement for its sale of 200,000 shares representing 20% of the total outstanding equity of QX Mobile to Galbo Enterprises Limited, a non-affiliated BVI corporation ("Galbo"), for Rmb 67,000,000. The subscription price was fully paid before December 31, 2002. The subscription price was applied by QX Mobile toward the acquisition of its 65% interest in CECT. Upon completion of the subscription, our controlling interest in QX Mobile was reduced to 80%.

By a stock purchase agreement dated as of September 30, 2006 between us and Galbo, we repurchased the foregoing 200,000 shares of QX Mobile from Galbo for a total purchase price of Rmb 340,685,800 (US$43,654,720), which represented 20% of seven times the net income of QX Mobile for the fiscal year ended December 31, 2005. The purchase price was paid as follows:

(i) Rmb 170,342,900 (US$21,827,360) was paid in cash; and

(ii) an aggregate of 1,562,348 newly issued restricted shares of our common stock were issued, based on a per share price of US$13.794, equal to the volume weighted average price of our common stock for the seven trading days prior to September 30, 2006.

Upon completion of this transaction in November 2006, our controlling interest in QX Mobile was restored to 100%.

Our two major operating subsidiaries include CECT and HZQXCI. Through our HZQXCI subsidiary, we conduct the business of the research and development and distribution of mobile phones and the design and distribution of fixed line telephones, wireless telephones and fax machines. CECT manufactures and sells mobile handsets based primarily on Global System for Mobile Communications, or GSM, global cellular technologies.

We classify our products into two core business segments, namely mobile phones and indoor phones. In view of the fact that we operate principally in Mainland China, no geographical segment information is presented. Sales in the PRC market accounted for approximately 97% and 97% of our total revenues for the fiscal years ended December 31, 2006 and 2007, respectively.