China Industrial Group second quarter net earnings; US$6.2 million, or US$0.13 a share.

NEW YORK--(BUSINESS WIRE)--Aug. 14, 1995--China Industrial Group Inc. (NASDAQ:CIND) today announced that net income for the second quarter of 1995 increased to US$6.2 million, which is 6% higher than the US$5.85 million earned in the second quarter of 1994.

The weighted average number of common shares outstanding in the 1995 second quarter totalled 48,130,000 compared with 43,518,000 in the second quarter of 1994. Therefore, net income per common share was US$0.13 in the second quarter of 1995.

Shareholders' equity at the end of the second quarter increased to US$73.2 million from US$ 67.3 million at the end of the first quarter of 1995 and from US$30.8 million at the end of the second quarter of 1994. Benthony Ip, Chief Financial Officer of China Industrial Group said: "Second quarter earnings were within our expectations and we expect our businesses will continue growing in line with expansion of the Chinese economy." Ip continued: "The healthy performance in the second quarter reflects the natural expansion of the wool market in China and the growing Chinese economy."

As indicated by the editor of The China Business Review (March-April 1995) China's economic growth continued to be among the world's fastest last year, despite Bejing's efforts to moderate it and keep inflation under control: in 1994, the GNP growth was 11.8%. In view of this GNP growth, the management of China Industrial Group remains optimistic about the prospects of future earnings and its planned business expansion in the Pacific rim.

China Industrial Group, Inc. supplies and distributes, primarily to industrial customers, a diversified line of raw materials as well as semi-finished products, including wool, woolen products, chemicals and pharmaceuticals. The group, incorporated as a U.S. public company, operates one of the largest non-governmental distribution networks in China, reaching across 35 regions. It imports and distributes wool in China which is purchased primarily in Australia and New Zealand. With the proceeds of its wool sales, the group purchases industrial chemicals and pharmaceutical products in China and distributes them, for hard currency, throughout Southeast Asia, on the Indian sub-continent and in Africa. China Industrial Group, Inc. also manufactures woolen textiles and semi-finished products, mainly for the Chinese market. The group now supplies approximately 20% of China's wool imports which in turn account for 90% of China's wool consumption. -0-

                       Financial Highlights (In US$)

Consolidated Income Statement

                      For the 3 months ended   For the 6 months ended
                        6/30/95   6/30/94(1)      6/30/95  6/30/94(1)

Earnings Per Share        $0.13       $0.13         $0.26       $0.27
Revenues             73,669,278  71,542,600   150,450,676 140,604,678
Cost of Goods Sold   62,251,624  60,596,150   127,464,819 118,923,339
Gross Profit         11,417,654  10,946,450    22,985,857  21,681,339
Selling, General
 and Administrative
 Expenses             4,353,756   3,798,424     8,560,286   7,643,640
Operating Income
 Before Interest
 and Tax              7,063,898   7,148,026    14,425,571  14,037,699
Interest Expense        561,125     548,375     1,134,633   1,107,725
Net Income            6,230,237   5,855,593    12,740,817  11,377,039
Shares
 Outstanding (2)     48,130,000  43,518,000    48,378,000  42,495,000
Employees (approx)        5,500       5,500         5,500       5,500

Consolidated Balance Sheet

                                        6/30/95       12/31/94

Current Assets                        $94,095,126   $94,556,042
       Total Assets                   115,886,326   116,347,289
Current Liabilities                    25,034,702    39,434,234
Long-Term Debt                         12,244,946    10,382,252
Retained Earnings                      54,518,288    41,777,471
Shareholders' Equity,
Including Retained Earnings            73,152,322    61,413,040
       Total liabilities and
       Shareholders' Equity          $115,886,326  $116,347,289

Key Financial Ratios:

       Debt Ratio                          0.32          0.43
       Long-Term Debt/Equity              16.7%         16.9%
       Current Ratio                       3.76          2.40

(1) The corresponding figures reflect the adjustments to the annual
    financial statements filed previously.
(2) Figures refer to the weighted average of shares outstanding over
    the period.

CONTACT: China Industrial Group Inc.

Investor Relations Department

212/308-8877

or

800/337-CIND