China, with 1.23 billion people, contains approximately one-fifth of the world's population. Since 1979, China began implementing market-oriented reforms aimed at improving the Chinese standard of living. As a developing country, China devotes only limited resources to health care (3% vs. 14% GNP for the United States). Consequently, there is a countrywide shortage of up-to-date medical facilities.

Since 1992 disposable income per capita in China has more than doubled nationally, with urban income growth levels exceeding even these increases. A recent report documents a 46 % increase in 1999 per capita healthcare spending in Beijing. For the growing affluent segment of the local population, expectation for healthcare services frequently exceeds what the traditional public system can offer. APMG believes that demographic developments in China, including the growth of the Chinese middle class, continue to create demand for better services.

Demands for Upscale Inpatient Services - Since the beginning of the Opening Policy in 1979, the number of foreign nationals residing in China has been steadily increasing. Affluent locals, overseas Chinese, and employees of foreign companies create demands on an even greater scale. In general, upscale facilities are rare, due to a historical government healthcare system, which is designed to serve the public at large. While the grounds of many of the major hospitals in China are spacious, maintenance and management of these hospitals are usually well below Western standards. Consequently, hospitals may appear run-down in spite of a relatively short operating history. Hospital rooms are usually crowded with multiple occupants. It is apparent that better managed and maintained medical facilities are desperately needed in China to serve the expatriate community and the growing middle class.

Government Policy on Joint Venture Hospitals - Responding to the increasing demands by the expatriate community for medical services, the Chinese government allowed foreign investors to own and operate medical facilities for the first time, as joint venture clinics with local medical institutions in 1991. Since then, there has been gradual relaxation of these regulations to allow majority ownership of independent medical facilities by foreigners. Since joint venture medical institutions will reduce the financial burden of local hospitals, Chinese healthcare authorities are generally receptive to the new concept to establish joint venture hospitals. It was under this early experimental environment that APMG began its operation in 1993.

Marketing Strategies - As a medical service provider, APMG is committed to provide quality health care to the expatriate community as well as local Chinese citizens, albeit with different emphasis.

Expatriate Community and Affluent Locals - To serve the expatriate community, has the vision of developing a network of inpatient facilities composed of "VIP" units and freestanding hospitals. To gain familiarity and expertise in this uncharted territory, APMG started services with a joint venture, 50-bed freestanding hospital - the Shanghai Gamma Knife Hospital in October of 1993. This was followed by the development of two additional "VIP" inpatient units within major teaching hospitals in Beijing, and Harbin. In contrast to "VIP" units in some local hospitals, which address mainly the appearance of hospital wards, the Group also brings to its inpatient facilities a comprehensive system of medical quality assurance, supervised by its panel of U.S. medical experts. The Group's Beijing Tiantan International Medical Center is heralded by members of the Ministry of Public Health as a shining example of a modern hospital. It is visited on an almost daily basis by hospital administrative staff from all over China.

Chinese Citizens - For Chinese citizens at large, is committed to provide the latest medical treatment for severe illnesses, with improved outcome in a cost-effective manner. Being a developing country, only a small fraction of Chinese citizens can currently afford the upscale medical services provided by. However, in areas where new medical technology has significantly impacted the length of hospital stay, opportunities do exist for to deliver the latest medical treatment to a significant sector of the population, including those who are covered under various government insurance programs.