Harbin Electric : VOLUNTARY ANNOUNCEMENT - PROPOSED INTRODUCTION OF STRATEGIC INVESTORS BY ELECTRIC MACHINERY COMPANY

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(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1133)

VOLUNTARY ANNOUNCEMENT

PROPOSED INTRODUCTION OF STRATEGIC INVESTORS BY

ELECTRIC MACHINERY COMPANY

This announcement is made by Harbin Electric Company Limited (the "Company") on a voluntary basis to inform shareholders and potential investors of the Company about the latest business development of the Company.

The board of directors of the Company (the "Board") hereby announces that Harbin Electric Machinery Co., Ltd.* ( 哈 爾 濱 電 機 廠 有 限 責 任 公 司) ("Electric Machinery Company"), a wholly-owned subsidiary of the Company, proposed to introduce strategic investors (the "Proposed Introduction of Strategic Investors") by way of capital increase, share expansion and other means through public solicitation by listing on the assets and equity exchange and other forms. The relevant terms and scale of the Proposed Introduction of Strategic Investors will be determined with reference to market conditions. It is expected that upon implementation of the Proposed Introduction of Strategic Investors, the Company will remain as the controlling shareholder of Electric Machinery Company.

INFORMATION ABOUT ELECTRIC MACHINERY COMPANY

Electric Machinery Company, a wholly-owned subsidiary of the Company, is a company incorporated in the PRC with limited liability with a registered capital of RMB709,236,880. Its main businesses are the manufacture of products such as water turbine generators, steam turbine generators and water turbines as well as related consultation, installation and commissioning and technical services, etc..

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REASONS FOR AND BENEFITS OF THE PROPOSED INTRODUCTION OF STRATEGIC INVESTORS

The Proposed Introduction of Strategic Investors by Electric Machinery Company can diversify the shareholder structure of Electric Machinery Company, optimise corporate governance, expand capital strength, accelerate business development, promote transformation and upgrade, realise the complementary advantages of Electric Machinery Company and strategic investors, and enhance the development vitality of Electric Machinery Company.

The Board believes that the Proposed Introduction of Strategic Investors is in the interests of the Company and its shareholders as a whole.

As at the date of this announcement, the Proposed Introduction of Strategic Investors of Electric Machinery Company is still in the preparatory stage and no legal binding agreement or arrangement has been entered into. There are uncertainties in the specific targets, timing and relevant agreement terms of the Proposed Introduction of Strategic Investors. The Company will make further announcements in due course. Shareholders and potential investors of the Company should exercise caution when dealing in the Company's securities.

By Order of the Board

Harbin Electric Company Limited

Ai Li-song

Company Secretary

Harbin, the PRC

31 August 2020

As at the date of this announcement, the executive directors of the Company are Mr. Si Ze-fu, Mr. Wu Wei-zhang and Mr. Zhang Ying-jian; and the independent non- executive directors of the Company are Mr. Zhu Hong-jie, Mr. Yu Wen-xing, Mr. Hu Jian-min and Mr. Tian Min.

• For identification purposes only

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