PART I •  Converging fixed communications and mobile communications services to provide customers with  access to personalized information through personal computers or mobile handsets;  •  Taking advantage of our superior brand and network quality to attract our competitors’ customers;  •  We are developing new media to provide both higher-speed access as well as attractive content to  our customers. We are also continually enhancing our internet value-added services, such as online  games, internet music, internet banking and internet protocol video services, including hiChannel, an  internet platform where customers can view videos and multimedia content.  •  We have installed hiCloud CaaS servers and are planning to construct a cloud computing center for  the provision of internet data center and cloud computing services.  Internet services : Our strategy for internet services is to continue to build on the success of our HiNet  internet services and enhance our internet value-added services.  Integrated services : We believe integrated services are effective in encouraging usage and enhancing  customer loyalty. We intend to increase our offerings for integrated services. In particular, we believe we  are positioned to provide our customers with fully integrated solutions across fixed communications, mobile  communications and internet platforms. Our “Friends and Family” service, which offers customers preferential  rates, has attracted over 1.54 million mobile customers. In addition, we provide a wide range of integrated  services customized to meet the needs of our corporate customers, such as integrated network management  services, integrated information and communication services, secure internet services, enterprise push mail  services, 3G mobile office and mPro business service, which is designed for business professionals who need to  access information, such as their email, calendar, contacts and news, wirelessly. We are also developing cloud- based multi-screen services in relation to music, media, news information and payment. We started to offer  HiCloud CaaS (Compute as a Service), StaaS (Storage as a Service) in 2010 and we plan to provide customers  SoD (Service on Demand) which allows flexibility for customers to make their own choices of HiCloud services.  Quality of service is critical in attracting and retaining customers and enhancing our long-term profitability.  In order to continually enhance and improve the quality of our services, we have, in addition to the quality  assurance function of our regular operating units, established a number of dedicated task forces to monitor our  network performance. Our senior management sets our quality evaluation criteria and regularly reviews the  quality of our performance.  In order to ensure that our quality of service will translate into strong customer loyalty, we plan to continue  to focus on and invest in the provision of a full range of services that emphasize customer care from the point of  sale onward. For example, we have extended the focus of our corporate customer services from major accounts to  include small and medium-sized enterprises and in January 2007 established our Enterprise Business Group. As  of December 31, 2010, our Enterprise Business Group is staffed by approximately 344 professionals and offers  packaged and customized services, customer-oriented solutions and integrated information and communications  services. We have completed the integration of our call centers, all of which can now be reached by calling a  single number “123.” We offer 24-hour customer service, including the handling of service and billing inquiries  with the assistance of an Interactive Voice Response, or IVR, system. To improve the quality of our customer  services, we implemented a customer relationship management system, which encompass, among other things,  a customer complaint system, a business information database for the use of our call centers, and a data mining  system to enhance our sales and market analysis efforts.  We have historically been focused, and will continue to focus, on cost control, particularly in the areas  of network efficiencies and personnel costs. We expect to be able to further improve our operational efficiency  and cost structure by migrating to more advanced networks and sophisticated operational support systems, and  efficiently managing our workforce.  Emphasize quality of service and customer satisfaction  Improve operational efficiency and cost structure  21