Harbin Electric Reports Strong Results for the Second Quarter 2008-1

（By freelance Chinese translator li – based in Harbin, China – English to Chinese translation or Chinese to English translation services - website localization）

HARBIN, China, Aug 11, 2008 /Xinhua-PRNewswire-FirstCall via COMTEX/ ----Harbin Electric, Inc. ('Harbin Electric'（哈电电气公司） or the 'Company'; Nasdaq: HRBN), a leading developer and manufacturer of a wide range of electric motors（电动机）, reported its financial results for the second quarter 2008. The Company filed its quarterly report（季度报告） 10Q last Friday, August 8, 2008.

Total revenues in the second quarter of 2008 were $23.96 million, a 71% increase compared to $13.99 million in the same quarter of 2007, primarily driven by sales of new products from the automobile specialty micro-motors and tower type oil pumps（塔式油泵）. Linear motors（直线电机） and their integrated application systems contributed 45% to total revenues, automobile specialty micro-motors（汽车专用微型电机） 38%, and others 17% compared to 66%, 0%, and 34%, respectively, for the quarter ended（截止） June 30, 2007. Automobile micro-motors contributed approximately $9 million and tower type oil pumps contributed approximately $3 million to total revenues. Sales to markets outside China accounted for about 13% of total revenues.

Gross profit margin（毛利率） was 48% compared to 52% for the same period last year. The slight decline in gross profit margin was mainly due to changes in the product mix（产品组合、产品线） with the introduction of the new product line（新产品线） of the automobile micro-motor business, which has a relatively lower gross profit margin. Gross profit margin was 52% for linear motors and 40% for automobile specialty micro-motors.

Selling, general and administrative expenses (SG&A) were $3.04 million, compared to $1.45 million in the same quarter of 2007. As a percentage of total sales（占销售额百分比）, the Company's total SG&A expenses increased to 13% in this quarter from 10% in the same quarter last year. The year-over year increase（年增长率） was primarily a result of business expansion（业务扩张）, increased sales activities and generally higher administration expenses related to compensation（工资、薪水） as well as the Company's listing on NASDAQ such as fees related to legal (法律事项) , auditing, board of directors（董事会）, liability insurance（责任保险）, professional consultation, financial reporting and filing compared to the previous year. The Company expects total SG&A expenses as a percentage of sales to be in the range of 10%-12% on average going forward（将来）.

Operating margin（营业毛利） declined to 34% from 40% in the prior year quarter, primarily due to lower gross profit margin in our automobile micro-motors business and higher selling, general and administrative expenses（销售和一般管理费用）.

Net Income（净收入） increased by 37% to $6.23 million in the second quarter of 2008 from $4.56 million in the same quarter of 2007 despite（尽管、其中包括） a $1.05 million provision for income tax（备付所得税） as the Company began to pay income tax on January 1, 2008. This has resulted in a significant reduction in net earnings growth（净收益增长） compared to previous periods. Higher SG&A costs for this quarter also negatively affected earnings growth.

Additionally, the Company received $763,408 in government grants（政府津贴、补助） in the second quarter of 2007, while there were no such grants in the second quarter of 2008, which also unfavorably affected the quarterly comparison.

Net earnings per diluted share（每股摊薄收益） grew 29% year-over-year to $0.31 from $0.24 for the same quarter of last year. The total diluted weighted average number of shares（摊薄的加权平均股份数量） increased by 1.28 million shares, which resulted in some earnings dilution.