ZPP Announces Completion of Plan of Arrangement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 21, 2012) - Zongshen PEM Power Systems Inc. ("ZPP" or the "Company") (TSX:ZPP) announces today the completion of its previously announced plan of arrangement transaction (the "Arrangement") involving the Company, Zongshen Industrial Group Co. Ltd. ("ZIG") and Hong Kong VAS International Development Limited ("HKVAS"), whereby HKVAS has agreed to acquire all of the issued and outstanding common shares of ZPP (the "Shares") not owned by HKVAS or ZIG for C$0.60 per Share in cash. As a result of the Arrangement, HKVAS and ZIG now own 100% of the Company's Shares.

The Shares will be delisted from the Toronto Stock Exchange pursuant to the Arrangement and the Company expects such delisting to be effective as of the close of business on December 27, 2012. In addition, the Company will apply for and will make the required filings with the relevant Canadian securities regulatory authorities in order for the Company to cease to be a reporting issuer in the relevant Canadian provinces.

Registered shareholders of the Company who have not yet sent letters of transmittal accompanied by original Share certificates to the depositary for the Arrangement, Computershare Investor Services Inc., are reminded that they should do so promptly in order to receive the cash consideration under the terms described in the management information circular addressed to the Company's shareholders dated November 15, 2012. The management information circular and the letter of transmittal are available on SEDAR at www.sedar.com under the Company's profile.

About Zongshen PEM Power Systems Inc.

Zongshen PEM Power Systems Inc. is a public company trading under the symbol ZPP on the Toronto Stock Exchange. The Company manufactures low-cost, high quality, environmentally friendly gas motorbikes, electric motorcycles, electric bicycles and other e-vehicles in China for the Chinese domestic and international markets. One of the largest shareholders of Zongshen PEM Power System is Zongshen Industrial Group, which is one of China's largest manufacturers and distributors of engines and power equipment.

Forward-looking Statements and Information

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws and which are based on the expectations, estimates and projections of management of the parties as of the date of this news release unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward-looking statements and information concerning: the ability to and timing of the anticipated delisting of the Company's Shares from the Toronto Stock Exchange ("TSX"); and the ability to and timing of the anticipated receipt from the relevant Canadian securities regulatory authorities in connection with the Company's application to cease to be a reporting issuer in the relevant Canadian provinces.

In respect of the forward-looking statements and information concerning the anticipated delisting of the Company's Shares from TSX and the receipt from the relevant Canadian securities regulatory authorities in connection with the Company's application to cease to be a reporting issuer in the relevant Canadian provinces, the Company has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory and stock exchange approvals; and other expectations and assumptions concerning these approvals. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks and uncertainties inherent in the nature of the Arrangement include the failure of the Company to obtain the necessary approval from the TSX for the delisting of the Company's Shares and regulatory approval in connection with the Company's application to cease to be a reporting issuer in the relevant Canadian provinces, in a timely manner, or at all.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of the Company are included in reports on file with applicable securities regulatory authorities. The forward-looking statements and information contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.