ITEM 8.01 OTHER EVENTS.

Management of the Company recently reviewed the structure of Capital Future Developments Limited - BVI ("Capital"), the Company's wholly owned subsidiary, and Zhejiang Yong Xin Digital Technology Co., Ltd. ("Zhejiang"), Yiwu Yong Xin Communication Ltd. ("Yiwu"), Hangzhou Wandga Electronics Co., Ltd. ("Wang Da"), Shanghai Joy & Harmony Electronics Company Limited ("Joy & Harmony") and Hangzhou Sanhe Electronic Technology, Limited ("Sanhe"), the Company's direct and indirect subsidiaries. As a result of this review and in order to comply fully with certain laws of the People's Republic of China relating to the direct ownership of certain subsidiaries, management of the Company determined that certain of its subsidiaries were required to enter into restructuring agreements (the "Restructuring").

As a result of the Restructuring, instead of Capital owning 100% of the issued and outstanding equity of Zhejiang Yong Xin Digital Technology Co., Ltd. ("Zhejiang") as previously disclosed in the Company's annual and quarterly reports, Capital has entered certain contractual arrangements with Zhejiang whereby Capital owns a 100% interest in the revenues of Zhejiang. The Company does not have an equity interest in Zhejiang, but enjoys all the economic benefits of the company through a series of contractual arrangements. Copies of these agreements are attached as exhibits 10.1 through 10.5 hereto.

The Company does not expect this restructuring to have a material effect on its financial statements.

ABOUT CHINA 3C GROUP

China 3C Group is a leading retail chain operating over 800 independent stores in Eastern China. The company specializes in selling 3C products (communications, computers and consumer electronics) in China through its subsidiary Zhejiang Yong Xin Digital Technology Co., Ltd. Among China 3C's primary attributes is its efficient distribution network and rapid logistics system. The company's goal is to become the number one retailer of 3C products in China. For more information, visit http://www.china3cgroup.com.


RECENT EARNINGS

On May 14, 2007, the company announced revenues for the first quarter of 2007 was $84.5 million versus $13.4 million in the comparable quarter last year, an increase of 530%. Net income for the quarter was $6.5 million, or $0.12 per basic and diluted share, up 607% from $913,548 or $0.02 earnings per share for the same quarter last year.

The company realized $13.9 million in gross profit for the quarter, up 621% from $1.9 million in gross profit for the same quarter last year. The increase in revenue and net income was due to increased sales and the assimilation of the acquisitions made during fiscal year 2006.

The company generated $2.6 million in cash from operating activities during the quarter and had $9.1 million in cash at the end of the first quarter.


AMEX EXCHANGE LISTING

In an 8K filed on Jan. 17, 2006, the company announced at an investor presentation that the company has applied for listing on the American Stock Exchange.


PROJECTED REVENUES AND GUIDANCE

On May 16, 2007, Zhenggang Wang, the CEO of China 3C Group gave guidance for 2007 and stated, "We expect to record revenue in the range of $360 million to $380 million and net income of $27.0 million to $28.5 million for the fiscal year ending December 31, 2007. Earnings per share are expected to range between $0.50 and $0.54 per diluted share. As with all guidance, these statements are forward-looking and our actual results may differ materially. We also reserve the right to adjust this guidance at any time as a result of acquisitions or other strategic initiatives we may pursue."

"We are also reiterating our previous guidance regarding store openings. We expect to open 1,200 stores by the end of 2007 and anticipate opening 4,000 total stores by the end of 2010, at which time we believe we will be realizing annual revenues of $1 billion. We will also be issuing first quarter 2007 comparable-store sales data under a separate release in the next few weeks."
 
Ludlow China began coverage on China 3C Group (CHCG) on Aug. 28, 2006 at a price of $2.65 a share.


ABOUT LUDLOW CHINA FUND

Based in New York City, the Ludlow China Fund aims to provide individual and institutional investors with a means to invest in the emerging China market through our diversified fund and index. The Ludlow China Fund owns and operates the Ludlow China Indices, which tracks a wide basket of US traded large and small cap Chinese stocks.

For more information on the Ludlow China Fund or to request a prospectus visit - http://www.ludlowchina.com 


RISK FACTORS

Some risk factors that may effect the valuation calculations in this report are the companies inability to meet fiscal revenue projections, an increase in shares issued and outstanding, decrease in interest or price/sales ratios within the China retail sector, industry competition, technological advances, decrease in demand for company’s product, accounting changes and restatements, and legal issues.

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Contact:

Ludlow China Ventures
Gerry Salazar
Phone: (718) 855-8451
Email: gerry@ludlowchina.com

Website: www.ludlowchina.com

Disclaimer:

This is NOT a solicitation to Buy or Sell any security, but rather is for research purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow China Ventures does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow China Ventures, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow China Ventures was compensated three thousand five hundred dollars for inclusion into the Ludlow China Index, and should be considered a possible conflict of interest when reviewing this report and information. 

Safe Harbor Statements:

This research report includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

(NOTE: Ludlow China Ventures is NOT a broker-dealer, and does not offer buy or sell recommendations. Ludlow Capital's reports are strictly independent investment opinions, and does not hold any positions in the companies we cover unless otherwise clearly stated in our report. Rather, we offer our subscribers a perspective on each investment from our years of experience in dealing with small and micro-cap companies. We update our investment opinions and commentaries throughout the year, and encourage any interested investors to subscribe to our yearly membership to receive regular updates on these companies.)