For Immediate Release (Calgary, AB Canada)
July 8, 1999

Zi Corporation (NASDAQ: ZICA, TSE: ZIC), the leader in multi-language smart text input software technology, today announced that CHINA HUAYU (Hong Kong) LIMITED (“China Huayu”) and ZI CORPORATION (H.K.) LIMITED (“Zi”), have formally signed a Shareholders’ Agreement and officially formed a new Hong Kong subsidiary to be named HUAYU ZI SOFTWARE TECHNOLOGY LIMITED (“Huayu Zi”), in which Zi will hold an 85% interest.  

This agreement is the result of Zi’s close relationship with the Ministry of Education in China, and its State owned Enterprise (“SoE”), China Huayu Development Corporation.  China Huayu Development Corporation is engaged in the development and distribution of technology applicable to the education sector.

The “Huayu” brand name is well recognized in China as a high profile subsidiary of the Ministry of Education.  The English translation for “Huayu” is “Education for China”.

The purpose and scope of business for this new subsidiary is, to enhance the economic quality of education and the use of the internet for all Chinese people by providing an intuitive and easy to use input system known as Huayu Zi Input so that all Chinese people can use all products that accept Chinese characters input (including personal computer, hand-held computer, set-top box, notebook computer, microcomputer and palmtop computer) and access the Internet in Chinese in the same manner as they write Chinese characters.

The new company will depend on Zi’s technology and management expertise and will gain access to Zi’s patented products to be bundled together with other software products and personal computer appliances that will be provided by both domestic and foreign Original Equipment Manufacturers (“OEMs”) in China.  In addition, the new company will also benefit from a license of the Huayu trademark and a license of the Zi trademark, which will result in a new Huayu Zi trademark to be decided upon by the Board of Directors of the new company.  This added benefit of a strategic partnership of China Huayu and Zi in dealing with the OEMs will be beneficial to China Huayu and Zi in their joint business development plans.

"China Huayu is optimistic about China’s demand for hardware and software after Beijing said it would spend RMB 20 billion equipping universities and schools with computers by the 21st century” said Ma Jun, President of China Huayu and newly appointed Vice-Chairman of Huayu Zi.  "China Huayu believes that Zi Input Technology has significant potential to deliver mass market software that is simple to learn and easy to use by not only the Chinese education system but also by the growing number of Chinese consumers that want to become part of the on-line community".

Ma Jun also stated “China Huayu is committed to using Huayu Zi Input Software on every applicable product that China Huayu and its affiliates manufactures, sells or distributes in China”.

The size of the market encompasses the Ministry of Education’s control over 975,000 schools and over 240 million students in the system.  The average age of students using computers currently is 16 years.  By incorporating the Huayu Zi input system it is estimated that the average age will be reduced to 6 years.

Zi Corporation is a world-class company that has proven it can deliver sophisticated Chinese language smart text input technology in a user-friendly format.  When Zi made the decision to have its research and development engineers expand its technology into other languages, the new line of product development extended into English, French, German, Spanish and Italian.  This multi-language smart text input technology is compatible with the widest range of operating systems that will enable the company to move quickly into the field of e-Zi text, smart messaging system and into intuitive input systems that will make the common keyboard redundant.

Certain statements in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements concerning the anticipated benefits to Zi Corporation of its agreement with China Huayu. These expected benefits involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of Zi Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include uncertainties in the ability to successfully collaborate with China Huayu; possible failure to continue to be selected as the Chinese character-based language enabling technology by China Huayu; the ability of China Huayu to successfully assist in the marketing and distribution any of the Huayu Zi products; economic conditions in Asia; the risks of doing business in foreign countries including China; and the risks and uncertainties referred to in Zi Corporation’s Report of Form 20-F for the year ended December 31, 1998 filed with the U.S. Securities and Exchange Commission.  There can be no assurance that Zi Corporation will achieve commercial success through the agreement described herein.

NEITHER THE TORONTO STOCK EXCHANGE NOR NASDAQ HAVE APPROVED OR DISAPPROVED OF THE INFORMATION CONTAINED HEREIN.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Zi Corporation
Carol Kim
Manager, Investor/Media Relations
+1-403-233-8875
Web site: http://www.zicorp.com/
Email: investor@zicorp.com