So they took Fedora and a dead end fork of Open Office and re-skinned them to look like Windows XP. Additional applications are installed using Yum. Microsoft are toast!
The original Red Flag Linux is ended in 2014, due to fail to get government subsidy. This is recorded on both Chinese and English wikipedia. And in later 2014, another company bought the remnant of Red Flag Linux and continued publishing it till now, though I don't know anyone still using it.
Actually the biggest fear I have of this sort of thing is that they'll end up with standalone unshared forks of stuff, which won't benefit from newer developments and bug fixes in other forks, and vice-versa.
Another problem is they may violate licenses by not distributing source. We may end up with forked versions of the kernel and other major components, with useful new features implemented and no corresponding source. (Note: I have no evidence that this is happening).
Edit: BTW, what ever happened to Red Flag Linux?