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The largest transaction-based e-commerce platform for IC and other electronic components in ChinaCogobuy Group (“Cogobuy” or “the Company” and, together with its subsidiaries and Shenzhen Cogobuy Information Technologies Limited) is a leading e-commerce company dedicated to serving the electronics manufacturing industry in China. We operate the largest transaction-based e-commerce platform for IC and other electronic components in China as measured by GMV in 2013 by fulfilling orders with a GMV of approximately RMB3.9 billion. Through Cogobuy’s e-commerce platform, including a direct sales platform, an online marketplace and a dedicated team of technical consultants and professional sales representatives, the Company provides customers with comprehensive online and offline services across pre-sale, sale and post-sale stages.

Focus on significant demand of SME, facing value chain of trillion-RMB-levelThe global electronics industry has experienced remarkable growth over the last decade, primarily driven by mass adoption, as well as increasing product diversity and manufacturing segmentation. China is the world’s leading manufacturing hub of electronic products. Driven by the strong demand from approximately three million electronics manufacturers, China has become the largest IC and other electronic components procurement market with transaction value of over RMB2.0 trillion in 2013, according to Analysys International.

It is expected to reach RMB2.2 trillion, RMB2.5 trillion and RMB3.4 trillion in 2014, 2015 and 2016, respectively, representing a CAGR of 19% from 2013 to 2016, according to Analysys International.
The large suppliers and distributors normally only focus on providing high-quality IC and other electronic components to 3,000 blue-chip customers which is only minority of the market. The SMEs are lack of resources that they cannot obtain competitive prices from components suppliers and efficiently manage the procurement process.

As the Company could see such a large, profitable and fast-growing but underserved segment, Cogobuy aims to satisfy the strong needs of high-quality brand products of the SMEs. The Company offers a wide selection of products at competitive prices through the e-commerce platform, which are sourced from approximately 500 suppliers, including some of the top brand-name suppliers in key product categories to creating an efficient channel to access authentic and high-quality branded products with reliable supply assurance.

In 2011, 2012 and 2013, on a combined basis, SMEs comprised of approximately 97.9%, 96.5% and 96.5%. As the customers need to purchase products frequently to be updated to the market, Cogobuy conducts extensive pre-sale consultations and targeted marketing, aiming to convert most of our customers into repeat customers. 

Furthermore, because the customers typically purchase large volumes of IC and other electronic components with high values, the Company experiences an average transaction value that far exceeds that of traditional B2C e-commerce companies, according to Analysys International. The Company average transaction value per direct sales order in 2013 was approximately RMB147,000. Accordingly, the Company is able to keep the logistics costs per order at a low-level. The economies of scale enable the company to offer SME customers a wide range of high quality components at competitive prices while maintaining profitability. SME customers also generally require less offline service coverage, which allows the company to better leverage the e-commerce platform, and in turn enhance our operating margin. Cogobuy’s customer base is a diversified group of electronics manufacturers engaged in various segments, which ensures that the sales normally would not be materially affected by events influencing one or two segments.

Keeping pace of the times, being innovative and modernThe electronic components industry is subject to short product life cycles, fast-changing product trend; Cogobuy knows the value chain of electronic components and the fast changing trends of technology and products well, adding value to the customers and build up high entry barrier to our potential competitors. 

The Company filters the massive amount of available solutions and come up with customized selections for customers by using the Company’s professional experience and knowledge. In particular, The Company looks into the product development objectives of SME customers and recommend solutions that they may find useful, which in turn prompt them to procure the requisite IC and other electronic components from the Company.