SMIT Signs MOU; Ventures into Cross-border E-Commerce O2O Smart Terminal Business

~HONG KONG, March 31, 2017 -- SMIT Holdings Limited ("SMIT" or the "Company," together with its subsidiaries, the "Group") (stock code: 2239), a global leading CAM supplier and a major mPOS supplier in China, has announced that it has signed a memorandum of understanding ("MOU") in round A financing as the lead to invest in Mainsweb Technology (Shenzhen) Company Limited ("Mainsweb"). The deal enables the Group to venture into cross-border e-commerce O2O smart terminal business to capture the development opportunities presented by overseas online shopping, and the unique operation model thus created will provide solutions to retailers to face the challenges posed by the intense competition from online shopping.

Mainsweb has developed eb56 for overseas suppliers and, small and medium-sized cross-border e-commerce operators in China. eb56 is a one-stop cross-border e-commerce platform providing integrated services, encompassing the global supply chain, overseas warehouse, customs declaration and quarantine inspection, system technological development, integrated warehousing and distribution operation, bonded transaction, O2O distribution and smart terminal service. Mainsweb operates three businesses, namely "Linkeasyglobal", a cross-border e-commerce platform for logistics, clearance and foreign exchange settlement; "eb56", a cross-border e-commerce bonded B2B transaction platform; and "Himiwi", a cross-border e-commerce O2O service platform. Mainsweb has assisted a total of 200 foreign famous brands to enter the China market, covering daily necessities in the mother and infant, beauty and cosmetics and healthcare sectors, among others.

Apart from online platforms, Mainsweb also sets up smart terminals for offline retail stores to attract customers. The convergence of online and offline operations can provide the advantages in supply chain and distribution operations and technology, so that foreign branded consumer products can be directly introduced into China, thus creating a new retail business model of cross-border e-commerce for consumers, medium-sized e-commerce operators, suppliers and warehouses. Through the strategic partnership, SMIT can leverage its technologies to provide smart terminals required by Mainsweb. This not only brings synergies to the Group's business, but also enables SMIT to further explore additional income streams in order to develop high gross profit products. At the same time, the partnership would provide funds for Mainsweb to expedite its business development.

The demand for foreign branded products of consumers in China is strongly increasing. According to the market statistics, the online shopping market in China is expected to enjoy a CAGR exceeding 21% from RMB4.7 trillion in 2016 to RMB10.1 trillion in 2020. The size of import and export trading via cross-border e-commerce is expected to reach RMB12 trillion in 2020, accounting for 37.6% of China's total import and export amount. Cross-border retail import amount is expected to reach RMB1.5 trillion in 2020, representing an annual growth of 43%. All these statistics show the enormous development potential of online shopping and e-commerce.

Mr. Shuai Hongyu, President of SMIT, said, "Capitalising on SMIT's advantages in the smart security POS field and the strategic cooperation with Mainsweb, the Group is able to further extend its business from the supply of hardware to the overseas online shopping market to capture tremendous opportunities. This shift enables the Group to realise its strategy for smart POS and O2O retail investment and its deployment in growing industries. In view of the challenges of intense competition presented by online shopping to retailers, forging partnerships not only helps the retailers to secure new customers at lower costs, but more importantly, this unique operation model neither requires stocking inventory nor exerts pressure on cash flow. At present, the O2O smart terminal business is still at the early stage of development but is expected to have highly promising prospects in the future."

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About SMIT Holdings Limited (Stock code: 2239)

SMIT Holdings Limited is a leading security devices provider for pay TV broadcasting access worldwide and for mobile point-of-sale, or mPOS, payment systems in China. The Company's main product types are CAMs and mPOS devices. According to Frost & Sullivan, the Company was the largest CAM provider globally by both sales volume and revenue in 2014 and for the first half of 2015. In addition, the Company was a major mPOS supplier in China.

SOURCE SMIT Holdings Limited