Cogo Highlights Opportunities in China's Rapidly Growing Smart Meter Market

SHENZHEN, China, Jan. 14 /PRNewswire-FirstCall/ -- Cogo Group, Inc. (Nasdaq: COGO), a leading platform services provider for the technology and industrial sectors in China, today announced further details surrounding its strategy to capitalize on China's expected Smart Meter upgrade over the next five years.  Cogo expects China's upgrade of standard electrical meters to advanced Smart Meters over the next several years to be a key catalyst for growth in the company's Industrial Business.

Chinese utility companies plan to upgrade approximately 300 million standard meters (both commercial and residential), which will allow them to transmit data real-time back to an electrical "Smart Grid," greatly enhancing the efficiency of power transmission.  The Smart Meter upgrade and the country's conversion to a national Smart Grid system are key components of China's stimulus package, announced in November of 2008 and valued at four trillion RMB (US$586 million).

According to estimates provided by the China Electricity Council ("CEC"), the national Smart Meter roll-out will require 21 billion RMB (US$3.1 billion) in 2011, up from 16 billion RMB in 2010 and 12 billion in 2009.  Total expenditures budgeted for the upgrade of the country's Smart Grid will reach 280 billion RMB (US$40 billion) in 2011 (up from 220 billion RMB in 2010 and 180 billion in 2009).  Both Cisco and GE have announced new plans to pursue opportunities in these roll-outs in China.

Cogo recorded approximately US$3 million in Smart Meter revenue in the third quarter of 2009, following the close of its Mega Smart acquisition.  The company expects this number to increase significantly during the course of 2010, fuelled by the upgrade program.  Cogo is already actively engaged with many of the leading participants in the Smart Meter roll-out in China, including Holley Metering, Wasion and the Hexing Group.    

"We are very excited about the opportunities available to Cogo over the next few years with China's new but rapidly growing Smart Meter upgrade," said Jeffrey Kang, CEO and Chairman of Cogo.  "We expect that Smart Grid and Smart Meter are going to be key factors in the overall growth of our Industrial Business, which we expect to grow much faster than the overall Company in 2010 and beyond.  Additionally, we believe that Cogo's overall revenue growth will accelerate materially in 2010, with margins expanding as the economic and consumer situation in China continue to improve," Mr. Kang remarked.

About Cogo Group, Inc.:

Cogo Group, Inc. (Nasdaq: COGO) is a leading provider of customized module and subsystem design solutions in China. The Company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Cogo leverages these relationships and combines their IP to create designs that Cogo then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Cogo focuses on the telecommunications equipment, digital media and industrial applications end-markets for their customized design modules while also offering business and engineering services to their large telecommunications equipment vendor customers. Over the last fifteen years, Cogo has grown its customer list to include nearly 1,400 manufacturers across the telecommunications equipment, digital media and industrial applications markets, covering both multinational Chinese subsidiaries and Chinese domestic companies.

Safe Harbor Statement:

This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our proposed discussions related to our business or growth strategy such as growth in industrial applications businesses and businesses with Holley Metering, Wasion and the Hexing Group, which are subject to change. Such information is based upon expectations of our management that were reasonable when made, but may prove to be incorrect. All such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. For further descriptions of other risks and uncertainties, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

SOURCE Cogo Group, Inc.