Subaye, Inc. Announces Bundled Cloud Computing Product

GUANGZHOU CITY, China, Nov. 3, 2010 /PRNewswire-Asia-FirstCall/ -- Subaye, Inc. (Nasdaq: SBAY) ("Subaye" or the "Company"), a leading outsourced online business services provider in China engaged in cloud computing and video marketing business solutions, announced today that it has re-launched its online service offerings with a focus on its cloud computing solutions. All online business solutions have now been bundled together as a full online business suite offering. Subaye's online business solutions are now being targeted to the mid-tier small and medium sized business (SME) market in China. Previously, Subaye's online business solutions were offered under separate arrangements and the Company was targeting lower-tier SMEs in China. These changes were effective in September 2010 and have been introduced to all 19 markets where Subaye is currently operating.

Subaye's new online business suite is offered to mid-tiered small and medium sized enterprises (SMEs) throughout Greater China. Previously, Subaye offered its online services as separate product offerings to entry level SMEs. In September, Subaye began to convert its video marketing and cloud computing customers, which were previously paying a subscriber fee of approximately $120 and $100 per month, respectively. The new bundled solution is now being offered for approximately $580 per month, which includes Subaye's traditional video marketing services and cloud computing solutions consisting of online customer relationship management, online marketing, brand awareness and campaign management, as well as business administration solutions (i.e. human resources, accounts receivable, accounts payable, among others). In the next twelve months Subaye will be prioritizing mid-tier SMEs but will also attempt to convince a targeted 10% of its former video marketing customers to utilize the new online business suite and agree to the new subscriber fee.

Management believes its integrated service suite offers superior value to competitors' more limited standalone products. The ability to manage the full spectrum of customer relationship, sales and marketing functions from one software module is especially compelling.

Subaye was unable to retain a majority of its traditional video marketing customers but was able to retain and convert most of its cloud computing customers. Subaye believes the benefits of the Company's migration to this new business model are as follows:

1. One flat fee for all online business services.
2. Free upgrades to future software releases as the Company adds new features and functionalities.
3. No comparable bundled service currently exists. Competitive pricing as compared to Alibaba which offers online marketing services only.  
4. Designated sales and customer service contact for all online business services needs.

"We are excited about our strategic focus on premium, integrated products, targeted to the most attractive SME sub segment, the mid-tier SMEs," stated Mr. Zhiguang Cai, Chief Executive Officer of Subaye, Inc. "By providing SME customers with a comprehensive business development and operations management solution, we are positioning the Company for robust sales, margin and cash flow growth. We feel that we have optimized our business model to fully capitalize on the $1.4 billion cloud computing opportunity in China, as estimated by NEC of Japan. We have already seen positive results from customers, particularly those in the Guangdong, Hunan and Hubei markets. With a first mover's advantage and established relationships with a significant customer base, Subaye is uniquely positioned to capture a larger share of this market."

The change to a premium pricing model will also benefit Subaye and its sales agents in several ways.

1. Sales productivity and retention will improve as agents will receive a 30% commission vs. 25% previously. Though this commission rate is not a long term policy initiative, Subaye believes the growth in this business is significantly impacted by the quality of its sales agents and their level of motivation. Subaye believes the opportunity in China's cloud computing market is now and Subaye will put all of its resources to use in order to capture market share.
2. Customer retention will be a strength as Subaye's online business suite is relied upon by customers for daily operations. The longer a customer uses the online business suite, the less likely they will be to switch to a competing product.
3. Sales and collection cycles will improve as the Company shifts from cash payments from lower-tier SMEs to automated bank payments from mid-tier SMEs. Sales agents can now focus efforts entirely on developing new business and retaining current customers without the additional responsibility of collecting cash fees from customers.

Proceeds from Copyright Sales

The Company has received all proceeds from the sale of its assets from discontinued operations. As of November 1, 2010 the Company had $12.3 million in cash.

3D Online Mall

The 3D Online Mall is scheduled for an initial launch on December 28, 2010. The Company will hold an investor conference call within a few days of the launch to discuss the impact of the 3D online mall on the Company's operations.

About Subaye, Inc.

Subaye, Inc. is a leading online business services provider in China engaged in enterprise cloud computing business solutions. The Company previously conducted a trade services and an entertainment media business. For further information on Subaye, Inc., please visit http://www.subaye.net.

Forward-Looking Statements

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about Subaye, Inc.'s industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Subaye, Inc.'s operations are conducted in the People's Republic of China ("PRC") and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. Other potential risks and uncertainties include but are not limited to the ability to procure, properly price, retain and successfully complete projects, and changes in products and competition. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Readers should review carefully reports or documents the Company files periodically with the Securities and Exchange Commission.

SOURCE Subaye, Inc.