HONG KONG —┬áSMIT Holdings Limited (“SMIT” or the “Company” together with its subsidiaries, the “Group”; HKE:2239), a leading global CAM supplier and major mPOS supplier in China, has signed a memorandum of understanding (“MOU”) to enter Series A finance as the lead investor in Mainsweb Technology (Shenzhen) Company Limited (“Mainsweb”). The deal opens the cross-border e-commerce market and O2O smart terminal business, and offers the development opportunities presented by overseas online shopping. The unique operating model also provides solutions for retailers facing the challenges posed by the intense competition from online shopping.

Mainsweb has developed eb56.com for overseas suppliers and, small and medium-sized cross-border e-commerce operators in China. eb56.com is a one-stop cross-border e-commerce platform providing integrated services, encompassing the global supply chain, an 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; ‘Linkeasyglobal’, a cross-border e-commerce platform for logistics, clearance and foreign exchange settlement; ‘eb56.com’, a cross-border e-commerce bonded B2B transaction platform; and ‘Himiwi’, a cross-border e-commerce O2O service platform. Mainsweb has assisted nearly 200 popular foreign brands in entering the Chinese market, providing for the daily requirements of mothers and infants for example, in the beauty & 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 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 as 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 will provide funds for Mainsweb to expedite business development.

The demand for foreign branded products of consumers in China is strongly increasing. According to market forecasts, online shopping markets in China are expected to grow from RMB4.7 trillion in 2016 to RMB10.1 trillion in 2020, with CAGR exceeding 21% . 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%. These numbers underscore 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, capturing tremendous opportunity. 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.”