Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2008

Nov 11, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Inspur International Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

DISCLOSEABLE AND CONNECTED TRANSACTION

Independent financial adviser to the independent board committee and the independent shareholders of the Company

==> picture [42 x 39] intentionally omitted <==

REXCAPITAL (Hong Kong) Limited

The notice convening an extraordinary general meeting (“ EGM ”) of Inspur International Limited (the “ Company ”) to be held at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Hong Kong at 10:00 a.m. on Thursday, 27 November 2008 is set out on pages 27 to 28 of this circular. Shareholders of the Company are advised to read the notice and complete and return the form of proxy for use at the EGM enclosed with this circular in accordance with the instructions printed thereon.

A form of proxy for the EGM is enclosed with this circular. Whether you are able to attend or not, please complete and return the enclosed form of proxy to the branch share registrar of the Company, Computershare Hong Kong Investor Services Limited, Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. The completion and delivery of a form of proxy will not preclude you from attending and voting at the EGM in person.

• For identification purpose only

12 November 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information of LC Genersoft and The Vendor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Financial Effect of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from REXCAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27

— i —

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

“Acquisition”	the acquisition by the Purchaser of 48.69% equity interest in
	LC Genersoft subject to the terms and conditions of the
	Acquisition Agreement
“Acquisition Agreement”	the conditional equity interest transfer agreement dated 21
	October 2008 entered into between the Vendor and the
	Purchaser in relation to the Acquisition
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Inspur International Limited, an exempted company
	incorporated in the Cayman Islands with limited liability, the
	ordinary shares of which are listed on the main board of the
	Stock Exchange
“Completion”	completion of the Acquisition
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the consideration of the Acquisition payable by the Purchaser
	to the Vendor, being RMB87,382,000
“Director(s)”	the director(s) of the Company
“EGM”	the extraordinary general meeting of the Company to be
	convened and held for the approving, amongst other things,
	the Acquisition Agreement and transactions contemplated
	thereunder
“Enlarged Group”	the Group immediately after the Completion
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Independent Board committee”	an independent board committee, comprising Mr. Meng Xiang
	Xu, Mr. Liu Ping Yuan and Mr. Wong Lit Chor, Alexis all
	being the independent non-executive Directors, to advise the
	Independent shareholders as to the fairness and
	reasonableness of the Acquisition Agreement
“Independent Shareholders”	Shareholders other than Inspur Group, the Vendor, their
	ultimate beneficial owners and their respective associates

— 1 —

DEFINITIONS

• “Inspur Group” Inspur Group Limited* (浪潮集團有限公司), which is a company incorporated in the PRC and through its wholly owned subsidiary, Inspur Electronics (HK) Limited, being the controlling shareholder of the Company, interested in approximately 43.95% of the existing issued ordinary Shares of the Company as at the Latest Practicable Date

• “Latest Practicable Date” 10 November 2008, being the latest practicable date prior to printing of this circular for ascertaining certain information contained herein

• “LC Genersoft” Inspur Group Shandong Genersoft Software Incorporation* (浪潮集團山東通用軟件有限公司), a domestic limited liability company established under the laws of the PRC

• “Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange

• “PRC” the People’s Republic of China “Preferred Shares” 234,279,559 series A senior redeemable convertible voting preferred shares of HK$0.01 each in the share capital of the Company attached with rights of conversion to 1,171,397,795 Shares issued by the Company to Microsoft Corporation

• “Purchaser” Inspur (Shandong) Electronic Information Limited* (浪潮(山東)電子信息有限公司), a company incorporated in the PRC and a wholly owned subsidiary of the Company

• “REXCAPITAL” REXCAPITAL (Hong Kong) Limited, a licensed corporation to carry out type 6 regulated activity under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the Acquisition Agreement and the transactions contemplated thereunder

• “SFO” Securities and Futures Ordinance (chapter 571 of the laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.002 each in the share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s) and the Preferred Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited

— 2 —

	DEFINITIONS
“Vendor”	Shandong Inspur Software Company Limited* (山東浪潮齊魯
	軟件產業股份有限公司), a company incorporated in the PRC,
	of which the issued A shares are listed on the Shanghai Stock
	Exchange in the PRC and a subsidiary of Inspur Group
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent

* The English translation of Chinese names or words in this circular is included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

— 3 —

LETTER FROM THE BOARD

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

Executive Directors: Mr. Sun Pishu ( Chairman ) Mr. Zhang Lei Mr. Wang Miao Mr. Leung Chi Ho

Non-executive Directors: Mr. Xin Wei Hua Mr. Wang Hung, Alex

Independent Non-executive Directors:

Mr. Meng Xiang Xu Mr. Liu Ping Yuan Mr. Wong Lit Chor, Alexis

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Room 726 Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay Kowloon Hong Kong

12 November 2008

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

Reference is made to the Company’s announcement dated 23 October 2008 in respect of the Acquisition Agreement entered into by the Purchaser (a wholly owned subsidiary of the Company) and the Vendor pursuant to which the Purchaser has agreed to purchase and the Vendor has agreed to sell 48.69% equity interest in LC Genersoft at the consideration of RMB87,382,000 which will be settled by cash.

The purposes of this circular are, among other things: (i) to provide you with further information in respect of the Acquisition; (ii) to set out the recommendation from the Independent Board Committee to the Independent Shareholders; (iii) to set out the recommendation from REXCAPITAL to the Independent Board Committee and the Independent Shareholders; and (iv) to give you the notice of the EGM.

• For identification purpose only

— 4 —

LETTER FROM THE BOARD

Reference is made to the Company’s announcement dated 20 December 2007 and circular dated 29 February 2008 in respect of the previous acquisition by the Company of 21.26% equity interest of LC Genersoft. The Board announced on 21 October 2008 that the Purchaser (a wholly owned subsidiary of the Company) entered into the Acquisition Agreement with the Vendor in relation to acquisition of 48.69% equity interest in LC Genersoft. Further details of the Acquisition are set out below:

ACQUISITION AGREEMENT

Date: 21 October 2008

Parties: Vendor: Shandong Inspur Software Company Limited (山東浪潮齊魯軟件產業股份有限公司) Purchaser: Inspur (Shandong) Electronic Information Limited (浪潮(山東)電子信息有限公司), a wholly owned subsidiary of the Company

As the Vendor is a subsidiary of Inspur Group, which is the controlling shareholder of the Company and the Vendor is a substantial shareholder of LC Genersoft (a non-wholly owned subsidiary of the Company), the Vendor is a connected person of the Company. “A” shares of the Vendor are listed on the Shanghai Stock Exchange and Inspur Group, which currently owns approximately 26.49% equity interest in the Vendor, is the single largest shareholder of the Vendor. Inspur Group’s principal activity is investment holding. It is beneficially owned as to approximately 38.88% by 山東省國有資產控股公司 (Shandong State-owned Asset Investment Holdings Co., Ltd, of which the main activity is the management of state-owned assets), approximately 19.99% by 英大國際信託有限責任公司 (Yingda International Trust Co., Ltd, of which the main activity is investment as trustees), approximately 16.13% by 濟南裕澤資訊科技有限公司 (Jinan Yuze Information Technology Limited, of which the main activity is investment holding) and 25% by 山東德盛資訊科技發展有限公司 (Shandong Desheng Information Technology Limited, of which the main activity is investment holding).

Assets to be acquired

Pursuant to the Acquisition Agreement, the Company has conditionally agreed to purchase and the Vendor has conditionally agreed to sell 48.69% equity interest in LC Genersoft owned by the Vendor.

Consideration

The Consideration shall be RMB87,382,000 which shall be satisfied in cash by internal resources of the Group upon Completion which shall take place within 10 business days after fulfillment of all the conditions as set out in paragraph headed “Conditions” below.

The Consideration was arrived at after arm’s length negotiation between the parties to the Acquisition Agreement with reference to, among other things, the price earnings ratio of around 9.8 times (based on the audited consolidated profit after tax of LC Genersoft for the year ended 31 December 2007, being RMB18,341,000).

— 5 —

LETTER FROM THE BOARD

As informed by the Vendor, the acquisition cost of the 48.69% equity interest in LC Genersoft of the Vendor was approximately RMB58,254,700.

The Directors consider that the Consideration and the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions

The Acquisition is conditional upon the following conditions (the “Conditions”) having been fulfilled:

• (i) the Independent Shareholders of the Company passing at the EGM the necessary resolution approving the Acquisition;

• (ii) the shareholders of the Vendor passing at the general meeting of the Vendor’s shareholders the necessary resolution approving the Acquisition; and

• (iii) all relevant approvals and consents for the Acquisition having been obtained.

Up to the Latest Practicable Date, none of the Conditions has been fulfilled.

Completion

Completion shall take place within ten (10) business days after the fulfillment of all the Conditions. It is expected that Completion will take place on or before 20 December 2008.

INFORMATION OF LC GENERSOFT AND THE VENDOR

LC Genersoft is a domestic limited liability company established in the PRC on 25 May 1994. LC Genersoft and its subsidiaries are principally engaged in the development, distribution of enterprise resources planning products, and offering all-round services for enterprise informationization. Its products, as some of the most successful products in China top-tier market, have quite a large percentage of market share, and its clients includes state owned enterprises, domestic listed companies, companies in pharmaceutical industry and other industries.

As at the date of the Acquisition Agreement, LC Genersoft was beneficially owned (i) as to 48.69% by the Vendor, (ii) as to 30.05% by the Purchaser, a wholly owned subsidiary of the Company, and (iii) as to 21.26% by Jinan Qiyi Information Technology Company Limited* (濟南啟益信息科技有限公司), a wholly owned subsidiary of the Company. The Group acquired the 30.05% equity interest in LC Genersoft by subscription for the enlarged registered capital of LC Genersoft on 31 March 2006 at consideration of RMB40,200,000 (details of the transaction was set out in the announcement and circular of the Company dated 17 February 2006 and 8 March 2006 respectively). At the Latest Practicable Date, the Group’s total equity interest in LC Genersoft amounted to 51.31% (i.e. LC Genersoft is a non wholly owned subsidiary of the Group) and the Group will own the entire equity interest in LC Genersoft upon Completion. There are five directors in LC Genersoft, two of which are nominated by the Vendor and three of which are nominated by the Group.

— 6 —

LETTER FROM THE BOARD

The following table shows the turnover, net profit before tax and net profit after tax and net assets value of LC Genersoft and its subsidiaries based on its audited consolidated financial statements for 2006 and 2007, and the unaudited consolidated management accounts for the nine months ended 30 September 2008 (prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants):

	For the nine	For the	For the
	months ended	year ended	year ended
	30 September	31 December	31 December
	2008	2007	2006
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
Turnover	180,259	172,603	125,181
Net profit before tax	33,207	19,367	5,260
Net profit after tax	31,423	18,341	5,260
	As at	As at	As at
	30 September	31 December	31 December
	2008	2007	2006
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
Net asset value	116,024	134,602	116,261
	(Note)

Note: The net asset value of LC Genersoft and its subsidiaries as at 30 September 2008 is lower than that as at 31 December 2007 as a cash dividend of amount RMB50,000,000 was paid to its shareholders with RMB25,655,300 paid to the Group and RMB24,344,700 paid to the Vendor.

The Vendor of which the issued A shares are listed on the Shanghai Stock Exchange is principally engaged in development and sale of application software and provision of system integration services for sizable enterprises in the industry of tobacco and other industries.

REASONS FOR THE ACQUISITION

The Group is an integrated information technology services provider with services covering taxation, finance, ERP, telecommunication and e-government sectors and software outsourcing services.

The Group has been keeping abreast with market developments and product trends in the information technology sector in order to further procure its existing and other information technology products. Based on the information available to the Group, the enterprise resources planning products provided by LC Genersoft has established its standing in the fields like pharmaceutical, petrochemical, food processing, machinery manufacturing and construction and the services provided

— 7 —

LETTER FROM THE BOARD

by LC Genersoft is ranked the first among other management software providers. According to the information provided by LC Genersoft, about 20% of the listed companies in the PRC and about 35% of the securities companies in the PRC apply the management software system provided by LC Genersoft to their business.

On 18 December 2007, the Company entered into the sale and purchase agreement in relation to acquisition of 21.26% equity interest in LC Genersoft at consideration of RMB35,079,000. After completion of the aforesaid acquisition in March 2008, the Group’s equity interest in LC Genersoft increased from 30.05% to 51.31%. After completion of the Acquisition, the Group’s interest in LC Genersoft will be further increased to 100%, and the Acquisition will enable the Group to further increase the control over the business performance of LC Genersoft, strengthen business integration and enhance the contribution of revenue and profit from LC Genersoft to the Group (from 51.31% to 100%).

The Directors consider that the Acquisition Agreement is entered into upon normal commercial terms following arm’s length negotiations between the parties to the Acquisition Agreement and that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Shareholders as a whole.

FINANCIAL EFFECT OF THE ACQUISITION

As LC Genersoft is currently a non-wholly owned subsidiary of the Group, the financial results, assets and liabilities of LC Genersoft (including its subsidiaries) are consolidated into the accounts of the Group with the minority interests in the net assets of LC Genersoft being presented separately from the Group’s equity therein. Upon Completion, LC Genersoft will become a wholly-owned subsidiary of the Group, the financial results, assets and liabilities of LC Genersoft (including its subsidiaries) will continue to be consolidated into the accounts of the Group but without any minority interests in the net assets or net profit after taxation of LC Genersoft. It is expected that the Acquisition will lead to a drop in assets of the Group (representing the excess of payment of Consideration over the goodwill arising from the Acquisition), no change to liabilities of the Group and a drop in minority interest. With respect to prospects of LC Genersoft, it is expected that there will be an increase in the earnings attributable to the Group.

IMPLICATIONS UNDER THE LISTING RULES

As the relevant percentage ratios for the Acquisition are more than 5% and less than 25%, the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules. As Inspur Group, through its wholly owned subsidiary, Inspur Electronics (HK) Limited, beneficially owns approximately 43.95% of the entire issued ordinary share capital of the Company, it is a controlling shareholder for the purposes of the Listing Rules. Although the Vendor is beneficially owned as to approximately 26.49% by Inspur Group, it is regarded as a subsidiary of Inspur Group as Inspur Group is its single largest shareholder and has controlled the majority of its board of directors. As the Vendor is a subsidiary of Inspur Group and is a substantial shareholder of LC Genersoft (a non-wholly owned subsidiary of the Company), the Vendor is a connected person of the Company under the Listing Rules. As such, the Acquisition also constitutes a connected transaction of the Company under the Listing

— 8 —

LETTER FROM THE BOARD

Rules and is subject to, among other things, the approval by the Independent Shareholders at the EGM to be taken by way of a poll. Inspur Group, the Vendor, their ultimate beneficial owners and their respective associates shall abstain from voting for the relevant resolution at the EGM due to their interest in the Acquisition.

EGM

Set out on pages 27 to 28 of this circular is a notice convening the EGM which will be held at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Thursday, 27 November 2008 at which resolution will be proposed to approve, among others, the Acquisition Agreement and the transactions contemplated thereunder.

A form of proxy for the EGM is enclosed. Whether or not you propose to attend the EGM, you are requested to complete the form of proxy and return the same to Computershare Hong Kong Investor Services Limited, the Company’s branch share registrar in Hong Kong, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the meeting (or any adjourned meeting). Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting (or any adjourned meeting) if you so wish.

The Acquisition Agreement is subject to, among other things, the approval by the Independent Shareholders at the EGM to be taken by way of a poll. Inspur Group (including its ultimate beneficial owners and their respective associates) and the Vendor (including its ultimate beneficial owners and their respective associates) shall abstain from voting for the relevant resolution at the EGM due to their interest in the concerned transactions. Other than the above, no other Shareholders have material interest in the above transactions and will abstain from voting at the EGM. As at the Latest Practicable Date, Inspur Group (including its ultimate beneficial owners and their respective associates) controls or is entitled to control over the entire voting right in respect of their Shares and the Vendor (including its ultimate beneficial owners (but excluding Inspur Group) and their respective associates) was not interested in any Shares. Therefore, a total of 1,354,390,000 Shares (representing approximately 43.95% of the issued share capital of the Company and approximately 31.84% of the total voting rights of the holders of the Shares and Preferred Shares) shall abstain from voting at the EGM. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon Inspur Group and the Vendor (including their ultimate beneficial owners and their respective associates); and (ii) no obligation or entitlement of Inspur Group and the Vendor (including their ultimate beneficial owners and their respective associates) as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

— 9 —

LETTER FROM THE BOARD

According to the Company’s memorandum and articles, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the chairman of such meeting; or

• (b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; or

• (e) if the chairman of such meeting and/or the Directors individually or collectively hold proxies in respect of shares holding 5% or more of the total voting rights at such meeting, and if on a show of hands a meeting votes in the opposite manner to that instructed in those proxies, the chairman of such meeting and/or the Directors and the chairman of such meeting holding proxies as aforesaid collectively shall demand a poll; provided that if it is apparent from the total proxies held that a vote taken on a poll will not reverse the vote taken on a show of hands, then the Directors and/or the chairman of such meeting shall not be required to demand a poll.

Notwithstanding the above, the resolution approving the Acquisition Agreement will be voted on by way of a poll in the EGM.

RECOMMENDATIONS

The Independent Board Committee has been established to advise the Independent Shareholders whether the terms of the Acquisition Agreement and the transactions contemplated thereunder are fair and reasonable so far as the Shareholders are concerned and REXCPAITAL has been appointed to advise the Independent Board Committee and the Independent Shareholders in that connection.

The text of REXCAPITAL containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 20 of this circular and the text of the letter from the Independent Board Committee to the Independent Shareholders is set out on page 12 of this circular.

— 10 —

LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of REXCAPITAL, is of the opinion that the Acquisition Agreement is entered into upon normal commercial terms and that the terms of the Acquisition Agreement are fair and reasonable and are in the interests of the Company and the Independent Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at EGM.

The Board considers that the terms of the Acquisition Agreement are fair and reasonable and the entering into the Acquisition Agreement is in the interests of the Company and the Independent Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the resolution to be proposed at EGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

By Order of the Board Inspur International Limited Sun Pishu Chairman

— 11 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

12 November 2008

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

We refer to the circular dated 12 November 2008 issued by the Company (the “Circular”), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the Acquisition Agreement and the transactions contemplated thereunder and to advise the Independent Shareholders as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders should vote at the EGM. REXCAPITAL has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 4 to 11 of the Circular, and the letter from REXCAPITAL to the Independent Board Committee and the Independent Shareholders which contains its advice to us in respect of the Acquisition Agreement, as set out on pages 13 to 20 of the Circular.

Having taken into account of the advice of REXCAPITAL, we consider that the Acquisition Agreement is entered into upon normal commercial terms and that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the Independent Shareholders as whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

Yours faithfully,

the Independent Board Committee Meng Xiang Xu Liu Ping Yuan Wong Lit Chor, Alexis Independent non-executive Independent non-executive Independent non-executive Director Director Director

• For identification purpose only

— 12 —

LETTER FROM REXCAPITAL

The following is the text of a letter of advice from REXCAPITAL to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, and is prepared for inclusion in this circular.

==> picture [43 x 39] intentionally omitted <==

REXCAPITAL (Hong Kong) Limited

34th Floor, COSCO Tower Grand Millennium Plaza 183 Queen’s Road Central Hong Kong

12 November 2008

The Independent Board Committee and the Independent Shareholders

Inspur International Limited

Room 726 Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay Kowloon Hong Kong

Dear Sirs,

DISCLOSABLE AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and the reasonableness of the terms of the Acquisition Agreement and as to whether the terms thereof are on normal commercial terms and in the interest of the Company and the Independent Shareholders as a whole. Details of the Acquisition Agreement are set out in the circular to the Shareholders dated 12 November 2008 (the “Circular”), of which this letter forms a part. Terms used in this letter have the same meanings as defined in the Circular unless the context requires otherwise.

The Company announced that on 21 October 2008, the Purchaser (a wholly owned subsidiary of the Company) entered into the Acquisition Agreement with the Vendor in relation to the further acquisition of 48.69% equity interest in LC Genersoft at the consideration of RMB87,382,000 in cash.

As stated in the Letter from the Board (the “Letter”), the Acquisition constitutes a discloseable transaction of the Company under the Listing Rules. As Inspur Group through its wholly owned subsidiary, Inspur Electronics (HK) Limited, beneficially owns approximately 43.95% of the entire issued ordinary share capital of the Company, it is a controlling Shareholder for the purposes of the Listing Rules. Also, Inspur Group is the single largest shareholder of the Vendor with beneficial interest of approximately 26.49% and has controlled the majority of the Vendor’s board of directors,

— 13 —

LETTER FROM REXCAPITAL

the Vendor is regarded as a subsidiary of Inspur Group. As the Vendor is a subsidiary of Inspur Group and is a substantial shareholder of LC Genersoft (a non-wholly owned subsidiary of the Company), the Vendor is a connected person of the Company under the Listing Rules. As such, the Acquisition also constitutes a connected transaction of the Company under the Listing Rules and is subject to, among other things, the approval by the Independent Shareholders at the EGM to be taken by way of a poll.

The Independent Board Committee, comprising Mr. Meng Xiang Xu, Mr. Liu Ping Yuan and Mr. Wong Lit Chor, Alexis, has been established to advise the Independent Shareholders as to whether the terms of the Acquisition Agreement are fair and reasonable so far as the Independent Shareholders are concerned and whether the terms of the Acquisition Agreement is in the interest of the Company and the Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied upon accuracy of the information and representations contained in the Circular and information provided to us by the Company and its Director(s). We have assumed that all statements, information and representations made or referred to in the Circular and all information and representations which have been provided by the Company and the Director(s), for which they are solely and wholly responsible, were true at the time they were made and continue to be true as at the date hereof. We have also assumed that all statements of belief, opinion and intention made by the Director(s) in the Circular were reasonably made after due and careful enquiry and were based on honestly-held opinions.

We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Director(s) and have been confirmed by the Director(s) that no material facts and representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group, nor have we carried out any independent verification of the information provided by the Director(s) and management of the Company. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our recommendation regarding the Acquisition Agreement.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In giving our recommendation to the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Acquisition Agreement, we have taken into consideration the following factors and reasons:

I. THE ACQUISITION

1. Background and Reasons for the Acquisition

The Group is an integrated information technology services provider with services covering taxation, finance, ERP, telecommunication and e-government sectors and software outsourcing services.

— 14 —

LETTER FROM REXCAPITAL

As stated in the Letter, LC Genersoft is a domestic limited liability company established in the PRC on 25 May 1994. LC Genersoft and its subsidiaries are principally engaged in the development, distribution of enterprise resources planning (“ERP”) products, and offering all-round services for enterprise informationization. Its products, as some of the most successful products in China top-tier market, have quite a large percentage of market share, and its clients includes state owned enterprises, domestic listed companies, companies in pharmaceutical industry and other industries.

As advised by the Company, on 31 March 2006, the Group acquired 30.05% equity interest in LC Genersoft at a consideration of RMB40,200,000 (details of the transaction was set out in the announcement and circular of the Company dated 17 February 2006 and 8 March 2006 respectively) (the “First Acquisition”) and on 18 December 2007, the Company entered into an acquisition agreement to further acquired 21.26% equity interest in LC Genersoft at a consideration of RMB35,079,000 (subject to adjustments) (details of the transaction was set out in the announcement and circular of the Company dated 20 December 2007 and 29 February 2008 respectively) (the “Second Acquisition”). As at the Latest Practicable Date, LC Genersoft is beneficially owned (i) as to 48.69% by the Vendor, (ii) as to 30.05% by the Purchaser, a wholly owned subsidiary of the Company, and (iii) as to 21.26% by Jinan Qiyi Information Technology Company Limited* (濟南啟益信息科技有限公司), a wholly owned subsidiary of the Company. Accordingly, the Group’s total interest in LC Genersoft amounts to 51.31% (i.e. LC Genersoft is a non wholly owned subsidiary of the Group). After Completion, the Group’s interest in LC Genersoft will further be increased to 100%.

As duplicated from the Letter, the following table shows the turnover, net profit before and after tax and the net asset value of LC Genersoft and its subsidiaries based on its audited consolidated financial statements for 2006 and 2007, and the unaudited consolidated management accounts for the nine months ended 30 September 2008 (prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants):

	For the	For the	For the
	nine months ended	year ended	year ended
	30 September	31 December	31 December
	2008	2007	2006
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
Turnover	180,259	172,603	125,181
Net profit before tax	33,207	19,367	5,260
Net profit after tax	31,423	18,341	5,260
	As at	As at	As at
	30 September	31 December	31 December
	2008	2007	2006
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
	116,024
Net asset value	(Note)	134,602	116,261

— 15 —

LETTER FROM REXCAPITAL

Note: The net asset value of LC Genersoft and its subsidiaries as at 30 September 2008 is lower than that as at 31 December 2007 as a cash dividend of amount RMB50,000,000 was paid to its shareholders with RMB25,655,300 paid to the Group and RMB24,344,700 paid to the Vendor.

As disclosed in the Letter, The Group has been keeping abreast with market developments and product trends in the information technology sector in order to further procure its existing and other information technology products. Based on the information available to the Group, the ERP products provided by LC Genersoft has established its standing in the fields like pharmaceutical, petrochemical, food processing, machinery manufacturing and construction and the services provided by LC Genersoft is ranked the first among other management software providers. According to the information provided by LC Genersoft, about 20% of the listed companies in the PRC and about 35% of the securities companies in the PRC apply the management software system provided by LC Genersoft to their business. Also disclosed in the Letter, after completion of the Second Acquisition in March 2008, the Group’s interest in LC Genersoft has been increased from 30.05% to 51.31% and, following the completion of the Acquisition, will further be increased to 100%, which will enable the Group to further increase the control over the business performance of LC Genersoft, strengthen business integration and enhance the contribution of revenue and profit from LC Genersoft to the Group.

We have reviewed the financial statements and the management accounts of LC Genersoft and enquired and discussed with the management of the Company in respect of, among others, the business, the customers network and the positioning of LC Genersoft in its industry. We have reviewed the annual report of the Company for the year 2007 and noted that the Group will seek to acquire domestic businesses with excellent track records, so that its business portfolio, source of income and risk profile could be diversified. We have also searched through published articles in relation to, among others, the ERP products and noted that the PRC enterprises are encouraged by the government to apply the ERP products on their businesses.

Having considered (i) the increasing trend of the profitability of LC Genersoft for the past two years ended 31 December 2007 and the nine months ended 30 September 2008; (ii) the Acquisition provides opportunities to the Company to enhance its revenue sources by increasing its profit share in LC Genersoft; (iii) the Acquisition is in line with the investment and marketing strategy of the Group; and (iv) the management structure of PRC enterprises in general has been under a continuously reform towards international standards in recent years and thus the demand of the ERP products which are widely adopted by the enterprises in foreign countries for their respective internal management system, is anticipated to be on an upward trend under the fast growing economy in the PRC, we agree with the view of the Directors as stated above and are of the opinion that the Acquisition is in the ordinary course of business of the Company and in the interests of the Company and its Shareholders as a whole.

2. Consideration for the Acquisition

As set out in the Letter, the Consideration of RMB87,382,000 was arrived at after arm’s length negotiation between the parties to the Acquisition Agreement with reference to, among other things,

— 16 —

LETTER FROM REXCAPITAL

the price earnings ratio (the “PER”) of around 9.8 times (based on the audited consolidated profit after tax of LC Genersoft for the year ended 31 December 2007, being RMB18,341,000). As advised by the Company, the Directors consider that the Consideration and the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

In order to assess the reasonableness of the PER, we have identified comparable companies (the “Comparables”) being listed companies on the Stock Exchange (on GEM or Main Board) engaged in similar businesses of LC Genersoft including, but not limited to, the development, distribution of ERP products, and offering all-round services for enterprise informationization. To the best of our knowledge, we have identified 8 Comparables by searching through published information on the Stock Exchange’s website. The Comparables may not contain all listed companies in the related industries. The PER is based on their respective market capitalization determined in according to the Stock Exchange as at 21 October 2008, being the date of the Acquisition Agreement, and their respective latest publicly available full year information available in the Stock Exchange’s website. As the Comparables are engaged in similar business of LC Genersoft and their respective PER are determined with reference to the date of the Acquisition Agreement, we consider the Comparables are fair and representative samples. Shareholders should note that the stated PERs of the respective companies could be sensitive to, amongst other things, each of their particular businesses, financial position and market price performance of the shares of the respective companies and therefore, the PERs of the Comparables listed below are for information and reference purposes only.

Comparables	Principal business	PER (times)
Computer And	Provision of system and network integration	6.40
Technologies Holdings	services, IT solutions implementation,
Ltd. (Stock code: 46)	application development services, enterprise
	applications, IT operation outsourcing
	services, and distribution of digital media
	products
Kingdee International	Develop and sale of enterprise application	12.31
Software Group Co.	software and Java-based middleware, provide	(Note)
Ltd. (Stock code: 268)	software-related customer service and sale of
	hardware
FlexSystem Holdings	Development and sale of software products	4.79
Limited (Stock code:	and provision of application software services
8050)
Qianlong Technology	Development and trading of computer	6.09
International Holdings	software, provision of the related maintenance	(Note)
Ltd. (Stock code: 8015)	and consulting services and investment in IT
	companies

— 17 —

LETTER FROM REXCAPITAL

Comparables	Principal business	PER (times)
Excel Technology	Sale of enterprise software products and	13.41
International Holdings	provision of maintenance services, systems
Ltd. (Stock code: 8048)	integration services and resale of
	complementary hardware and software
	products, consultancy services, and services in
	respect of ASP business
Universal Technologies	Provision of enterprise solutions with a focus	9.01
Holdings Ltd. (Stock	online payment and logics to enterprises in the
code: 8091)	PRC
Soluteck Holdings Ltd.	Sale of electronic banking systems, other	21.57
(Stock code: 8111)	systems; provision of hardware and software
	technical support services of computer
	communication systems; technical development
	of network communication, development and
	design of system software
Nanjing Sample	Provision of video security system solutions,	7.56
Technology Co. Ltd. -	sales of security system software and related	(Note)
H Shares (Stock code:	computer products
8287)
	Range:	4.79 to
		21.57
	Mean:	10.14

Source: www.hkex.com.hk

Note: For calculation purposes, the earning per share recorded in RMB has been converted into HK$ under the exchange rate of HK$1 to RMB 0.88.

Despite of the unfavorable condition of the current stock market and the possible deferral of large and global business expansion with ERP implementation, the PER for the Acquisition, being 9.8 times falls within the range from 4.79 times to 21.57 times and is below the mean of PERs of the Comparables.

As set out in the Letter and the Company’s circulars dated 8 March 2006 and 29 February 2008 in respect of the First Acquisition and the Second Acquisition, the considerations for the First Acquisition and the Second Acquisition were RMB40,200,000 and RMB35,079,000 (subject to adjustments) respectively. Based on the audited net profit after tax of LC Genersoft of RMB7,747,000 and RMB18,341,000 for the years ended 31 December 2005 and 31 December 2007 set out in the abovementioned circulars, the PERs for the First Acquisition and the Second Acquisition

— 18 —

LETTER FROM REXCAPITAL

were 17.27 times and 9.00 times respectively. Taking into account (i) the unaudited net profit after tax for the nine months ended 30 September 2008 already represented 1.71 times of the net profit after tax for the full year 2007; and (ii) the PER of the Acquisition falls within the PERs of the First Acquisition and the Second Acquisition and below the average of 13.14 times of such two previous acquisitions, we consider the PER of 9.8 times for the Acquisition is justifiable.

Having consider the above, we consider the Consideration with reference to the PER of 9.8 times is fair and reasonable so far as the Independent Shareholders are concerned.

3. Financial effects of the Acquisition

(i) Net asset value

As reported in the annual report of the Group for the year ended 31 December 2007 and the interim report for the Group for the six months ended 30 June 2008 (the “IR 2008”), the audited consolidated net asset value (defined as shareholders’ equity and reserves) of the Group as at 31 December 2007 was approximately HK$274.65 million and the unaudited consolidated net asset value (defined as shareholders’ equity and reserves) of the Group as at 30 June 2008 was approximately HK$557.10 million. As advised by the Company, the Acquisition has no significant impact to the net asset value (defined as shareholders’ equity and reserves) of the Group.

(ii) Earnings

As mentioned above, upon completion of the Acquisition, LC Genersoft will be a wholly-owned subsidiary of the Group. In view of the profitable track record of LC Genersoft, we consider that it is a fair expectation that the increase in shareholding in LC Genersoft will have a positive impact on the future earning growth potential of the Group.

(iii) Gearing ratio

According to the IR 2008, the Group has an unaudited bank balances and cash of approximately HK$432.54 million as at 30 June 2008. As stated in the Letter, the Consideration will be satisfied in cash, hence, the bank balances and cash classified under the current assets of the consolidated balance sheet of the Group will be decreased to the extent of the Consideration of RMB87,382,000 as a result of the Acquisition. As the Consideration will be settled by internal resources of the Group, it is expected that there is no significant impact on the gearing ratio as a result of the Acquisition.

— 19 —

LETTER FROM REXCAPITAL

RECOMMENDATION

Taking into account the foregoing, we consider the terms of the Acquisition are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Independent Shareholders as a whole. We would therefore advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to approve the Acquisition to be proposed at the EGM.

Yours faithfully, For and on behalf of REXCAPITAL (Hong Kong) Limited Sam Lum

Executive Director

— 20 —

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all resonable enquiries that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

• (a) Interests and short positions of the Directors and the chief executive of the Company in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Listing Rules, were as follows:

• (i) Long positions in Shares

**Name **	of Director	Type of interests	Number of Shares	Percentage of interests
Wang	Miao	Beneficial owner	75,000,000	2.43%
Wang	Hung, Alex	Beneficial owner	75,000,000	2.43%

• (ii) Long positions in underlying Shares of the Company

		Description	Number of
		of equity	underlying	Percentage
Name of Director	Type of interests	derivatives	Shares	of interests
		(Note 1)
Sun Pishu	Beneficial owner	share option	20,000,000	0.65%
Zhang Lei	Beneficial owner	share option	20,000,000	0.65%
Leung Chi Ho	Beneficial owner	share option	20,000,000	0.65%
Wang Miao	Beneficial owner	share option	20,000,000	0.65%
Wang Hung, Alex	Beneficial owner	share option	20,000,000	0.65%
Xin Wei Hua	Beneficial owner	share option	20,000,000	0.65%

• Note 1: The share options were granted under the pre-IPO share option scheme adopted by the Company on 8 April 2004 at a subscription price of HK$0.0648 per Share. Up to the Latest Practicable Date, none of the above share options had been exercised.

— 21 —

APPENDIX

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code.

• (b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to the Directors and the chief executive, as at the Latest Practicable Date, the following person (not being Director or chief executive of the Company) had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

Long positions in Shares

				Approximate
			Number of	percentage
**Name **	of Shareholders	Type of interests	Shares	of interests
Inspur	Group Limited (Note 2)	Interest in a controlled	1,354,390,000	43.95%
		corporation (Note 1)
Inspur	Electronics (HK) Limited (Note 3)	Beneficial owner	1,354,390,000	43.95%

• Note 1: Inspur Group Limited is taken to be interested in 1,354,390,000 Shares because it is being 100% shareholder in the issued share capital of Inspur Electronics (HK) Limited.

• Note 2: Mr Sun Pishu and Mr Xin Wei Hua, who are directors of the Company, are also directors of Inspur Group Limited.

• Note 3: Mr Sun Pishu, Mr Wang Miao, Mr Xin Wei Hua and Mr Wang Hung, Alex, who are directors of the Company, are also directors of Inspur Electronics (HK) Limited.

Long positions in series A senior redeemable convertible voting preferred shares of the Company

		Number of		Approximate
		Preferred	Number of	percentage of
Name of Shareholders	Type of interests	Shares	underlying Shares	interests
			(Note 1)
Microsoft Corporation	Beneficial owner	234,279,559	1,171,397,795	100%

— 22 —

APPENDIX

GENERAL INFORMATION

Note 1: Holder of each Preferred Share shall be entitled to have five votes on a show of hands or five votes for each Preferred Share as if each Preferred Share registered in its name in the register of members of the Company had been converted into five Shares at the time of any general meeting of the Company. Microsoft Corporation has agreed that in the event that it becomes entitled to exercise or control the exercise of more than 28% of the voting rights at general meetings of the Company (other than meeting of the holder(s) of Preferred Shares), it shall not and shall procure its nominee(s) not to exercise such portion of the voting rights attaching to the Preferred Shares and/or Shares in excess of 28% of the total voting rights at any general meeting of the Company. At the Latest Practicable Date, the above 1,171,397,795 underlying Shares represented approximately 27.54% of the issued share capital of the Company as enlarged by the full exercise of the conversation rights attaching to the Preferred Shares.

Long positions in members of the Enlarged Group

			Approximate
			percentage of
			shareholding
			in the
			members of
	Types of		the Enlarged
Name of shareholders	Interest	Equity interest held	Group
Shandong Inspur Software	Beneficial	RMB7,000,000 in the	46.67%
Company Limited#	owner	registered capital of Shandong
(山東浪潮齊魯軟件產業股份		Langchao Electronic Business
有限公司)		Software Company Limited#
Shanghai Huili Co. Ltd.#	Beneficial	RMB50,000 in the registered	10%
(上海滙力有限公司)	owner	capital of Shanghai Guoqiang
		Genersoft Incorporation#
Wang Xingshan	Beneficial	RMB300,000 in the registered	10%
	owner	capital of Inspur Guangdong
		Genersoft Technology
		Incorporation#
Webgroup Co.	Beneficial	US$14,504 in the registered	10.36%
	owner	capital of Langchao Gaoyou
		(Shanghai) Services
		Incorporation#
		高優(上海)信息科技有限公司

# English name is for identification purpose only

Note: At the Latest Practicable Date, Shandong Inspur Software Company Limited holds beneficial interest in RMB19,442,624.48 in the registered capital of Inspur Group Shandong Genersoft Incorporation (“ LC Genersoft ”) (representing 48.69 % interest in LC Genersoft) which is a member of the Group. Upon Completion, Shandong Inspur Software Company Limited will be no longer have any interest in the registered capital of LC Genersoft. On the basis of Enlarged Group, Shandong Inspur Software Company Limited’s interest in LC Genersoft is not shown in the above table.

— 23 —

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares (including any interests in options in respect of such capital), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Enlarged Group.

3. DIRECTORS’ OTHER INTEREST

As at the Latest Practicable Date, so far as the Directors are aware of, none of them or their respective associates had any interest in a business which competes or may compete with the business of the Group or any other conflicts of interest with the Group.

As at the Latest Practicable Date, none of the Directors has any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2007, being the date to which the latest published audited financial statements of the Company were made up.

There is no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director is materially interested and which is significant to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Group (excluding contracts expiring or terminable by the employer within one year without payment of compensation other than statutory compensation).

5. LITIGATION AND CLAIMS

As at the Latest Practicable Date, neither the Company nor any other member of the Enlarged Group is engaged in any litigation or claims of material importance pending and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Enlarged Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2007, being the date to which the latest audited financial statements of the Company were made up.

— 24 —

GENERAL INFORMATION

APPENDIX

7. EXPERT AND CONSENT

REXCAPITAL has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name in the form and context in which it respectively appears.

The following is the qualification of the expert who has provided its advice which is contained in this circular:

Name

Qualification

REXCAPITAL A licensed corporation to carry on type 6 (advising on corporate finance) of the regulated activity under the SFO

As at the Latest Practicable Date, REXCAPITAL was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Enlarged Group nor did it have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up (i.e. 31 December 2007), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

8. MISCELLANEOUS

• (a) The registered office of the Company is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands, and the head office and principal place of business in Hong Kong of which is at Room 726, Nan Fung Commercial Centre, 19 Lam Lok Street, Kowloon Bay, Kowloon, Hong Kong.

• (b) The principal share registrar and transfer office of the Company is Butterfield Fulcrum Group (Cayman) Limited at Butterfield House, 68 Fort Street, P.O. Box 705, George Town, Grand Cayman KY1-1107, Cayman Islands and the Hong Kong branch share registrar and transfer office of which is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong

• (c) The company secretary and qualified accountant of the Company is Ms. Chan Wing who is an associate member of the Hong Kong Institute of Certified Public Accountants.

• (d) The English text of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistency.

— 25 —

GENERAL INFORMATION

APPENDIX

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s principal place of business in Hong Kong from the date of this circular up to and including the date of the EGM:

• (i) the letter from the Independent Board Committee, the text of which is set out on page 12 of this circular;

• (ii) the letter of advice from REXCAPITAL, the text of which is set out on pages 13 to 20 of this circular;

• (iii) the written consent referred to in the paragraph headed “Expert and consent” in this appendix; and

• (iv) Acquisition Agreement.

— 26 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“ EGM ”) of Inspur International Limited (the “Company” ) will be held at 10:00 a.m. on Thursday, 27 November 2008 at Hong Kong International Trade & Exhibition Centre, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT :

• (a) the conditional equity interest transfer agreement dated 21 October 2008 (the “Acquisition Agreement” ) entered into between Shandong Inspur Software Company Limited (山東浪潮齊魯軟件產業股份有限公司) as vendor and Inspur (Shandong) Electronic Information Limited (浪潮(山東)電子信息有限公司) as purchaser in relation to the acquisition of 48.69% equity interest in Inspur Group Shandong Genersoft Software Incorporation (浪潮集團山東通用軟件有限公司), a copy of the Acquisition Agreement has been tabled at the meeting marked “A” and signed by the Chairman of the meeting for the purpose of identification, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

• (b) the directors of the Company be and they are hereby authorised to do all such acts and things, to sign and execute all such further documents and to take such steps as they may consider necessary, appropriate, desirable or expedient for implementation of or giving effect to the Acquisition Agreement and any of the transactions contemplated thereunder.”

By Order of the Board Inspur International Limited Sun Pishu

Chairman

Hong Kong, 12 November 2008

• For identification purpose only

— 27 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

Registered Office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and Principal place of business in Hong Kong: Room 726

Nan Fung Commercial Centre 19 Lam Lok Street Kowloon Bay Kowloon Hong Kong

Notes:

1. A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

3. In the case of joint holders of shares, any one of such holders may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

4. The voting on the resolution at the EGM will be conducted by way of a poll.

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