Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2009

Jun 15, 2009

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).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take 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

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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 Center, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Thursday, 2 July 2009 is set out on pages 22 to 23 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

15 June 2009

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information of Jinan Communication and The Vendors . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22

— i —

DEFINITIONS

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

“Acquisition” the acquisition by the Purchaser of 100% interest in Jinan Communication subject to the terms and conditions of the Acquisition Agreement “Acquisition Agreement” the conditional equity interest transfer agreement dated 1 June 2009 entered into between the Vendors 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 Vendors, being RMB130,000,000 “Director(s)” the director(s) of the Company “EGM” the extraordinary general meeting of the Company to be convened and held for approving, among other things, the Acquisition Agreement and the transactions contemplated thereunder “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, ultimate beneficial owners of Inspur Group 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, is interested in 1,354,390,000 Ordinary Shares of the Company “Jinan Communication” Jinan Inspur Communication Limited (濟南浪潮數字通信有 限公司), a domestic limited liability company established in the PRC

• “Latest Practicable Date”

• 12 June 2009, being the latest practicable date prior to printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

• Rules Governing the Listing of Securities on the Stock Exchange

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

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

— 2 —

DEFINITIONS

“Vendors”	(1)	Shandong Inspur Light and Electricity	Technology
		Limited* (山東浪潮光電科技有限公司),	a domestic
		limited liability company incorporated in the PRC; and
	(2)	Shandong Inspur Leasing Limited* (山東浪潮租賃有限
		公司), a domestic limited liability company	incorporated
		in the PRC
“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 Cayman Islands with limited liability)

(Stock Code : 596)

Executive Directors: Mr. Sun Pishu ( Chairman ) Mr. Zhang Lei Mr. Leung Chi Ho Mr. Dong Hailong

Non-executive Directors: Mr. Xin Wei Hua

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

15 June 2009

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

Reference is made to the Company’s announcement dated 3 June 2009 in respect of the Acquisition Agreement entered into by the Purchaser (a wholly owned subsidiary of the Company) and the Vendors pursuant to which the Purchaser agreed to purchase and the Vendors agreed to sell 100% interest in Jinan Communication at the Consideration of RMB130,000,000.

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

Further details of the Acquisition are set out below:

ACQUISITION AGREEMENT

Date

1 June 2009

Parties

• Vendors: (1) Shandong Inspur Light and Electricity Technology Limited* (山東浪潮光電 科技有限公司), a subsidiary of Inspur Group — as to 95% interest in Jinan Communication; and

• (2) Shandong Inspur Leasing Limited* (山東浪潮租賃有限公司), a subsidiary of Inspur Group — as to 5% interest in Jinan Communication

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 at the date of the Acquisition Agreement, Inspur Group through its wholly owned subsidiary, Inspur Electronics (HK) Limited, beneficially holding approximately 32.62% issued Ordinary Shares of the Company, is a substantial shareholder of the Company. Both the Vendors are subsidiaries of Inspur Group and therefore are connected persons of the Company under the Listing Rules.

Assets to be acquired

100% interest in Jinan Communication

Consideration

RMB130,000,000

The Consideration 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 set out in the paragraph “Conditions” below.

The Consideration was arrived at after arm’s length negotiations between the parties with reference to five times of the audited net profit after tax of Jinan Communication for the year ended 31 December 2008.

— 5 —

LETTER FROM THE BOARD

Conditions

The Acquisition is subject to the following conditions:

• (i) the shareholders of Shandong Inspur Light and Electricity Technology Limited (山東浪潮光電科技有限公司) and the board of directors of Shandong Inspur Leasing Limited (山東浪潮租賃有限公司) passing resolutions approving the Acquisition Agreement and the transactions contemplated thereunder;

• (ii) the Board of the Company passing resolutions approving the Acquisition Agreement and the transactions contemplated thereunder; and

• (iii) the Independent Shareholders passing resolutions approving the Acquisition Agreement and the transactions contemplated thereunder.

Completion

Completion shall take place within 10 business days after the fulfilment of all the conditions.

INFORMATION OF JINAN COMMUNICATION AND THE VENDORS

Jinan Communication is established in the PRC on 24 December 2005. It is an investment holding company and its only asset is its 30% interest in Qingdao Lejin. Qingdao Lejin is principally engaged in research and development, manufacturing and sale of wireless GSM mobile phones and value added software for mobile phones.

The following shows the turnover, net profit before tax and net profit after tax and net asset value of Jinan Communication based on its audited accounts for the two years ended 31 December 2008:

	**For **	the year ended	**For **	the year ended
	31 December 2008		31 December 2007
		(audited)		(audited)
		RMB’000		RMB’000
Turnover		0		0
Net profit before tax		25,908		4,205
Net profit after tax		25,908		4,205
		As at		As at
	31 December 2008		31 December 2007
		(audited)		(audited)
		RMB’000		RMB’000
Net asset value		93,925		86,016

— 6 —

LETTER FROM THE BOARD

As informed by the Vendors, the acquisition cost of 100% interest in Jinan Communication by the Vendors was RMB50,000,000, representing the registered and paid-up capital of Jinan Communication.

Shandong Inspur Light and Electricity Technology Limited (山東浪潮光電科技有限公司) is principally engaged in investment in new and high technology business. Shandong Inspur Leasing Limited (山東浪潮租賃有限公司) is principally engaged in financial leasing of computer and communication equipment, electronic equipment and electronic products and real property and financial leasing business. Both the Vendors are subsidiaries of Inspur Group which is an investment holding company and through its subsidiaries is principally engaged in research and development, manufacture and sale of computer hardware and software, semi-conductors, intelligent terminals and mobile telecommunication products.

REASONS FOR THE ACQUISITION

The Group is an integrated information technology services provider offering services covering taxation, finance, Enterprises Resources Planning (ERP), telecommunication and e-government sections and software outsourcing services. The Acquisition will enable the Group to complement and expand its existing information technology services and achieve synergy effect, in particular, it will help the Group expand its telecommunication value added business and digital business in the coming 3G era in the PRC and improve the Group’s telecommunication supply chain. As a result of the Acquisition, the Group will be able to strengthen its position in the telecommunication section.

The Directors consider that the Acquisition Agreement is entered into on 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.

IMPLICATIONS UNDER THE LISTING RULES

The applicable percentage ratios of the Acquisition is more than 5% but less than 25%, therefore, the Acquisition constitutes a discloseable transaction under the Listing Rules.

As at the date of the Acquisition Agreement, Inspur Group through its wholly owned subsidiary, Inspur Electronics (HK) Limited, beneficially holding approximately 32.62% issued Ordinary Shares of the Company, is a substantial shareholder of the Company. Both the Vendors are subsidiaries of Inspur Group and therefore are connected persons of the Company under the Listing Rules. As such, the Acquisition also constitutes a connected transaction which is subject to reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

EGM

Set out on pages 22 to 23 of this circular is a notice convening the EGM which will be held at Hong Kong International Trade & Exhibition Center, Meeting Room 5, 7th Floor, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Thursday, 2 July 2009 at which resolutions will be proposed to approve, among others, the Acquisition Agreement and the transactions contemplated thereunder.

— 7 —

LETTER FROM THE BOARD

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.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by a poll. Therefore, all resolutions proposed at the EGM shall be voted by poll.

Inspur Group and its associates shall abstain from voting for the relevant resolution at the EGM due to their interest in the Acquisition. Other than as aforesaid, no other Shareholders are required to abstain from voting at the EGM. As at the Latest Practicable Date, Inspur Group through its wholly owned subsidiary, Inspur Electronics (HK) Limited, holds 1,354,390,000 Ordinary Shares in the Company and controls or is entitled to control over the entire voting right in respect of the said Ordinary Shares.

RECOMMENDATIONS

The Independent Board Committee, having taken into account the advice of REXCAPITAL, is of the opinion that the Acquisition Agreement is entered into on normal commercial terms following arm’s length negotiation between the parties thereto and that the terms of the Acquisition Agreement are fair and reasonable and are in the interest of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at EGM.

The text of REXCAPITAL containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 10 to 15 of this circular and the text of the letter from the Independent Board Committee to the Independent Shareholders is set out on page 9 of this circular.

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

— 8 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

(Incorporated in Cayman Islands with limited liability)

(Stock Code : 596)

15 June 2009

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

We refer to the circular dated 15 June 2009 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 8 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 10 to 15 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 following arm’s length negotiations between the parties thereto, and that the terms of the Acquisition Agreement are fair and reasonable and in the interests of the Company and the 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

— 9 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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.

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REXCAPITAL (Hong Kong) Limited

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

15 June 2009

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, details of which are set out in the circular to the Shareholders dated 15 June 2009 (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 3 June 2009, the Purchaser (a wholly owned subsidiary of the Company) entered into the Acquisition Agreement with the Vendors in relation to the acquisition of 100% equity interest in Jinan Communication at the consideration of RMB130,000,000 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 at the date of the Acquisition Agreement, as Inspur Group through its wholly owned subsidiary, Inspur Electronics (HK) Limited, beneficially owns approximately 32.62% of the entire issued ordinary share capital of the Company, it is a substantial shareholder for the purposes of the Listing Rules. Also, both the Vendors are subsidiaries of the Inspur Group and therefore are connected persons of the Company under the Listing Rules. As

— 10 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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. Inspur Group and its associates shall abstain from voting for the relevant resolution at the EGM due to their interest in the Acquisition.

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 offering services covering taxation, finance, enterprises resources planning (ERP), telecommunication and e-government sectors and software outsourcing services.

— 11 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the Letter, Jinan Communication is an investment holding company and its only asset is its 30% interest in Qingdao Lejin which is principally engaged in research and development, manufacturing and sale of wireless GSM mobile phones and value added software for mobile phones. As advised by the Company, Qingdao Lejin is owned as to 70% by LG Group, a Korean base international player in the electronic and telecommunication industry, and its associate and is the sole manufacturer of GSM standard mobile phones for the LG brand in the PRC.

As set out in the Letter, the following table shows the turnover, net profit before and after tax and the net asset value of Jinan Communication based on its audited accounts for the two years ended 31 December 2008:

	For the	For the
	year ended	year ended
	31 December	31 December
	2008	2007
	(audited)	(audited)
	RMB’000	RMB’000
Turnover	0	0
Net profit before tax	25,908	4,205
Net profit after tax	25,908	4,205
	As at	As at
	31 December	31 December
	2008	2007
	(audited)	(audited)
	RMB’000	RMB’000
Net asset value	93,925	86,016

As advised by the Directors, the increase of net profit of Qingdao Lejin is mainly due to the increase in market share of the LG mobile phones in the industry and the effect of economy of scale benefited from the expansion of operation.

As disclosed in the Letter, the Acquisition will enable the Group to complement and expand its existing information technology services and achieve synergy effect, in particular, it will help the Group expand its telecommunication value added business and digital business in the coming 3G era in the PRC and improve the Group’s telecommunication supply chain and as a result of the acquisition, the Group will be able to strengthen its position in the telecommunication section.

We have reviewed the financial statements of Jinan Communication and enquired and discussed with the management of the Company in respect of, among others, the business, the customers network and the positioning of Qingdao Lejin in its industry. We have discussed with the management, reviewed the annual report of the Company for the year 2008 and noted that the Group will seek opportunities for merger and acquisition as well as strategic partnership in domestic and international markets, so that its business portfolio, source of income and risk profile could be diversified.

— 12 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered (i) the increasing trend of the profitability of Jinan Communication for the past two years ended 31 December 2008; (ii) the Acquisition provides opportunities to the Company to enhance and diversify its profit-generating sources; and (iii) the Acquisition could complement and expand its existing information technology services and achieve synergy effect, 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 RMB130,000,000 was arrived at after arm’s length negotiation between the parties to the Acquisition Agreement with reference to five times of the audited net profit after tax of Jinan Communication for the year ended 31 December 2008. 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 Consideration, we have identified comparable companies (the “Comparables”) being listed companies in Hong Kong engaged in similar or related businesses of Jinan Communication including, but not limited to, the research and development, distributing and trading of, manufacturing and sale of mobile phones and software application program development.

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. As the Comparables are engaged in similar business of Jinan Communication and their respective price-to-earning ratio (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.

— 13 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparables	Principal business	PER (times)
Foxconn International	A vertically integrated manufacturing services	40.3
Holdings Ltd (Stock	provider for the handset industry worldwide
Code: 2038.HK)
SIM Technology Group Ltd	Developing mobile handset, wireless	10.5
(Stock Code: 2000.HK)	communication and LCD modules
Hannstar Board International	Supply PCBs for game consoles, servers, and	3.3
Holdings Ltd (Stock	mobile phones
Code: 667.HK)
Yorkey Optical International	Manufacture plastic and metal parts and	6.9
Cayman Ltd (Stock Code:	components of optical and optoelectronic
2788.HK)	products for copiers, computer peripherals,
	handsets and file cameras
TCL Communication	Design, manufacture and market mobile handsets	17.0
Technology Holdings Ltd
(Stock Code: 2618.HK)
First Mobile Group	Distribute and trade mobile phones and related	5.9
Holdings Ltd (Stock	accessories and sell pre-pay airtime and provide
Code: 865.HK)	telecommunication services
China Fortune Holdings Ltd	Distribute and trade mobile phones and related	3.1
(Stock Code: 110.HK)	accessories
HKC International Holdings	Sell and distribute mobile phones and related	112.8
Ltd (Stock Code: 248.HK)	accessories as well as office telephone systems
	Range:	3.1 to 112.8
	Mean:	25.0

Source: Bloomberg

We note that the PER for the Acquisition, being 5 times PER, falls within the range from 3.1 times to 112.8 times and is below the mean of PERs of the Comparables.

Taking into account (i) the increasing trend of the net profit after tax of Jinan Communication; and (ii) the PER of the Acquisition falls within the PERs of the Comparables, we consider the PER of 5 times for the Acquisition is fair and reasonable so far as the Independent Shareholders are concerned.

— 14 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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 2008, the audited consolidated net asset value of the Group as at 31 December 2008 was approximately HK$800 million. As advised by the Company, upon completion of the Acquisition, there will not be significant impact to the net asset value of the Group.

(ii) Earnings

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

(iii) Gearing ratio

According to the annual report of the Group for the year ended 31 December 2008, the Group has a cash and bank balances of approximately HK$607 million as at 31 December 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 by RMB130,000,000 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.

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 Gregory Ho

Head of Corporate Finance

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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 Companies (the “Model Code”) contained in the Listing Rules, were as follows:

Long positions in Ordinary Shares

				Percentage of
				interests of issued
**Name **	of Director	Type of interests	Number of Shares	Ordinary Shares
Dong	Hailong	Beneficial Owner	5,000	0.00%

Long positions in underlying Ordinary Shares of the Company

			Number of
		Description	underlying	Percentage of
	Type of	of equity	Ordinary	interests of issued
Name of Director	interests	derivatives	Shares	Ordinary Shares
		(Note 1)
Sun Pishu	Beneficial owner	share option	20,000,000	0.55%
Zhang Lei	Beneficial owner	share option	20,000,000	0.55%
Leung Chi Ho	Beneficial owner	share option	20,000,000	0.55%
Xin Wei Hua	Beneficial owner	share option	20,000,000	0.55%

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.

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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 Ordinary Shares

				Approximate
				percentage
			Number of	of issued
			Ordinary	Ordinary
**Name **	of Shareholders	Type of interests	Shares	Shares
Inspur	Group Limited	Interest in a controlled	1,354,390,000	37.17%
		corporation (Note)
Inspur	Electronics (HK) Limited	Beneficial owner	1,354,390,000	37.17%

Note:

1. Inspur Group Limited is taken to be interested in 1,354,390,000 Ordinary Shares because it holds 100% issued share capital of Inspur Electronics (HK) Limited.

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

3. Mr. Sun Pishu and Mr. Xin Wei Hua, who are directors of the Company, are also directors of Inspur Electronics (HK) Limited.

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APPENDIX

GENERAL INFORMATION

Long positions in Preferred Shares

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

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 Ordinary 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 24.33% 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 Group

			Approximate
	Types of		percentage of
Name of shareholders	Interest	Equity interest held	shareholding
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)資訊科技有限公司
Fang Wen Sheng	Beneficial	RMB225,000 in the registered	37.5%
	Owner	capital of Jinan Inspur
		Fangzhi Information
		Technology Limited#
		(濟南浪潮方智信息技術有限公司)
Bao JianHua	Beneficial	RMB90,000 in the registered	15%
	Owner	capital of Jinan Inspur
		Fangzhi Information
		Technology Limited#
		(濟南浪潮方智信息技術有限公司)

# English name is for identification purpose only

— 18 —

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 Group.

3. DIRECTORS’ OTHER INTEREST

As at the Latest Practicable Date, so far as the Directors are aware of, none of themselves or their respective associates had any interest in a business which competes or may compete with the business of the Group or have 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 2008, 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. 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 2008, being the date to which the latest audited financial statements of the Company were made up.

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GENERAL INFORMATION

APPENDIX

6. 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 out 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 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 2008), 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.

7. 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 Fund Services (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 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.

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GENERAL INFORMATION

APPENDIX

8. 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 9 of this circular;

• (ii) the letter of advice from REXCAPITAL, the text of which is set out on pages 10 to 15 of this circular;

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

• (iv) the Acquisition Agreement.

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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, 2 July 2009 at Hong Kong International Trade & Exhibition Center, 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 equity interest transfer agreement dated 1 June 2009 (the “Acquisition Agreement” ) entered into between Shandong Inspur Light and Electricity Technology Limited (山東浪潮 光電科技有限公司) and Shandong Inspur Leasing Limited (山東浪潮租賃有限公司), as vendors 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 100% interest in Jinan Inspur Communication Limited (濟南浪潮數字通信有限公司), a copy of the Acquisition Agreement has been tabled at the meeting marked “A” and initialed 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, execute and seal, where applicable, 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, 15 June 2009

* For identification purpose only

— 22 —

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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