THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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.

If you are in doubt as to any aspect of this circular, you should consult your 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 and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

Independent financial adviser to the Independent Board Committee and the independent shareholders of the Company

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FIRST SHANGHAI CAPITAL LIMITED

A notice convening an Extraordinary General Meeting (“EGM”) of Inspur International Limited to be held at Flats B&C, 30/F., Tower A, Billion Center, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong on Monday, 15 August 2011 at 10:00 a.m. is set out on pages 44 to 46 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Such form of proxy is also published on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk.

Whether or not you intend to attend the EGM, you are requested to complete the form of proxy and return the same to the office of the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, 17M 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.

29 July 2011

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letters from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Letter of advice from First Shanghai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44

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DEFINITIONS

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

“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Common Services Transactions” the transactions in relation to provision of the services in respect of use of premises, water, electricity, heating and motor vehicles by the Inspur Group to the Group under the Framework Agreement and the new Framework Agreement
“Company”

Inspur International Limited, an exempted company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

“connected person(s)” has the meaning ascribed to it under the Listing Rules
“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, (i) the Supplemental Agreement and the proposed New Caps (Microsoft); and (ii) the New Framework Agreement and the proposed New Caps (Inspur Group)
“First Shanghai” First Shanghai Capital Limited, a licensed corporation to carry on type 6 regulated activity (advising on corporate finance) under the SFO, being the independent financial adviser appointed to advise: (i) the Independent Board Committee and the Independent Shareholders (Microsoft) on the fairness and reasonableness of the Supplemental Agreement and the New Caps (Microsoft) and the transactions contemplated thereunder; and (ii) the Independent Board Committee and the Independent Shareholders (Inspur Group) on the fairness and reasonableness of the New Framework Agreement and New Caps (Inspur Group) and the transactions contemplated thereunder
“Framework Agreement” the agreement dated 12 January 2009 between the Company and the IPG in relation to Inspur Group CCT for the three years ending 31 December 2011 (as supplemented by the supplemental agreement dated 7 June 2010 between the parties)

“Group” the Company and its subsidiaries

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DEFINITIONS

“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. Zhang Tiqin and Mr. Wong Lit Chor, Alexis, all being the independent non-executive directors of the Company, to (i) advise the Independent Shareholders (Microsoft) as to the fairness and reasonableness of the MMOS Agreement and the Supplemental Agreement; and (ii) to advise the Independent Shareholders (Inspur Group) as to the fairness and reasonableness of the New Framework Agreement

“Independent Shareholders Shareholders other than IPG and its associates (Inspur Group)”
“Independent Shareholders (Microsoft)”

Shareholders other than Microsoft and its associates

“Inspur Business”
“Inspur Business” Shandong Inspur Business System Company Limited (山東浪潮商用系統有限公司), a domestic limited liability company established under the laws of the PRC, a wholly owned subsidiary of the Company
“Inspur Cheeloo” Shangdong Inspur Cheeloosoft Company Limited (山東浪潮齊魯軟件產業有限公司), a company incorporated in the PRC, a subsidiary of IPG
“Inspur Communication” Inspur Communication Information System Limited (浪潮通信資訊系統有限公司), a domestic limited liability company established under the laws of the PRC, a wholly owned subsidiary of the Company
“Inspur Worldwide Services” Inspur Worldwide Services Limited (浪潮世科（山東）信息技術有限公司)
“Inspur Group CCT” the continuing connected transactions of the Company under the Framework Agreement and New Framework Agreement, including the Supply Transactions, Selling Agency Transactions, Purchase Transactions, Common Services Transactions and Processing Transactions
“Inspur Group” IPG and its subsidiaries

“Inspur 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 and a subsidiary of the Company

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DEFINITIONS

“IPG” 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 35.72% of the existing issued ordinary shares of the Company “Latest Practicable Date” 27 July 2011, 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

“Master Services Agreement” the agreement dated 1 April 2005 between Microsoft and Inspur Worldwide Services, varied and amended by the supplemental agreement dated 26 September 2008, in relation to Services for a term ended 30 June 2011
“Microsoft” Microsoft Corporation, a corporation incorporated in the USA and holder of the Preferred Shares

“Microsoft CCT” the provision of the Services by Inspur Worldwide Services from time to time under the Master Services Agreement or MMOS Agreement “MMOS Agreement” the Microsoft Master Outsourced Services Agreement dated 27 May 2010 between Inspur Worldwide Services and Microsoft which is a standard agreement as to terms of the services to be provided to Microsoft “Ordinary Share(s)” ordinary share(s) of HK$0.002 each in the share capital of the Company “New Caps (Inspur Group)” the new annual caps of the Inspur Group CCT to be entered into by the relevant parties for the three financial years ending 31 December 2013 under the following categories: Supply Transactions, Selling Agency Transactions (value of transactions), Selling Agency Transactions (related commission), Purchase Transactions, Common Services Transactions and Processing Transactions “New Caps (Microsoft)” the new annual caps of the Microsoft CCT to be entered into for the periods of: the six months ending 31 December 2011, year ending 31 December 2012, year ending 31 December 2013 and six months ending 30 June 2014

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DEFINITIONS

“New Framework Agreement”
the conditional agreement dated 15 July 2011 between the Company and the IPG in relation to Inspur Group CCT for the three years ending 31 December 2013
“PRC”

the People’s Republic of China

“Preferred Shares”

251,090,335 series A senior redeemable convertible voting preferred shares attached with rights of conversion to 1,188,208,571 Ordinary Shares issued by the Company to Microsoft Corporation

“Processing Transactions” transactions in relation to the provision of procurement of raw materials of and assembling and manufacturing tax-collection cashier machines by Inspur Cheeloo to Inspur Business under the Framework Agreement and the New Framework Agreement
“Purchase Transactions” transactions in relation to purchase of IT products by the Group from the Inspur Group under the Framework Agreement and the New Framework Agreement
“Selling Agency Transactions” transactions in relation to sale of various IT service products by the Group to the Inspur Group which is acting as selling agent of the Group and sale of various IT products by the Group to the Inspur Group under subcontracting arrangement of software development and maintenance business under the Framework Agreement and the New Framework Agreement
“Services”
the services provided by Inspur Worldwide Services to Microsoft pursuant to the terms of the Master Services Agreement or MMOS Agreement which may include, but not limited to, the development and/or delivery of any materials, inventions, ideas, designs, concepts, techniques, discoveries, or improvements in relation to software development
“SFO”
Securities and Futures Ordinance (chapter 571 of the laws of Hong Kong)
“Share(s)” Ordinary Share(s) and Preferred Share(s) “Shareholder(s)” holder(s) of the Share(s)

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DEFINITIONS

“SOW”	any of the following which describe the Services and/or
	deliverables (as defined below) which are ordered by
	Microsoft and accepted by Inspur Worldwide Services in
	accordance with MMOS Agreement:
	(i) purchase order of Microsoft;
	(ii) electronic statement of work transmitted by Microsoft;
	or
	(iii) written agreement signed by authorised representatives
	of both parties of the MMOS Agreement expressly
	referencing the MMOS Agreement.
	“deliverables” means any development that is a tangible piece
	of work product created by Inspur Worldwide Services at the
	direction of Microsoft or its affiliates under MMOS
	Agreement and that is delivered to Microsoft or its affiliates
	under MMOS Agreement
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Supplemental Agreement”	the supplemental agreement to the MMOS Agreement signed
	on 27 June 2011 by Microsoft and Inspur Worldwide Services
	in relation to setting of New Caps (Microsoft)
“Supply Transactions”	transactions in relation to supply and provision of products
	and services by the Group to the Inspur Group under the
	Framework Agreement and the New Framework Agreement
“USA”	The United States of America
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“US$”	US dollars, the lawful currency of the USA
“%”	per cent

For the purpose of illustration in this circular, figures in United States dollars and Renminbi are translated into Hong Kong dollars at the approximate exchange rates of US$1.00 to HK$7.80 and RMB1.00 to HK$1.187 respectively. In addition, all the English translation of certain 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.

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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. Wang Xingshan Mr. Chen Dongfeng Mr. Dong Hailong

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

Independent non-executive Directors:

Mr. Meng Xiang Xu Mr. Zhang Tiqin Mr. Wong Lit Chor, Alexis

Head office and principal place of business in Hong Kong: Flats B & C, 30/F. Tower A, Billion Centre 1 Wang Kwong Road Kowloon Bay Kowloon Hong Kong 29 July 2011

To the Shareholders

Dear Sir or Madam,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

Reference is made to the Company’s announcement dated 29 June 2011, on 27 June 2011, Inspur Worldwide Services (a wholly owned subsidiary of the Company) entered into the Supplemental Agreement with Microsoft in relation to setting New Caps (Microsoft) for the Services (including outsourced services). As Microsoft is a connected person of the Company, the Microsoft CCT constitutes continuing connected transactions on the part of the Company under the Listing Rules.

In addition, reference is made to the Company’s announcement dated 15 July 2011, on 15 July 2011, the Company (for itself and on behalf of the other members of the Group) entered into the New Framework Agreement with Inspur Group Limited (“IPG”) (for itself and on behalf of the other

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LETTER FROM THE BOARD

members of the Inspur Group) about the renewal of the Inspur Group CCT for the term of three years ending 31 December 2013. As IPG is a connected person of the Company, the Inspur Group CCT constitutes continuing connected transactions on the part of the Company under the Listing Rules.

The purpose of this circular is to provide you with information regarding, among other things, (i) further information about the MMOS Agreement, the Supplemental Agreement and the proposed New Caps (Microsoft), (ii) further information about the New Framework Agreement and the proposed New Caps (Inspur Group); (iii) the recommendations from the Independent Board Committee to the Independent Shareholders (Microsoft) and Independent Shareholders (Inspur Group), (iv) the letter from First Shanghai to the Independent Board Committee and the Independent Shareholders (Microsoft) and Independent Shareholders (Inspur Group); and (v) notice of the EGM.

BACKGROUND OF MICROSOFT CCT

Reference is made to the announcement and the circular issued by the Company on 28 September 2008 and 17 October 2008 respectively in relation to the Microsoft CCT under the Master Services Agreement which is a standard agreement prepared by Microsoft for services to be provided to Microsoft. On 10 November 2008, the Company obtained the approval of the Independent Shareholders (Microsoft) for the transactions under the Master Services Agreement and the annual caps for the Microsoft CCT has expired on 30 June 2011. Microsoft revised the terms of standard agreement for services to be provided to Microsoft and issued Microsoft Master Outsourced Services Agreement (“ MMOS Agreement ”) in 2010 and Inspur Worldwide Services signed the MMOS Agreement on 27 May 2010 and there is no change to original cap amounts on Microsoft CCT for periods ended 30 June 2011.

MMOS AGREEMENT AND SUPPLEMENTAL AGREEMENT

MMOS Agreement

Inspur Worldwide Services (a wholly subsidiary of the Company) has been appointed by Microsoft under MMOS Agreement to provide Services (including outsourced services). Inspur Worldwide Services will provide to Microsoft the Services under MMOS Agreement as specified in an SOW including services that involve comprehensive, multi-year management or operation of Microsoft’s information technology or internal business processing activities. For the work to be performed under the MMOS Agreement, the parties will agree upon delivery and payment schedule and other terms in SOW. Inspur Worldwide Services will send invoices to Microsoft on the progress payments in accordance with the agreed schedule and usually the full payments will be made upon the completion of the work. Upon receipt of a correct and undisputed invoice from Inspur Worldwide Services, Microsoft is required to pay either (i) within sixty days with no discount on the invoiced amount; or (ii) within 10 days less two percent (2%) discount on the invoiced amount. The pricing terms have been and will be based on the hourly rate of the relevant types of employees of Inspur Worldwide Services who are involved in the provision of the Services. The hourly rates offered to Microsoft are comparable with those offered by Inspur Worldwide Services to independent third parties.The MMOS Agreement is in the standard form of services agreement used by Microsoft. Under the MMOS Agreement, Inspur Worldwide Services will provide to Microsoft the Services with the related particulars set forth in the SOW that Inspur Worldwide Services and Microsoft may execute

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LETTER FROM THE BOARD

from time to time pursuant to the general terms and conditions set forth in the MMOS Agreement. The SOW will include detailed description of the work to be performed by Inspur Worldwide Services, delivery schedule, amount of fee and payment timing and method, and other terms (including technical details of the projects involved).

Supplemental Agreement

As it is expected that the Microsoft CCT contemplated thereunder will continue on a recurring basis, Inspur Worldwide Services and Microsoft entered into the Supplemental Agreement on 27 June 2011 whereby they agreed conditionally the setting of the New Caps (Micosoft) for the three years ending 30 June 2014.

Pursuant to the Supplemental Agreement, the aggregate value of the fees in respect of the work performed by Inspur Worldwide Services under the MMOS Agreement shall not exceed the following limits in respect of their respective periods:

Period Annual Limit 1 July 2011 to 30 June 2012 US$16,410,000 (equivalent to about HK$127,998,000) 1 July 2012 to 30 June 2013 US$20,680,000 (equivalent to about HK$161,304,000) 1 July 2013 to 30 June 2014 US$25,360,000 (equivalent to about HK$197,808,000)

Note: the year end date of the above annual limits is set at 30 June as this coincides with the financial year end date of Microsoft.

The Supplemental Agreement is conditional upon the approval of the Independent Shareholders (Microsoft) on the Supplemental Agreement in the EGM.

Under the Supplemental Agreement, other than the setting of the proposed New Caps (Microsoft), all other terms and conditions of the MMOS Agreement remain in force and unchanged.

The aggregate amount of the Microsoft CCT from 1 July 2011 to the Latest Practicable Date is about US$212,492 (equivalent to about HK$1,657,438) which is below the thresholds under Rule 14A.34 of the Listing Rules. Prior to the obtaining of the approval of the Independent Shareholders (Microsoft), the Company will ensure the amount of the Microsoft CCT from 1 July 2011 will not exceed the thresholds under Rule 14A.34 of the Listing Rules.

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LETTER FROM THE BOARD

ANNUAL CAPS OF MICROSOFT CCT

Historical amounts of Microsoft CCT for the recent years

Set out below are the historical amounts of Microsoft CCT for the three years ended 31 December 2010 and the six months ended 30 June 2011:

Value of From 3 July 2008 to Year ended Year ended Six months ended Transactions 31 December 2008 31 December 2009 31 December 2010 30 June 2011 (Note) Historical amounts US$4,330,000 US$6,100,000 US$6,030,000 US$5,382,900 (equivalent to about (equivalent to about (equivalent to about (equivalent to about HK$33,774,000) HK$47,580,000) HK$47,034,000) HK$41,986,620) Approved Caps US$5,540,000 US$13,670,000 US$20,510,000 US$14,150,000 (equivalent to about (equivalent to about (equivalent to about (equivalent to about HK$43,212,000) HK$106,626,000) HK$159,978,000) HK$110,370,000)

Note:

The Microsoft CCT have become continuing connected transactions of the Company with effect from 3 July 2008 which is the date of the completion of the acquisition of the holding company of Inspur Worldwide Services by the Company, since then Inspur Worldwide Services becomes a subsidiary of the Group.

Proposed caps in respect of Microsoft CCT for the three years

The amounts of the proposed New Caps (Microsoft) in respect of the Microsoft CCT subject to the approval of the Independent Shareholders (Microsoft) for the following periods are set out as below:

	Six months ending	Year ending	Year ending	Six months ending
	31 December 2011	31 December 2012	31 December 2013	30 June 2014
Proposed New Caps	US$8,550,000	US$18,720,000	US$23,400,000	US$11,789,400
(Microsoft)	(equivalent to about	(equivalent to about	(equivalent to about	(equivalent to about
	HK$66,690,000)	HK$146,016,000)	HK$182,520,000)	HK$91,957,320)

With reference to historical transaction amounts, the management of the Group has derived the distribution ratio of revenue for the first and second half of the year, where 42% of yearly revenue is generated in the first half of the year and 58% of yearly revenue is generated in the second half of the year, for the determination ofthe New Caps (Microsoft) which are for half-year periods.

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LETTER FROM THE BOARD

Despite the historical transaction amounts of the Microsoft CCT remained fairly stable, the New Caps (Microsoft) is determined upon the following basis: (i) the Group enhanced its cooperation with strategic contractors such as Microsoft by developing new products, providing solutions, marketing and promotion in order to achieve a sustainable and stable growth of its software outsourcing business; (ii) the Group has further cooperated with diverse divisions and product units in Microsoft including those related to cloud computing, windows products and genuine software; and (iii) the governmental support to the software industry in the PRC, therefore the transaction amounts of the Microsoft CCT is expected to grow in the future. In addition, annual growth rates of 27%, 25% and 20% for each of the years ending 31 December 2012, 2013 and 2014 were adopted for determining the annual growth of the New Caps (Microsoft). The above annual growth rates are determined by the Group based on its understanding of the expected growth of software outsourcing business in the PRC in the coming three years with reference to the relevant reports of market research companies with expertise in information technology in the PRC (such as International Data Corporation).

REASONS FOR AND BENEFITS OF ENTERING INTO SUPPLEMENTAL AGREEMENT

It is expected that the Microsoft CCT will continue on a recurring basis. By entering into the Supplemental Agreement, Inspur Worldwide Services can continue the provision of Services which will generate significant revenue to the Group.

The Directors consider that the transactions under the MMOS Agreement are on normal commercial terms and entered in the ordinary and usual course of business of the Group. In view of the above reasons, the Directors are also of the view that the terms of the Microsoft CCT (including the proposed New Caps (Microsoft)) are fair and reasonable and the entering into the Microsoft CCT by Inspur Worldwide Services is in the interest of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES FOR MICROSOFT CCT

Information on the Group and Microsoft

The Group is an integrated IT services provider with services covering taxation, Finance, ERP, telecommunication, e-government sectors and software outsourcing services. Inspur Worldwide Services is a wholly foreign owned company established in the PRC and is principally engaged in provision of outsourcing development services in the PRC.

Microsoft is a leading software company in the world. Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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LETTER FROM THE BOARD

Implication under the Listing Rules

As Microsoft is the holder of the Preferred Shares and is entitled to voting rights of 1,188,208,571 Ordinary Shares (representing approximately 23.86% of the total voting rights of the holders of the Ordinary Shares and Preferred Shares), Microsoft is a connected person of the Company and the Microsoft CCT constitute continuing connected transactions on the part of the Company under the Listing Rules. As the amounts of the proposed New Caps (Microsoft) of the Microsoft CCT exceed the thresholds set out in Rule 14A.34 of the Listing Rules, the Microsoft CCT will be subject to the reporting, announcement and independent shareholders’ approval requirements pursuant to Rule 14A.35 of the Listing Rules. Microsoft and its associates will abstain from voting in the EGM to be convened in respect of the resolution approving the Microsoft CCT and the proposed New Caps (Microsoft) in relation to the Microsoft CCT.

None of the Directors have a material interest in the Supplemental Agreement and transactions contemplated thereunder or need to abstain from voting on the board resolution approving the Supplemental Agreement and the transactions contemplated thereunder.

The Company will seek the approval by the Independent Shareholders (Microsoft) by way of a poll in the EGM of the Supplemental Agreement and the proposed New Caps (Microsoft).

Independent Board Committee comprising the independent non-executive Directors has been formed to advise the Independent Shareholders (Microsoft) on the terms of the Supplemental Agreement and the proposed New Caps (Microsoft) and First Shanghai has been appointed as an independent financial adviser to advise the Independent Board Committee in respect of the terms of the Supplemental Agreement and the proposed New Caps (Microsoft) in relation to the Microsoft CCT.

BACKGROUND OF INSPUR GROUP CCT

Reference is made to the Company’s announcements dated 12 January 2009 and 7 June 2010 and the Company’s circulars dated 27 February 2009 and 21 June 2010 regarding the Inspur Group CCT. On 16 March 2009, the Company has obtained the approval of the Independent Shareholders (Inspur Group) for the Inspur Group CCT and the annual caps assigned to the transactions for the three financial years ended 31 December 2011. Due to the expected increase in the Supply Transactions, on 14 July 2010 the Company has obtained the approval of the Independent Shareholders (Inspur Group) of the revised caps for the Supply Transactions for the two years ending 31 December 2011. Because of the expected increase transaction amounts of the Selling Agency Transactions and Common Services Transactions, the Company has entered into the New Framework Agreement with Inspur Group in respect of the New Caps (Inspur Group) for the three financial years ending 31 December 2013 and will ask for approval of the Independent Shareholders (Inspur Group) of the New Framework Agreement and the New Caps (Inspur Group).

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LETTER FROM THE BOARD

INSPUR GROUP CCT

The Inspur Group CCT comprises: Supply Transactions, Selling Agency Transactions, Purchase Transactions, Common Services Transactions and Processing Transactions.

1. Supply Transactions

Types of products and services

The members of the Group supply and provide the members of the Inspur Group with various IT products and IT services from time to time including without limitation the following three types of products and services:

(i) Computer products and components including without limitation CPU, integrated circuit, computer mainboards where the Group is acting as the sourcing agent of the Inspur Group for overseas products and components;
(ii) IT hardware products including without limitation personal computers and computer components designed, developed or otherwise processed by the Group for the purpose of overseas export; and
(iii) IT services without limitation the services related to the development of cards used in personal computers and electronic products, sourced software, ERP software and those software developed by the Group.

Pricing and other terms

(i) Sourcing of overseas products for Inspur Group

The Inspur Group pays a premium of not less than 1.5% above the purchase price paid by the Group, without taking into account of rebates received from the suppliers, for all computer components sources overseas by the Group on their behalf.

(ii) Provision of other IT products and services

The members of the Group supply the IT products and IT services to the members of the Inspur Group. The actual quantity, specification, delivery date and price of the IT products and the amount of fees and detailed terms and conditions of the IT services to be provided by the members of the Group are subject to the individual orders places by the members of the Inspur Group with the relevant member of the Group. The parties have agreed that:

(a) the price per unit of the IT products and the service fees of the IT services to be supplied or provided by a relevant member of the Group will be agreed between the parties by reference to, among other factors, the then prevailing market rates of such IT products and IT services; and

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LETTER FROM THE BOARD

(b) the Group shall not be obliged to accept any terms and conditions for the supply or provision of the IT products and IT services which are less favourable than those agreed between any member of the Group and its independent third party customers for the IT products and IT services.

Payment terms

The Group gives two-month credit period for the Inspur Group to settle the amount of the IT products after delivery and the service fees of the IT services after completion of the performance of the services.

2. Selling Agency Transactions

The Group appoints the Inspur Group as its selling agent in respect of various IT service products (including supply of IT products together with related services in both software development and software maintenance) of the Group (such as e-government service products, ERP software, finance software, communication software and other similar products). Some of the business may be generated from public tenders made by the Inspur Group. The Group will be involved in participation in negotiation and finalization of the terms of supply of IT products and related services to the ultimate third party customers and to ensure that the supply of IT products and related services is on normal commercial terms. The members of the Inspur Group will place orders to the relevant members of the Group for supply of the products (together with related services) from time to time. After acceptance of the orders by the Group, the Group will directly provide the products and related services to the customers. After the delivery of the products and completion of the performance of the services to the customers, the relevant members of the Inspur Group will issue sales invoices to the customers and the relevant members of Group will issue sales invoice to the Inspur Group for settlement by cash of the price of the products and services fees.

The Group pays selling agency commission of not more than 1% (calculated on the price of the relevant products) to the Inspur Group. The Inspur Group will deduct the related commission from the price received from the customers and pay back the net proceeds to the Group within seven days.

3. Purchase Transactions

Types of products

The Group purchases from the Inspur Group various IT products from time to time including without limitation the following two types of products:

(i) computer software and hardware products (including personal computers and servers under the brand name of “Inspur”); and
(ii) computer components which mainly are used for assembly of computers for overseas market.

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LETTER FROM THE BOARD

Pricing

The members of the Group purchase the computer products and components from the members of the Inspur Group. The actual quantity, specification, delivery date and price of such products to be provided by the members of the Inspur Group are subject to the individual orders places by the members of the Group with the relevant member of the Inspur Group. The parties have agreed that:

(a) the price per unit of the computer products and components to be supplied by a relevant member of the Inspur Group will be agreed between the parties by reference to, among other factors, the then prevailing market prices of such products at the relevant time; and
(b) the Group shall not be obliged to accept any terms and conditions for the purchase of the computer products and components which are less favourable than those agreed between any member of the Inspur Group and its independent third party purchasers for the computer products and components.

Payment terms

The Inspur Group gives two-month credit period for the Group to settle the price of the products after delivery. The Group makes the payment out of the Group’s internal resources.

4. Common Services Transactions

Inspur Group provides services in respect of use of premises, water, electricity, heating and motor vehicles (“common services”) to various members of the Group at fees determined on normal commercial terms and by arm’s length negotiation, or on terms no less favourable to the Group than terms available to or from other parties (based on services of same category). In general, the above fees are billed on a monthly basis and will be satisfied by cash out of the internal resources of the Group.

5. Processing Transactions

Inspur Business has appointed Inspur Cheeloo to provide services of procurement of raw materials of and assembling and manufacturing tax-collection cashier machines at processing fee calculated at 5% of the value of the raw materials and the said rate is comparable to the rates in the market. In general, Inspur Business pays the price of the tax-collection cashier machines (including the related processing fees) within 30 days after receipt of the goods by cash out of its own internal resources.

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LETTER FROM THE BOARD

ANNUAL CAPS OF INSPUR GROUP CCT

Set out below are the historical amounts of the Inspur Group CCT for the two years ended 31 December 2010 and the six months ended 30 June 2011 (with the relevant annual caps approved by the Independent Shareholders (Inspur Group) set out in brackets):

	Year ended	Year ended		six months
	31 December	31 December	ended 30 June
(All amounts in HK$’000)	2009	2010		2011
Supply Transactions	393,259	729,971		196,102
	(400,000)	(730,000)		(331,000)
Selling Agency Transactions
— (value of transactions)	73,670	123,925		144,654
	(108,000)	(125,000)		(145,000)
— (related commission)	647	862		1,193
	(1,080)	(1,250)		(1,450)
Purchase Transactions	123,504	142,596		19,104
	(132,000)	(145,000)		(160,000)
Common Services Transactions	5,606	8,245		5,476
	(7,700)	(8,470)		(9,317)
Processing Transactions	156,180	181,781		58,057
	(166,667)	(222,222)		(277,778)

From the review of the historical amounts for the six months in 2011, it is found that there is significant increase in the following transactions:

(1) In respect of the Selling Agency Transactions, there is significant increase in the business general from public tenders of government projects made by Inspur Group for the six months ended 30 June 2011. It is expected in the remaining part of the year 2011, the value of transactions under Selling Agency Transaction will be around RMB214,000,000 and the existing annual cap in 2011 is not adequate to cater for such increase in business.
(2) In respect of Common Services Transactions, following the relocation of offices of the members of the Group into new premises owned by Inspur Group and the expansion of the business of the Group, the transaction amount of Common Services Transactions in the six months ended 30 June 2011 have been increased to about HK$5,476,000 and the existing annual cap in 2011 is not adequate for business expansion purpose.

The lower historical transaction amount of the Purchase Transactions and the Processing Transactions for the six months ended 30 June 2011 is a temporary cyclic phenomenon in those months. The amount is expected to rebound for the remaining months in 2011 due to the expansion of the business.

— 15 —

LETTER FROM THE BOARD

NEW FRAMEWORK AGREEMENT AND NEW CAPS (INSPUR GROUP)

On 15 July 2011, the Company (for itself and on behalf of the other members of the Group) entered into the New Framework Agreement with Inspur Group Limited (“ IPG ”) ((for itself and on behalf of the other members of the Inspur Group) about the Inspur Group CCT for the term of three years ending 31 December 2013. The New Framework Agreement is conditional upon the obtaining of the approval of the Independent Shareholders (Inspur Group) of the New Framework Agreement and the transactions contemplated thereunder and the New Caps (Inspur Group) on or before 31 August 2011 (or any other later date as agreed by the parties).

The New Caps (Inspur Group) under the New Framework Agreement are:

	Year ending	Year ending	Year ending
	31 December	31 December	31 December
(All amounts in ’000)	2011	2012	2013
Supply Transactions	HK$345,000	HK$380,000	HK$418,000
Selling Agency Transactions
— (value of transactions)	RMB333,000	RMB366,000	RMB400,000
— (related commission)	RMB3,330	RMB3,660	RMB4,000
Purchase Transactions	HK$160,000	HK$176,000	HK$193,000
Common Services Transactions	RMB13,000	RMB14,300	RMB15,730
Processing Transactions	RMB182,000	RMB200,000	RMB220,000

Note: the above annual cap amounts do not include any tax or duty (such as VAT).

The factors which have been taken into account by the Company for determination of the above new Caps (Inspur Group) : (a) recent historical amounts (details are set out above) (ii) annual growth rates of the relevant transactions with reference to the average industry growth rate and the expected growth rates are: (i) Supply Transactions (2011: 18%, 2012 and 2013: 10%); (ii) Selling Agency Transactions (10%); (iii) Purchase Transactions (10%); (iv) Common Services Transactions (10%); and (v) Processing Transactions (10%). For the Common Services Transactions, the increase is mainly due to rise in rental expenses resulting from the following: (i) a substantial number of the departments and members of the Group have moved to the new premises of the Inspur Group resulting in rise in rental areas; and (ii) increase in rate of rent as the new premises can offer new and improved facilities.

For the Purchase Transactions, the lower historical transaction amount of the Purchase Transactions for the six months ended 30 June 2011 is a temporary cycle and the transaction amount is expected to rebound for the remaining months in 2011 due to, inter alia, the governmental support to the software industry in the PRC and the endeavours of the Group to improve the relevant business. From the past records of Purchase Transactions in recent years, the monthly amount of Purchase Transactions fluctuates significantly (from a few million Hong Kong dollars to forty million Hong Kong dollars). In addition, the amount of Purchase Transactions with the Inspur Group represents a small portion of the total purchase amounts of the Group which is less than 10% on the average. The Group will enter into Purchase Transactions with Inspur Group when the terms of such transactions

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LETTER FROM THE BOARD

are favourable (from the viewpoint of the Group) as compared with transactions with other parties. Given the historical annual amount of Purchase Transactions in 2009 and 2010 being HK$123 million and HK$142 million, the transaction amount will rebound in the remaining months in 2011. The annual cap for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 12%. The annual cap for each of the years ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the annual growth rate.

For the Processing Transactions, the lower historical transaction amount of the Processing Transactions for the six months ended 30 June 2011 is a temporary cycle and the transaction amount is expected to rebound for the remaining months in 2011 due to, inter alia, the improvement in the general economy in the PRC and the endeavours of the Group to improve the relevant business. The annual cap for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 18%, and the annual cap for each of the year ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the annual growth rate.

INFORMATION ON THE GROUP AND INSPUR GROUP

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

IPG is an investment holding company established in the PRC. Inspur Group devotes itself to be the leading suppliers of Cloud Computer Solutions in China. Inspur Group provides IT services and products to the customers in more than 20 countries, meeting the information-based demands of governments and corporations all-around.

REASONS FOR AND BENEFITS OF ENTERING INTO NEW FRAMEWORK AGREEMENT

By entering into New Framework Agreement, the Group can continue to derive benefits from the Inspur Group CCT which can capture the synergic advantages of both the Group and the Inspur Group (including the established worldwide client network of Inspur Group).

The Directors consider that the transactions under the New Framework Agreement are on normal commercial terms and entered into in the ordinary and usual course of business of the Group. In view of the above reasons, the Directors are of the view that the Inspur Group CCT are in the interests of the Company and the Shareholders as a whole.

Since Mr. Sun Pishu is a director of IPG and he has material interest in the New Framework Agreement, he has abstained from voting on the board resolution approving the New Framework Agreement.

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LETTER FROM THE BOARD

IMPLICATION UNDER THE LISTING RULES FOR INSPUR GROUP CCT

IPG is a company established in the PRC and is beneficially owned as to approximately 38.88% by 山東省國有資產投資控股有限公司 (Shandong State-owned Asset Investment Holdings Co., Ltd), 25% by 山東德盛信息科技發展有限公司 (Shandong Desheng Information Technology Limited), approximately 16.13% by 濟南裕澤信息科技有限公司 (Jinan Yuze Information Technology Limited), and approximately 19.99% by 英大國際信託有限責任公司 (Yingda International Trust Co., Ltd) which holds such shares on behalf of 濟南普特投資有限公司 (Jinan Pute Investment Limited), the actual contributor of those shares.

Through its wholly owned subsidiary, Inspur Electronics (HK) Limited, being the controlling shareholder of the Company, IPG is interested in 1,354,390,000 Ordinary Shares at the Latest Practicable Date, representing approximately 35.72% of the issued ordinary share capital of the Company. Under the Listing Rules, IPG is a connected person of the Company and the transactions contemplated under the New Framework Agreement constitute continuing connected transactions of the Company. For the calculation of the relevant percentage ratios under the Listing Rules, in view of the fact that the counterparties of the Inspur Group CCT are of the same group of companies (i.e. members of the Inspur Group), the annual cap amounts for the Supply Transactions and Selling Agency Transactions (value of transactions) are aggregated together as they involve cash inflow from the Group while the annual cap amounts of the Purchase Transactions, Common Services Transactions, Processing Transactions and Selling Agency Transactions (commission payments) are aggregated together as they involve cash outflow to the Group. As the aggregate of the annual amounts of the Inspur Group CCT under the New Framework Agreement are expected to exceed the thresholds set out in Rule 14A.34 of the Listing Rules, the Inspur Group CCT will be subject to the reporting, announcement and independent shareholders’ approval requirements pursuant to Rules 14A.35 of the Listing Rules. IPG, its ultimate beneficial owners and their respective associates will abstain from voting in the EGM to be convened in respect of the resolution approving the Inspur Group CCT.

EGM

Set out on pages 44 to 46 of this circular is a notice convening the EGM which will be held at Flats B & C, 30/F, Tower A, Billion Centre, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong at 10:00 a.m. on Monday, 15 August 2011 at which resolutions will be proposed to approve (i) the Supplemental Agreement and the proposed New Caps (Microsoft); and (ii) the New Framework Agreement and the proposed New Caps (Inspur Group).

Resolution approving Microsoft CCT

The Supplemental Agreement and the proposed New Caps (Microsoft) are subject to, among other things, the approval by the Independent Shareholders (Microsoft) at the EGM to be taken by way of a poll. Microsoft and its associates shall abstain from voting for the relevant resolution approving the Supplemental Agreement and the proposed New Caps (Microsoft) 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, Microsoft (including its associates) is the holder of the Preferred Shares and is entitled to voting rights of 1,188,208,571 Ordinary Shares (representing approximately 23.86% of the total voting rights of the

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LETTER FROM THE BOARD

holders of the Ordinary Shares and Preferred Shares). Microsoft (including its associates) controls or is entitled to control over the entire voting right in respect of its Preferred Shares. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon Microsoft (including its associates); and (ii) no obligation or entitlement of Microsoft (including its 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 Preferred Shares to a third party, either generally or on a case-by-case basis.

Resolution approving Inspur Group CCT

The New Framework Agreement and the proposed New Caps (Inspur Group) are subject to, among other things, the approval by the Independent Shareholders (Inspur Group) at the EGM to be taken by way of a poll. IPG and its associates shall abstain from voting for the relevant resolution approving the New Framework Agreement and the proposed New Caps (Inspur Group) 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, IPG (including its associates) is entitled to voting rights of 1,354,390,000 Ordinary Shares (representing approximately 27.20% of the total voting rights of the holders of the Ordinary Shares and Preferred Shares). IPG (including its associates) controls or is entitled to control over the entire voting right in respect of its Ordinary Shares. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon IPG (including its associates); and (ii) no obligation or entitlement of IPG (including its 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 Ordinary Shares to a third party, either generally or on a case-by-case basis.

A form of proxy for the EGM is enclosed. Whether or not you wish to attend the EGM, you are requested to complete the form of proxy and return the same to the office of the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited, 17M 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.

RECOMMENDATIONS

The Independent Board Committee has been established:

(i) to advise the Independent Shareholders (Microsoft) whether the terms of the Supplemental Agreement and the proposed New Caps (Microsoft) are fair and reasonable so far as the Independent Shareholders (Microsoft) are concerned; and
(ii) to advise the Independent Shareholders (Inspur Group) whether the terms of the New Framework Agreement and the proposed New Caps (Inspur Group) are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

— 19 —

LETTER FROM THE BOARD

First Shanghai has been appointed to advise the Independent Board Committee and the Independent Shareholders (Microsoft) and Independent Shareholders (Inspur Group) in that connection.

The text of the letters from First Shanghai containing its advice to: (i) the Independent Board Committee and the Independent Shareholders (Microsoft); and (ii) the Independent Board Committee and the Independent Shareholders (Inspur Group) is set out on pages 23 to 37 of this circular and the text of the letters from the Independent Board Committee to the Independent Shareholders (Microsoft) and the Independent Shareholders (Inspur Group) are set out on pages 21 and 22 respectively of this circular.

The Independent Board Committee, having taken into account the advice of First Shanghai, is of the opinion that

(i) the terms of the Supplemental Agreement and the proposed New Caps (Microsoft) are fair and reasonable and are in the interest of the Company and the Shareholders as a whole and recommends the Independent Shareholders (Microsoft) to vote in favour of the resolution approving the Microsoft CCT to be proposed at EGM; and
(ii) the terms of the New Framework Agreement and the proposed New Caps (Inspur Group) are fair and reasonable and are in the interest of the Company and the Shareholders as a whole and recommends the Independent Shareholders (Inspur Group) to vote in favour of the resolution approving the Inspur Group CCT to be proposed at EGM.

The Board considers that

(i) the entering into the Supplemental Agreement and the approval of the proposed New Caps (Microsoft) are both in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders (Microsoft) to vote in favour of the resolution approving the Microsoft CCT to be proposed at EGM; and
(ii) the entering into the New Framework Agreement and the approval of the proposed New Caps (Inspur Group) are both in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders (Inspur Group) to vote in favour of the resolution approving the Inspur Group CCT to be proposed at EGM.

ADDITIONAL INFORMATION

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

Yours faithfully For and on behalf of the Board of Inspur International Limited Mr. Sun Pishu Chairman

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LETTERS 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)

29 July 2011

To the Independent Shareholders (excluding Microsoft Corporation and its associates)

Dear Sir or Madam,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH MICROSOFT

We refer to the circular dated 29 July 2011 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 Supplemental Agreement and the proposed New Caps (Microsoft) and to advise the Independent Shareholders (Microsoft) as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders (Microsoft) should vote at the EGM. First Shanghai has been appointed to advise the Independent Board Committee and the Independent Shareholders (Microsoft) in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 6 to 21 of the Circular, and the letter from First Shanghai to the Independent Board Committee and the Independent Shareholders (Microsoft) and others which contains its advice to us in respect of the Supplemental Agreement and the proposed New Caps (Microsoft), as set out on pages 23 to 37 of the Circular.

Having taken into account of the advice of First Shanghai, we consider that (i) the Supplemental Agreement to be entered into upon normal commercial terms, and the continuing connected transactions contemplated thereunder to be entered into in the ordinary and usual course of business of the Group and they are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and (ii) the proposed New Caps (Microsoft) are fair and reasonable insofar as the Company and the Shareholders as whole. Accordingly, we recommend the Independent Shareholders (Microsoft) to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Supplemental Agreement and the proposed New Caps (Microsoft).

Yours faithfully,

the Independent Board Committee Meng Xiang Xu Zhang Tiqin Wong Lit Chor, Alexis Independent non-executive Independent non-executive Independent non-executive Director Director Director

— 21 —

LETTERS 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)

29 July 2011

To the Independent Shareholders (excluding Inspur Group Limited and its associates)

Dear Sir or Madam,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH INSPUR GROUP

We have been appointed as members of the Independent Board Committee to consider the New Framework Agreement and the proposed New Caps (Inspur Group) and to advise the Independent Shareholders (Inspur Group) as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders (Inspur Group) should vote at the EGM. First Shanghai has been appointed to advise the Independent Board Committee and the Independent Shareholders (Inspur Group) in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 6 to 21 of the Circular, and the letter from First Shanghai to the Independent Board Committee and the Independent Shareholders (Inspur Group) and others which contains its advice to us in respect of the Supplemental Agreement and the proposed New Caps (Inspur Group), as set out on pages 23 to 37 of the Circular.

Having taken into account of the advice of First Shanghai, we consider that (i) the New Framework Agreement to be entered into upon normal commercial terms, and the continuing connected transactions contemplated thereunder to be entered into in the ordinary and usual course of business of the Group and they are fair and reasonable and in the interests of the Company and the Shareholders as whole, and (ii) the proposed New Caps (Inspur Group) are fair and reasonable insofar as the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders (Inspur Group) to vote in favour of the ordinary resolution to be proposed at the EGM to approve the New Framework Agreement and the proposed New Caps (Inspur Group).

Yours faithfully,

the Independent Board Committee Meng Xiang Xu Zhang Tiqin Wong Lit Chor, Alexis Independent non-executive Independent non-executive Independent non-executive Director Director Director

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LETTER OF ADVICE FROM FIRST SHANGHAI

The following is the text of the letter of advice to the Independent Board Committee, the Independent Shareholders (Microsoft) and the Independent Shareholders (Inspur Group) from First Shanghai for the purpose of incorporation into this circular.

==> picture [117 x 51] intentionally omitted <==

FIRST SHANGHAI CAPITAL LIMITED

19th Floor, Wing On House 71 Des Voeux Road Central Hong Kong

29 July 2011

To the Independent Board Committee, the Independent Shareholders (Microsoft) and the Independent Shareholders (Inspur Group)

Dear Sir or Madam,

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement to (i) advise the Independent Board Committee and the Independent Shareholders (Microsoft) in respect of the terms of the Supplemental Agreement (together with the MMOS Agreement, the “ Microsoft Agreements ”) and the New Caps (Microsoft); and (ii) advise the Independent Board Committee and the Independent Shareholders (Inspur Group) in respect of the terms of the New Framework Agreement and the New Caps (Inspur Group), details of which are set out in the circular of the Company to the Shareholders dated 29 July 2011 (the “ Circular ”) of which this letter forms a part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

On 27 June 2011, Inspur Worldwide Services, which is a wholly-owned subsidiary of the Company, entered into the Supplemental Agreement with Microsoft regarding the New Caps (Microsoft) in respect of the transactions contemplated under the MMOS Agreement. On 15 July 2011, the Company entered into the New Framework Agreement with IPG regarding the renewal of the Inspur Group CCT and the New Caps (Inspur Group). As detailed in the letter from the Board, Microsoft is the holder of the Preferred Shares with voting rights and IPG is a controlling shareholder of the Company. Hence, Microsoft and IPG are connected persons of the Company and the transactions contemplated under the Microsoft Agreements and the New Framework Agreement constitute continuing connected transactions of the Company, which are subject to, amongst others, approval by the independent shareholders of the Company by way of poll at the EGM.

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Meng Xiang Xu, Mr. Zhang Tiqin and Mr. Wong Lit Chor, Alexis, has been established

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LETTER OF ADVICE FROM FIRST SHANGHAI

to (i) advise the Independent Shareholders (Microsoft) in respect of the terms of the Supplemental Agreement and the New Caps (Microsoft); and (ii) advise the Independent Shareholders (Inspur Group) in respect of the terms of the New Framework Agreement and the New Caps (Inspur Group). We, First Shanghai Capital Limited, have been appointed to advise the Independent Board Committee, the Independent Shareholders (Microsoft) and the Independent Shareholders (Inspur Group) in this regard.

In putting forth our opinion and recommendation, we have relied on the accuracy of the information and representations included in the Circular and provided to us by the management of the Group, and have assumed that all such information and representations made or referred to in the Circular and provided to us by the management of the Group were true at the time they were made and will continue to be true up to the time of the holding of the EGM. We have also assumed that all statements of belief, opinion and intention made in the Circular were reasonably made after due enquiry. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the management of the Group and have been advised that no material facts have been withheld or omitted from the information provided and referred to in the Circular. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the management of the Group nor have we conducted any form of investigation into the business, affairs or future prospects of the Group, the Inspur Group or Microsoft.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the terms of the Supplemental Agreement and the New Framework Agreement (collectively, the “ Agreements ”), we have taken into account the following principal factors and reasons:

1. Background to and reasons for the entering into of the Agreements

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

Inspur Worldwide Services, which is a wholly-owned subsidiary of the Company, is principally engaged in the provision of outsourcing development services in the PRC. On the other hand, Microsoft is principally engaged in developing, manufacturing, licensing, and supporting a wide range of software products and services for many types of computing devices with offices in more than 100 countries and the common stocks of Microsoft are traded on the NASDAQ Stock Market. We understand that Inspur Worldwide Services has been providing software outsourcing services to Microsoft. As mentioned in the annual report of the Company for the year ended 31 December 2010 (the “ 2010 Annual Report ”), the Group enhanced its cooperation with strategic contractors such as Microsoft by developing new products, providing solutions, marketing and promotion in order to achieve a sustainable and stable growth of its software outsourcing business. In particular, in order to expand its software outsourcing businesses, we are advised that the Group has further cooperated with

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LETTER OF ADVICE FROM FIRST SHANGHAI

diverse divisions and product units in Microsoft including those related to cloud computing, windows products and genuine software. Nonetheless, the previous Master Services Agreement and its respective annual caps in connection with the provision of services to Microsoft were to be expired on 30 June 2011. We understand from the management of the Group that the Group intends to grasp the opportunity to continue to provide services to Microsoft, which may be able to generate revenue to the Group and enhance the reputation of the Group at the same time, hence Inspur Worldwide Services entered into the Microsoft Agreements with Microsoft.

IPG, which is a controlling shareholder of the Company, is an investment holding company established in the PRC. The Inspur Group provides IT products and IT services to customers, which include governments and corporations, in more than 20 countries. We understand from the management of the Group that the Group leverages on the business platform and network of the Inspur Group to facilitate the business development of the Group. We also understand from the management of the Group that the Group has established long term strategic business relationship with the Inspur Group and each type of Inspur Group CCT is either revenue in nature or supports the principal businesses of the Group. Hence, in view of that the previous Framework Agreement will expire on 31 December 2011 and the transaction amounts of certain Inspur Group CCT are expected to increase, the Company entered into the New Framework Agreement with IPG.

Further, in respect of the prospects of the software industry in the PRC, we note that the State Administration of the PRC promulgated “Certain Policies to Further Promote the Development of Software Industry and Integrated Circuit Industry” (進一步鼓勵軟件產業和集成電路產業發展的若干政策) in early 2011, which mentioned that the PRC government would, inter alia , (i) continue to implement favourable value added tax policies for the software industry; and (ii) provide dedicated support to software development projects in the PRC.

Having considered, in particular, (i) the transactions contemplated under the Agreements are in the ordinary and usual course of business and are in line with the development strategy of the Group; (ii) the transactions contemplated under the Agreements are either revenue in nature or supports the principal businesses of the Group; (iii) the Group has already established business relationship with Microsoft, which is a globally renowned corporation, and also with the Inspur Group, which the Group can leverage on its business platform and network; (iv) the governmental support to the software industry in the PRC; and (v) the terms of the Agreements are fair and reasonable as discussed below, we are of the view that the entering into of the Agreements is in the interests of the Company and the Shareholders as a whole.

2. Principal terms of the Microsoft Agreements

As stated in the letter from the Board, the MMOS Agreement is in the standard form of services agreement used by Microsoft, whereas the Supplemental Agreement was entered into to set the New Caps (Microsoft) for the three years ending 30 June 2014.

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LETTER OF ADVICE FROM FIRST SHANGHAI

(i) Principal terms under the MMOS Agreement

Pursuant to the MMOS Agreement, particulars of the scope, fee and other terms of the Services will be described in the individual SOWs to be made by Microsoft, which can be in the form of purchase order, electronic statement or written agreement.

We understand that the pricing terms have been and will be based on the hourly rate of the relevant types of employees involved in the provision of the Services. As such, we have reviewed relevant documents, including the payment schedule of comparable services offered by Inspur Worldwide Services to Microsoft and to independent third parties, and we noted that the hourly rates offered to Microsoft are comparable with those offered to independent third parties.

In respect of payment terms, we understand that Inspur Worldwide Services will primarily offer Microsoft a credit period of 60 days. As such, we have reviewed relevant documents, including contracts for comparable services which Inspur Worldwide Services entered into with Microsoft and with independent third parties, and we noted that the credit period of 60 days offered to Microsoft is comparable with those offered to independent third parties. We also understand that Inspur Worldwide Services will further offer a 2% discount (the “ Early Settlement Discount ”) to Microsoft should Microsoft settle the payment within 10 days. In this regard, after principally taking into account that (i) the Early Settlement Discount is stipulated in the standard form of services agreement used by Microsoft; (ii) the Group offers an average credit period of 30 to 180 days to its customers in general as mentioned in the 2010 Annual Report; and (iii) the early settlement by Microsoft can enhance the working capital position of the Group, we consider that the Early Settlement Discount of merely 2% is acceptable.

In addition to the above, we also understand from the management of the Group that the Group has no contractual obligation under the Microsoft Agreements to provide the Services to Microsoft, therefore the entering into of the Microsoft Agreements would not restrict the Group from utilising its resources to provide similar services to other interested parties should the terms with other parties be more favourable to the Group.

Having taken into account, in particular, (i) the MMOS Agreement is in the standard form of services agreement used by Microsoft; (ii) the principal pricing basis and payment terms offered to Microsoft are comparable with those offered to independent third parties; (iii) the Group has the discretion to decide whether to provide the Services to Microsoft or any other interested parties, whichever would be more favourable to the Group; and (iv) measures are in place as required under the Listing Rules to govern the internal control of the Group as detailed in the section headed “Measures to ensure compliance with the Listing Rules” below, we are of the view that the terms of the MMOS Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders (Microsoft) are concerned.

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LETTER OF ADVICE FROM FIRST SHANGHAI

(ii) New Caps (Microsoft) under the Supplemental Agreement

The following table sets out the relevant historical transaction amounts of the Microsoft CCT and the New Caps (Microsoft) under the Supplemental Agreement:-

		Historical	transaction
		amounts under the Master			New Caps	(Microsoft)
		Services Agreement		under the Supplemental Agreement
			For the	For the
		For the year	six months	six months	For the year	For the year	For the six
		ended	ended	ending	ending	ending	months
		31 December	30 June	31 December	31 December	31 December	ending
		2010	2011	2011	2012	2013	30 June 2014
		(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)
Microsoft	CCT	US$6,030	US$5,383	US$8,550	US$18,720	US$23,400	US$11,789
		(approximately	(approximately	(approximately	(approximately	(approximately	(approximately
		HK$47,034)	HK$41,987)	HK$66,690)	HK$146,016)	HK$182,520)	HK$91,957)
		(note 1)	(note 2)

Notes:

The approved annual cap for the year ended 31 December 2010 was approximately US$20,510,000 (approximately HK$159,978,000)
The approved annual cap for the six months ended 30 June 2011 was approximately US$14,150,000 (approximately HK$110,370,000)

As mentioned in the letter from the Board, the New Caps (Microsoft) were determined after primarily taking into account the historical transaction amounts of the Microsoft CCT, the recent trend in the growth of the Microsoft CCT and the growth rate of the outsourcing development industry in the PRC.

We are advised that, with reference to historical transaction amounts, the management of the Group has derived the distribution ratio of revenue for the first and second half of the year (the “ Distribution Ratio ”), where 42% of yearly revenue is generated in the first half of the year and 58% of yearly revenue is generated in the second half of the year, for the determination of the New Caps (Microsoft) which are for half-year periods. As such, we have reviewed the historical transaction amounts for the recent financial year and we noted that the Distribution Ratio is comparable with the historical distribution ratio of revenue for the first and second half of the year.

Despite the historical transaction amounts of the Microsoft CCT remained fairly stable, we understand that (i) the Group enhanced its cooperation with strategic contractors such as Microsoft by developing new products, providing solutions, marketing and promotion in order to achieve a sustainable and stable growth of its software outsourcing business; (ii) the Group has further cooperated with diverse divisions and product units in Microsoft including those related to cloud computing, windows products and genuine software; and (iii) the governmental support to the software industry in the PRC, therefore we are advised that the transaction amount of the Microsoft CCT is

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LETTER OF ADVICE FROM FIRST SHANGHAI

expected to grow in the future. We are further advised that annual growth rates of approximately 27%, 25% and 20% for each of the years ending 31 December 2012, 2013 and 2014 (the “ Annual Growth Rates ”) were adopted for determining the annual growth of the New Caps (Microsoft). As such, we have reviewed relevant information on the website of International Data Corporation (“ IDC ”), which is a global provider of market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets with more than 1,000 analysts in over 110 countries worldwide. According to information obtained from the IDC website, we understand that the estimated annual turnover growth rates of the software outsourcing market in the PRC for the years ending 31 December 2012, 2013 and 2014 as published in the report titled “China-Based Offshore Software Development 2010-2014 Forecast and Analysis” (中國離岸軟件開發外包市場2010-2014預測與分析) by IDC in 2010 are around 28%, 25% and 20%, which are all in line with the Annual Growth Rates.

We have reviewed the calculation of the New Caps (Microsoft) and we understand from the management of the Group that the annual cap for the six months ending 31 December 2011 (the ” 2011 Second Half Cap ”) was derived from (i) the sum of the historical actual transaction amount for the five months ended 31 May 2011 and the scheduled order for the month ended 30 June 2011 (the “ 2011 First Half Amount ”); and (ii) applying the Distribution Ratio to the 2011 First Half Amount. We note that the 2011 First Half Amount was substantially achieved and after having been advised that the delayed orders will be gradually completed in July 2011 and having considered the strategic relationship between the Group and Microsoft, we are of the view that the adoption of the 2011 First Half Amount is acceptable.

Subsequently, the annual caps for the year ending 31 December 2012 and the year ending 31 December 2013 (the “ 2013 Full Year Cap ”) were derived from (i) the sum of the 2011 First Half Amount and the 2011 Second Half Cap (the “ 2011 Full Year Value ”); and (ii) multiplying the 2011 Full Year Value by the relevant Annual Growth Rates. Lastly, the annual cap for the six months ending 30 June 2014 was derived from (i) multiplying the 2013 Full Year Cap by the relevant Annual Growth Rates to obtain the estimated full year value for the year ending 31 December 2014 (the “ 2014 Full Year Value ”); and (ii) applying the Distribution Ratio to the 2014 Full Year Value.

Based on our above analysis, we are of the view that the terms of the Supplemental Agreement are fair and reasonable so far as the Independent Shareholders (Microsoft) are concerned.

3. Principal terms of the New Framework Agreement

The Inspur Group CCT contemplated under the New Framework Agreement comprises the Supply Transactions, the Selling Agency Transactions, the Purchase Transactions, the Common Services Transactions and the Processing Transactions.

A. Principal terms of the Inspur Group CCT

(i) Principal terms of the Supply Transactions

The Supply Transactions involve the supply of various IT products and IT services by the Group to the Inspur Group.

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LETTER OF ADVICE FROM FIRST SHANGHAI

In respect of the sourcing of overseas products for the Inspur Group, the Inspur Group has to pay a premium of not less than 1.5% above the original purchase price paid by the Group. As such, we have reviewed a schedule prepared by the Group which compares the gross margins of comparable sales made by the Group to the Inspur Group and independent third parties in the latest full financial year. We are advised that the gross margins of sales made to the Inspur Group were within the range of the individual gross margins of sales made to independent third parties and did not significantly differ from the overall aggregated gross margin of sales made to independent third parties, hence implying that the selling prices offered to the Inspur Group were comparable with those offered to independent third parties in general. Further, we understand that the agreed pricing premium assures that the Group could sell its overseas products at a price higher than the original cost instead of having the risk of making a loss should the overseas products be sold at the market price. In addition, we are advised that such pricing policy has been adopted in the past few years.

In respect of the provision of other IT products and IT services, the price per unit of the IT products and the service fees of the IT services would be agreed by reference to, amongst others, the prevailing market rates. As such, we have reviewed relevant documents, including pricing schedules which the Group offered to the Inspur Group and independent third parties, and we noted that the pricing terms offered to the Inspur Group were comparable with those offered to independent third parties.

The Group offers a credit period of two months to the Inspur Group. Hence, we have reviewed relevant documents, including contracts which the Group entered into with the Inspur Group and with independent third parties, and we noted that the payment terms offered to the Inspur Group were comparable with those offered to independent third parties. In addition, according to the 2010 Annual Report, the Group offers an average credit period of 30 to 180 days to its customers in general and we note that the credit period of two months falls within the range.

Based on the above, we are of the view that the terms of the Supply Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(ii) Principal terms of the Selling Agency Transactions

We understand from the management of the Group that, given the established business platform and network of the Inspur Group, the Inspur Group is capable of generating businesses for the Group. As such, the Group appoints the Inspur Group as its selling agent in respect of various IT products and IT services. We are also advised by the management of the Group that the Inspur Group is the only selling agent engaged by the Group.

We understand that, for the businesses generated by the Inspur Group, the Group is involved in the negotiation and finalization of the contract terms with the ultimate third party customers to ensure that the contracts are on normal commercial terms. We also understand that the Inspur Group will receive the payment from the ultimate third party customers after the Group has delivered the relevant IT products or IT services to the ultimate customers. Subsequently, immediately within seven days after the Inspur Group has received the payment from the ultimate customers, the Inspur Group will deduct a selling agency commission of not more than 1% of the transaction value and pay the net

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LETTER OF ADVICE FROM FIRST SHANGHAI

proceeds back to the Group. As such, we have reviewed relevant documents and understood that it is the general business policy of the Inspur Group to charge a selling agency commission of not more than 1% of the transaction value and we also understood that the Inspur Group has been charging the Group at such commission rate in the past few years.

Having considered, in particular, (i) the Group achieved net profit margin of approximately 8% for the year ended 31 December 2010 as noted from the 2010 Annual Report; (ii) the maximum selling agency commission is of merely 1%, where the actual amount of commission charged for the year ended 31 December 2010 was only approximately 0.7%; (iii) the selling agency arrangement with the Inspur Group provides an additional channel for the Group to enhance its revenue base; (iv) it is the general business policy of the Inspur Group to charge a selling agency commission of not more than 1%; and (v) the Inspur Group has been charging the Group at such commission rate in the past few years, we are of the view that the terms of the Selling Agency Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(iii) Principal terms of the Purchase Transactions

The Purchase Transactions involve the purchase of various IT products by the Group from the Inspur Group.

As stated in the letter from the Board, the price of the various IT products to be supplied will be agreed between the parties by reference to, among other factors, the then prevailing markets prices of such IT products. As such, we have reviewed relevant documents, including purchase orders which the Group entered in with the Inspur Group and with independent third parties, and we noted that the pricing terms offered by the Inspur Group were comparable with those offered by independent third parties.

The Group is offered a credit period of two months by the Inspur Group. Hence, we have reviewed relevant documents, including purchase orders which the Group entered into with the Inspur Group and with independent third parties, and we noted that the payment terms offered by the Inspur Group were comparable with those offered by independent third parties. In addition, according to the 2010 Annual Report, the average credit period of the Group for trade purchases is up to 30 to 90 days in general and we note that the credit period of two months falls within the range.

Based on the above, we are of the view that the terms of the Purchase Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(iv) Principal terms of the Common Services Transactions

The Common Services Transactions involve the procurement of common services in respect of the use of premises, water, electricity, heating and motor vehicles by the Group from the Inspur Group.

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LETTER OF ADVICE FROM FIRST SHANGHAI

We understand from the management of the Group that the common service fees are determined either on normal commercial terms and by arm’s length negotiation or on terms no less favourable to the Group as compared with independent third parties. As such, we have reviewed the fee quotation comparison schedule prepared by the Group and we noted that the pricing terms of the major common services offered by the Inspur Group were comparable with those offered by independent third parties.

As stated in the letter from the Board, the common service fees are billed on a monthly basis. Hence, we have reviewed relevant documents, including contracts which the Group entered into with the Inspur Group and with independent third parties, and we noted that the payment terms of the major common services offered by the Inspur Group were either comparable with or no less favourable than those offered by independent third parties.

Based on the above, we are of the view that the terms of the Common Services Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(v) Principal terms of the Processing Transactions

The Processing Transactions involve the procurement of processing services, principally being the assembling and manufacturing of tax-collection cashier machines, by the Group from the Inspur Group.

We understand from the management of the Group that the Group negotiates with raw material suppliers to ensure that the raw materials to be procured by the Inspur Group for processing would be on normal commercial terms. Subsequently, the Inspur Group would procure raw materials on normal commercial terms as negotiated by the Group and the Inspur Group would assemble and manufacture tax-collection cashier machines with the procured raw materials. As disclosed in the letter from the Board, the Inspur Group charges a processing fee calculated at 5% of the value of the raw materials. As such, we have reviewed relevant documents, including contracts which the Inspur Group entered into with the Group and with independent third parties, and we noted that the pricing terms offered to the Group were comparable with those offered to independent third parties.

The Group is offered a credit period of 30 days by the Inspur Group. Hence, we have reviewed relevant documents, including contracts which the Group entered into with the Inspur Group and with independent third parties, and we noted that the payment terms offered by the Inspur Group were comparable with those offered by independent third parties. In addition, according to the 2010 Annual Report, the average credit period of the Group for trade purchases is up to 30 to 90 days in general and we note that the credit period of 30 days falls within the range.

Based on the above, we are of the view that the terms of the Processing Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

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LETTER OF ADVICE FROM FIRST SHANGHAI

B. New Caps (Inspur Group) under the New Framework Agreement

As disclosed in the letter from the Board, the historical annual caps of the Inspur Group CCT are set out as follows:

	Historical annual caps	Historical annual caps	Historical annual caps
	under the previous Framework Agreement
	For the	For the	For the
	year ended	year ended	year ended
	31 December	31 December	31 December
	2009	2010	2011
	(in ‘000)	(in ‘000)	(in ‘000)
Supply Transactions	HK$400,000	HK$730,000	HK$331,000
Selling Agency Transactions (transaction value)	HK$108,000	HK$125,000	HK$145,000
Selling Agency Transactions (commission value)	HK$1,080	HK$1,250	HK$1,450
Purchase Transactions	HK$132,000	HK$145,000	HK$160,000
Common Services Transactions	HK$7,700	HK$8,470	HK$9,317
Processing Transactions	HK$166,667	HK$222,222	HK$277,778

The following table sets out the relevant historical transaction amounts and the New Caps (Inspur Group) under the New Framework Agreement:-

		Historical transaction amounts	Historical transaction amounts	Historical transaction amounts	New	Caps (Inspur Group)	Caps (Inspur Group)
	under the previous Framework Agreement				under the New Framework		Agreement
				For the
		For the	For the	six months	For the	For the	For the
		year ended	year ended	ended	year ending	year ending	year ending
	31 December		31 December	30 June	31 December	31 December	31 December
		2009	2010	2011	2011	2012	2013
		(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)	(in ‘000)
Supply Transactions	HK$247,589		HK$292,538	HK$196,102	HK$345,000	HK$380,000	HK$418,000
		(note 1)	(note 1)
Selling Agency		HK$73,670	HK$123,925	HK$144,654	RMB333,000	RMB366,000	RMB400,000
Transactions		(note 2)	(note 2)	(note 2)	(approximately	(approximately	(approximately
					HK$391,765)	HK$430,588)	HK$470,588)
					(note 3)	(note 3)	(note 3)
Purchase Transactions	HK$123,504		HK$142,596	HK$19,104	HK$160,000	HK$176,000	HK$193,000
Common Services		HK$5,606	HK$8,245	HK$5,476	RMB13,000	RMB14,300	RMB15,730
Transactions					(approximately	(approximately	(approximately
					HK$15,294)	HK$16,824)	HK$18,506)
Processing Transactions	HK$156,180		HK$181,781	HK$58,057	RMB182,000	RMB200,000	RMB220,000
					(approximately	(approximately	(approximately
					HK$214,118)	HK$235,294)	HK$258,824)

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LETTER OF ADVICE FROM FIRST SHANGHAI

Notes:

As detailed in the announcement of the Company dated 7 June 2010, the Group has discontinued the business of sale of IT hardware products to Venezuela, therefore the historical transaction amounts have excluded the sale of IT hardware products to Venezuela for illustrative purposes.
The figures are related to the historical transaction amounts in respect of transaction values.
The figures are related to the annual caps in respect of transaction values. The annual caps in respect of the related commission amounts are 1% of the annual caps in respect of the transaction values given that the Inspur Group charges a selling agency commission of not more than 1% of transaction value pursuant to the New Framework Agreement.
Currencies are translated at the exchange rate of HK$1.00 to RMB0.85 for illustrative purposes.

We understand from the management of the Group that the determination of New Caps (Inspur Group) in respect of the New Framework Agreement for each of the years ending 31 December 2012 and 31 December 2013 has made reference to an annual growth rate of around 10% (the “ Annual Growth Rate ”). As such, we have reviewed relevant information, including the websites of International Monetary Fund and IDC, and we noted that the Annual Growth Rate was comparable with (i) the estimated growth rates of the gross domestic product of the PRC for each of the years ending 31 December 2012 and 2013 of approximately 11% and 12% respectively as published by the International Monetary Fund in 2011, which are applicable to the Inspur Group CCT given that the Group operates in the PRC and its business operations, including but not limited to the use of common services and processing volume required, may increase along with the general economy in the PRC; and (ii) the estimated compound annual growth rate of the IT services market in the PRC from 2011 to 2015 of approximately 12% as published in the report titled “China IT Services Market 2011-2015 Forecast and Analysis” (中國IT服務市場2011-2015年預測與分析) by IDC in 2010, which is applicable to the Inspur Group CCT given that the Group provides IT related services and its business operations, including but not limited to the use of common services and processing volume required, may increase along with the general industry growth.

(i) Annual caps of the Supply Transactions

We note that the annual cap of the Supply Transactions for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 18%, which we understand is comparable with the annual growth rate of the historical transaction amount for the year ended 31 December 2010 of approximately 18%. We also note that the annual cap for each of the years ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the Annual Growth Rate. As such, we are of the view that the annual caps of the Supply Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

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LETTER OF ADVICE FROM FIRST SHANGHAI

(ii) Annual caps of the Selling Agency Transactions

We recognize that the transaction value of the Selling Agency Transactions for the five months ended 31 May 2011 significantly increased to approximately HK$142 million, where the transaction value for the year ended 31 December 2010 was only approximately HK$124 million, therefore we understand from the management of the Group that the determination of the annual cap for the year ending 31 December 2011 has taken into account such significant growth. We note that the annual cap for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 216%, which we understand is within the range of the annual growth rate of the historical transaction amount for the year ended 31 December 2010 of approximately 68% and the year-on-year growth rate for the six months ended 30 June 2011 of approximately 264%. We also note that the annual cap for each of the years ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the Annual Growth Rate. As such, we are of the view that the annual caps of the Selling Agency Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(iii) Annual caps of the Purchase Transactions

We are advised by the management of the Group that the lower historical transaction amount of the Purchase Transactions for the six months ended 30 June 2011 is a temporary cyclical phenomenon and the transaction amount is expected to rebound for the remaining months in 2011 due to, inter alia , the governmental support to the software industry in the PRC and the endeavours of the Group to improve the relevant business. We are also advised by the management of the Group that there is no indication that the transaction amount will continue to be low and the achievability of a significantly higher full year amount is evidenced in the full year historical transaction amount for each of the years ended 31 December 2009 and 2010 and the growth in transaction amount for the month ended 30 June 2011, where a transaction amount of approximately HK$4 million was recorded for the single month, as compared with the transaction amount for the five months ended 31 May 2011 of approximately HK$15 million. In addition to the above, we have reviewed historical transaction amount of the Purchase Transactions for the year ended 31 December 2010 and we noted that the Group orders in bulk, where the procurement amount from the Inspur Group could reach as high as approximately HK$38 million in a single month. We have also further reviewed relevant historical total procurement amount of the Group, including those procured from independent third parties, and we noted that the procurement amount from the Inspur Group represented only approximately 9% of the total procurement amount for the year ended 31 December 2010, implying the significant growth potential of the procurement amount from the Inspur Group. Based on the above, we are given to understand that the lower historical transaction amount of the Purchase Transactions for the six months ended 30 June 2011 is of temporary nature and the transaction amount is expected to rebound for the remaining months in 2011.

We note that the annual cap of the Purchase Transactions for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 12%, which we understand is comparable with the annual growth rate of the historical transaction amount for the year ended 31 December 2010 of approximately 15%. We also note that the annual cap for each of the years ending 31 December 2012

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LETTER OF ADVICE FROM FIRST SHANGHAI

and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the Annual Growth Rate. As such, we are of the view that the annual caps of the Purchase Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(iv) Annual caps of the Common Services Transactions

As advised by the management of the Group, offices of the Group have been relocated to premises owned by the Inspur Group, therefore the common service fees payable to the Inspur Group are expected to rise due to the increase in rental area and utilities usage. As such, we have reviewed the common service fee schedule prepared by the Group (the “ Service Fee Schedule ”) and we noted that the annual cap of the Common Services Transactions for the year ending 31 December 2011 was derived from the Service Fee Schedule. For illustrative purposes, the annual growth rate of the historical transaction amount for the year ended 31 December 2010 is approximately 47%, whereas the annual growth rate of the annual cap for the year ending 31 December 2011 as compared with the historical transaction amount for the year ended 31 December 2010 is approximately 85%. We also note that the annual cap for each of the years ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the Annual Growth Rate. As such, we are of the view that the annual caps of the Common Services Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

(v) Annual caps of the Processing Transactions

We are advised by the management of the Group that the lower historical transaction amount of the Processing Transactions for the six months ended 30 June 2011 is a temporary cyclical phenomenon and the transaction amount is expected to rebound for the remaining months in 2011 due to, inter alia , the improvement in the general economy in the PRC and the endeavours of the Group to improve the relevant business. We are also advised by the management of the Group that there is no indication that the transaction amount will continue to be low. We understand that the achievability of a significantly higher full year amount is evidenced in the full year historical transaction amount for each of the years ended 31 December 2009 and 2010 and the significant growth in transaction amount for the month ended 30 June 2011, where a transaction amount of approximately HK$33 million was recorded for the single month, as compared with the transaction amount for the five months ended 31 May 2011 of approximately HK$25 million.

We note that the annual cap of the Processing Transactions for the year ending 31 December 2011 was derived from multiplying the historical transaction amount for the year ended 31 December 2010 by an annual growth rate of approximately 18%, which we understand is comparable with the annual growth rate of the historical transaction amount for the year ended 31 December 2010 of approximately 16%. We also note that the annual cap for each of the years ending 31 December 2012 and 31 December 2013 was calculated based on the annual cap for the year ending 31 December 2011 and the Annual Growth Rate. As such, we are of the view that the annual caps of the Processing Transactions are fair and reasonable so far as the Independent Shareholders (Inspur Group) are concerned.

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LETTER OF ADVICE FROM FIRST SHANGHAI

Measures to ensure compliance with the Listing Rules

In compliance with the annual review requirements under Chapter 14A of the Listing Rules, the Company will comply with the following during the term of the Agreements in relation to the Microsoft CCT and the Inspur Group CCT (collectively, the “ Transactions ”):

(i) each year the independent non-executive Directors must review the Transactions and confirm in the Company’s annual report and accounts that the Transactions have been entered into (a) in the ordinary and usual course of business of the Company; (b) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties; and (c) in accordance with the Agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;
(ii) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least 10 business days prior to the bulk printing of the annual report of the Company) confirming that the Transactions (a) have received the approval of the Board; (b) are in accordance with the pricing policies of the Company if the Transactions involve provision of goods or services by the Company; (c) have been entered into in accordance with the relevant agreement governing the transactions; and (d) have not exceeded the respective annual caps;
(iii) the Company will allow, and will procure that the counterparties will provide the auditors of the Company with sufficient access to the relevant records of the Transactions for the purpose of reporting on the Transactions. The Board must state in the annual report whether its auditors have confirmed the matters stated in paragraph (ii) above; and
(iv) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (i) and/or (ii) above respectively.

In light of the reporting requirements attached to the Transactions, in particular, (i) the restriction of the value of the Transactions by way of the annual caps; and (ii) the ongoing review by the independent non-executive Directors and the auditors of the Company of the terms of the Transactions and the annual caps not being exceeded, we are of the view that appropriate measures will be in place to govern the conduct of the Transactions and safeguard the interests of the relevant independent shareholders of the Company.

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LETTER OF ADVICE FROM FIRST SHANGHAI

RECOMMENDATION

Having taken into account the above principal factors, we are of the view that (i) the entering into of the Agreements is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole; and (ii) the terms of the Agreements are on normal commercial terms, and together with the bases of their respective annual caps, are fair and reasonable so far as the relevant independent shareholders of the Company are concerned. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves advise, (i) the Independent Shareholders (Microsoft) to vote in favour of the relevant resolution to be proposed at the EGM to approve the Supplemental Agreement and the New Caps (Microsoft); and (ii) the Independent Shareholders (Inspur Group) to vote in favour of the relevant resolution to be proposed at the EGM to approve the New Framework Agreement and the New Caps (Inspur Group).

Yours faithfully, For and on behalf of First Shanghai Capital Limited Eric Lee Fanny Lee Managing Director Managing Director

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this document 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:

(i) Long positions in Shares

				Percentage of
				issued share
			Number of	capital of the
Name	of Director	Type of interests	Shares	Company
Dong	Hailong	Beneficial owner	5,000	0.00%

(ii) Long positions in underlying Shares of the Company

				Percentage
				of the
				issued share
		Description	Number of	capital of
		of equity	underlying	the
Name of Director	Type of interests	derivatives	Shares	Company
Sun Pishu	Beneficial owner	share option	20,000,000	0.53%
		(Note 1)

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GENERAL INFORMATION

APPENDIX

					Percentage
					of the
					issued share
			Description	Number of	capital of
			of equity	underlying	the
Name	of Director	Type of interests	derivatives	Shares	Company
Wang	Xingshan	Beneficial owner	share option	5,000,000	0.13%
			(Note 2)
Chen	Dongfeng	Beneficial owner	share option	4,000,000	0.11%
			(Note 2)
Dong	Hailong	Beneficial owner	share option	2,000,000	0.05%
			(Note 2)
Meng	Xiang Xu	Beneficial owner	share option	200,000	0.01%
			(Note 2)
Wong	Lit Chor, Alexis	Beneficial owner	share option	200,000	0.01%
			(Note 2)

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.
Note 2: The share options were granted on 10 December 2010 under the 2008 share option scheme adopted by the Company on 10 November 2008 at a subscription price of HK$0.682 per Share. Up to the Latest Practicable Date, none of the above share options had been exercised.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and 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:

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GENERAL INFORMATION

APPENDIX

Long positions in Shares

			Approximate
		Number of	percentage of
Name of Shareholders	Type of interests	Shares	interests
Inspur Group Limited	Interest in a controlled	1,354,390,000	35.72%
	corporation (Note 1)
Inspur Electronics (HK) Limited	Beneficial owner	1,354,390,000	35.72%
	(Note 1)
Matthews International Capital	Investment manager	302,660,000	7.98%
Management, LLC
The Hamon Investment Group	Investment manager	262,050,000	6.91%
Pte Limited
The Dreyfus Corporation	Investment manager	211,565,000	5.58%

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, who is a director of the Company, is also a director of Inspur Group Limited and a director of Inspur Electronics (HK) Limited.

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

			Number of
			underlying	Approximate
		Number of	Ordinary	percentage of
		Preferred	Shares	voting rights
Name of Shareholders	Type of interests	Shares	(Note 1)	of Shares
Microsoft Corporation	Beneficial owner	251,090,335	1,188,208,571	23.86%

— 40 —

APPENDIX

GENERAL INFORMATION

Note 1: Microsoft Corporation held 251,090,335 class A senior redeemable voting preferred shares convertible into 1,188,208,571 Ordinary Shares. 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 Ordinary Shares in excess of 28% of the total voting rights at any general meeting of the Company. At the Latest Practicable Date, the above 1,188,208,571 underlying Ordinary Shares represented approximately 23.86% 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
		percentage of
			shareholding
		in	the members
Name of shareholders	Types of Interest	Equity interest held	of the Group
Wu Xi Yi Jie Xin Cheng	Beneficial owner	RMB200,000 in the registered	10%
Information Technology		capital of Wuxi Inspur
Company Limtied# (無錫易		Business Technology Company
捷信誠信息技術有限公司)		Limited#
		(無錫浪潮商服技術有限公司)
Fang Wensheng	Beneficial owner	RMB225,000 in the registered	37.5%
		capital of Inspur Fangzhi#
		(濟南浪潮方智信息技術有限公
		司)
Bao Jianhua	Beneficial owner	RMB90,000 in the registered	15%
		capital of Inspur Fangzhi#
		(濟南浪潮方智信息技術有限公
		司)
Shanghai Huili Co. Ltd.#	Beneficial owner	RMB50,000 in the registered	10%
(上海滙力有限公司)		capital of Shanghai Guoqiang
		Genersoft Incorporation#
		(上海國强通用軟件有限公司)
Webgroup Co.	Beneficial owner	US$14,504 in the registered	10.36%
		capital of Langchao Gaoyou
		(Shanghai) Services
		Incorporation#
		高優(上海)信息科技有限公司
Shen Zhen Liang Long	Beneficial owner	RMB1,500,000 in registered	30%
Management & Consulting		capital of Shangdong Inspur
Company Limited#		Financial Information Systems
(深圳量龍管理諮詢有限公司)		Company Limited#
		(山東浪潮金融信息系統有限公司)

English names are for identification purpose only

— 41 —

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 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 2010, 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 2010, being the date to which the latest audited financial statements of the Company were made up.

6. EXPERT

First Shanghai 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 they appear.

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

Name Qualification First Shanghai A licensed corporation to carry out type 6 (advising on corporate finance) regulated activity under the SFO

— 42 —

APPENDIX

GENERAL INFORMATION

As at the Latest Practicable Date, First Shanghai 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 2010), 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 Flats B & C, 30/F, Tower A, Billion Centre, 1 Wang Kwong Road, Kowloon Bay, Kowloon.
(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 609, 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 17M 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.

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) Supplemental Agreement;
(ii) MMOS Agreement;
(iii) Framework Agreement; and
(iv) New Framework Agreement.

— 43 —

NOTICE OF THE EGM

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 596)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Inspur International Limited (the “ Company ”) will be held at Flats B& C , 30/F., Tower A, Billion Center, 1 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong, on Monday, 15 August 2011 at 10:00 a.m. to pass the following resolutions as the ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT:
(a) the supplemental agreement (the “ Supplemental Agreement ”) entered into by Inspur Worldwide Services Limited (浪潮世科(山東)信息技術有限公司) and Microsoft Corporation on 27 June 2011 in relation to setting of the annual caps of the transactions for the three years ending 30 June 2014 under the Microsoft Master Outsourced Services Agreement dated 27 May 2010 between the aforesaid parties regarding the provision of outsourced services by Inspur Worldwide Services Limited to Microsoft Corporation and related matters (details of the Supplemental Agreement are set out in the Company’s circular dated 29 July 2011 (the “ Circular ”), copies of the Supplemental Agreement and the Circular have been tabled at the meeting and marked “A” and “B” respectively 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;
(b) the proposed New Caps (Microsoft) in respect of the Microsoft CCT (as defined and more particularly described in the Circular) be and are hereby approved and confirmed; and
(c) the directors of the Company be and are hereby authorized to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the Supplemental Agreement, the proposed New Caps (Microsoft) and all transactions contemplated thereunder.”

— 44 —

NOTICE OF THE EGM

“ THAT:
(a) the new framework agreement (the “ New Framework Agreement ”) entered into by the Company (for itself and on behalf of its subsidiaries) and Inspur Group Limited (浪潮集團有限公司) (for itself and on behalf of its subsidiaries) on 15 July 2011 in relation to the continuing connected transactions between the Company and its subsidiaries of one part and Inspur Group Limited and its subsidiaries of another part for the three years ending 31 December 2013 (details of the New Framework Agreement are set out in the Circular, a copy of the New Framework Agreement has been tabled at the meeting and marked “C” 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;
(b) the proposed New Caps (Inspur Group) in respect of the Inspur Group CCT (as defined and more particularly described in the Circular) be and are hereby approved and confirmed; and
(c) the directors of the Company be and are hereby authorized to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the New Framework Agreement, the proposed New Caps (Inspur Group) and all transactions contemplated thereunder.”

By order of the Board Inspur International Limited Mr. Sun Pishu Chairman

Hong Kong, 29 July 2011

Registered office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive Flats B & C, 30/F. P.O. Box 2681 Tower A, Billion Centre Grand Cayman KY1-1111 1 Wang Kwong Road Cayman Islands Kowloon Bay Kowloon Hong Kong

Notes:

A form of proxy for use at the EGM or any adjournment thereof is enclosed.
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 annual general meeting 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.

— 45 —

NOTICE OF THE EGM

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 17M 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.
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.
The voting on the resolutions at the EGM will be conducted by way of a poll.

As at the date of this notice, the Board comprised Mr. Sun Pishu, Mr. Wang Xingshan, Mr. Chen Dongfeng and Mr. Dong Hailong as executive Directors, and Mr. Meng Xiang Xu, Mr. Zhang Tiqin and Mr. Wong Lit Chor, Alexis as independent non-executive Directors.

— 46 —

AI assistant

Inspur Digital Enterprise Technology Limited — Proxy Solicitation & Information Statement 2011

49324_rns_2011-07-28_47ee0244-4758-48f2-8c54-08dd2d5fba5e.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

FIRST SHANGHAI CAPITAL LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

Independent non-executive Directors:

To the Shareholders

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM THE BOARD

BACKGROUND OF MICROSOFT CCT

MMOS AGREEMENT AND SUPPLEMENTAL AGREEMENT

MMOS Agreement

LETTER FROM THE BOARD

Supplemental Agreement

LETTER FROM THE BOARD

ANNUAL CAPS OF MICROSOFT CCT

Historical amounts of Microsoft CCT for the recent years

Proposed caps in respect of Microsoft CCT for the three years

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF ENTERING INTO SUPPLEMENTAL AGREEMENT

IMPLICATIONS UNDER THE LISTING RULES FOR MICROSOFT CCT

Information on the Group and Microsoft

LETTER FROM THE BOARD

Implication under the Listing Rules

BACKGROUND OF INSPUR GROUP CCT

INSPUR GROUP CCT

1. Supply Transactions

Types of products and services

Pricing and other terms

LETTER FROM THE BOARD

Payment terms

2. Selling Agency Transactions

3. Purchase Transactions

Types of products

LETTER FROM THE BOARD

Pricing

Payment terms

4. Common Services Transactions

5. Processing Transactions

LETTER FROM THE BOARD

ANNUAL CAPS OF INSPUR GROUP CCT

LETTER FROM THE BOARD

NEW FRAMEWORK AGREEMENT AND NEW CAPS (INSPUR GROUP)

LETTER FROM THE BOARD

INFORMATION ON THE GROUP AND INSPUR GROUP

REASONS FOR AND BENEFITS OF ENTERING INTO NEW FRAMEWORK AGREEMENT

IMPLICATION UNDER THE LISTING RULES FOR INSPUR GROUP CCT

EGM

Resolution approving Microsoft CCT

LETTER FROM THE BOARD

Resolution approving Inspur Group CCT

RECOMMENDATIONS

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH MICROSOFT

INSPUR INTERNATIONAL LIMITED 浪潮國際有限公司

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS WITH INSPUR GROUP

LETTER OF ADVICE FROM FIRST SHANGHAI

FIRST SHANGHAI CAPITAL LIMITED

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER OF ADVICE FROM FIRST SHANGHAI

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background to and reasons for the entering into of the Agreements

LETTER OF ADVICE FROM FIRST SHANGHAI

2. Principal terms of the Microsoft Agreements

LETTER OF ADVICE FROM FIRST SHANGHAI

(i) Principal terms under the MMOS Agreement

LETTER OF ADVICE FROM FIRST SHANGHAI

Inspur Digital Enterprise Technology Limited Proxy Solicitation & Information Statement 2011