SHENZHEN, CHINA: SinoHub Inc., an electronics company whose main growth driver is manufacturing and distributing custom, private-label mobile phones, has entered into a joint venture agreement with Ciao Telecom Inc., a global provider of telecom products and services with headquarters in the US, to manufacture and market mobile communications devices in Brazil.
Brazil is currently one of the largest, fastest growing mobile communication device markets in the world, with 276 million active mobile phones expected by year end 2012, representing an annual growth rate of 14 percent. Through this joint venture, SinoHub and Ciao Telecom will seek to capitalize on these growth trends by manufacturing and marketing high quality mobile phones and tablets.
Pursuant to the Agreement, the joint venture will organize a Brazilian corporation to be named CiaoHub, S.A., which will conduct operations in Brazil. SinoHub and Ciao Telecom will each own 47 percent of the new company, with the remaining 6 percent to be equally divided among the six directors of CiaoHub. CiaoHub will develop plans to construct a 9,000 square meter factory in Vila Velha, Espirito Santo, Brazil for the production of mobile communication devices including mobile phones, smart phones, tablets and mobile device components.
The factory is expected to be modeled on SinoHub's manufacturing facility located in Shenzhen, PR China, and will be managed by SinoHub. Construction of the factory is expected to be completed by October 2012, assuming the timely completion of site acquisition and initial funding for the factory and operations. SinoHub will be responsible for the production of CiaoHub's products, and Ciao Telecom will be responsible for the distribution of the mobile communications devices CiaoHub manufactures.
CiaoHub will seek to raise capital to build the initial factory, purchase equipment, hire and train the required staff, purchase initial inventory and market its products. Current plans call for total capital of approximately US$15 million.
Discussions with various debt capital sources are underway although funding commitments have not yet been secured. Assuming completion of a factory on the scale currently envisioned, in its startup year of 2013, CiaoHub expects to manufacture and sell approximately 1.3 million mobile phones and tablets in Brazil and to end 2013 with approximately 380 employees.