Reliance Webstore forays into handset distribution through ‘Hub-and-Spoke’ business model

Coolpad to set-up special R&D unit in China to service Reliance

· First Indian retail chain to diversify into handset distribution business
· Targets distribution network of 10,000 retailers across 700 cities in next three years
· Each Reliance World Store to be a distribution hub to manage MBO network
· Handset business contribute 50% of Reliance Webstore’s overall revenues
· Coolpad to contribute 30% of overall handset sales by Reliance
· Coolpad’s special unit in China to develop differentiated products for the Indian market

MUMBAI, November 5, 2009:

Reliance Webstore Limited, the wholly-owned subsidiary of Reliance Communications and the retail venture of Reliance ADA Group that operates a nationwide chain of Reliance World stores, has geared up its business operations for a major thrust in the handset retailing business. The company has diversified into handset distribution business in addition to its current focus of handset retailing through Reliance World and Reliance Mobile stores. As part of this strategic move, Reliance Webstore has established a new division to focus and grow its handset distribution business. Incidentally, this is the first time a retail chain is foraying into the distribution business.

Reliance Webstore will follow the ‘Hub-and-Spoke’ business model to manage its handset distribution operations. This is the first time in India that the ‘Hub-and-Spoke’ concept is being deployed by a retail chain to distribute products. This unique business model will leverage Reliance World stores to act as distribution hubs. Each store will be responsible for registering its own channel partners and handset retailers and develop its own mini-distribution network. As part of its foray into the handset distribution business, the company has already signed-up more than 1200 handset retailers and Multi-Brand Outlets (MBOs) in nearly 100 towns.

Commenting on the development, Mr Sarup Chowdhary, Director & CEO, Reliance Webstore Limited said, “We continually identify new growth opportunities by leveraging our Group’s synergies across multiple sectors and competitive advantage of Reliance Webstore’s overall retail network. Our ‘Hub-and-Spoke’ model for handset distribution is unique to India and will result in remarkable convenience and efficiencies in the distribution chain. In addition to our exclusive distribution agreement with Coolpad Communications, we have also identified other new business opportunities to leverage this model for a larger participation in the Indian telecom retail sector.”

Reliance Webstore’s distribution model is designed to ensure that each registered retailer (spoke) is within 15-30 minutes’ distance of a Reliance World store. The Reliance World store (Hub) will act as a stocking and transaction point for these retailers, offering remarkable convenience and efficiencies in meeting market response & requirements. The model is also designed to cut the flab of traditional distribution models, resulting in attractive price-points for the end-consumers. This way, Reliance Webstore’s unique business model offers a win-win proposition for all — the manufacturer, the company, the retailer and the customer.

Over the next three years, Reliance Webstore is targeting a distribution network of over 10,000 multi-brand outlets (MBO) and retailers spread across 700 Indian towns.

This “Hub and Spoke” business model is expected to accelerate Reliance Webstore’s growth trajectory of its already profitable telecom retail business. In addition to retailing handsets, airtime, accessories and providing customer service for Reliance Communications, the company’s chain of Reliance World stores will now distribute handsets to other retailers. The telecom retail business currently contributes over 50% to Reliance Webstore’s annual revenues and the distribution model is expected to further augment this share. The company has been focusing on growing this business further by entering into strategic global agreements with handset manufacturers, retailing of open market handsets and geographical expansion of its retail operations.

Reliance Webstore’s handset distribution business foray immediately follows the company’s strategic agreement with Hong-Kong listed China Wireless’ Indian joint venture, Coolpad Communications. Reliance Webstore signed a strategic distribution agreement with Coolpad Communications gaining exclusive rights to market and distribute Coolpad’s dual-mode smartphones in India. While this agreement marked China Wireless’ formal foray in the Indian market, it also opened up a new business opportunity for Reliance Webstore to diversify for a powerful presence in the Indian telecom retail sector.

Coolpad, as part of its growth outlook, plans to establish an R&D unit in India. According to Mr Sami Al-Lawati, China Wireless’ India Head and Managing Director of Coolpad Communications, “We are currently scouting various locations across India for Coolpad’s R&D centre. The R&D unit in India will be critical to our business growth in India and our expansion across the Globe.”

Coolpad is planning an investment of Rs 400 crores in India over the next three to four years. This investment will be towards the company’s capex and opex requirements. The funds will be raised through internal accruals and debt.

In order to further strengthen its relationship with Reliance ADA Group, Coolpad is establishing a dedicated R&D unit and resources in Shenzhen, China. The resources for this unit will be directly picked from the China Wireless’ R&D team. The special R&D unit will liaise with Reliance Webstore teams across India to seek customer feedback and develop differentiated products for the Indian market. Coolpad will also leverage the pan-India retail and distribution network of Reliance Webstore to enhance sales of its dual-mode smartphones in India.

“Given our unique strengths in the dual-mode and 3G segments, we envisage a major upside for Coolpad as Reliance Webstore enters the handset distribution business in the backdrop of India’s emerging 3G scenario,” said Sami Al-Lawati.

The test-marketing results and subsequent launch of Coolpad smartphones in India indicates the great potential for smartphones in India. The Coolpad smartphones are expected to contribute over 30% of the overall handset sales at Reliance World and Reliance Mobile Stores.

About Reliance Webstore Limited

Reliance Webstore Limited, a Reliance ADA Group company and a wholly owned retail subsidiary of Reliance Communications, operates the nationwide chain of Reliance World retail stores. The stores are designed to give the customer a delightful experience of the digital world of information, communication, entertainment and utility services. Besides being retail points for proprietary as well as open market handsets and accessories, Reliance World outlets are now distribution hubs for other mobile retailers in their vicinity.

Currently, there are 232 Reliance World stores across 104 cities in India and the network continues to expand to more locations and cities.

Besides offering the products and services of Reliance Communications, Reliance World showcases all retail offerings of the Group’s brands, including Reliance Big TV DTH, Big Flix Video Rentals and Reliance Money financial services. The stores also offer a wide range of interesting and innovative products & services, beyond the Group’s brands.

All Reliance World stores are connected to Reliance’s countrywide optic fibre network. The Broadband Centre at Reliance World leverages this broadband network to offer High-Speed Internet Surfing, Online Gaming, Video Conferencing, Digital Electronic News Gathering, Digital Services, eLearning, Ready-to-use Offices and many more services. For more information on Reliance World, visit www.relianceworld.in

About China Wireless Technologies Limited

China Wireless Technologies Limited (Listed on the main board of HKEX. Stock Code 2369) is dedicated to wireless data integration solutions with smart phones at the core. It is a professional provider of integrated solutions for smart phone sets, mobile data platform systems and value-added business operations in China.

China Wireless Technologies Limited (the “Company”) was incorporated in the Cayman Islands as an exempted company with limited liability on 11 June 2002. The shares of the Company (the “Shares”) were listed on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) in December 2004.

In the last decade, capitalizing on the development of wireless telecommunications technological know-how in wireless telecommunications across multiple wireless telecommunications network standards including paging, GSM, CDMA1X, TD-SCDMA and PHS network, the Company and its subsidiaries (the “Group”) have developed a number of various proprietary technologies and patents such as operating systems, radio frequency, protocols and wireless data decomposed transmission technology. The Group has developed advanced research and development capabilities in mobile communications and gradually becomes a leader of high-end dual-mode smartphone in the global telecommunications market.