SinoHub, Inc. CEO Interview: Henry T. Cochran

• On 11:53 am EDT, Tuesday October 6, 2009

67 WALL STREET, New York - October 6, 2009 - The Wall Street Transcript has just published its Transportation and Logistics Report offering a timely review of the sector to serious investors and industry executives. This 81 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: China Export Tax -- Overcapacity in the Shipping Industry -- Market Balance -- Traffic Flow -- Asia-Pacific Region -- Import/Export Traffic -- Beneficiaries of Financial Strength -- Terminating Markets -- International Business -- Tanker Companies Versus Dry Bulk Companies -- Chinese Stimulus -- Real Demand Versus Stimulus Demand -- Monitoring Potential Acquisitions -- Automobile Industry -- Demand in Emerging Countries -- Falling Demand -- Future Oversupply -- Growth of Fleets -- Pickups in Infrastructure Spending -- Navigating the Downturn -- Supply & Demand -- Chinese Cell Phones -- Mobile Phone Market Growth -- Future Growth -- Stimulus Programs -- Temporary Boosts -- Inventory Stabilization -- Affects of Declines in Passenger Flights -- Capacity of Passenger Aircraft -- Improvement in Volumes -- Pricing and Margins -- Restructuring -- Forms of Consolidation -- Investing in Infrastructure -- Wage Concessions -- Railroad Expansion

Companies include: Diana Shipping (DSX); Star Bulk Carriers (SBLK); Nordic American Tankers (NAT); Overseas Shipholding Group (OSG); General Maritime (GMR); Federal Express (FDX); UPS (UPS); Forward Air (FWRD); Expeditors International (EXPD); Express-1; Tsakos Energy Navigation (TNP); Navios (NM); Vale (VALE); Excel (EXM); Teekay (TK); DryShips (DRYS); UTi Worldwide (UTIW); Old Dominion (ODFL); Arkansas Best (ABFS); J.B. Hunt (JBHT); Con-way (CNW); Atlas Air (AAWW); Air Transport Services Group (ATSG); Norfolk Southern (NSC); Union Pacific (UNP); CSX (CSX); Canadian National Railway (CNI); C.H. Robinson (CHRW); Kuehne and Nagel; Deutsche Post; YRC Worldwide (YRCW); Dynamex (DDMX); Ryder ®

In the following brief excerpt from the 81 page , Henry T. Cochran, CEO of SinoHub, Inc., discusses the outlook for the sector and for investors.

TWST: Would you please give us a brief history and overview of SinoHub?E

Mr. Cochran: SinoHub is the product of an idea that my Co-founder, Lei Xia, who is now SinoHub's President, came up with during a conversation with a friend. This friend was the Director of Purchasing for Nokia in Beijing in early 2000. He said that the company was having tremendous problems with their supply chain for electronic components into China. As many people are aware, China is the largest manufacturer of electronics in the world by a good stretch at this point. But China does not make many of the electronic components that go into that manufacturing. In fact, 85% of all components that are used in manufacturing in China are imported. So there are problems getting these parts into China. There are problems with customs and VAT - value-added taxes - charged at the border. Or you have to import on a bonded basis, meaning that you've got to keep track of everything coming in very carefully. So Lei started thinking, "Well, if Nokia has this problem with the supply chain, then everybody must have this problem with the supply chain. Why don't we set up a company that can really change the game in terms of China's electronics supply chain and bring it into the Internet age to make it more flexible and easy to use?" Frankly, the electronics supply chain was organized in China by adopting the model that was originally invented in the United States 40 years ago before the Internet. And so Lei contacted me because of my background in software, and we partnered to start SinoHub with the goal of really solving, once and for all, the need for a much better platform to support electronic component supply chain management in China.

TWST: Would you describe your target customer?

Mr. Cochran: In our early days, our target customers were franchise distributors. We were basically helping them import parts into China. Very quickly, however, we realized that one of the big benefits for us was that as a result of this import process, we got to see the pricing of all the parts that we were importing. And that gave us a tremendous advantage later on when we had critical mass and could go to manufacturers and say, "Hey, let us help you with your purchasing." By the way, that's what we call our fulfillment business - "If you don't mind, how about letting us to do procurement too, which means that we can substitute our supplier for your supplier" Of course it's all original parts and original packaging, so there's no quality issue.

TWST: Are your customers assemblers as opposed to component manufacturers?

Mr. Cochran: That's correct. Our customers are not component manufacturers. Our customers are design houses and manufacturers of electronics products. Seventy percent of our business is in the mobile phone space. So a lot of our customers are mobile phone design houses, and they're doing a fantastic business right now in China. In the Chinese market, cell phones are a have-to-have product - you have to have a mobile phone in China to be connected. It's a market where the technology changes rapidly and time is of the essence. So all the things that we offer through our supply chain platform, which makes the whole supply chain transparent for all of the participants, are really, really important in the mobile phone space. About 15% of our business is in the network space and 15% is in other.

TWST: Your customers are competing against the likes of Nokia, LG, Samsung?

Mr. Cochran: Actually not because basically what's happened is our customers are not selling in the top-tier market. They are competing with LG and Nokia in the second-tier market. There has been a huge shift, one that started several years ago, in that the second-tier market was very brand oriented as well. People wanted to buy a Nokia or wanted to buy a Samsung, or a Sony Ericsson or whatever it was. That's changed totally. Today the second-tier market for cell phones in China is all price- and functionality-oriented. So the white-box phones that our customers make are really cleaning up, and yes, they are taking business away from the majors.

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