SHENZHEN -- SinoHub and Ciao Telecom will invest $15 million in a new joint venture to manufacture and market mobile communications devices in Brazil.

Under terms of the agreement, the companies will organize a Brazilian corporation to be named CiaoHub. SinoHub and Ciao Telecom will each own 47% of the new company, with the remaining 6% to be equally divided among the six directors of CiaoHub.

CiaoHub will develop plans to construct a 9,000 sq. meter factory in Vila Velha, Espirito Santo, Brazil for the production of mobile communication devices including mobile phones, smartphones, tablets and mobile device components. The factory is expected to be modeled on SinoHub's manufacturing facility located in Shenzhen, 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 $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.

SinoHub manufactures private-label mobile phones, while Ciao Telecom is a provider of telecommunications products and services.

Brazil is currently one of the largest, fastest growing mobile communication device markets in the world, with 276 million active mobile phones expected by the end of 2012, an annual growth rate of 14%.

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