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Vtion Wireless Technology: Company Exits Consumer Tablet PC Business

Frankfurt, 14 December 2012

Vtion Wireless Technology AG, one of the leading suppliers of wireless data solutions for mobile computing in China, announces the discontinuation of its consumer-oriented tablet PC business. This business accounted for approximately 15 per cent of Vtion's revenues for the first nine months of 2012. The reason for the decision was the increasing pricing competition in the consumer tablet PC market, resulting in margin pressure negatively affecting the company's overall profitability. Vtion's decision to exit this business was made for the benefit of the company's overall profitability.


Changes in the Consumer Market

An increasing number of low-end tablet PC suppliers have entered the market as the overall Chinese tablet PC market continues to grow. The resulting pricing competition in the consumer space has put pressure on Vtion's margins. Though the company has an established brand vis-à-vis the telecom operators, its lack of brand recognition among consumers means the company cannot charge a significant premium for better quality. Thus, while continuing to supply tablet PCs as part of the industry-specific computing solutions business segment, the company will exit the consumer space beginning January 2013. Consumer tablet sales thereafter will be aimed at selling off inventory.

"When we began this business we had high hopes for the tablet PC consumer market," states Vtion CEO Chen Guoping. "Though we were successful in our attempts to differentiate through pre-installed apps for targeted consumer groups, an increasing number of low-end providers entered the market, some of which compete at gross margins as low as five per cent. This had the effect of driving down prices in the overall market for all but the absolute top brands. In light of this, we have decided to close the business, because it is more important for us to maintain our strong profitability even if it comes at the expense of the top line," he concludes.


Business Model Going Forward

For the first nine months of 2012, Vtion's tablet PC sales in the consumer space accounted for approximately 15 per cent of total sales. Exiting this business will have a corresponding effect on the company's revenue for 2013. According to CEO Chen Guoping, "The hardware business in China is quite difficult overall. However, we are still successful in the wireless data terminal segment because of our solid foundation and brand recognition in that area. Lacking a true consumer brand, we have made this decision in the interest of our overall profitability." Over the long-term Vtion will move towards a more software and services-centric business model through industry specific computing solutions and mobile applications. However, these businesses are still in their incubation phase and unlikely to contribute significantly to the company's financial results in the near term. Nevertheless Vtion expects stable results in the wireless data terminal business segment while it continues to build up the newer businesses.

Vtion currently sells mobile applications designed for the usage by traveling insurance sales personnel. The company is also exploring further industries in which it can develop customized applications. Through its wholly-owned subsidiary, Vtion Anzhuo, the company is also active in the mobile applications space, working exclusively on the Android operating system. The company currently offers over 20,000 applications through its online sales channels


About Vtion

The Vtion Group is a leading supplier of wireless computing solutions and products for mobile Internet access via broadband wireless networks in the People's Republic of China. The company offers tablet PC products and support services through its mobile intelligent terminals business segment, including both to the consumer market and industry-specific clients. Through its wholly owned subsidiary, Vtion Anzhuo, the company offers online applications for the Android operating system. For 2011, the company reached sales revenues of EUR 77 million with an EBIT margin of 10.3 per cent. Vtion Wireless Technology AG shares are being traded in the Prime Standard on the Frankfurt Stock Exchange with the ISIN DE000CHEN993. The company's ticker symbol is V33.


For further information, please contact:

Kirchhoff Consult AG
Dr Kay Baden, tel.: +49 40 60 91 86 0,

Disclaimer concerning prognoses

This communication contains forward-looking statements. Forward-looking statements are statements that are not historical facts instead they reflect Vtion's current views and expectations and the assumptions underlying them about future events. Forward-looking statements are subject to many risks and uncertainties. If any of such risks and uncertainties materialise or if the assumptions underlying any of Vtion's forward-looking statements are proving to be incorrect, Vtion's actual results may be materially different from those expressed or implied by such forward-looking statements. Vtion does not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.

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