Viewtran (VIEWF) 6-K Current report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For September 30, 2011

Commission File No.:  001-35273

COGO GROUP, INC.

Room 10001, Tower C, Skyworth Building,

High-Tech Industrial Park,

Nanshan, Shenzhen 518057, PRC

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES.)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x                     Form 40-F o

Indicate by check markif the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  o                     No x

If “Yes” marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

EXPLANATORY NOTE

 This Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the future financial performance of Cogo Group, Inc. (the “Company”). The Company has attempted to identify forward-looking statements by terminology, including, but not limited to, “anticipates”, “believes”, “expects”, “can”, “continue”, “could”, “estimates”, “intends”, “may”, “plans”, “potential”, “predicts”, “should” or “will” or the negative of these terms or other comparable terminology.

The forward-looking statements included in this Form 6-K are subject to risks, uncertainties and assumptions about the Company’s businesses and business environments. These statements reflect the Company’s current views with respect to future events and are not a guarantee of future results, operations, levels of activity, performance or achievements. Actual results of the Company’s results, operations, levels of activity, performance or achievements may differ materially from information contained in the forward-looking statements as a result of risk factors.   The Company’s expectations are as of the date of filing of this Form 6-K, and the Company does not intend to update any of the forward-looking statements after the date this Form 6-K is filed to confirm these statements to actual results, unless required by law.

On November 10, 2011, the Company announced its unaudited consolidated financial results for the nine-month period ended September 30, 2011.

FINANCIAL INFORMATION

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2011

and December 31, 2010

	September 30, 2011						December 31, 2010
	USD’000			RMB’000			RMB’000
Assets
Current assets:
Cash		78,374			499,868			699,650
Pledged bank deposits		59,866			381,823			332,050
Accounts receivable, net		157,711			1,005,881			681,911
Bills receivable		5,097			32,508			31,001
Inventories		65,755			419,383			250,573
Income taxes receivable		168			1,070			2,478
Prepaid expenses and other receivables		7,982			50,913			49,338
Total current assets		374,953			2,391,446			2,047,001
Property and equipment, net		2,958			18,864			14,613
Goodwill and intangible assets, less accumulated amortization, RMB144,235 thousand (USD22,614 thousand) in 2011 and RMB122,637 thousand in 2010		62,305			397,379			258,935
Other assets		3,492			22,271			1,468
Total Assets		443,708			2,829,960			2,322,017
Liabilities and equity
Current liabilities:
Accounts payable		24,433			155,834			63,283
Bank borrowings		132,707			846,404			505,888
Income taxes payable		2,193			13,986			16,153
Accrued expenses and other liabilities		6,439			41,061			15,581
Total current liabilities		165,772			1,057,285			600,905
Deferred tax liabilities		4,150			26,471			13,777
Total liabilities		169,922			1,083,756			614,682
Equity
Common stock: Par value: USD0.01 Authorized: 200,000,000 Shares Issued: 41,309,285 shares in 2011, 41,181,529 shares in 2010 Outstanding: 33,110,950 shares in 2011, 35,848,764 shares in 2010		524			3,340			3,332
Additional paid in capital		215,092			1,371,856			1,315,806
Retained earnings		123,156			785,491			716,839
Accumulated other comprehensive loss		(19,337	)		(123,332	)		(117,479	)
		319,435			2,037,355			1,918,498
Less cost of common stock in treasury, 8,198,335 shares in 2011 and 5,332,765 shares in 2010		(49,199	)		(313,794	)		(226,495	)
Total Cogo Group, Inc. equity		270,236			1,723,561			1,692,003
Noncontrolling interests		3,550			22,643			15,332
Total equity		273,786			1,746,204			1,707,335
Total liabilities and equity		443,708			2,829,960			2,322,017

See accompanying notes to unaudited condensed consolidated financial statements.

1

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income and

Comprehensive Income for the three months ended September 30, 2011 and 2010

	Three Months ended September 30,
	2011			2011			2010
	USD’000			RMB’000			RMB’000
Net Revenue
Product sales		146,428			933,919			661,392
Service revenue		-			-			8,997
		146,428			933,919			670,389
Cost of sales
Cost of goods sold		(131,269	)		(837,234	)		(568,120	)
Cost of service		-			-			(7,287	)
		(131,269	)		(837,234	)		(575,407	)
Gross profit		15,159			96,685			94,982
Selling, general and administrative expenses		(7,888	)		(50,302	)		(40,255	)
Research and development expenses		(3,929	)		(25,059	)		(19,893	)
Other operating income		4			23			188
Income from operations		3,346			21,347			35,022
Interest expense		(991	)		(6,322	)		(3,435	)
Interest income		638			4,066			3,971
Earnings before income taxes		2,993			19,091			35,558
Income tax expense		(430	)		(2,745	)		(4,156	)
Net income		2,563			16,346			31,402
Less net income attributable to noncontrolling interests		(267	)		(1,705	)		(306	)
Net income attributable to Cogo Group, Inc.		2,296			14,641			31,096
	USD			RMB			RMB
Earnings per share attributable to Cogo Group, Inc.
Basic		0.06			0.40			0.83
Diluted		0.06			0.40			0.82
Weighted average number of common shares outstanding
Basic					36,317,706			37,244,589
Diluted					36,317,706			37,853,878
	Three Months ended September 30,
		2011			2011			2010
	USD’000			RMB’000			RMB’000
Comprehensive income:
Net income		2,563			16,346			31,402
Other comprehensive income
Foreign currency translation adjustments		(386	)		(2,461	)		(3,876	)
Comprehensive income
Less: comprehensive income attributable to noncontrolling interests		(261	)		(1,663	)		(206	)
Comprehensive income attributable to Cogo Group, Inc.		1,916			12,222			27,320

See accompanying notes to unaudited condensed consolidated financial statements.

2

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

for the nine months ended September 30, 2011 and 2010

	Nine Months ended September 30,
	2011			2011			2010
	USD’000			RMB’000			RMB’000
Net Revenue
Product sales		390,022			2,487,562			1,816,723
Service revenue		-			-			23,446
		390,022			2,487,562			1,840,169
Cost of sales
Cost of goods sold		(342,855	)		(2,186,731	)		(1,560,886	)
Cost of service		-			-			(18,942	)
		(342,855	)		(2,186,731	)		(1,579,828	)
Gross profit		47,167			300,831			260,341
Selling, general and administrative expenses		(22,157	)		(141,315	)		(117,611	)
Research and development expenses		(11,161	)		(71,185	)		(54,915	)
Other operating income		3			17			224
Income from operations		13,852			88,348			88,039
Interest expense		(2,067	)		(13,184	)		(6,216	)
Interest income		1,691			10,785			10,758
Earnings before income taxes		13,476			85,949			92,581
Income tax expense		(1,546	)		(9,858	)		(9,855	)
Net income		11,930			76,091			82,726
Less net income attributable to noncontrolling interests		(1,166	)		(7,439	)		(711	)
Net income attributable to Cogo Group, Inc.		10,764			68,652			82,015
Earnings per share attributable to Cogo Group, Inc.
		USD			RMB			RMB
Basic		0.29			1.83			2.21
Diluted		0.28			1.81			2.16
Weighted average number of common shares outstanding
Basic					37,457,578			37,149,639
Diluted					37,878,587			38,006,683
	Nine Months ended September 30,
		2011			2011			2010
	USD’000			RMB’000			RMB’000
Comprehensive income:
Net income		11,930			76,091			82,726
Other comprehensive income
Foreign currency translation adjustments		(938	)		(5,981	)		(5,972	)
Comprehensive income
Less: comprehensive income attributable to noncontrolling interests		(1,146	)		(7,311	)		(470	)
Comprehensive income attributable to Cogo Group, Inc.		9,846			62,799			76,284

See accompanying notes to unaudited condensed consolidated financial statements.

3

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows for the

nine months ended September 30, 2011 and 2010

	Nine months ended September 30,
	2011			2011			2010
	USD’000			RMB’000			RMB’000
Cash flows from operating activities:
Net income		11,930			76,091			82,726
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense		717			4,565			4,627
Amortization of intangible assets		3,384			21,592			16,353
Deferred income taxes		(466	)		(2,970	)		(2,699	)
Allowance for doubtful accounts		365			2,325			(14	)
Loss on disposal of property and
Equipment		-			-			441
Share-based compensation		8,789			56,058			51,310
Change in current assets and liabilities:
Accounts receivable, net		(54,785	)		(349,415	)		11,349
Bills receivable		(236	)		(1,507	)		(7,833	)
Inventories		(27,628	)		(176,211	)		(153,622	)
Prepaid expenses and other receivables		(3,587	)		(22,881	)		(12,413	)
Accounts payable		15,730			100,327			(1,110	)
Income taxes receivable		211			1,348			-
Income taxes payable		(322	)		(2,053	)		3,899
Accrued expenses and other liabilities		(1,339	)		(8,546	)		(6,817	)
Net cash used in operating activities		(47,237	)		(301,277	)		(13,803	)
Cash flows from investing activities:
Increase in pledged bank deposits		(8,666	)		(55,271	)		(20,417	)
Payment for acquisitions of subsidiaries		(16,721	)		(106,644	)		(65,127	)
Purchases of property and equipment		(1,406	)		(8,970	)		(5,675	)
Net cash used in investing activities		(26,793	)		(170,885	)		(91,219	)
Cash flows from financing activities:
Purchase of treasury stock		(13,688	)		(87,299	)		(42,771	)
Proceeds from bank borrowings		57,105			364,213			401,150
Net cash provided by financing activities		43,417			276,914			358,379
Effect of exchange rate changes on cash		(710	)		(4,534	)		(3,412	)
Net increase (decrease) in cash		(31,323	)		(199,782	)		249,945
Cash at beginning of the period		109,697			699,650			667,320
Cash at end of the period		78,374			499,868			917,265
Supplementary cash flow information:
Interest paid		2,067			13,184			6,216
Income tax paid		2,122			13,535			8,649

See accompanying notes to unaudited condensed consolidated financial statements.

4

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity for the nine months ended

September 30, 2011

	Cogo Group, Inc. Stockholders
	Common Stock					Additional paid in capital			Retained earnings		Accumulated other comprehensive loss			Treasury stock			Noncontrolling interest			Total equity
	No. of Shares outstanding			RMB’000		RMB’000			RMB’000		RMB’000			RMB’000			RMB’000			RMB’000
Balance as of January 1, 2011		35,848,764			3,332		1,315,806			716,839		(117,479	)		(226,495	)		15,332			1,707,335
Net income		–			–		–			68,652		–			–			7,439			76,091
Foreign currency translation adjustments		–			–		–			–		(5,853	)		–			(128	)		(5,981	)
Issuance of common stock pursuant to share-based compensation plan		127,756			8		(8	)		–		–			–			–			–
Share-based compensation		–			–		56,058			–		–			–			–			56,058
Purchase of treasury stock		(2,865,570	)		–		–			–		–			(87,299	)		–			(87,299	)
Balance as of September 30, 2011		33,110,950			3,340		1,371,856			785,491		(123,332	)		(313,794	)		22,643			1,746,204
Balance as of September 30, 2011 (in USD)					524		215,092			123,156		(19,337	)		(49,199	)		3,550			273,786

See accompanying notes to unaudited condensed consolidated financial statements.

5

COGO GROUP, INC. and SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1– Basis Of Presentation

The unaudited condensed consolidated financial statements of Cogo Group, Inc., (the “Company”) and its subsidiaries (the “Group”), include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Group’s consolidated financial position, results of operations and cash flows for all periods presented.

As disclosed in note 16, the domicile of the Company was changed from Maryland to the Cayman Islands effective August 4, 2011. As a result, the Group’s consolidated financial position, results of operations and cash flows for all periods presented that arose before August 4, 2011 related to those of the Company’s predecessor, Cogo Group, Inc., a Maryland corporation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report of the Company’s predecessor, Cogo Group, Inc., a Maryland corporation, on Form 10-K for the year ended December 31, 2010.

The Group has experienced, and expects to continue to experience, seasonal fluctuations in net revenue, which have historically been lowest in the first quarter of the year due to the Chinese New Year holiday season period and are typically highest in the fourth quarter of the year due to the desire by original equipment manufacturers (“OEMs”) and other customers to spend the remaining allocated annual budgets. Consequently, the Group’s financial position, operating results, cash flows and trends in these unaudited condensed consolidated financial statements are not necessarily indicative of future results that may be expected for any other interim period or for the full year.

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

The accompanying unaudited condensed consolidated financial statements are expressed in Renminbi (“RMB”), the national currency of the People’s Republic of China (the “PRC”). For the convenience of the reader, the September 30, 2011 RMB amounts, included in the accompanying unaudited condensed consolidated financial statements have been translated into United States dollars (“USD”) at the rate of USD1.0000 = RMB6.3780. No representation is made that the RMB could have been, or could be, converted into USD at that rate or at any particular rate or at all.

Note 2– Summary Of Significant Accounting Policies

The Company has evaluated that the recently issued accounting pronouncements have no significant impacts to the unaudited condensed consolidated financial statements.

6

Note 3– Accounts Receivable, Net

	September 30,				December 31,
	2011		2011		2010
	USD’000		RMB’000		RMB’000
Accounts receivable		169,567		1,081,498		755,203
Less:  allowance for doubtful accounts		(11,856)		(75,617)		(73,292)
Accounts receivable, net		157,711		1,005,881		681,911

An analysis of the allowance for doubtful accounts is as follows:

	Three months ended September 30,					Nine months ended September 30,
	2011		2010			2011			2010
	RMB’000		RMB’000			RMB’000			RMB’000
Beginning Balance		72,635		73,308			73,292			73,306
Addition charged to allowance for doubtful accounts		2,982		-			3,000			324
Write back on allowance for doubtful accounts		-		(16	)		(675	)		(338	)
Ending Balance		75,617		73,292			75,617			73,292

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount.

The Group records the transfers of accounts receivable pursuant to a factoring agreement with Bank of China (Hong Kong) Limited (“BOC”)as sales when it is considered to have surrendered control of such receivables under the provisions of ASC 860, Transfers and Servicing. For the three months and nine months ended September 30, 2011, the Group received proceeds from the sale of accounts receivable amounting to RMB178,584 thousand (USD28,000 thousand) and RMB546,357 thousand (USD84,900 thousand), respectively. For the three months and nine months ended September 30, 2010, the Group received proceeds from the sale of accounts receivable amounting to RMB131,314 thousand and RMB280,258 thousand, respectively. In addition, the Group recorded interest expense amounting to RMB1,563 thousand (USD245 thousand) and RMB3,322 thousand (USD517 thousand), respectively, in respect of the factored accounts receivable for the three months and nine months ended September 30, 2011. The Group recorded interest expense amounting to RMB894 thousand and RMB1,089 thousand, respectively, for factored accounts receivable for the three months and nine months ended September 30, 2010. As of September 30, 2011 and December 31, 2010, the Group has derecognized factored accounts receivable amounting to RMB309,679 thousand (USD48,554 thousand) and RMB188,042 thousand, respectively, in accordance with ASC 860. As of September 30, 2011 and December 31, 2010, the Group has not accrued a recourse liability since the estimated fair value of the recourse obligation was immaterial.

7

Note 4– Bills Receivable

The Group has arranged to transfer with recourse certain of its bills receivable to banks. For the three months ended September 30, 2011 and 2010, the Group received proceeds, net of discount, from the sale of bills receivable amounting to RMB16,760 thousand (USD2,628 thousand), and RMB3,455 thousand, respectively. In addition, the Group recorded discounts amounting to RMB357 thousand (USD56 thousand), and RMB45 thousand, respectively, in respect of the bills receivable sold for the three months ended September 30, 2011 and 2010. For the nine months ended September 30, 2011 and 2010, the Group received proceeds, net of discount, from the sale of bills receivable amounting to RMB45,455 thousand (USD7,127 thousand) and RMB22,043 thousand, respectively. In addition, the Group recorded discounts amounting to RMB843 thousand (USD132 thousand) and RMB190 thousand, respectively, in respect of the bills receivable sold for the nine months ended September 30, 2011 and 2010. The annualized discount rate ranges from 6.4% to 11.1% of the balance transferred, which is recorded as “interest expense”.

For bills receivable sold to banks that the Group has surrendered control, the Group derecognized the discounted bills receivable pursuant to the provisions of ASC 860. As of September 30, 2011 and December 31, 2010, gross amount of RMB21,777 thousand (USD3,414 thousand) and RMB2,158  thousand, respectively, of discounted bills receivable were derecognized by the Group respectively, in accordance with ASC 860. As of September 30, 2011 and December 31, 2010, the Group has not accrued a recourse liability since the estimated fair value of the recourse obligation was immaterial.

Note 5– Inventories

Inventories are stated at the lower of cost or market.  Cost is determined by the first-in, first-out method.  Cost of inventories comprises direct materials.  Inventories by major categories are as follows:

	September 30,				December 31,
	2011		2011		2010
	USD’000		RMB’000		RMB’000
Raw materials		28		178		162
Finished goods		65,727		419,205		250,411
Total inventories		65,755		419,383		250,573

No inventory was written off during the three months ended September 30, 2011, and inventories amounting to RMB63 thousand (USD10 thousand) were written off during the nine months then ended. Inventories amounting to RMB7,000 thousand and RMB9,600 thousand were written off during the three months and nine months ended September 30, 2010, respectively.

Note 6- Property And Equipment, Net

Property and equipment is stated at cost less depreciation and if applicable, impairment.  Property and equipment consists of the following:

	September 30,						December 31,
	2011						2010
	USD’000			RMB’000			RMB’000
Property and equipment, at cost		8,063			51,423			42,685
Less:  accumulated depreciation		(5,105	)		(32,559	)		(28,072	)
Property and equipment, net		2,958			18,864			14,613

8

Note 7– Goodwill and Intangible Assets

The changes in the carrying amount of goodwill and intangible assets for the period ended September 30, 2011 is as follows:

	Goodwill		Intangible Assets			Total
	RMB’000		RMB’000			RMB’000
Balance as of January 1, 2011		175,436		83,499			258,935
Acquisition of MDC Tech International Holdings Limited (note 15(a))		61,509		98,527			160,036
Amortization of intangible assets		-		(21,592	)		(21,592	)
Balance as of September 30, 2011		236,945		160,434			397,379
Balance as of September 30, 2011 (in USD)		37,151		25,154			62,305

Note 8– Bank Borrowings and Banking Facilities

The Group entered into several banking facilities with Standard Chartered Bank (Hong Kong) Limited, BOC, Guangdong Development Bank Holdings Company Limited (“GDB”) and China Merchants Bank Company Limited. As of September 30, 2011 and December 31, 2010, the aggregate credit limit of these facilities amounted to RMB1,565,799 thousand (USD 245,500 thousand) and RMB886,233, respectively. These facilities include letters of guarantee, bank loans and irrevocable letters of credit. The banking facility with BOC also included an accounts receivable factoring agreement as disclosed in note 3. The credit limit and the respective secured deposits for the accounts receivable factoring agreement share the same credit limit with the banking facility with BOC.

As of September 30, 2011 and December 31, 2010, the total outstanding bank borrowings amounted to RMB846,404 thousand (USD132,707 thousand) and RMB505,888 thousand, respectively. The weighted average interest rate on outstanding bank borrowings as of September 30, 2011 was 2.1% (December 31, 2010: 2.1%). The aggregate amount of funds secured as pledged deposits with the respective banks at September 30, 2011 and December 31, 2010 amounted to RMB381,823 thousand (USD59,866 thousand) and RMB332,050 thousand, respectively.

Note 9– Accrued Expenses and Other Liabilities, and Other Non-Current Liabilities

Accrued expenses and other liabilities, and other non-current liabilities consist of the following:

	September 30,				December 31,
	2011		2011		2010
	USD’000		RMB’000		RMB’000
Legal and professional fees		399		2,536		2,749
Accrued staff related costs		122		780		7,750
Payables for acquisitions (Note 15 (a))		5,500		35,079		-
Other accruals		418		2,666		5,082
Accrued expenses and other liabilities		6,439		41,061		15,581

9

Note 10– Share-Based Compensation

During the three months ended September 30, 2011 and 2010, the Company recognized share-based compensation expense for awards issued under the 2006 Incentive Plan and the 2009 Omnibus Securities and Incentive Plan (the “2009 Incentive Plan”) of RMB18,772 thousand (USD1,150 thousand) and RMB17,619 thousand, respectively. During the nine months ended September 30, 2011 and 2010, the Company recognized share-based compensation expense for awards issued under the 2006 Incentive Plan and the 2009 Incentive Plan of RMB56,058 thousand (USD8,789 thousand) and RMB51,310 thousand, respectively. A detailed description of the Company’s share-based compensation awards is included in the Annual Report of the Company’s predecessor, Cogo Group, Inc., a Maryland corporation, on Form 10-K for the year ended December 31, 2010.

(a) Options under the 2004 Incentive Plan

Under the Company’s 2004 Incentive Plan, the Company issued options to purchase shares of the Company’s common stock. The options granted under the 2004 Incentive Plan had a weighted average exercise price per option of USD4.08 and weighted average remaining contractual term of approximately 3 years as of September 30, 2011.  During the three months and nine months ended September 30, 2011, no share options under the 2004 Incentive Plan were exercised.  During the three months and nine months ended September 30, 2010, nil and 7,500 options were exercised, respectively. As of September 30, 2011, 1,184,769 options were outstanding under the 2004 Incentive Plan.

(b) Non-vested share units

A summary of non-vested share units activity is as follows:

	2006 Incentive Plan					2009 Incentive Plan
	Shares			Weighted average grant-date fair value		Shares			Weighted average grant-date fair value
				USD					USD
Balance as of January 1, 2011		786,465			6.74		1,615,952			6.26
Granted on January 1, 2011 (note i)		-			-		210,000			8.85
Granted on March 21, 2011 (note i)		-			-		1,000,000			7.80
Granted on April 1, 2011 (note i)		-			-		150,000			8.85
Granted on June 24, 2011(note ii)		-			-		50,000			5.27
Vested		(320,082	)		7.28		(793,360	)		6.79
Balance as of September 30, 2011		466,383			6.36		2,232,592			7.16

__________

Note i	The stock awards vest in equal quarterly installments over a period of three years from the date of grant.
Note ii	The stock awards were fully vested on the date of grant.

(c) Performance shares

10

A summary of performance share units activity is as follows:

	2009 Incentive Plan
	Shares		Weighted average grant-date fair value
			USD
Balance as of January 1, 2011		-		-
Granted on January 1, 2011 (note i)		330,000		8.85
Granted on January 1, 2011 (note ii)		270,000		8.85
Granted on April 1, 2011 (note i)		30,000		8.85
Granted on April 1, 2011 (note ii)		30,000		8.85
Vested		-		-
Balance as of September 30, 2011		660,000		8.85

Note i

The performance awards which were granted on January 1, 2011 and April 1, 2011 vest in equal annual installments over a period of three years from January 1, 2011 to December 31, 2013 and April 1, 2011 to March 31, 2014, respectively, and are subject to meeting certain earnings or other performance measures in 2011, 2012 and 2013.

Note ii

During the nine months ended September 30, 2011, the Company has granted performance share awards that contain service and market conditions. For performance share awards with market conditions, the market conditions are considered in the grant date fair value using a lattice model and will be recognized over the requisite service period regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. The share awards which were granted on January 1, 2011 and April 1, 2011 vest in equal annual installments over a period of three years from January 1, 2011 to December 31, 2013 and April 1, 2011 to March 31, 2014, respectively, and are subject to meeting the specified market condition in 2011, 2012 and 2013.

Note 11– Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months ended September 30,				Nine Months ended September 30,
	2011		2010		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Numerator for basic and diluted earnings per share:
Net income attributable to Cogo Group, Inc.		14,641		31,096		68,652		82,015
Denominator:
Basic weighted average shares		36,317,706		37,244,589		37,457,578		37,149,639
Effect of dilutive non-vested equity share units, performance shares, options and warrants		-		609,289		421,009		857,044
Diluted weighted average shares		36,317,706		37,853,878		37,878,587		38,006,683
	RMB		RMB		RMB		RMB
Basic earnings per share:		0.40		0.83		1.83		2.21
Diluted earnings per share:		0.40		0.82		1.81		2.16

11

Non-vested equity share units, performance shares and options amounting to approximately 3,575 thousand and 474 thousand are excluded from the Company’s dilutive computation as their effect would be anti-dilutive for the three months ended September 30, 2011 and 2010, respectively.  For the nine months ended September 30, 2011 and 2010, approximately 2,935 thousand and 474 thousand of such non-vested equity share units, respectively are excluded from the Company’s dilutive computation as their effect would be anti-dilutive.

Note 12– Operating Segment Information

Segment information is as follows:

	Three Months ended September 30,				Nine Months ended September 30,
	2011		2010		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Net revenue
Product sales
Segment revenue from external customers
Digital media		373,403		377,961		1,122,419		1,053,188
Telecommunications equipment		369,228		165,975		845,994		446,773
Industrial business		191,288		117,456		519,149		316,762
		933,919		661,392		2,487,562		1,816,723

12

	Three Months ended September 30,						Nine Months ended September 30,
	2011			2010			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000
Service revenue
Segment revenue from external customers		-			8,997			-			23,446
Inter-segment revenue		3,106			6,821			9,199			14,341
		3,106			15,818			9,199			37,787
Inter-company elimination		(3,106	)		(6,821	)		(9,199	)		(14,341	)
Total net revenue		933,919			670,389			2,487,562			1,840,169
Income from operations
Product sales		44,997			45,960			156,978			117,866
Service revenue		-			1,260			-			3,363
Unallocated (note i)		(23,650	)		(12,198	)		(68,630	)		(33,190	)
Total income from operations		21,347			35,022			88,348			88,039
Interest expense		(6,322	)		(3,435	)		(13,184	)		(6,216	)
Interest income		4,066			3,971			10,785			10,758
Earnings before income taxes		19,091			35,558			85,949			92,581

	September 30, 2011		December 31, 2010
	RMB’000		RMB’000
Total assets
Product sales		2,814,916		2,298,459
Service revenue		13,161		21,995
Unallocated (note ii)		1,883		1,563
		2,829,960		2,322,017

_________

Note i:  Unallocated income from operations includes items such as corporate staff and overheads.

Note ii:  Unallocated assets mainly include cash for corporate use.

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Note 13– Comprehensive Income

The following table reconciles equity attributable to noncontrolling interest:

	Three Months ended September 30,						Nine Months ended September 30,
	2011			2010			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000
Beginning balance		20,980			8,719			15,332			8,455
Net income attributable to noncontrolling interest		1,705			306			7,439			711
Foreign currency translation adjustments		(42	)		(100	)		(128	)		(241	)
Ending balance		22,643			8,925			22,643			8,925

Note 14– Fair Value Measurement

The fair values of pledged bank deposits, accounts receivable, accounts payable, bank borrowings and accrued expenses and other liabilities approximated the respective carrying amounts because of the short maturity of these instruments. The Group adopted ASC 820-10, for the nonfinancial assets and liabilities that are remeasured at fair value on a nonrecurring basis. The nonfinancial assets and liabilities that are remeasured at fair value on a nonrecurring basis did not impact our financial position or results of operations; however, it could have an impact in future periods.  In addition, the Group may have additional disclosure requirements in the event it incurs impairment of the Group’s assets in future periods.

Note 15– Acquisitions

(a) MDC Tech International Holdings Limited (“MDC”)

On January 31, 2011, the acquisition date, the Group acquired 100% of the outstanding shares of MDC and thereby obtained control of MDC and its subsidiary for a consideration of USD22,000 thousand (equivalent to RMB145,237 thousand as of the acquisition date). The purchase consideration will be funded with existing cash balances. The purchase consideration would be paid over twelve months in four equal installments on or before the last business day of each of the four fiscal quarters. The first three installments were USD5,500 thousand each (equivalent to RMB35,079 thousand) and were paid during the three months ended March 31, 2011, June 30, 2011 and September 30, 2011, respectively. The remaining consideration payable of USD5,500 thousand (equivalent to RMB35,079 thousand) for the acquisition is due to be settled within the year ending December 31, 2011 and is non-interest bearing. In light of the installment schedule, the Group has recorded the purchase consideration on a discounted basis, which amounted to USD21,869 thousand (equivalent to RMB144,372 thousand as of the acquisition date).

The principal activities of MDC and its subsidiary are the distribution of medical and healthcare equipment in the PRC, and the development of industrial applications on energy saving modules in the PRC.

The acquisition of MDC was accounted for by the Group as a purchase business combination in accordance with ASC 805, Business Combinations. The acquisition of MDC resulted in the recognition of goodwill of RMB61,509 thousand and the recording of net identifiable assets of RMB82,863 thousand at the date of acquisition. Recognized intangible assets relate to order backlog, customer relationships, non-compete agreements and proprietary technology which have a total weighted-average useful life of 8.9 years from the date of acquisition. Goodwill and the amortization of these intangible assets are not deductible for tax purposes.

The acquisition is expected to support the expansion of the Company’s industrial business in the PRC and the medical equipment and system sales in the PRC. Goodwill is attributed by (1) synergy to expand MDC’s operation and business on the established platform, industry knowledge and experience of the Group and the current experience of the Group in providing module reference design and solutions to customers; (2) expected future additional sales orders from new customers approachable by MDC after the acquisition, but for which MDC alone do not have sufficient resources to carry out such businesses; and (3) the expected outlook in the PRC medical and healthcare equipment and industrial application market with the PRC government stimulus package. The combination of these factors is the drivers behind the excess of purchase price paid over the value of assets and liabilities acquired.

14

Management has increased the fair value of the acquired customer relationships by RMB47,827 thousand and decreased the fair value of the acquired non-compete agreements by RMB47,532 thousand as a result of the refinement of the valuation during the three months ended September 30, 2011. The revisions in valuation have resulted in reduction of goodwill by RMB246 thousand and addition of deferred tax liabilities by RMB49 thousand.

The purchase price allocation is as follows:

	USD’000			RMB’000
Intangible assets
– order backlog		545			3,595
– customer relationships		7,700			50,833
– non-compete agreements		6,500			42,911
– proprietary technology		180			1,188
Goodwill		9,317			61,509
Deferred tax liabilities		(2,373	)		(15,664	)
Net asset acquired		21,869			144,372

The amount of revenue for MDC since the acquisition date included in the consolidated income statement from January 31, 2011 to September 30, 2011 is RMB66,492 thousand (USD10,271 thousand).

Unaudited proforma financial information

The following unaudited proforma financial information represents the combined results of operations of the Group as if the acquisition of MDC had occurred as of January 1, 2010. The unaudited proforma information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had it completed the acquisition as of January 1, 2010. In addition, the unaudited proforma financial information does not attempt to project the future results of operations of the Group.

	Three months ended September 30,						Nine months ended September 30,
	2011		2011		2010		2011		2011		2010
	USD’000 (unaudited)		RMB’000 (unaudited)		RMB’000 (unaudited)		USD’000 (unaudited)		RMB’000 (unaudited)		RMB’000 (unaudited)
Net revenue		146,428		933,919		692,018		390,963		2,487,562		1,905,787
Income from operations		3,346		21,347		32,637		17,021		108,563		80,101
Net Income attributable to Cogo Group, Inc.		2,296		14,641		29,103		11,778		75,123		74,791
Earnings per share
Basic		0.06		0.40		0.78		0.32		2.02		2.01
Diluted		0.06		0.40		0.77		0.31		1.98		1.97

15

(b) Goldshare Holdings Limited (“Goldshare”)

On April 1, 2011, the Group entered into a note subscription and share purchase agreement to acquire 3,142,857 shares (representing 44% of the outstanding shares) of Goldshare for a cash consideration of RMB22,000 thousand (equivalent to USD3,404 thousand); and to subscribe to a convertible note to be issued by Goldshare for RMB20,000 thousand (equivalent to USD3,094 thousand). The note will be convertible into 2,857,143 new shares of Goldshare at the option of the Group. The Group will be entitled to a total of 60% of the outstanding shares of Goldshare and Goldshare will become a subsidiary of the Group, if the Group exercises the conversion options.

Goldshare engages in the business of distribution of passive components with most of its operations in the PRC. The purchase consideration is contingently payable at various dates upon achieving certain agreed earnings levels of Goldshare and will be funded with existing cash balances. The schedule of payment of the purchase consideration will be separately agreed upon by the Group and the seller of Goldshare.

The note subscription and share purchase agreement has not been consummated. Therefore, the results of Goldshare have not been included in the unaudited condensed consolidated financial statements of the Company for the period ended September 30, 2011. We expect the share purchase agreement closing conditions will be met by March 31, 2012.

Note 16– Redomestication Merger

On May 2, 2011, the Company filed a Form F-4 that related to the redomestication of the Company from Maryland to the Cayman Islands.  The redomestication was approved by a shareholder vote on July 25, 2011.  The redomestication became effective and changed the domicile of the Company from Maryland to the Cayman Islands effective August 4, 2011.

Note 17– Subsequent Events

The Group entered into a credit facility agreement (the “Agreement”), effective as of October 25, 2011, with the Hong Kong and Shanghai Banking Corporation Limited (“HSBC”). Pursuant to the Agreement, HSBC extended to the Group a banking facility which included import facilities, trust receipts, revolving loans and other treasury facilities up to USD32,000 thousand (equivalent to RMB120,960 thousand).

16

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This commentary should be read in conjunction with Cogo Group, Inc. (the “Company”) and its subsidiaries’ (together, “we,” “us,” “our” or the “Group”) unaudited condensed consolidated financial statements for the period ended September 30, 2011 and 2010 as well as the Group’s consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in the Annual Report of the Company’s predecessor, Cogo Group, Inc., a Maryland corporation, on Form 10-K for the year ended December 31, 2010.

Portions of the discussion and analysis below contain certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our plans and objectives for future expansion, including our new digital consumer electronic and storage solution products; expectations for the domestic wireless handset, telecommunications equipment, consumer electronic and storage solution end-markets in the People’s Republic of China (the “PRC”); anticipated margins for our solutions; general and cyclical economic and business conditions, and, in particular, those in the PRC’s wireless handset, telecommunications equipment and consumer electronics industries; our ability to enter into and renew key corporate and strategic relationships with our customers and suppliers; changes in the favorable tax incentives enjoyed by our PRC operating companies; and other statements containing forward looking terminology such as “may,” “expects,” “believes,” “anticipates,” “intends,” “projects,” “looking forward” or similar terms, variations of such terms or the negative of such terms. Such information is based upon various assumptions made by, and expectations of, our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions which are subject to change. Accordingly, there can be no assurance that actual results will meet expectations and actual results may vary (perhaps materially) from certain of the results anticipated herein. For a further description of these and other risks and uncertainties, see the most recent Annual Report of our predecessor, Cogo Group, Inc., a Maryland corporation, filed with the Securities and Exchange Commission (“SEC”) on Form 10-K, and our subsequent SEC filings.

Overview

We provide customized module design solutions for a diverse set of applications and end-markets, serving as a gateway for our technology component suppliers to access leading electronics manufacturers in the PRC. Our customized module design solutions allow our customers to take advantage of technology components from reputable suppliers in an efficient and cost-effective manner, effectively reducing their time-to-market and lowering their overall costs. Our close collaboration with our customers’ product development teams provides us with a unique understanding of their needs, enabling us to customize our suppliers’ technology components with module designs that meet our customers’ needs. In addition, in 2006, we began offering technology and engineering services in the PRC and in 2007, we began offering software design services in the PRC.

17

We focus on the digital media, telecommunications equipment and industrial business end-markets in the PRC. In the digital media end-market, we provide mobile handset and module solutions for functionalities such as CMMB mobile TV, motion sensor, camera, power supply and bluetooth as well as solutions for high definition digital set-top box, GPS and solutions for tablet computers. In the telecommunications equipment end-market, we provide solutions for public switched telephone network or PSTN switching, optical transmitters, electrical signal processing and optical signal amplification; in the industrial business end-market, which we entered in the beginning of 2008, we provide industrial solutions for the green energy, smart meter, smart grid, railways, healthcare and auto-electronics sectors. Currently, we have over 1,600 customers, including many of the most established manufacturers in the digital media, telecommunications equipment and industrial business end-markets in the PRC such as ZTE, TCL and BYD. We work with original equipment manufacturers, or OEMs, as well as subsystem designers and contract manufacturers to provide solutions to support industry leaders like Huawei. In developing customized module design solutions for use in our customers’ products, we collaborate closely with over 30 suppliers of technology components, including many large multinational companies such as Broadcom, Sandisk, Freescale and Atmel. Additionally, in October 2006, we became one of the first PRC-based companies to license software technology and have access to selected source codes directly from Microsoft. After our January 2011 acquisition of MDC Tech International Holdings Limited (“MDC”), we began to work with hospitals in the PRC for the sales of medical and healthcare equipment and systems.

We have two reportable operating segments: product sales consisting of revenues generated by providing customized module design solutions focusing primarily in the digital media, telecommunications equipment and industrial business end-markets, as well as the distribution of medical and healthcare equipment under the industrial business end-market, and service revenue, generated by providing technology and engineering services, network system integration and related training and maintenance services.

Principal Factors Affecting Our Results of Operations

The major factors affecting our results of operations and financial condition include:

Revenue mix. Our net revenue and gross profit are affected by our product mix. In the second quarter of 2011, telecommunications equipment related sales, which have generally lower profit margins than our digital module related sales and our industrial business module related sales, constituted a significantly greater portion of our total net revenue as compared to the previous quarters.

Growth in end-market industries. The rapid growth of the domestic telecommunications equipment, industrial business and digital media end-markets has been important growth drivers for the PRC’s electronics manufacturing industries. Specific markets that we expect to experience continued growth are the data communications market, consisting of asymmetric digital subscriber line (ADSL) modems and Voice over Internet Protocol (VoIP) equipment; the routers and network security equipment markets; the optical transmission systems market; the fixed line telecommunications network market, as well as the digital media market particularly relating to digital TV and GPS applications. Increased domestic consumer spending power has contributed to rapid growth in these markets. This growth in domestic consumer spending power in turn has driven, and we believe will continue to drive, growth in the electronics manufacturing businesses supporting hardware OEMs, including those engaged in the customized design of module solutions such as ourselves. However, these industries and the respective domestic manufacturers that operate in these industries may not continue to grow their sales at historical levels, if at all. The stagnation or reduction in overall demand for telecommunications equipment, industrial business and digital media products could materially affect our results of operations.

18

Increase in exports. We believe that the development of a highly-skilled, low-cost manufacturing base has also enabled the PRC’s domestic telecommunications equipment and digital consumer electronics manufacturers to be competitive in the global marketplace. As an example, ZTE, a major manufacturer of mobile handset and telecommunications equipment in the PRC, as well as other telecommunications equipment and mobile handset manufacturers, have also begun to expand overseas. We believe that growth in the export market will likely have a positive effect on our results of operations and financial condition, as it should increase the demand for our solutions, particularly among our digital media clients.

Growth by entering new end-markets, strengthening in-house capabilities and leveraging our customer base. In 2008, we began targeting the industrial business end-market by providing industrial solutions for the green energy and auto-electronics sectors. In 2011, after our acquisition of MDC, we began to sell medical and healthcare equipment and systems to PRC hospitals. The revenues generated from the industrial business-end market have grown from 17.5% of our revenue in the third quarter of 2010 to 20.5% of our revenue in the third quarter of 2011.  We anticipate that sales related to the industrial business end-market will generally have higher profit margins than our digital media and telecom equipment modules related sales, though such higher margins may decline over time as this industry matures. We will also look for opportunities to expand into new end-markets that we believe represent significant growth opportunities, including sales of the medical and healthcare equipment and system in the current period.

Our success in the industrial business end-market will depend, in significant part, on our ability to leverage our existing customer base. We expect to continue to incur additional research and development expenses, through hiring additional engineering personnel to develop new solutions and expanding our intellectual property and technological capabilities, to meet the needs of our customers that have expanded into or are expected to expand into the industrial business end-market.

General economic and market conditions. Due to changing market conditions, the level of consumer and information technology spending has declined and reduced the demand for our mobile handsets since the third quarter of 2008. Furthermore, our profit margins have been reduced since we strategically lowered our pricing in order to grow the business in a slowing economic environment. Our other businesses, such as industrial business and digital media products, continue to show solid growth, driven by stable infrastructure investments in the PRC.

Net Revenue

Product sales

For our product sales segment, we do not charge our customers an independent design fee. Instead, our business model is to generate revenue by reselling a limited number of specific components required in our module reference design. The difference between the purchase price we pay our suppliers for these components and our sales price to the customer for these components compensates us for our design, technical support and distribution services. During the period, we also engaged in the sales of medical and healthcare equipment and system in accordance with the specifications of customers arising from the acquisition of MDC in January 2011. Our net revenue is net of a 17% value-added tax, or VAT. Costs incurred for the design of modules are expensed as incurred and recorded as research and development expense in the Company’s unaudited condensed consolidated statements of income and comprehensive income.

19

Our broad and diversified customer base includes many of the major telecommunications equipment, industrial business and digital consumer electronics manufacturers in the PRC. In addition, our customers include industry participants supporting these OEMs, such as subsystem designers and contract manufacturers in the PRC, as well as international manufacturers who have begun to manufacture end-products in the PRC for the domestic and international market. Subsequent to the January 2011 acquisition of MDC, our customers also include PRC hospitals.

Seasonality

Our net revenue is subject to seasonal fluctuation and periods of increased demand. All product module sales are typically highest in the fourth quarter of the year due to desire by OEMs and other customers to spend remaining budgets allocated for a given period, usually on an annual basis. Net revenue has historically been lowest in the first quarter of the year due to the Chinese New Year holiday and the general reduction in sales following the holiday season. The digital media industry also experiences cyclical fluctuations, as well as fluctuations in how quickly certain new digital media products and technologies are adopted by the market. These sales patterns may not be indicative of future sales performance.

Service Revenue

We provide technology and engineering services, and related training and maintenance services to our customers. We generate revenue when our services are rendered and acknowledged by our customers. Our service revenue is net of business tax.  However, we have not recorded service revenue in the second quarter.

Cost of Sales

Our cost of sales comprises cost of goods sold and cost of service.

Cost of Goods Sold

Cost of goods sold primarily consists of the purchase of components and equipment from suppliers. We develop our customized module design solutions based on specific technology components purchased from suppliers in our target end-markets. Our list of over 30 key suppliers includes Broadcom (integrated circuit and Bluetooth), Sandisk (flash memory), Freescale Semiconductor (automotive solutions), Atmel (industrial solutions), Xilinx (industrial solutions) and Philips (medical and healthcare equipment). We typically issue purchase orders to our suppliers only after we have received customer orders, enabling us to maintain low inventory levels and, in turn, minimize risks typically associated with holding inventory. If we lose a key supplier, or a supplier reduces the quantity of products it sells to us, does not maintain a sufficient inventory level of products required by us or is otherwise unable to meet our demands for its components, we may have to expend significant time, effort and other resources to locate a suitable alternative supplier and secure replacement components. Even if we are able to find a replacement supplier, we may be required to redevelop the customized module design solution to effectively incorporate the replacement components.

20

Cost of Service

Cost of service consists of direct staff costs and other direct related costs for providing engineering and technology services including training and materials.

Operating Expenses

Selling, General and Administrative Expenses

Our selling expenses include expenditures to promote our new module solutions and gain a larger customer base, personnel expenses and travel and entertainment costs related to sales and marketing activities, and freight charges. We expense all these expenditures as they are incurred. Selling expenses are expected to continue to grow in the future as we diversify by developing and acquiring new design capabilities and expanding into new end-markets. Also included in selling expenses are allowances for doubtful accounts.

General and administrative expenses include compensation and benefits for our general and administrative staff, professional fees, amortization of intangible assets, foreign exchange losses and general travel and entertainment costs. We expense all general and administrative expenses as they are incurred. We expect that general and administrative expenses will continue to increase for the foreseeable future as a result of our expected continued growth and the continuing costs of complying with U.S. rules and regulations necessary to maintain our listing in the United States.

Research and Development Expenses

Research and development expenses consist primarily of salaries and related costs of the employees engaged in research, design and development activities; the costs for design and testing; the cost of parts for prototypes; equipment depreciation; and third party development expenses. We expense research and development expenses as they are incurred. As of September 30, 2011, we had approximately 338 engineers and other technical employees engaged in research and development related activities to develop new customized module design solutions targeted at the telecommunications equipment, industrial business and digital media industries.

Noncontrolling Interest

Noncontrolling interest consisted of 30% and 40% of the outstanding equity interest in Comtech Broadband Corporation Limited (“Comtech Broadband”) and Comtech Digital Technology (Hong Kong) Limited (“Comtech Digital”), respectively. For the quarter ended September 30, 2011, approximately 52.2% of our total net revenue was generated through Comtech Broadband. Approximately 3.0% of our total net revenue was generated through Comtech Digital for the third quarter of 2011. For the quarter ended September 30, 2011, approximately 33.4% and 2.0% of our total net income was generated through Comtech Broadband and Comtech Digital, respectively.

21

Taxation

Our following PRC subsidiaries are enjoying tax holidays during 2011:

·   Comloca Technology (Shenzhen) Company Limited, Shenzhen Huameng Software Company Limited, Viewtran Technology (Shenzhen) Co. Limited and Epcot Multimedia Technology (SZ) Co. Ltd., being production oriented foreign investment enterprises, are entitled to 50% reduction in their income tax rates. They are subject to income tax at 12% for 2011.

·   Mega Sky (Shenzhen) Limited and Mega Smart (Shenzhen) Limited, being software and integrated circuit design enterprises, are each granted full income tax exemption for 2011.

Our effective tax rates were 14.4% and 11.7% for the three months ended September 30, 2011 and 2010, respectively. Our effective tax rates were 11.5% and 10.6% for the nine months ended September 30, 2011 and 2010, respectively. The effective income tax rates for the nine months and nine months ended September 30, 2011 differ from the PRC statutory income tax rate of 25% primarily due to the effect of tax holidays and the effect of non-deductible share-based compensation cost.

Our PRC subsidiaries have cash balances of RMB576,714 thousand (USD90,422 thousand) and RMB738,147 thousand as of September 30, 2011 and December 31, 2010, respectively which are planned to be permanently reinvested in the PRC. Any distributions from our PRC subsidiaries would be subject to the U.S. federal income tax at 34%, less any applicable foreign tax credits. Due to our policy of indefinitely reinvesting our earnings in our PRC business, we have not provided for deferred tax liabilities on undistributed earnings of our PRC subsidiaries.

As of and for the three months and nine months ended September 30, 2011, we did not have any unrecognized tax benefits and thus no interest and penalties related to unrecognized tax benefits were recorded. In addition, we do not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months.

Three months ended September 30, 2011 compared to three months ended September 30, 2010

Overview

The following table sets forth information regarding the breakdown of revenues and income from operations between our product sales segment and service revenue segment:

	Three Months ended September 30,
	2011		2010
	RMB’000		RMB’000
Net revenue
Product sales
Digital media		373,403		377,961
Telecommunications equipment		369,228		165,975
Industrial business		191,288		117,456
Service revenue		-		8,997
Total net revenue		933,919		670,389

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Net Revenue. Total net revenue increased by RMB263,530 thousand (USD41,319 thousand), or 39.3% in the three months ended September 30, 2011 when compared to the corresponding period in 2010. The increase was mainly due to the continued expansion in all end-markets especially the telecommunications equipment end-market during the period. The acquisition of MDC in January 2011 also generated net revenue of RMB19,637 thousand (USD3,079 thousand) during the nine months ended September 30, 2011.

Product Sales

Details of product sales by market type are as follows:

	Three months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% Change
	USD’000		RMB’000					RMB’000
Digital media		58,545		373,403		40.0	%		377,961		56.4	%		(1.3	%)
Telecommunications equipment		57,891		369,228		39.5	%		165,975		24.8	%		122.4	%
Industrial business		29,992		191,288		20.5	%		117,456		17.5	%		62.9	%
Total product sales		146,428		933,919		100.0	%		661,392		98.7	%		41.2	%

Product sales for the three months ended September 30, 2011 was RMB933,919 thousand (USD146,428 thousand), being RMB272,527 thousand (USD42,729 thousand), or 41.2% higher than the corresponding period in 2010. Digital media sales decreased by RMB4,558 thousand (USD715 thousand), or 1.3%; telecommunications equipment related sales increased by RMB203,253 thousand (USD31,868 thousand), or 122.4%; and industrial business related sales increased by RMB73,832 thousand (USD11,576 thousand), or 62.9%. The increase in product sales was mainly attributable to the increase in sales in the telecommunications equipment end-market resulting from the increase in investments in the 3G telecommunications infrastructure in the PRC. It was also attributable to the Group’s continued effort and strategic focus in the expansion of the industrial business end-market, the increased sales volume as a result of growing demand from some large customers and the promising new lines of business such as automotive, HDTV, smart meters, smart grid and 3G handset assess. The sale of medical equipment and components of the smart grid business resulting from the acquisition of MDC also contributed to the increase.

Service Revenue.

Service revenue is as follows:

	Three months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% Change
	USD’000		RMB’000					RMB’000
Service revenue		-		-		0.0	%		8,997		1.3	%		(100.0	%)

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Service revenue was derived from the provision of technology and engineering services, network system integration and related training and maintenance services. The decrease of RMB8,997 thousand (USD1,411 thousand) was mainly attributable to no service revenue being generated as our Group focused on the fast-growing telecommunications equipment and industrial business end-markets in the three months ended September 30, 2011.

Gross Profit. Gross profit was RMB96,685 thousand (USD15,159 thousand) in the three months ended September 30, 2011, an increase of RMB1,703 thousand (USD267 thousand), or 1.8% when compared to RMB94,982 thousand in the corresponding period in 2010. Gross margin was 10.4% in the three months ended September 30, 2011, compared to 14.2% in the corresponding period in 2010. The increase in gross profit was primarily attributable to increased sales volume in the telecommunications equipment and industrial business end-markets. The decreased gross margin was mainly due to the change in revenue mix, of which the telecommunications equipment end-market related sales had a relatively lower margin.

Selling, General and Administrative and R&D Expenses. Selling, general and administrative and R&D expenses were RMB75,361 thousand (USD11,817 thousand) in the three months ended September 30, 2011, or 25.3% higher than the corresponding period in 2010. The expenses for the three months ended September 30, 2011 and 2010 are as follows:

	Three months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% change
	USD’000		RMB’000					RMB’000
Selling expenses		2,938		18,737		2.0	%		11,737		1.7	%		59.6	%
General and administrative expenses		4,950		31,565		3.4	%		28,518		4.3	%		10.7	%
R&D expenses		3,929		25,059		2.7	%		19,893		3.0	%		26.0	%
Total		11,817		75,361		8.1	%		60,148		9.0	%		25.3	%

Selling, General and Administrative Expenses. The increase in selling expenses in the three months ended September 30, 2011 of RMB7,000 thousand (USD1,098 thousand), or 59.6%, was mainly attributable to the increase in staff costs, travel and business-related entertainment expenses as a result of increase in sales and related entertainment activities during the period.

The increase in general and administrative expenses of RMB3,047 thousand (USD478 thousand), or 10.7%, was primarily attributable to an increase in rental, travel and business-related entertainment expenses, as a result of an increase in business activities; an increase in amortization of intangible assets, as a result of the acquisition of MDC; and an increase in stock-based compensation cost as a result of the increase in shares granted to employees, for the nine month ended September 30, 2011.

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R&D Expenses.  R&D expenses increased in the three months ended September 30, 2011 by RMB5,165 thousand (USD810 thousand), or 26.0%, as compared to the corresponding period in 2010.  R&D expenses mainly consist of staff cost and R&D facility charges, and the increase was primarily attributable to an increase in R&D staff cost, including an increase in salaries of RMB2,479 thousand (USD389 thousand) and an increase in stock-based compensation cost of RMB1,572 thousand (USD246 thousand).

Interest Expense. Interest expense increased in the three months ended September 30, 2011 by RMB2,887 thousand (USD453 thousand) or 84.0%, as compared to the corresponding period in 2010. The increase in interest expense was attributable to an increase in average bank borrowings.

Interest Income. Interest income in the three months ended September 30, 2011 amounted to RMB4,066 thousand (USD638 thousand), compared to RMB3,971 thousand in the corresponding period in 2010. The slight increase was mainly attributable to a slight increase in average bank deposits as compared to the corresponding period in 2010.

Income Tax Expense. The effective income tax rate for the three months ended September 30, 2011 and 2010 was 14.4% and 11.7%, respectively.  The increase in effective income tax rate was due to increase in revenue generated by subsidiaries including Comtech Communication Technology (Shenzhen) Company Limited and Comtech Broadband that were taxed at higher tax rates during the period.

Net Income; Earnings per share. As a result of the above items, net income attributable to Cogo Group, Inc. for the three months ended September 30, 2011 was RMB14,641 thousand (USD2,296 thousand), as compared to RMB31,096 thousand in the corresponding period in 2010. We reported basic per share earnings of RMB0.40 (USD0.06) and diluted earnings per share of RMB0.40 (USD0.06) for the three months ended September 30, 2011, as compared to basic earnings per share of RMB0.83 and diluted earnings per share of RMB0.82 for the corresponding period in 2010.

Nine months ended September 30, 2011 compared to nine months ended September 30, 2010

Overview

The following table sets forth information regarding the breakdown of revenues and income from operations between our product sales segment and service revenue segment:

	Nine months ended September 30,
	2011		2010
	RMB’000		RMB’000
Net revenue
Product sales
Digital media		1,122,419		1,053,188
Telecommunications equipment		845,994		446,773
Industrial business		519,149		316,762
Service revenue		-		23,446
Total net revenue		2,487,562		1,840,169

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Net Revenue. Total net revenue increased by RMB647,393 thousand (USD101,504 thousand), or 35.2% in the nine months ended September 30, 2011 when compared to the corresponding period in 2010. The increase was mainly due to the continued expansion in all end-markets. The acquisition of MDC in January 2011 also generated net revenue of RMB66,492 thousand (USD10,425 thousand) during the nine months ended September 30, 2011.

Product Sales

Details of product sales by market type are as follows:

	Nine months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% Change
	USD’000		RMB’000					RMB’000
Digital media		175,983		1,122,419		45.1	%		1,053,188		57.2	%		6.6	%
Telecommunications equipment		132,643		845,994		34.0	%		446,773		24.3	%		89.4	%
Industrial business		81,397		519,149		20.9	%		316,762		17.2	%		63.9	%
Total product sales		390,022		2,487,562		100.0	%		1,816,723		98.7	%		36.9	%

Product sales for the nine months ended September 30, 2011 was RMB2,487,562 thousand (USD390,022 thousand), or 36.9% higher than the corresponding period in 2010. Digital media sales increased by RMB69,231 thousand (USD10,855 thousand), or 6.6%; telecommunications equipment related sales increased by RMB399,221 thousand (USD62,593 thousand), or 89.4%; and industrial business related sales increased by RMB202,387 thousand (USD31,732 thousand), or 63.9%. The increase in product sales was mainly attributable to the increase in sales in the telecommunications equipment end-market resulting from the increase in investments in the 3G telecommunications infrastructure in the PRC. It was also attributable to the Group’s continued effort and strategic focus in the expansion of the industrial business end-market, the increased sales volume as a result of growing demand from some large customers and the promising new lines of business such as automotive, HDTV, smart meters, smart grid and 3G handset assess. The sale of medical equipment and components of the smart grid business resulting from the acquisition of MDC also contributed to the increase.

Service Revenue.

Service revenue is as follows:

	Nine months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% Change
	USD’000		RMB’000					RMB’000
Service revenue		-		-		0.0	%		23,446		1.3	%		(100.0	%)

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Service revenue was derived from the provision of technology and engineering services, network system integration and related training and maintenance services. The decrease of RMB23,446 thousand (USD3,676 thousand) for the nine months ended September 30, 2011, as compared to same period of 2010, was due to no service revenue being generated as our Group focused on the fast-growing telecommunications equipment and industrial business end-markets in the nine months ended September 30, 2011.

Gross Profit. Gross profit was RMB300,831 thousand (USD47,167 thousand) in the nine months ended September 30, 2011, an increase of RMB40,490 thousand (USD6,348 thousand), or 15.6% when compared to RMB260,341 thousand in the corresponding period in 2010. Gross margin was 12.1% in the nine months ended September 30, 2011, compared to 14.1% in the corresponding period in 2010. The increase in gross profit was primarily attributable to increased sales volume in all end-markets.  The decreased gross margin was mainly due to the change in revenue mix, of which the digital media and telecommunications equipment end-markets related sales had a relatively lower margin.

Selling, General and Administrative and R&D Expenses. Selling, general and administrative and R&D expenses were RMB212,500 thousand (USD33,318 thousand) in the nine months ended September 30, 2011, or 23.2% higher than the corresponding period in 2010.  The expenses for the nine months ended September 30, 2011 and 2010 are as follows:

	Nine months ended September 30,
	2011							2010
	Amount				% of Net Revenue			Amount		% of Net Revenue			% change
	USD’000		RMB’000					RMB’000
Selling expenses		7,355		46,911		1.9	%		31,472		1.7	%		49.1	%
General and administrative expenses		14,802		94,404		3.8	%		86,139		4.7	%		9.6	%
R&D expenses		11,161		71,185		2.9	%		54,915		3.0	%		29.6	%
Total		33,318		212,500		8.6	%		172,526		9.4	%		23.2	%

Selling, General and Administrative Expenses. The increase in selling expenses in the nine months ended September 30, 2011 of RMB15,439 thousand (USD2,421 thousand), or 49.1%, was mainly attributable to the increase in staff costs, travel and business-related entertainment expenses as a result of increase in sales and related entertainment activities during the period.

The increase in general and administrative expenses of RMB8,265 thousand (USD1,296 thousand), or 9.6%, was primarily attributable to an increase in rental, travel and business-related entertainment expenses, as a result of increase of business activities; an increase in amortization of intangible assets, as a result of the acquisition of MDC; and an increase in stock-based compensation cost as a result of the increase in shares granted to employees, during the period.

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R&D Expenses.  R&D expenses increased in the nine months ended September 30, 2011 by RMB16,270 thousand (USD2,551 thousand), or 29.6%, as compared to the corresponding period in 2010.  R&D expenses mainly consist of staff cost and R&D facility charges, and the increase was primarily attributable to an increase in R&D staff cost, including an increase in salaries of RMB8,870 thousand (USD1,391 thousand) and an increase in stock-based compensation cost of RMB3,774 thousand (USD592 thousand).

Interest Expense. Interest expense increased in the nine months ended September 30, 2011 by RMB6,968 thousand (USD1,093 thousand) or 112.1%, as compared to the corresponding period in 2010. The increase in interest expense was attributable to an increase in average bank borrowings.

Interest Income. Interest income in the nine months ended September 30, 2011 amounted to RMB10,785 thousand (USD1,691 thousand), compared to RMB10,758 thousand in the corresponding period in 2010. The slight increase was mainly attributable to a slight increase in average bank deposits as compared to the corresponding period in 2010.

Income Tax Expense. The effective income tax rate for the nine months ended September 30, 2011 and 2010 were remained fairly stable at 11.5% and 10.6%, respectively.

Net Income; Earnings per share. As a result of the above items, net income attributable to Cogo Group, Inc. for the nine months ended September 30, 2011 was RMB68,652 thousand (USD10,764 thousand), as compared to RMB82,015 thousand in the corresponding period in 2010. We reported basic per share earnings of RMB1.83 (USD0.29) and diluted earnings per share of RMB1.81 (USD0.28) for the nine months ended September 30, 2011, as compared to basic earnings per share of RMB2.21 and diluted earnings per share of RMB2.16 for the corresponding period in 2010.

Liquidity and Capital Resources

Cash flows and working capital

Our accounts payable cycle typically averages approximately one month, whereas our receivables cycle typically averages approximately three to four months. Accordingly, working capital, being current assets less current liabilities, is needed to fund this timing difference.

As of September 30, 2011, apart from the cash payable in relation to our acquisition of the subsidiaries, we had no material commitments for capital expenditures.

As of September 30, 2011, we had approximately RMB499,868 thousand (USD78,374 thousand) in cash. We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations, available borrowings under bank lines of credit and factoring facilities and possible future public or private equity offerings. At times, we may evaluate possible acquisitions of, or investments in, businesses that are complementary to ours, which may require the use of cash. We believe that our cash, operating cash flows, credit arrangements, and access to equity and debt capital markets, taken together, provide adequate resources to fund our ongoing operating expenditures for the next 12 months. In the event that they do not, we may require additional funds in the future to support our working capital requirements or for other purposes and may seek to raise such additional funds through the sale of public or private equity, as well as from other sources.

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As of September 30, 2011, we had working capital of RMB1,334,161 thousand (USD209,181 thousand), including RMB499,868 thousand (USD78,374 thousand) in cash, as compared with working capital RMB1,446,096 thousand, including RMB699,650 thousand in cash, as of December 31, 2010.

Operating activities used cash of RMB301,277 thousand (USD47,237 thousand) for the nine months ended September 30, 2011, compared to cash used of RMB13,803 thousand in the corresponding period in 2010. The increase in cash used in operating activities as compared to the prior year was primarily due to an increase in accounts receivable as a result of increased revenue and an increase in cash paid for inventory purchases in the current period to meet expected demand in the coming months.

Investing activities used RMB170,885 thousand (USD26,793 thousand) for the nine months ended September 30, 2011, mainly for payments for acquisitions of subsidiaries of RMB106,644 thousand (USD16,721 thousand), increase of pledged bank deposits of RMB55,271 thousand (USD8,666 thousand) and purchases of property and equipment of RMB8,970 thousand (USD1,406 thousand). Investing activities used RMB91,219 thousand during the nine months ended September 30, 2010, mainly for payments for the acquisitions of subsidiaries of RMB65,127 thousand.

Financing activities provided cash of RMB276,914 thousand (USD43,417 thousand) for the nine months ended September 30, 2011, primarily arising from proceeds from bank borrowings of RMB364,213 thousand (USD57,105 thousand), offset by purchase of treasury stock of RMB87,299 thousand (USD13,688 thousand).

Indebtedness

We entered into several banking facilities with Standard Chartered Bank (Hong Kong) Limited, Bank of China (Hong Kong) Limited (“BOC”), Guangdong Development Bank Holdings Company Limited and China Merchants Bank Company Limited. As of September 30, 2011 and December 31, 2010, the aggregate credit limit of these facilities amounted to RMB1,565,799 thousand (USD245,500 thousand) and RMB886,233, respectively. These facilities include letters of guarantee, bank loans and irrevocable letters of credit. The banking facility with BOC also included an accounts receivable factoring agreement. The credit limit and the respective secured deposits for the accounts receivable factoring agreement shares the same credit limit with the banking facility with BOC.

As of September 30, 2011 and December 31, 2010, the total outstanding bank borrowings amounted to RMB846,404 thousand (USD132,707 thousand) and RMB505,888 thousand, respectively. The weighted average interest rate on outstanding bank borrowings as of September 30, 2011 was 2.1% (December 31, 2010: 2.1%). The aggregate amount of funds secured as pledged deposits with the respective banks at September 30, 2011 and December 31, 2010 amounted to RMB381,823 thousand (USD59,866 thousand) and RMB332,050 thousand, respectively.

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We record the transfers of accounts receivable pursuant to the factoring agreement with BOC as sales when it is considered to have surrendered control of such receivables. For the three months and nine months ended September 30, 2011, we received proceeds from the sale of accounts receivable amounting to RMB178,584 thousand (USD28,000 thousand) and RMB546,357 thousand (USD84,900 thousand), respectively, compared with RMB131,314 thousand and RMB280,258 thousand for the three months and nine months ended September 30, 2010, respectively. In addition, we recorded interest expense amounting to RMB1,563 thousand (USD245 thousand) and RMB3,322 thousand (USD517 thousand), respectively, in respect of the factored accounts receivable for the three months and nine months ended September 30, 2011. We recorded interest expense amounting to RMB894 thousand and RMB1,089 thousand, respectively, in respect of the factored accounts receivable for the three months and nine months ended September 30, 2010. As of September 30, 2011 and December 31, 2010, we have derecognized factored accounts receivable amounting to RMB309,679 thousand (USD48,554 thousand) and RMB188,042 thousand, respectively.

In certain circumstances, we have arranged to transfer with recourse certain of our bills receivable to banks. For the three months ended September 2011 and 2010, we received proceeds, net of discount, from the sale of bills receivable amounting to RMB16,760 thousand (USD2,628 thousand), and RMB3,455 thousand, respectively. In addition, we recorded discounts amounting to RMB357 thousand (USD56 thousand) and RMB45 thousand, respectively, in respect of the bills receivable sold for the three months ended September 30, 2011 and 2010. For the nine months ended September 30, 2011 and 2010, we received proceeds, net of discount, from the sale of bills receivable amounting to RMB45,455 thousand (USD7,127 thousand) and RMB22,043 thousand, respectively. In addition, we recorded discounts amounting to RMB843 thousand (USD132 thousand) and RMB190 thousand, respectively, in respect of the bills receivable sold for the nine months ended September 30, 2011 and 2010. The annualized discount rate ranges from 6.4% to 11.1% of the balance transferred, which is recorded as “interest expense”. As of September 30, 2011 and December 31, 2010, gross amount of RMB21,777 thousand (USD3,414 thousand) and RMB2,158 thousand of discounted bills receivable was derecognized, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

Our reporting currency is the Renminbi. Transactions in other currencies are recorded in Renminbi at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are remeasured into Renminbi at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in our statements of operations as a component of current period earnings.

The State Administration of Foreign Exchange, or SAFE, of the PRC, under the authority of the People’s Bank of China, controls the conversion of Renminbi into foreign currencies. The principal regulation governing foreign currency exchange in the PRC is the Foreign Currency Administration Rules (1996), as amended, or the “Rules”. Under the Rules, once various procedural requirements are met, Renminbi is convertible for current account transactions, including trade and service-related foreign exchange transactions and dividend payments, but not for capital account transactions, including direct investment, loans or investments in securities outside the PRC, without prior approval of the SAFE of the PRC, or its local counterparts.

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Since July 2005, the Renminbi is no longer pegged to the U.S. dollar. Although currently the Renminbi exchange rate versus the U.S. dollar is restricted to a rise or fall of no more than 0.3% per day and the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, the PRC authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market. As of September 30, 2011, the exchange rate of RMB to $1.0000 was RMB6.3780.

We conduct substantially all of our operations through our PRC operating companies, and their financial performance and position are measured in terms of Renminbi. Our solutions are primarily procured, sold and delivered in the PRC for Renminbi. The majority of our net revenue are denominated in Renminbi.

Any devaluation of the Renminbi against the U.S. dollar would consequently have an adverse effect on our financial performance and asset values when measured in terms of U.S. dollars. On the other hand, the appreciation of the Renminbi could make our customers’ products more expensive to purchase because many of our customers are involved in the export of goods, which may have an adverse impact on their sales. A decrease in sales by our customers could have an adverse effect on our operating results. In addition, as of September 30, 2011 and December 31, 2010, we have cash denominated in U.S. dollars amounting to RMB313,292 thousand (USD49,121 thousand) and RMB291,467 thousand, respectively. Also, from time to time we may have U.S. dollar denominated borrowings. Accordingly, a decoupling of the Renminbi may affect our financial performance in the future.

We recognized a foreign currency translation adjustment of RMB2,461 thousand (USD386 thousand) for the quarter ended September 30, 2011. We do not currently engage in hedging activities and as such, we may in the future experience economic loss as a result of any foreign currency exchange rate fluctuations.

Interest Rate Risk

We are exposed to interest rate risk arising from short-term variable rate borrowings from time to time. Our future interest expense will fluctuate in line with any change in our borrowing rates. We do not have any derivative financial instruments and believe our exposure to interest rate risk and other relevant market risks is not material. Our bank borrowings amounted to RMB846,404 thousand (USD132,707 thousand) as of September 30, 2011. Based on the variable nature of the underlying interest rate, the bank borrowings approximated fair value at that date.

If there was a hypothetical 1% change in interest rates, the net impact to earnings and cash flows would be approximately RMB8,464 thousand (USD1,327 thousand). The potential change in cash flows and earning is calculated based on the change in the net interest expense over a one year period due to an immediate 1% change in price.

Inflation

In recent years, the PRC has not experienced significant inflation, and thus inflation has not had a material impact on our results of operations.

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Volatility of the market price of our shares

The market price of our shares experienced, and may continue to experience significant volatility, which in many cases may be regardless of our actual operating performance.  The volatility may be due to many factors such as actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research analysts, changes in the economic performance or market valuations of other companies operating in our industry, announcements by our competitors of technology innovations or material acquisitions, activities of short sellers and risk arbitrageurs, and other economic and political conditions.  We are closely monitoring these conditions and assessing if any goodwill impairment is necessary before the annual test of impairment for goodwill.

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OTHER INFORMATION

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Pursuant to our approved Company stock purchase program, we made the following purchases of our equity securities during the third quarter of 2011.

ISSUER PURCHASE OF EQUITY SECURITIES
Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Program
July 1 through July 30, 2011	1,242,500	$4.7947	3,131,524	1,868,476
August 1 through August 31, 2011	757,500	$3.5161	3,889,024	1,110,976
September 1 through September 30, 2011	-	-	-	-
Total	2,000,000	$4.3104	3,889,024	1,110,976

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COGO GROUP, INC.
November 10, 2011	By:	/s/ Jeffrey Kang
		Jeffrey Kang
		Chairman and Chief Executive Officer (Principal Executive Officer)

November 10, 2011	By:	/s/ Frank Zheng
		Frank Zheng
		Chief Financial Officer (Principal Financial Officer)