##### Table of Contents





SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2009.

or



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from                  to
                .

Commission File Number 000-02642





Cogo Group, Inc.

(Exact name of
registrant as specified in its charter)







|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Maryland                                                      |  | 52-0466460                         
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification No.)

Room 1001, Tower C, Skyworth Building

High-Tech Industrial Park

Nanshan,
Shenzhen 518057, PRC

(Address of Principal Executive Offices including zip code)

011-86-755-267-43210

(Registrants Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every, Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   ̈    No   ̈

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company



|                           |  |                      |  |                                              |  |                             
|-------------------------- |  | -------------------- |  | -------------------------------------------- |  | ----------------------------
|Large Accelerated Filer   ̈ |  | Accelerated Filer  x |  | Non-Accelerated Filer   ̈                     |  | Smaller reporting company   ̈
|                           |  |                      |  | (Do not check if a smallerreporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities
Exchange Act).  Yes   ̈    No  x

There were 36,134,925 shares of the Registrants Common Stock issued and outstanding on July 31, 2009.









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##### Table of Contents

Cogo Group, Inc.

Index to Form 10-Q



|           |  |                                                                                                           |  |     
|---------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                           |  | Page
|           |  |                                                                                                          
|Part I.    |  | Financial Information                                                                                     |  | 1   
|           |  |                                                                                                          
|           |  | Item 1. Unaudited Condensed Consolidated Financial Statements                                             |  | 1   
|           |  |                                                                                                          
|           |  | Unaudited Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008                 |  | 1   
|           |  |                                                                                                          
|           |  | Unaudited Condensed Consolidated Statements of Income for the three months ended June 30, 2009 and
2008   |  | 2   
|           |  |                                                                                                          
|           |  | Unaudited Condensed Consolidated Statements of Income for the six months ended June 30, 2009 and
2008     |  | 3   
|           |  |                                                                                                          
|           |  | Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and
2008 |  | 4   
|           |  |                                                                                                          
|           |  | Unaudited Condensed Consolidated Statements of Changes in Equity for the six months ended June 30,
2009   |  | 5   
|           |  |                                                                                                          
|           |  | Notes to Unaudited Condensed Consolidated Financial Statements                                            |  | 6   
|           |  |                                                                                                          
|           |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations             |  | 14  
|           |  |                                                                                                          
|           |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                                        |  | 24  
|           |  |                                                                                                          
|           |  | Item 4. Controls and Procedures                                                                           |  | 25  
|           |  |                                                                                                          
|Part II.   |  | Other Information                                                                                         |  | 25  
|           |  |                                                                                                          
|           |  | Item 1. Legal Proceedings                                                                                 |  | 25  
|           |  |                                                                                                          
|           |  | Item 1A. Risk Factors                                                                                     |  | 25  
|           |  |                                                                                                          
|           |  | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                       |  | 25  
|           |  |                                                                                                          
|           |  | Item 3. Defaults Upon Senior Securities                                                                   |  | 25  
|           |  |                                                                                                          
|           |  | Item 4. Submission of Matters to a Vote of Security Holders                                               |  | 25  
|           |  |                                                                                                          
|           |  | Item 5. Other Information                                                                                 |  | 25  
|           |  |                                                                                                          
|           |  | Item 6. Exhibits                                                                                          |  | 26  
|           | 
|SIGNATURES |  | 27                                                                                                       



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|------- | -----------------------------------------------------

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets



|                                                                                                                  |  |          |   |  |              |   |  |           |  
|----------------------------------------------------------------------------------------------------------------- |  | -------- | - |  | ------------ | - |  | --------- | -
|                                                                                                                  |  | June 30, |   |  | December 31, |  
|                                                                                                                  |  | 2009     |   |  | 2009         |   |  | 2008      |  
|                                                                                                                  |  | USD000  |   |  | RMB000      |   |  | RMB000   |  
|Assets                                                                                                            |  |          |   |  |              |   |  |           |  
|Current assets:                                                                                                   |  |          |   |  |              |   |  |           |  
|Cash                                                                                                              |  | 101,014  |   |  | 689,949      |   |  | 686,379   |  
|Pledged bank deposits                                                                                             |  | 17,000   |   |  | 116,113      |   |  | 115,983   |  
|Accounts receivable, net                                                                                          |  | 77,574   |   |  | 529,850      |   |  | 497,992   |  
|Bills receivable                                                                                                  |  | 1,450    |   |  | 9,902        |   |  | 13,555    |  
|Inventories                                                                                                       |  | 21,357   |   |  | 145,870      |   |  | 95,855    |  
|Prepaid expenses and other receivables                                                                            |  | 2,804    |   |  | 19,152       |   |  | 20,211    |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total current assets                                                                                              |  | 221,199  |   |  | 1,510,836    |   |  | 1,429,975 |  
|Property and equipment, net                                                                                       |  | 2,312    |   |  | 15,789       |   |  | 17,993    |  
|Goodwill and intangible assets, less accumulated amortization, RMB57,940 (USD8,483) in 2009 and RMB42,819 in 2008 |  | 51,563   |   |  | 352,189      |   |  | 237,234   |  
|Other assets                                                                                                      |  | 93       |   |  | 632          |   |  | 1,608     |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total Assets                                                                                                      |  | 275,167  |   |  | 1,879,446    |   |  | 1,686,810 |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Liabilities and equity                                                                                            |  |          |   |  |              |   |  |           |  
|Current liabilities:                                                                                              |  |          |   |  |              |   |  |           |  
|Accounts payable                                                                                                  |  | 13,883   |   |  | 94,819       |   |  | 107,512   |  
|Bank borrowings                                                                                                   |  | 4,444    |   |  | 30,351       |   |  |          |  
|Income taxes payable                                                                                              |  | 1,182    |   |  | 8,075        |   |  | 8,225     |  
|Accrued expenses and other liabilities                                                                            |  | 36,092   |   |  | 246,516      |   |  | 141,925   |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total current liabilities                                                                                         |  | 55,601   |   |  | 379,761      |   |  | 257,662   |  
|Deferred tax liabilities                                                                                          |  | 3,655    |   |  | 24,967       |   |  | 19,693    |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total liabilities                                                                                                 |  | 59,256   |   |  | 404,728      |   |  | 277,355   |  
|Equity                                                                                                            |  |          |   |  |              |   |  |           |  
|Common stock:                                                                                                     |  |          |   |  |              |   |  |           |  
|Par value: USD0.01                                                                                                |  |          |   |  |              |   |  |           |  
|Authorized 200,000,000 shares                                                                                     |  |          |   |  |              |   |  |           |  
|Issued: 39,935,232 shares                                                                                         |  |          |   |  |              |   |  |           |  
|Outstanding: 35,990,821 shares in 2009                                                                            |  |          |   |  |              |   |  |           |  
|35,231,661 shares in 2008                                                                                         |  | 476      |   |  | 3,248        |   |  | 3,196     |  
|Additional paid in capital                                                                                        |  | 173,211  |   |  | 1,183,066    |   |  | 1,146,840 |  
|Retained earnings                                                                                                 |  | 80,841   |   |  | 552,161      |   |  | 524,240   |  
|Accumulated other comprehensive loss                                                                              |  | (15,689  | ) |  | (107,157     | ) |  | (107,645  | )
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|                                                                                                                  |  | 238,839  |   |  | 1,631,318    |   |  | 1,566,631 |  
|Less cost of common stock in treasury, 3,944,411 shares in 2009 and 2008                                          |  | (23,819  | ) |  | (162,687     | ) |  | (162,687  | )
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total Cogo Group, Inc. equity                                                                                     |  | 215,020  |   |  | 1,468,631    |   |  | 1,403,944 |  
|Noncontrolling interest                                                                                           |  | 891      |   |  | 6,087        |   |  | 5,511     |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total equity                                                                                                      |  | 215,911  |   |  | 1,474,718    |   |  | 1,409,455 |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  
|Total liabilities and equity                                                                                      |  | 275,167  |   |  | 1,879,446    |   |  | 1,686,810 |  
|                                                                                                                  |  |          |   |  |              |   |  |           |  

See accompanying notes to unaudited condensed consolidated financial statements.



1



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##### Table of Contents

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income



|                                                        |  |                             |   |  |            |   |  |            |  
|------------------------------------------------------- |  | --------------------------- | - |  | ---------- | - |  | ---------- | -
|                                                        |  | Three Months ended June 30, |  
|                                                        |  | 2009                        |   |  | 2009       |   |  | 2008       |  
|                                                        |  | USD000                     |   |  | RMB000    |   |  | RMB000    |  
|Net revenue                                             |  |                             |   |  |            |   |  |            |  
|Product sales                                           |  | 72,526                      |   |  | 495,366    |   |  | 463,897    |  
|Services revenue                                        |  | 1,063                       |   |  | 7,263      |   |  | 4,020      |  
|                                                        |  |                             |   |  |            |   |  |            |  
|                                                        |  | 73,589                      |   |  | 502,629    |   |  | 467,917    |  
|Cost of sales                                           |  |                             |   |  |            |   |  |            |  
|Cost of goods sold                                      |  | (62,245                     | ) |  | (425,147   | ) |  | (381,223   | )
|Cost of services                                        |  | (857                        | ) |  | (5,856     | ) |  | (2,517     | )
|                                                        |  |                             |   |  |            |   |  |            |  
|                                                        |  | (63,102                     | ) |  | (431,003   | ) |  | (383,740   | )
|                                                        |  |                             |   |  |            |   |  |            |  
|Gross profit                                            |  | 10,487                      |   |  | 71,626     |   |  | 84,177     |  
|Selling, general and administrative expenses            |  | (5,866                      | ) |  | (40,058    | ) |  | (33,364    | )
|Research and development expenses                       |  | (2,354                      | ) |  | (16,076    | ) |  | (10,800    | )
|Other operating income                                  |  | 42                          |   |  | 286        |   |  | 108        |  
|                                                        |  |                             |   |  |            |   |  |            |  
|Income from operations                                  |  | 2,309                       |   |  | 15,778     |   |  | 40,121     |  
|Interest expense                                        |  | (70                         | ) |  | (478       | ) |  | (587       | )
|Interest income                                         |  | 640                         |   |  | 4,369      |   |  | 6,990      |  
|                                                        |  |                             |   |  |            |   |  |            |  
|Earnings before income taxes                            |  | 2,879                       |   |  | 19,669     |   |  | 46,524     |  
|Income tax expense                                      |  | (299                        | ) |  | (2,045     | ) |  | (2,173     | )
|                                                        |  |                             |   |  |            |   |  |            |  
|Net income                                              |  | 2,580                       |   |  | 17,624     |   |  | 44,351     |  
|Less net income attributable to noncontrolling interest |  | (48                         | ) |  | (327       | ) |  |           |  
|                                                        |  |                             |   |  |            |   |  |            |  
|Net income attributable to Cogo Group, Inc.             |  | 2,532                       |   |  | 17,297     |   |  | 44,351     |  
|                                                        |  |                             |   |  |            |   |  |            |  
|                                                        |  |                             |  
|                                                        |  | USD                         |   |  | RMB        |   |  | RMB        |  
|Earnings per share attributable to Cogo Group, Inc.     |  |                             |   |  |            |   |  |            |  
|Basic                                                   |  | 0.07                        |   |  | 0.48       |   |  | 1.14       |  
|Diluted                                                 |  | 0.07                        |   |  | 0.46       |   |  | 1.11       |  
|Weighted average number of common shares outstanding    |  |                             |   |  |            |   |  |            |  
|Basic                                                   |  |                             |   |  | 36,330,036 |   |  | 39,035,887 |  
|Diluted                                                 |  |                             |   |  | 37,698,805 |   |  | 40,094,428 |  

See accompanying notes to unaudited condensed consolidated financial statements.



2



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COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income



|                                                        |  |                           |   |  |            |   |  |            |  
|------------------------------------------------------- |  | ------------------------- | - |  | ---------- | - |  | ---------- | -
|                                                        |  | Six Months ended June 30, |  
|                                                        |  | 2009                      |   |  | 2009       |   |  | 2008       |  
|                                                        |  | USD000                   |   |  | RMB000    |   |  | RMB000    |  
|Net revenue                                             |  |                           |   |  |            |   |  |            |  
|Product sales                                           |  | 135,116                   |   |  | 922,871    |   |  | 872,732    |  
|Services revenue                                        |  | 1,766                     |   |  | 12,060     |   |  | 17,230     |  
|                                                        |  |                           |   |  |            |   |  |            |  
|                                                        |  | 136,882                   |   |  | 934,931    |   |  | 889,962    |  
|Cost of sales                                           |  |                           |   |  |            |   |  |            |  
|Cost of goods sold                                      |  | (115,964                  | ) |  | (792,055   | ) |  | (713,065   | )
|Cost of services                                        |  | (1,436                    | ) |  | (9,810     | ) |  | (10,331    | )
|                                                        |  |                           |   |  |            |   |  |            |  
|                                                        |  | (117,400                  | ) |  | (801,865   | ) |  | (723,396   | )
|                                                        |  |                           |   |  |            |   |  |            |  
|Gross profit                                            |  | 19,482                    |   |  | 133,066    |   |  | 166,566    |  
|Selling, general and administrative expenses            |  | (11,100                   | ) |  | (75,815    | ) |  | (73,142    | )
|Research and development expenses                       |  | (4,703                    | ) |  | (32,120    | ) |  | (20,433    | )
|Other operating income                                  |  | 47                        |   |  | 319        |   |  | 70         |  
|                                                        |  |                           |   |  |            |   |  |            |  
|Income from operations                                  |  | 3,726                     |   |  | 25,450     |   |  | 73,061     |  
|Interest expense                                        |  | (75                       | ) |  | (509       | ) |  | (827       | )
|Interest income                                         |  | 1,021                     |   |  | 6,972      |   |  | 14,608     |  
|                                                        |  |                           |   |  |            |   |  |            |  
|Earnings before income taxes                            |  | 4,672                     |   |  | 31,913     |   |  | 86,842     |  
|Income tax expense                                      |  | (501                      | ) |  | (3,422     | ) |  | (5,464     | )
|                                                        |  |                           |   |  |            |   |  |            |  
|Net income                                              |  | 4,171                     |   |  | 28,491     |   |  | 81,378     |  
|Less net income attributable to noncontrolling interest |  | (83                       | ) |  | (570       | ) |  |           |  
|                                                        |  |                           |   |  |            |   |  |            |  
|Net income attributable to Cogo Group, Inc.             |  | 4,088                     |   |  | 27,921     |   |  | 81,378     |  
|                                                        |  |                           |   |  |            |   |  |            |  
|                                                        |  |                           |  
|                                                        |  | USD                       |   |  | RMB        |   |  | RMB        |  
|Earnings per share attributable to Cogo Group, Inc.     |  |                           |   |  |            |   |  |            |  
|Basic                                                   |  | 0.11                      |   |  | 0.77       |   |  | 2.08       |  
|Diluted                                                 |  | 0.11                      |   |  | 0.74       |   |  | 2.03       |  
|Weighted average number of common shares outstanding    |  |                           |   |  |            |   |  |            |  
|Basic                                                   |  |                           |   |  | 36,127,454 |   |  | 39,051,296 |  
|Diluted                                                 |  |                           |   |  | 37,481,300 |   |  | 40,053,218 |  

See accompanying notes to unaudited condensed consolidated financial statements.



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COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows



|                                                                                         |  |                           |   |  |         |   |  |          |  
|---------------------------------------------------------------------------------------- |  | ------------------------- | - |  | ------- | - |  | -------- | -
|                                                                                         |  | Six Months ended June 30, |  
|                                                                                         |  | 2009                      |   |  | 2009    |   |  | 2008     |  
|                                                                                         |  | USD000                   |   |  | RMB000 |   |  | RMB000  |  
|Cash flows from operating activities:                                                    |  |                           |   |  |         |   |  |          |  
|Net income                                                                               |  | 4,171                     |   |  | 28,491  |   |  | 81,378   |  
|Adjustments to reconcile net income to net cash provided by operating activities:        |  |                           |   |  |         |   |  |          |  
|Depreciation expense                                                                     |  | 419                       |   |  | 2,862   |   |  | 4,237    |  
|Amortization of intangible assets                                                        |  | 2,214                     |   |  | 15,121  |   |  | 12,905   |  
|Deferred income taxes                                                                    |  | (349                      | ) |  | (2,387  | ) |  | (3,321   | )
|Loss on disposal of property and equipment                                               |  | 7                         |   |  | 48      |   |  | 28       |  
|Share-based compensation                                                                 |  | 4,266                     |   |  | 29,138  |   |  | 20,238   |  
|Change in current assets and liabilities, net of effects from acquisition of Mega Smart: |  |                           |   |  |         |   |  |          |  
|Accounts receivable, net                                                                 |  | (4,620                    | ) |  | (31,558 | ) |  | (109,575 | )
|Bill receivables                                                                         |  | 535                       |   |  | 3,653   |   |  | 18,584   |  
|Inventories                                                                              |  | (7,317                    | ) |  | (49,974 | ) |  | 24,012   |  
|Prepaid expenses and other receivables                                                   |  | 301                       |   |  | 2,058   |   |  | (3,697   | )
|Accounts payable                                                                         |  | (1,870                    | ) |  | (12,770 | ) |  | 4,577    |  
|Amount due to a related party                                                            |  |                          |   |  |        |   |  | (1,358   | )
|Income taxes payable                                                                     |  | (23                       | ) |  | (154    | ) |  | 3,422    |  
|Accrued expenses and other liabilities                                                   |  | (125                      | ) |  | (857    | ) |  | (9,307   | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Net cash provided by (used in) operating activities                                      |  | (2,391                    | ) |  | (16,329 | ) |  | 42,123   |  
|Cash flows used in investing activities:                                                 |  |                           |   |  |         |   |  |          |  
|Increase in pledged bank deposits                                                        |  |                          |   |  |        |   |  | (2,431   | )
|Payment for acquisitions of subsidiaries                                                 |  | (1,501                    | ) |  | (10,249 | ) |  | (43,986  | )
|Purchases of property and equipment                                                      |  | (105                      | ) |  | (718    | ) |  | (4,415   | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Net cash used in investing activities                                                    |  | (1,606                    | ) |  | (10,967 | ) |  | (50,832  | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Cash flows provided by (used in) financing activities:                                   |  |                           |   |  |         |   |  |          |  
|Proceeds from bank borrowings                                                            |  | 4,444                     |   |  | 30,351  |   |  |         |  
|Proceeds from exercise of stock options                                                  |  | 45                        |   |  | 307     |   |  |         |  
|Purchase of treasury stock                                                               |  |                          |   |  |        |   |  | (35,422  | )
|Repayment of bank borrowings                                                             |  |                          |   |  |        |   |  | (8,784   | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Net cash provided by (used in) financing activities                                      |  | 4,489                     |   |  | 30,658  |   |  | (44,206  | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Effect of exchange rate changes on cash                                                  |  | 30                        |   |  | 208     |   |  | (26,253  | )
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Net increase (decrease) in cash                                                          |  | 522                       |   |  | 3,570   |   |  | (79,168  | )
|Cash at beginning of the period                                                          |  | 100,492                   |   |  | 686,379 |   |  | 919,650  |  
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Cash at end of the period                                                                |  | 101,014                   |   |  | 689,949 |   |  | 840,482  |  
|                                                                                         |  |                           |   |  |         |   |  |          |  
|Supplementary cash flow information:                                                     |  |                           |   |  |         |   |  |          |  
|Interest paid                                                                            |  | (75                       | ) |  | (509    | ) |  | (827     | )
|Income tax paid                                                                          |  | (873                      | ) |  | (5,963  | ) |  | (5,364   | )
|Non-cash investing activities:                                                           |  |                           |   |  |         |   |  |          |  
|Shares issued for acquisition consideration payable, included in other liabilities       |  | 1,000                     |   |  | 6,833   |   |  | 13,880   |  
|Acquisition of Mega Smart included in accrued expenses and other liabilities (note 13)   |  | 17,929                    |   |  | 122,415 |   |  |         |  

See accompanying notes to unaudited condensed consolidated financial statements.



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##### Table of Contents

COGO GROUP, INC. and SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity



|                                                                                                        |  |                               |  |                           |  |                  |  |                                   |  |          |               |  |          |                        |  |              |  |          
|------------------------------------------------------------------------------------------------------- |  | ----------------------------- |  | ------------------------- |  | ---------------- |  | --------------------------------- |  | -------- | ------------- |  | -------- | ---------------------- |  | ------------ |  | ---------
|                                                                                                        |  | Cogo Group, Inc. Stockholders |  |                           |  |                  | 
|                                                                                                        |  | Common Stock                  |  | Additional paid incapital |  | Retainedearnings |  | Accumulatedothercomprehensiveloss |  |          | Treasurystock |  |          | Noncontrollinginterest |  | Total equity
|                                                                                                        |  | No. of Shares                 |  | RMB000                   |  | RMB000          |  | RMB000                           |  | RMB000  |               |  | RMB000  |                        |  | RMB000      |  | RMB000  
|Balance as of January 1, 2009                                                                           |  | 35,231,661                    |  | 3,196                     |  | 1,146,840        |  | 524,240                           |  | (107,645 | )             |  | (162,687 | )                      |  | 5,511        |  | 1,409,455
|Net income                                                                                              |  |                              |  |                          |  |                 |  | 27,921                            |  |         |               |  |         |                        |  | 570          |  | 28,491   
|Foreign currency translation adjustments                                                                |  |                              |  |                          |  |                 |  |                                  |  | 488      |               |  |         |                        |  | 6            |  | 494      
|Issuance of common stock to share-based compensation plan                                               |  | 700,059                       |  | 47                        |  | 260              |  |                                  |  |         |               |  |         |                        |  |             |  | 307      
|Share-based compensation                                                                                |  |                              |  |                          |  | 29,138           |  |                                  |  |         |               |  |         |                        |  |             |  | 29,138   
|Issuance of common stock in connection with consideration paid for the acquisition of Comtech Broadband |  | 59,101                        |  | 5                         |  | 6,828            |  |                                  |  |         |               |  |         |                        |  |             |  | 6,833    
|                                                                                                        |  |                               |  |                           |  |                  |  |                                   |  |          |               |  |          |                        |  |              |  |          
|Balance as of June 30, 2009                                                                             |  | 35,990,821                    |  | 3,248                     |  | 1,183,066        |  | 552,161                           |  | (107,157 | )             |  | (162,687 | )                      |  | 6,087        |  | 1,474,718
|                                                                                                        |  |                               |  |                           |  |                  |  |                                   |  |          |               |  |          |                        |  |              |  |          
|Balance as of June 30, 2009 (in USD)                                                                    |  |                               |  | 476                       |  | 173,211          |  | 80,841                            |  | (15,689  | )             |  | (23,819  | )                      |  | 891          |  | 215,911  
|                                                                                                        |  |                               |  |                           |  |                  |  |                                   |  |          |               |  |          |                        |  |              |  |          

See accompanying notes to unaudited condensed consolidated financial statements.



5



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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.

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 Companys Form 10-K for the year ended December 31, 2008.

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) to spend 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 June 30, 2009 RMB amounts, included in the accompanying unaudited condensed consolidated financial statements have been translated into United States dollars
(USD) at the rate of USD1.00 = RMB6.8302. 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

Financial Accounting Standard Board (FASB) Statement No. 141(R) (SFAS No. 141(R)) and FASB Statement No. 160 (SFAS No. 160)

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations and SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements  an amendment to ARB No. 51. SFAS No. 141(R) and SFAS No. 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded
at full fair value and require noncontrolling interests (previously referred to as minority interest) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. SFAS
No. 141(R) was effective for business combinations closing on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Group first adopted the provisions of SFAS No. 141(R) for the
acquisition of Mega Smart Group Limited (Mega Smart) in May 2009 (note 13). SFAS No. 160 requires the Company to make certain changes to the presentation of financial statements. This standard requires the Company to classify
noncontrolling interests (previously referred to as minority interest) as part of consolidated net earnings (RMB570 thousand (USD83 thousand) and nil for the six months ended June 30, 2009 and 2008, respectively) and to include the
accumulated amount of noncontrolling interests as part of equity (RMB6,087 thousand (USD891 thousand) and RMB5,511 thousand as of June 30, 2009 and December 31, 2008, respectively). The net income amounts the Company has previously
reported are now presented as Net income attributable to the Cogo Group, Inc. and, as required by SFAS No. 160, earnings per share continues to



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reflect amounts attributable only to the Company. Similarly, in the presentation of equity, the Company distinguishes between equity amounts attributable to
Cogo Group, Inc. stockholders and the amounts attributable to the noncontrolling interests that were previously classified as minority interests outside of equity.

FASB Statement No. 165 (SFAS No. 165)

In May 2009, the FASB issued SFAS No. 165, Subsequent
Events, SFAS No. 165 sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in financial
statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. The Group has evaluated the period beginning July 1, 2009 through to August 7, 2009, the date unaudited condensed consolidated financial statements were issued, and concluded there
were no events or transactions occurring during this period beginning July 1, 2009 through to August 7, 2009 that required recognition or disclosure in the unaudited condensed consolidated financial statements.

FASB Statement FSP FAS No. 107-1 and APB 28-1

In April 2009,
the FASB issued FASB Staff Position (FSP) FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair
Value of Financial Instruments, and requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. Additionally, this FSP amends Accounting Principles Board
(APB) Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. These disclosures are required for interim reporting periods
ended after June 15, 2009. The additional disclosure requirements under FSP No. FAS 107-1 and APB No. 28-1 are included in note 12 of the unaudited condensed consolidated financial statements.

Note 3  Accounts Receivable, Net

Accounts receivable consist
of the following:



|                                      |  |          |   |  |              |   |  |         |  
|------------------------------------- |  | -------- | - |  | ------------ | - |  | ------- | -
|                                      |  | June 30, |   |  | December 31, |  
|                                      |  | 2009     |   |  | 2009         |   |  | 2008    |  
|                                      |  | USD000  |   |  | RMB000      |   |  | RMB000 |  
|Accounts receivable                   |  | 85,576   |   |  | 584,500      |   |  | 535,306 |  
|Less: allowance for doubtful accounts |  | (8,002   | ) |  | (54,650      | ) |  | (37,314 | )
|                                      |  |          |   |  |              |   |  |         |  
|Accounts receivable, net              |  | 77,574   |   |  | 529,850      |   |  | 497,992 |  
|                                      |  |          |   |  |              |   |  |         |  



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



|                                                    |  |                             |  |                           |  |         |  |        
|--------------------------------------------------- |  | --------------------------- |  | ------------------------- |  | ------- |  | -------
|                                                    |  | Three Months ended June 30, |  | Six Months ended June 30,
|                                                    |  | 2009                        |  | 2008                      |  | 2009    |  | 2008   
|                                                    |  | RMB000                     |  | RMB000                   |  | RMB000 |  | RMB000
|Beginning balance                                   |  | 40,990                      |  | 35,375                    |  | 37,314  |  | 30,467 
|Addition charged to allowance for doubtful accounts |  | 13,660                      |  | 2,459                     |  | 17,336  |  | 7,367  
|                                                    |  |                             |  |                           |  |         |  |        
|Ending balance                                      |  | 54,650                      |  | 37,834                    |  | 54,650  |  | 37,834 
|                                                    |  |                             |  |                           |  |         |  |        

Note 4  Bills Receivable

To reduce the Groups credit risk, the Group requires certain customers to pay for the sale of the Groups products by bills receivable. Bills receivable represents short-term notes receivable issued by a
financial institution that entitles the Group to receive the full face amount from the financial institution at maturity, which generally ranges from 3 to 6 months from the date of issuance. Historically, the Group has experienced no losses on bills
receivable.

In certain circumstances, The Group has arranged to transfer with recourse certain of its bills receivable to banks. Under this discounting
arrangement, the bank pays a discounted amount to the Group and collects the amounts owed from the customers banks. The discount typically ranges from 1.6% to 1.7% of the balance transferred, which is recorded as interest expense.

For the three months ended June 30, 2009 and 2008, the Group received proceeds from the sale of bills receivable amounting to RMB14,253 thousand (USD2,087
thousand), and RMB33,578 thousand, respectively. In addition, the Group recorded discounts amounting to RMB60 thousand (USD9 thousand), and RMB540 thousand in respect of the bills receivable sold for the three months ended June 30, 2009 and
2008, respectively, which have been included in interest expense.

For the six months ended June 30, 2009 and 2008, the Group received proceeds from
the sale of bills receivable amounting to RMB29,067 thousand (USD4,256 thousand) and RMB42,108 thousand, respectively. In addition, the Group recorded discounts amounting to RMB101 thousand (USD15 thousand) and RMB577 thousand in respect of the
bills receivable sold for the six months ended June 30, 2009 and 2008, respectively, which have been included in 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 SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (SFAS No. 140). As at June 30, 2009 and December 31, 2008, the Group has derecognized discounted bills receivable amounting to RMB13,886 thousand (USD2,033 thousand) and RMB22,054
thousand, respectively in accordance with SFAS No. 140.

Note 5  Inventories

Inventories by major categories are as follows:



|                  |  |          |  |              |  |        
|----------------- |  | -------- |  | ------------ |  | -------
|                  |  | June 30, |  | December 31,
|                  |  | 2009     |  | 2009         |  | 2008   
|                  |  | USD000  |  | RMB000      |  | RMB000
|Raw materials     |  | 833      |  | 5,691        |  | 6,364  
|Finished goods    |  | 20,524   |  | 140,179      |  | 89,491 
|                  |  |          |  |              |  |        
|Total inventories |  | 21,357   |  | 145,870      |  | 95,855 
|                  |  |          |  |              |  |        



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Inventories amounting to RMB2,700 thousand (USD395 thousand) was written off during the six months ended June 30,
2009. No inventories were written off during the three months ended June 30, 2009 and the three and six months ended June 30, 2008.

Note 6
 Property And Equipment, Net

Property and equipment consists of the following:



|                                |  |          |   |  |              |   |  |         |  
|------------------------------- |  | -------- | - |  | ------------ | - |  | ------- | -
|                                |  | June 30, |   |  | December 31, |  
|                                |  | 2009     |   |  | 2009         |   |  | 2008    |  
|                                |  | USD000  |   |  | RMB000      |   |  | RMB000 |  
|Property and equipment, at cost |  | 5,421    |   |  | 37,025       |   |  | 36,783  |  
|Less: accumulated depreciation  |  | (3,109   | ) |  | (21,236      | ) |  | (18,790 | )
|                                |  |          |   |  |              |   |  |         |  
|Property and equipment, net     |  | 2,312    |   |  | 15,789       |   |  | 17,993  |  
|                                |  |          |   |  |              |   |  |         |  

Note 7  Bank Borrowings And Banking Facilities

On October 7, 2005, the Group entered into a USD5,000 thousand credit facility with Standard Chartered Bank (Hong Kong) Limited (SCB). This facility is
secured by funds on deposit in an amount not less than USD2,000 thousand as of December 31, 2008 and June 30, 2009, and bears interest ranging from HIBOR + 1.5% to USD Prime per annum, depending on the borrowings made. The SCB facility is
repayable on demand and SCB may immediately terminate the facility without the Groups consent. Interest on this facility accrues until payment is demanded by SCB. There was no outstanding loan balance under the SCB facility as of June 30,
2009 and December 31, 2008.

On October 7, 2005, the Group entered into a USD9,000 thousand credit facility with the Bank of China (Hong Kong)
Limited (BOC).

On January 17, 2008, the facility with the BOC was amended in which the Group entered into a USD14,000 thousand revised
credit facility with the BOC and on October 10, 2008, the BOC increased the credit facility to USD41,000 thousand. The facility is secured by funds on deposit in an amount not less than USD15,000 thousand and bears interest from LIBOR
+2.25% per annum, depending on the different kinds of borrowings made and is used to settle foreign exchange obligations to the extent needed. The BOC facility is repayable on demand and the BOC may increase, reduce and/or cancel the facility
by providing written notice to the Group. Interest on this facility accrues until payment is demanded by the BOC. As of June 30, 2009 and December 31, 2008, the outstanding loan balances under the BOC facility were RMB30,351 thousand
(USD4,444 thousand) and nil, respectively.

Note 8  Share-Based Compensation

During the three months ended June 30, 2009 and 2008, the Company recognized share-based compensation expense for awards issued under the 2004 Incentive Plan and the 2006 Incentive Plan of RMB14,911 thousand
(USD2,183 thousand) and RMB8,898 thousand, respectively. During the six months ended June 30, 2009 and 2008, the Company recognized share-based compensation expense for awards issued under the 2004 Incentive Plan and the 2006 Incentive Plan of
RMB29,138 thousand (USD4,266 thousand) and RMB20,238 thousand, respectively. No options and stock warrants were issued during the three months and six months ended June 30, 2009 and 2008. A detailed description of the Companys share-based
compensation awards is included in the Companys Form 10-K for the year ended December 31, 2008.



|(a) | Options and stock warrants assumed under the Share Exchange Agreement
|--- | ---------------------------------------------------------------------

Under the Companys 1995 Stock Option Plan for Outside Directors (the Directors Plan), the Company issued options to purchase 115,000 shares of the Companys common stock. The options
granted under the Directors Plan have a weighted average exercise price per option of USD3.00 and expire on July 1, 2009. During the three and six months ended June 30, 2009, 15,000 options



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(2008: nil) under the Directors Plan were exercised. As of June 30, 2009, we had 85,000 options issued and outstanding under the
Directors Plan, having a weighted average exercise price per share of USD3.00 and aggregate intrinsic value of USD252 thousand, which were to expire on July 1, 2009.

The Company granted fully exercisable stock warrants to purchase up to 925,417 shares of its common stock. The stock warrants have a weighted average exercise price per stock warrant of USD2.76 each and expire on
July 1, 2009. No stock warrants were exercised during the three and six months ended June 30, 2009 and 2008. As of June 30, 2009, we had outstanding 19,999 common stock purchase three and warrants were outstanding with a weighted
average exercise price per common stock purchase warrant of USD3.00 and aggregate intrinsic value of USD59 thousand, which were to expire on July 1, 2009.



|(b) | Non-vested share units
|--- | ----------------------

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



|                              |  |                     |   |                     |                                       |  |           |   |  |                                      
|----------------------------- |  | ------------------- | - | ------------------- | ------------------------------------- |  | --------- | - |  | -------------------------------------
|                              |  | 2004 Incentive Plan |   | 2006 Incentive Plan
|                              |  | Shares              |   |                     | Weighted averagegrant-date fair value |  | Shares    |   |  | Weighted averagegrant-date fair value
|                              |  |                     |   |                     | USD                                   |  |           |   |  | USD                                  
|Balance as of January 1, 2009 |  | 464                 |   |                     | 9.14                                  |  | 2,281,437 |   |  | 5.56                                 
|Granted on January 14, 2009   |  |                    |   |                     |                                      |  | 500,000   |   |  | 5.50                                 
|Vested                        |  | (464                | ) |                     | 9.14                                  |  | (673,636  | ) |  | 5.42                                 
|                              |  |                     |   |                     |                                       |  |           |   |  |                                      
|Balance as of June 30, 2009   |  |                    |   |                     |                                      |  | 2,107,801 |   |  | 5.60                                 
|                              |  |                     |   |                     |                                       |  |           |   |  |                                      

Note 9  Earnings Per Share

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



|                                                                                           |  |                             |  |                           |  |            |  |           
|------------------------------------------------------------------------------------------ |  | --------------------------- |  | ------------------------- |  | ---------- |  | ----------
|                                                                                           |  | Three Months ended June 30, |  | Six Months ended June 30,
|                                                                                           |  | 2009                        |  | 2008                      |  | 2009       |  | 2008      
|                                                                                           |  | RMB000                     |  | RMB000                   |  | RMB000    |  | RMB000   
|Numerator for basic and diluted earnings per share:                                        |  |                             |  |                           |  |            |  |           
|Net income attributable to Cogo Group, Inc.                                                |  | 17,297                      |  | 44,351                    |  | 27,921     |  | 81,378    
|                                                                                           |  |                             |  |                           |  |            |  |           
|Denominator:                                                                               |  |                             |  |                           |  |            |  |           
|Basic weighted average shares                                                              |  | 36,330,036                  |  | 39,035,887                |  | 36,127,454 |  | 39,051,296
|Effect of dilutive non-vested equity share units, performance shares, options and warrants |  | 1,368,769                   |  | 1,058,541                 |  | 1,353,846  |  | 1,001,922 
|                                                                                           |  |                             |  |                           |  |            |  |           
|Diluted weighted average shares                                                            |  | 37,698,805                  |  | 40,094,428                |  | 37,481,300 |  | 40,053,218
|                                                                                           |  |                             |  |                           |  |            |  |           
|                                                                                           |  |                             |  |                          
|                                                                                           |  | RMB                         |  | RMB                       |  | RMB        |  | RMB       
|Basic earnings per share:                                                                  |  | 0.48                        |  | 1.14                      |  | 0.77       |  | 2.08      
|Diluted earnings per share:                                                                |  | 0.46                        |  | 1.11                      |  | 0.74       |  | 2.03      

Non-vested equity share units, performance shares, and options and warrants amounting to
approximately 762 thousand shares and 264 thousand shares are excluded from the Companys dilutive computation as their effect would be anti-dilutive for the three months ended June 30, 2009 and 2008. For the six months ended
June 30, 2009 and 2008, approximately 768 thousand shares and 417 thousand shares are excluded from the Companys dilutive computation as their effect would be anti-dilutive.



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Note 10  Operating Segment Information

Segment information is as follows:



|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|--------------------------------------- |  | --------------------------- | - |  | ------------------------- | - |  | ------- | - |  | ------- | -
|                                        |  | Three Months ended June 30, |   |  | Six Months ended June 30, |  
|                                        |  | 2009                        |   |  | 2008                      |   |  | 2009    |   |  | 2008    |  
|                                        |  | RMB000                     |   |  | RMB000                   |   |  | RMB000 |   |  | RMB000 |  
|Net revenue                             |  |                             |   |  |                           |   |  |         |   |  |         |  
|Product sales                           |  |                             |   |  |                           |   |  |         |   |  |         |  
|Segment revenue from external customers |  |                             |   |  |                           |   |  |         |   |  |         |  
|Mobile handset                          |  | 160,920                     |   |  | 160,961                   |   |  | 310,242 |   |  | 332,581 |  
|Telecommunications equipment            |  | 126,863                     |   |  | 136,795                   |   |  | 237,340 |   |  | 249,280 |  
|Industrial business                     |  | 58,604                      |   |  | 17,231                    |   |  | 105,543 |   |  | 20,199  |  
|Digital Media and others                |  | 148,979                     |   |  | 148,910                   |   |  | 269,746 |   |  | 270,672 |  
|Inter-segment revenue                   |  |                            |   |  |                          |   |  |        |   |  |        |  
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|                                        |  | 495,366                     |   |  | 463,897                   |   |  | 922,871 |   |  | 872,732 |  
|Service revenue                         |  |                             |   |  |                           |   |  |         |   |  |         |  
|Segment revenue from external customers |  | 7,263                       |   |  | 4,020                     |   |  | 12,060  |   |  | 17,230  |  
|Inter-segment revenue                   |  |                            |   |  | 35,994                    |   |  | 5,125   |   |  | 42,662  |  
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|                                        |  | 7,263                       |   |  | 40,014                    |   |  | 17,185  |   |  | 59,892  |  
|Inter-company elimination               |  |                            |   |  | (35,994                   | ) |  | (5,125  | ) |  | (42,662 | )
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|                                        |  | 502,629                     |   |  | 467,917                   |   |  | 934,931 |   |  | 889,962 |  
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|Income from operations                  |  |                             |   |  |                           |   |  |         |   |  |         |  
|Product sales                           |  | 24,444                      |   |  | 47,087                    |   |  | 42,981  |   |  | 89,278  |  
|Services revenue                        |  | 660                         |   |  | 4,515                     |   |  | 796     |   |  | 8,645   |  
|Unallocated (note i)                    |  | (9,326                      | ) |  | (11,481                   | ) |  | (18,327 | ) |  | (24,862 | )
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|Total income from operations            |  | 15,778                      |   |  | 40,121                    |   |  | 25,450  |   |  | 73,061  |  
|Interest expense                        |  | (478                        | ) |  | (587                      | ) |  | (509    | ) |  | (827    | )
|Interest income                         |  | 4,369                       |   |  | 6,990                     |   |  | 6,972   |   |  | 14,608  |  
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  
|Earnings before income taxes            |  | 19,669                      |   |  | 46,524                    |   |  | 31,913  |   |  | 86,842  |  
|                                        |  |                             |   |  |                           |   |  |         |   |  |         |  



|                      |  |              |  |                 
|--------------------- |  | ------------ |  | ----------------
|                      |  | June 30,2009 |  | December 31,2008
|                      |  | RMB000      |  | RMB000         
|Total assets          |  |              |  |                 
|Product sales         |  | 1,798,637    |  | 1,607,409       
|Service revenue       |  | 77,432       |  | 75,846          
|Unallocated (note ii) |  | 3,377        |  | 3,555           
|                      |  |              |  |                 
|                      |  | 1,879,446    |  | 1,686,810       
|                      |  |              |  |                 

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

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



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Note 11  Comprehensive Income

Comprehensive income is as follows:



|                                                                    |  |                             |   |  |                           |   |  |         |   |  |         |  
|------------------------------------------------------------------- |  | --------------------------- | - |  | ------------------------- | - |  | ------- | - |  | ------- | -
|                                                                    |  | Three Months ended June 30, |   |  | Six Months ended June 30, |  
|                                                                    |  | 2009                        |   |  | 2008                      |   |  | 2009    |   |  | 2008    |  
|                                                                    |  | RMB000                     |   |  | RMB000                   |   |  | RMB000 |   |  | RMB000 |  
|Net income                                                          |  | 17,624                      |   |  | 44,351                    |   |  | 28,491  |   |  | 81,378  |  
|Other comprehensive income (loss)                                   |  |                             |   |  |                           |   |  |         |   |  |         |  
|Foreign currency translation adjustments                            |  | (230                        | ) |  | (15,000                   | ) |  | 494     |   |  | (42,048 | )
|                                                                    |  |                             |   |  |                           |   |  |         |   |  |         |  
|Comprehensive income                                                |  | 17,394                      |   |  | 29,351                    |   |  | 28,985  |   |  | 39,330  |  
|Less: comprehensive income attributable to non-controlling interest |  | (325                        | ) |  |                          |   |  | (576    | ) |  |        |  
|                                                                    |  |                             |   |  |                           |   |  |         |   |  |         |  
|Comprehensive income attributable to Cogo Group, Inc.               |  | 17,069                      |   |  | 29,351                    |   |  | 28,409  |   |  | 39,330  |  
|                                                                    |  |                             |   |  |                           |   |  |         |   |  |         |  

The following table reconciles equity attributable to noncontrolling interest:



|                                                   |  |                             |   |                           |         |  |         |  |        
|-------------------------------------------------- |  | --------------------------- | - | ------------------------- | ------- |  | ------- |  | -------
|                                                   |  | Three Months ended June 30, |   | Six Months ended June 30,
|                                                   |  | 2009                        |   |                           | 2008    |  | 2009    |  | 2008   
|                                                   |  | RMB000                     |   |                           | RMB000 |  | RMB000 |  | RMB000
|Beginning balance                                  |  | 5,762                       |   |                           |        |  | 5,511   |  |       
|Net income attributable to noncontrolling interest |  | 327                         |   |                           |        |  | 570     |  |       
|Foreign currency translation adjustments           |  | (2                          | ) |                           |        |  | 6       |  |       
|                                                   |  |                             |   |                           |         |  |         |  |        
|Ending balance                                     |  | 6,087                       |   |                           |        |  | 6,087   |  |       
|                                                   |  |                             |   |                           |         |  |         |  |        

Note 12  Fair Value Measurement

The fair values of pledged bank deposits, accounts receivable, accounts payable, book borrowings and other payables and accrued liabilities approximated the respective carrying amounts because of the short maturity of
these instruments. The Group adopted SFAS No. 157, Fair Value Measurements, or SFAS No. 157, for the nonfinancial assets and liabilities that are remeasured at fair value on a non-recurring basis. The nonfinancial assets and
liabilities that are remeasured at fair value on a non-recurring 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 we incur impairment of our assets in future periods.

Note 13  Acquisition

Mega Smart

On May 30, 2009, the acquisition date, the
Groups product sales segment acquired 100% of the outstanding shares which in turn effectively obtained control of Mega Smart and its subsidiary for a consideration of USD18,000 thousand (RMB122,944 thousand). The purchase consideration will
be paid in thirteen installments. The first installment is USD6,000 thousand (RMB40,981 thousand), which is payable within three months of May 30, 2009. The subsequent installments are payable monthly over twelve months in twelve equal
installments of USD1,000 thousand (RMB6,830 thousand) one month following the first installment. In light of the installment schedule, the Group adopted the interest rate published by the Peoples Bank of China over the payment period and
calculated the fair value of the purchase consideration as USD17,929 thousand (RMB 122,415 thousand).

The principal activities of Mega Smart and its
subsidiary are developing industrial applications component business in China.

The acquisition of Mega Smart was accounted for by the Group as a purchase
business combination. The acquisition of Mega Smart resulted in the recognition of goodwill of RMB83,647 thousand and recording net identifiable assets of RMB38,768 at the date of acquisition. Recognized intangible assets relate to supplier
relationships, customer relationships, non-compete agreements and proprietary technology which have a weighted-average useful life of 7.6 years from the date of acquisition. Goodwill and the amortization of these intangible assets are not deductible
for tax purposes.



12



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##### Table of Contents

The acquisition is expected to support the expansion of the Companys industrial applications component business in
China. Goodwill is attributed by (1) synergy to expand Mega Smarts operation and business on the established platform, industry knowledge and experience of the Group; (2) assembled workforce including engineers and management; and
(3) the expected outlook in the PRC industrial application market with the PRC government stimulus package. The combination of these factors are the drivers behind the excess of purchase price paid over the value of assets and liabilities
acquired.

The following table summarizes the amounts assigned to each major asset acquired and liability assumed at the date of acquisition.



|                         |  |         |  
|------------------------ |  | ------- | -
|                         |  | RMB000 |  
|Intangible assets        |  |         |  
|- supplier relationships |  | 8,876   |  
|- customer relationships |  | 24,580  |  
|- non-compete agreements |  | 10,925  |  
|- proprietary technology |  | 2,048   |  
|Goodwill                 |  | 83,647  |  
|Deferred tax liabilities |  | (7,661  | )
|                         |  |         |  
|Net asset acquired       |  | 122,415 |  
|                         |  |         |  

The amounts of revenue and earnings for Mega Smart since the acquisition date included in the consolidated income
statement from May 30, 2009 to June 30, 2009 are RMB12,711 thousand and RMB201 thousand, respectively.

The Group is in the process of finalizing
the purchase price allocation; thus, the allocation of the purchase price is subject to refinement.

Unaudited pro forma financial information

The following unaudited proforma financial information represents the combined results of operations of the Group as if the acquisition of Mega Smart
had occurred as of the beginning of January 1, 2008. 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 at the
beginning of each year. In addition, the unaudited proforma financial information does not attempt to project the future results of operations of the Group.



|                                                   |  |                             |  |                           |  |          |  |         
|-------------------------------------------------- |  | --------------------------- |  | ------------------------- |  | -------- |  | --------
|                                                   |  | Three months ended June 30, |  | Six months ended June 30,
|                                                   |  | 2009                        |  | 2008                      |  | 2009     |  | 2008    
|                                                   |  | RMB 000                    |  | RMB 000                  |  | RMB 000 |  | RMB 000
|Net revenue                                        |  |                             |  |                           |  |          |  |         
|Product sales                                      |  | 519,938                     |  | 480,281                   |  | 972,016  |  | 905,500 
|Services revenue                                   |  | 7,263                       |  | 4,020                     |  | 12,060   |  | 17,230  
|                                                   |  |                             |  |                           |  |          |  |         
|                                                   |  | 527,201                     |  | 484,301                   |  | 984,076  |  | 922,730 
|Income from operations                             |  | 18,089                      |  | 40,574                    |  | 29,537   |  | 73,967  
|Net income attributable to Cogo Group, Inc         |  | 19,227                      |  | 44,729                    |  | 31,336   |  | 82,135  
|Earnings per share attributable to Cogo Group, Inc |  |                             |  |                           |  |          |  |         
|Basic                                              |  | 0.53                        |  | 1.15                      |  | 0.87     |  | 2.10    
|Diluted                                            |  | 0.51                        |  | 1.12                      |  | 0.84     |  | 2.05    



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##### Table of Contents

|Item 2. | 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 June 30, 2009 and 2008 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 Groups Form 10-K for the year ended December 31, 2008.

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 into 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 our most recent Annual Report 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 China. Our customized module design solutions allow our customers to take
advantage of technology components from reputable suppliers in an efficient and cost-effective manner, thus 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 to earn income through the provision
of engineering service to existing and new customers.

We are focused on the mobile handset, telecommunications equipment, industrial
business and digital media end-markets in China. In the mobile handset end-market, we provide module solutions for functionalities such as LCD, camera, power supply and Bluetooth; in the telecom equipment end-market, we provide solutions for PSTN
switching, optical transmitters, electrical signal processing and optical signal amplification; in the industrial business end-markets, which commenced since the beginning of 2008 and further expanded in 2009 with the acquisition of Mega Smart Group
Limited (Mega Smart), we provide industrial solutions for the green energy and auto-electronics sectors; and in the digital media end-market, we provide solutions for digital set-top boxes and GPS applications. Over the course of our
operating history, we have worked with over 1,200 customers, including a majority of the most established manufacturers in the mobile handset, telecom equipment and digital media end-markets in China such as ZTE, Huawei and Lenovo. In addition to
these original equipment manufacturers, or OEMs, our other customers include industry participants that support these OEMs, such as subsystem designers and contract manufacturers. 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, JDS Uniphase and Matsushita. In addition, in October 2006, we became one of the first
China-based companies to license software technology and have access to selected source codes directly from Microsoft.



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##### Table of Contents

We have two reportable operating segments: product sales consisting of revenues generated by providing
customized module design solutions focusing primarily in the mobile handset, telecommunications equipment, digital media and industrial business end-markets, and services revenue, generated by providing technology and 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. Over the last year, digital media related sales, which have
generally higher profit margins than our mobile handset module related sales and our telecom equipment module related sales, have constituted a significantly greater portion of our total net revenue as compared to previous years.

Growth in end-market industries. The rapid growth of the domestic mobile handset, telecom equipment, industrial business and digital media
end-markets have been important growth drivers for China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 telecom 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 mobile handset, telecom equipment, industrial business and digital media products could materially affect our
results of operations.

Increase in exports. We believe that the development of a highly-skilled, low-cost manufacturing base has
also enabled Chinas domestic mobile handset, telecom equipment and digital consumer electronics manufacturers to be competitive in the global marketplace. As an example, ZTE, a major manufacturer of mobile handset and telecom equipment in
China, as well as other telecom equipment and mobile handset manufacturers, have 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 mobile handset and digital media clients.

Growth by entering new
end-markets, strengthening in-house capabilities and leveraging our customer base. In 2005, we began targeting the digital media end-market and, over time, we intend to develop integrated circuit and application software design capabilities and
provide solutions based on our own proprietary technology. In the first quarter of 2005, we began generating sales from customized module design solutions for digital home entertainment products, primarily for digital set-top boxes, through sales to
our existing end-customers Haier, Konka, Lenovo and TCL. We have since then grown our revenues generated from this market from constituting 10.8% of our 2005 revenue to 28.9% of our first half of 2009 revenue. We anticipate that sales related to the
digital media end-markets will generally have higher profit margins than our mobile handset 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.

Our success in the digital media 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 digital media end-market.

General economic and market conditions. Due to the tough 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 declined because we strategically lowered our pricing in order to grow the business in a slowing economic environment. Our other
businesses, such as telecommunications and digital medial products, continue to show solid growth, driven by stable infrastructure investments in the PRC.



15



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##### Table of Contents

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. Our net revenue is net of a 17% value-added tax, or VAT.

Our broad and diversified customer base includes many of the major mobile handset, telecom equipment, industrial business and digital consumer electronics manufacturers in China. In addition, our customers include
industry participants supporting these OEMs, such as subsystem designers and contract manufacturers in China, as well as international manufacturers who have begun to manufacture end-products in China for the domestic and international market.

Our net revenues are 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 the desire by OEMs to spend remaining budgets allocated for a given period, usually on an annual basis. Net revenues have 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.

Services Revenue

We provide software design 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.

Cost of Sales

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

Cost of Goods Sold

Cost of goods sold primarily consists of the purchase of components 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), Maxim (integrated circuits), Matsushita (switches), and Freescale (microcontrollers). We typically issue purchase orders to our suppliers only after we receive 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.

Cost of Services

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



16



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##### Table of Contents

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.

General and administrative expenses include compensation and benefits for our general and administrative staff, professional fees, amortization of intangible assets, including intangible assets identified resulted
from the acquisition of Mega Smart, foreign exchange gain/loss, 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(R&D) Expenses

R&D 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 R&D expenses as they are incurred. As of June 30, 2009, we had approximately 252 engineers and other technical employees engaged in R&D-related activities to develop new
customized module design solutions targeted at the mobile handset, telecommunications equipment, industrial business and digital media industries. As a result of additional costs incurred in developing new customized module design solutions, and an
increasing headcount in our R&D department, we expect that our R&D expenses, including those relating to the planned hiring of additional R&D personnel, will increase in the future as we seek to expand our business by developing new
customized module design solutions and penetrating new end-markets, and as we seek to grow our engineering services business.

Taxation

The Company and the subsidiaries file separate income tax returns.

USA

The Company is a holding company incorporated in the State of Maryland, and is subject to United
States federal and state income taxes. The Company did not generate taxable income in the United States in the six months ended June 30, 2009 and 2008.

Cayman Islands and British Virgin Islands

Under the current laws of the Cayman Islands and British Virgin Islands, our
subsidiaries that are incorporated in the Cayman Islands and the British Virgin Islands are not subject to tax on income or capital gains. In addition, upon payments of dividends by these companies, no Cayman Islands and British Virgin Islands
withholding tax will be imposed.

PRC

On March 16, 2007, the National Peoples Congress passed the new Corporate Income Tax law (the new CIT law) which sets the income tax rate to 25% for all companies. The new CIT law was effective as of January 1,
2008. The new CIT law provides a five-year transition period from its effective date for those companies which were established before March 16, 2007 and which were entitled to a preferential lower tax rate under the then effective tax laws or
regulations, as well as grandfathering tax holidays. The transitional tax rates are 18%, 20%, 22%, 24% and 25% for 2008, 2009, 2010, 2011 and 2012 onwards, respectively. For the Shenzhen Subsidiaries that were entitled to a tax holiday such as the
two-year tax exemption followed by a three-year 50% tax reduction shall be entitled to the tax holiday.



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##### Table of Contents

Based on the above, the Shenzhen Subsidiaries are subject to the following tax rates:



| |  |  | Shenzhen Comtech International Limited and Comtech Communications Technology (Shenzhen) Limited was subject to a tax rate of 18% in 2008, and a tax rate of 20% in
2009
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Comtech Software Technology (Shenzhen) Company Limited was subject to a tax rates of 9% for 2008, and a tax rate of 20% in 2009
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Comloca Technology (Shenzhen) Company Limited and Shenzhen Huameng Software Company Limited was under a tax holiday in 2008 and is under a tax holiday in 2009
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Viewtran Technology (Shenzhen) Co., Limited (Viewtran) and Epcot Multimedia Technology (SZ) Co., Limited were under tax holidays in 2008, and are
subject to a tax rate of 10% in 2009
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, beginning on January 1, 2008, Shanghai E&T System Company
Limited, Shanghai Comtech Electronic Technology Ltd. and Keen Awards Beijing Limited are subject to the corporate income tax rate of 25% under the new CIT law.

Hong Kong

Our subsidiaries incorporated in Hong Kong are subject to Hong Kong Profits Tax. The profits tax rate for these
companies for 2008 and 2009 was 16.5%.

As a result of the PRC tax incentives above, our operations have been subject to relatively low tax
liabilities. Our effective tax rate was 10.7% and 6.3% in the six months ended June 30, 2009 and 2008, respectively. The increase in our effective tax rate was mostly due to the expiry of tax holiday for certain subsidiaries in Shenzhen, as
compared to the corresponding period in 2008.

Noncontrolling Interest

Noncontrolling interest (previously referred to as minority interest) consists of an interest of 30% of the outstanding equity interest in Long Rise Holdings Limited (Long Rise) that is held by a third
party. For the quarter ended June 30, 2009, approximately 10.8% of our total net revenue was generated through this subsidiary.

Three months ended
June 30, 2009 compared to three months ended June 30, 2008

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 June 30,
|                             |  | 2009                        |  | 2008   
|                             |  | RMB000                     |  | RMB000
|Net revenue                  |  |                             |  |        
|Product sales                |  |                             |  |        
|Mobile handset               |  | 160,920                     |  | 160,961
|Telecommunications equipment |  | 126,863                     |  | 136,795
|Industrial business          |  | 58,604                      |  | 17,231 
|Digital media and others     |  | 148,979                     |  | 148,910
|Services revenue             |  | 7,263                       |  | 4,020  
|                             |  |                             |  |        
|Total net revenue            |  | 502,629                     |  | 467,917
|                             |  |                             |  |        



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##### Table of Contents

Net Revenue.Total net revenue increased RMB34,712 thousand (USD5,082 thousand), or 7.4% in the
three months ended June 30, 2009 when compared to the corresponding period in 2008. The increase was mainly due to the continued expansion in the industrial business end-market.

Product Sales

Details of product
sales by market type are as follows:



|                             |  |                             |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|---------------------------- |  | --------------------------- |  | --------------- | ---- | ---- | ------ | -------- | --------------- |  | ---- | - |  | ----- | --
|                             |  | Three Months ended June 30, | 
|                             |  | 2009                        |  |                 | 2008 |      |        | % change |                
|                             |  | Amount                      |  | % of NetRevenue |      |      | Amount |          | % of NetRevenue |  |     
|                             |  | USD000                     |  | RMB000         |      |      |        |          | RMB000         |  |      |   |  |       |   
|Mobile handset               |  | 23,560                      |  | 160,920         |      | 32.0 | %      |          | 160,961         |  | 34.4 | % |  | (0.1  | )%
|Telecommunications equipment |  | 18,574                      |  | 126,863         |      | 25.2 | %      |          | 136,795         |  | 29.2 | % |  | (7.3  | )%
|Industrial business          |  | 8,580                       |  | 58,604          |      | 11.7 | %      |          | 17,231          |  | 3.7  | % |  | 240.1 | % 
|Digital media and other      |  | 21,812                      |  | 148,979         |      | 29.6 | %      |          | 148,910         |  | 31.8 | % |  | 0.1   | % 
|                             |  |                             |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|Total product sales          |  | 72,526                      |  | 495,366         |      | 98.5 | %      |          | 463,897         |  | 99.1 | % |  | 6.8   | % 
|                             |  |                             |  |                 |      |      |        |          |                 |  |      |   |  |       |   

Product sales for the three months ended June 30, 2009 was RMB495,366 thousand (USD72,526
thousand), or RMB31,469 thousand or 6.8% higher than the corresponding period in 2008. Mobile handset related sales decreased by RMB41 thousand (USD6 thousand), or 0.1%; telecommunications equipment related sales decreased by RMB9,932 thousand
(USD1,454 thousand), or 7.3%; industrial business related sales increased by RMB41,373 thousand (USD6,057 thousand), or 240.1%; and digital media and other sales increased by RMB69 thousand (USD10 thousand), or 0.1%. The increase in product sales
was mainly attributable to the Groups continued effort and strategic focus in the expansion of the digital media and other and the industrial business end-markets, offset by a decrease in telecommunications equipment revenue as a result of a
reduction in selling price.

Services Revenue. Services revenue is as follows:



|                 |  |                             |  |                 |      |     |        |          |                 |  |     |   |  |      |  
|---------------- |  | --------------------------- |  | --------------- | ---- | --- | ------ | -------- | --------------- |  | --- | - |  | ---- | -
|                 |  | Three Months ended June 30, | 
|                 |  | 2009                        |  |                 | 2008 |     |        | % Change |                
|                 |  | Amount                      |  | % of NetRevenue |      |     | Amount |          | % of NetRevenue |  |    
|                 |  | USD000                     |  | RMB000         |      |     |        |          | RMB000         |  |     |   |  |      |  
|Services revenue |  | 1,063                       |  | 7,263           |      | 1.5 | %      |          | 4,020           |  | 0.9 | % |  | 80.7 | %
|                 |  |                             |  |                 |      |     |        |          |                 |  |     |   |  |      |  

Services revenue was derived from the provision of technology and engineering services, network
system integration and related training and maintenance services. The increase of RMB3,243 thousand (USD475 thousand), or 80.7%, was mainly attributable to more sales generated from software design services for the quarter end June 30, 2009, as
compared to same period of 2008 due to the increase in demand resulting from shortages of supply in the market during the first quarter of 2009.

Gross Profit. Gross profit was RMB71,626 thousand (USD10,487 thousand) in the three months ended June 30, 2009, a decrease of RMB12,551 thousand (USD1,838 thousand), or 14.6% when compared to RMB84,177 thousand in the
corresponding period in 2008. Gross margin was 14.3% in the three months ended June 30, 2009, compared to 18% in the corresponding period in 2008. The decrease in both gross profit and gross profit margin was primarily attributable to the
intense market competition in the mobile handset and digital media end markets resulted in the reduced selling price strategy adopted by the Group since late 2008.



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##### Table of Contents

Selling, General and Administrative and R&D Expenses. Selling, general and administrative and
R&D expenses were RMB56,134 thousand (USD8,220 thousand) in the three months ended June 30, 2009, or 27.1% higher than the corresponding period in 2008. The expenses for the three months ended June 30, 2009 and 2008 are as follows:



|                                    |  |                             |  |                 |      |      |        |          |                 |  |     |   |  |       |   
|----------------------------------- |  | --------------------------- |  | --------------- | ---- | ---- | ------ | -------- | --------------- |  | --- | - |  | ----- | --
|                                    |  | Three Months ended June 30, | 
|                                    |  | 2009                        |  |                 | 2008 |      |        | % Change |                
|                                    |  | Amount                      |  | % of NetRevenue |      |      | Amount |          | % of NetRevenue |  |    
|                                    |  | USD000                     |  | RMB000         |      |      |        |          | RMB000         |  |     |   |  |       |   
|Selling expenses                    |  | 3,246                       |  | 22,166          |      | 4.4  | %      |          | 10,794          |  | 2.3 | % |  | 105.4 | % 
|General and administrative expenses |  | 2,620                       |  | 17,892          |      | 3.6  | %      |          | 22,570          |  | 4.8 | % |  | (20.7 | )%
|R&D expenses                        |  | 2,354                       |  | 16,076          |      | 3.2  | %      |          | 10,800          |  | 2.3 | % |  | 48.9  | % 
|                                    |  |                             |  |                 |      |      |        |          |                 |  |     |   |  |       |   
|Total                               |  | 8,220                       |  | 56,134          |      | 11.2 | %      |          | 44,164          |  | 9.4 | % |  | 27.1  | % 
|                                    |  |                             |  |                 |      |      |        |          |                 |  |     |   |  |       |   

Selling, General and Administrative Expenses.The increase in selling expenses in the three
months ended June 30, 2009 of RMB11,372 thousand (USD1,665 thousand), or 105.4%, was mainly attributable to an additional charge of doubtful account of RMB13,660 thousand (USD2,000 thousand) for the three months ended June 30, 2009 as
compared to RMB2,459 thousand for the same period of 2008. The additional charge of doubtful account was due to certain receivable balances being overdue in which the assessment of recoverability is remote.

The decrease in general and administrative expenses of RMB4,678 thousand (USD685 thousand), or 20.7%, was primarily attributable to exchange gain of
RMB7,930 thousand (USD1,161 thousand) mainly consisted of RMB8,412 thousand (USD1,232 thousand) unrealized gain resulted by the appreciation of Australian Dollars against RMB during the quarter, offset by an increase in amortization of intangible
assets of RMB1,376 thousand (USD201 thousand) and other general administrative expenses such as staff cost and office rental due to an increase in headcount as a result of our acquisition of Long Rise in July 2008 and Mega Smart in May 2009.

R&D Expenses. R&D expenses increased in the three months ended June 30, 2009 by RMB5,276 thousand (USD772 thousand),
or 48.9%, as compared to the corresponding period in 2008. The increase was primarily attributable to an increase in share-based compensation cost of RMB6,088 thousand (USD891 thousand) as a result of new stock awards granted to research staff in
2009.

Interest Expense.Interest expense decreased in the three months ended June 30, 2009 by RMB109 thousand (USD16 thousand)
or 18.6%, as compared to the corresponding period in 2008. The decrease in interest expense was attributable to the decrease in average borrowing cost due to the decrease in interest rates.

Interest Income. Interest income in the three months ended June 30, 2009 amounted to RMB4,369 thousand (USD640 thousand), compared to
RMB6,990 thousand in the corresponding period in 2008. The decrease was mainly attributable to a decrease in average interest rates as compared to the corresponding period in 2008.

Income Tax Expense. The effective tax rate for the three months ended June 30, 2009 was 10.4% compared to 4.7% for the comparable period in
2008. The increase in the effective tax rate was primarily due to the expiring of tax holiday for certain subsidiaries in Shenzhen.

Net
Income; Earnings per share. As a result of the above items, net income attributable to Cogo Group, Inc. for the three months ended June 30, 2009 was RMB17,297 thousand (USD2,532 thousand), as compared to RMB44,351 thousand in the
corresponding period in 2008. We reported basic per share earnings of RMB0.48 (USD0.07) and diluted earnings per share of RMB0.46 (USD0.07) for the three months ended June 30, 2009, as compared to basic earnings per share of RMB1.14 and diluted
earnings per share of RMB1.11 for the corresponding period in 2008.



20



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Six months ended June 30, 2009 compared to six months ended June 30, 2008

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:



|                             |  |                          |  |        
|---------------------------- |  | ------------------------ |  | -------
|                             |  | Six Months endedJune 30,
|                             |  | 2009                     |  | 2008   
|                             |  | RMB000                  |  | RMB000
|Net revenue                  |  |                          |  |        
|Product sales                |  |                          |  |        
|Mobile handset               |  | 310,242                  |  | 332,581
|Telecommunications equipment |  | 237,340                  |  | 249,280
|Industrial business          |  | 105,543                  |  | 20,199 
|Digital media and others     |  | 269,746                  |  | 270,672
|Services revenue             |  | 12,060                   |  | 17,230 
|                             |  |                          |  |        
|Total net revenue            |  | 934,931                  |  | 889,962
|                             |  |                          |  |        

Net Revenue.Total net revenue increased by RMB44,969 thousand (USD6,584 thousand), or
5.1%, for the six months ended June 30, 2009 when compared to the corresponding period in 2008. The increase was mainly due to the expansion in the industrial business end-market since 2008.

Product Sales.Product sales by market type for the six months ended June 30, 2009 and 2008 were as follows:



|                             |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|---------------------------- |  | ------------------------- |  | --------------- | ---- | ---- | ------ | -------- | --------------- |  | ---- | - |  | ----- | --
|                             |  | Six months ended June 30, | 
|                             |  | 2009                      |  |                 | 2008 |      |        | % Change |                
|                             |  | Amount                    |  | % of NetRevenue |      |      | Amount |          | % of NetRevenue |  |     
|                             |  | USD000                   |  | RMB000         |      |      |        |          | RMB000         |  |      |   |  |       |   
|Mobile handset               |  | 45,422                    |  | 310,242         |      | 33.2 | %      |          | 332,581         |  | 37.4 | % |  | (6.7  | )%
|Telecommunications equipment |  | 34,749                    |  | 237,340         |      | 25.4 | %      |          | 249,280         |  | 28.1 | % |  | (4.8  | )%
|Industrial business          |  | 15,452                    |  | 105,543         |      | 11.3 | %      |          | 20,199          |  | 2.3  | % |  | 422.5 | % 
|Digital media and other      |  | 39,493                    |  | 269,746         |      | 28.8 | %      |          | 270,672         |  | 30.4 | % |  | (0.3  | )%
|                             |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|Total product sales          |  | 135,116                   |  | 922,871         |      | 98.7 | %      |          | 872,732         |  | 98.1 | % |  | 5.7   | % 
|                             |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   

Product sales for the six months ended June 30, 2009 was RMB922,871 thousand (USD135,166
thousand), or RMB50,139 thousand or 5.7% higher than the corresponding period in 2008. Mobile handset related sales decreased by RMB22,239 thousand (USD3,271 thousand), or 6.7%; telecommunications equipment related sales decreased by RMB11,940
thousand (USD1,748 thousand) or 4.8%; and industrial business sales increased by RMB85,344 thousand (USD12,495 thousand), or 422.5%; and digital media and other related sales decreased by RMB926 thousand (USD136 thousand), or 0.3%. The increase in
product sales was mainly attributable to the Groups continued effort and strategic focus in the expansion of the digital media and other and the industrial business end-markets, offset by a decrease in mobile handset and telecommunications
equipment revenue as a result of a reduction in selling price.

Services Revenue. Services revenue for the six months ended
June 30, 2009 and 2008 was as follows:



|              |  |                           |  |                 |      |     |        |  |                 |  |     |          |  |       |   
|------------- |  | ------------------------- |  | --------------- | ---- | --- | ------ |  | --------------- |  | --- | -------- |  | ----- | --
|              |  | Six months ended June 30, | 
|              |  | 2009                      |  |                 | 2008 |     |        |  |                
|              |  | Amount                    |  | % of NetRevenue |      |     | Amount |  | % of NetRevenue |  |     | % Change | 
|              |  | USD000                   |  | RMB000         |      |     |        |  | RMB000         |  |     |          |  |       |   
|Sales revenue |  | 1,766                     |  | 12,060          |      | 1.3 | %      |  | 17,230          |  | 1.9 | %        |  | (30.0 | )%
|              |  |                           |  |                 |      |     |        |  |                 |  |     |          |  |       |   



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Services revenue was derived from the provision of technology and engineering services, software design,
network system integration and related training and maintenance services commencing from January 2006. The decrease of RMB5,170 thousand (USD757 thousand), or 30.0%, was mainly attributable to our increased focus on product sales since the second
quarter of 2008 which enhance the Groups overall product offerings.

Gross Profit. Gross profit was RMB133,066
thousand (USD19,482 thousand) for the six months ended June 30, 2009, a decrease of RMB33,500 thousand (USD4,905 thousand), or 20.1% when compared to RMB166,566 thousand in the corresponding period in 2008. Gross profit percentage was 14.2% for
the six months ended June 30, 2009, compared to 18.7% for the corresponding period in 2008. The decrease in both gross profit amount and percentage was primarily attributable to the intense market competition in the mobile handset and digital
media end markets resulted in the reduced selling price strategy adopted by the Group since late 2008.

Selling, General and
Administrative and R&D Expenses. Selling, general and administrative and R&D expenses were RMB107,935 thousand (USD15,803 thousand) in the six months ended June 30, 2009, or 15.3% higher than those of the same period the prior year.
The expenses for the six months ended June 30, 2009 and 2008 were as follows:



|                                    |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|----------------------------------- |  | ------------------------- |  | --------------- | ---- | ---- | ------ | -------- | --------------- |  | ---- | - |  | ----- | --
|                                    |  | Six months ended June 30, | 
|                                    |  | 2009                      |  |                 | 2008 |      |        | % Change |                
|                                    |  | Amount                    |  | % of NetRevenue |      |      | Amount |          | % of NetRevenue |  |     
|                                    |  | USD000                   |  | RMB000         |      |      |        |          | RMB000         |  |      |   |  |       |   
|Selling expenses                    |  | 4,880                     |  | 33,334          |      | 3.6  | %      |          | 23,704          |  | 2.7  | % |  | 40.6  | % 
|General and administrative expenses |  | 6,220                     |  | 42,481          |      | 4.5  | %      |          | 49,438          |  | 5.6  | % |  | (14.1 | )%
|R&D expenses                        |  | 4,703                     |  | 32,120          |      | 3.4  | %      |          | 20,433          |  | 2.3  | % |  | 57.2  | % 
|                                    |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   
|Total                               |  | 15,803                    |  | 107,935         |      | 11.5 | %      |          | 93,575          |  | 10.6 | % |  | 15.3  | % 
|                                    |  |                           |  |                 |      |      |        |          |                 |  |      |   |  |       |   

Selling, General and Administrative Expenses.The increase in selling expenses for the six
months ended June 30, 2009 of RMB9,630 thousand (USD1,410 thousand), or 40.6%, was mainly attributable to an additional charge of doubtful accounts of RMB17,336 thousand (USD2,538 thousand) for the six months ended June 30, 2009, as
compared to RMB7,367 thousand for the same period in 2008. The additional charge of doubtful account was due to certain receivable balances being overdue in which the assessment of recoverability is remote.

The decrease in general and administrative expenses of RMB6,957 thousand (USD1,019 thousand), or 14.1%, was primarily attributable to exchange gain of
RMB7,598 thousand (USD1,112 thousand), mainly consisted of RMB8,059 thousand (USD1,180 thousand) unrealized gain resulted by the appreciation of Australian Dollars against RMB during the six months ended June 30, 2009, and a reduction in
share-based compensation cost of RMB3,492 thousand (USD511 thousand) was due to the net effect of shares granted in the first quarter of 2009 against shares being fully vested in the first quarter of 2008, offset by an increase in amortization of
intangible assets of RMB2,216 thousand (USD324 thousand) and other general administrative expenses such as staff cost and office rental due to an increase in headcount as a result of our acquisition of Long Rise in July 2008 and Mega Smart in May
2009.

R&D Expenses. R&D expenses increased in the six months ended June 30, 2009 by RMB11,687 thousand (USD1,711
thousand), or 57.2%, as compared to the corresponding time period in 2008. The increase was primarily attributable to an increase in share-based compensation cost of RMB11,729 thousand (USD1,717 thousand) as a result of new stock awards granted to
R&D staff in 2009.

Interest Expense.Interest expense decreased for the six months ended June 30, 2009 by RMB318 thousand
(USD47 thousand) or 38.5%, as compared to the corresponding period in 2008. The decrease in interest expense was attributable to the decrease in average borrowing cost due to decrease in interest rate.

Interest Income. Interest income for the six months ended June 30, 2009 amounted to RMB6,972 thousand (USD1,021 thousand), compared to
RMB14,608 thousand in the corresponding period in 2008. The decrease was mainly attributable to a decrease in average interest rates as compared to the corresponding period in 2008.



22



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##### Table of Contents

Income Tax. The effective tax rate for the six months ended June 30, 2009 was 10.7% compared
to 6.3% for the comparable period in 2008. The increase in the effective tax rate was primarily due to the expiring of tax holidays for certain subsidiaries in Shenzhen.

Net Income; Earnings per share. As a result of the above items, net income for the six months ended June 30, 2009 was RMB27,921 thousand (USD4,088 thousand), compared to net income of RMB81,378 thousand in
the corresponding period in 2008. We reported basic per share earnings of RMB0.77 (USD0.11) for the six months ended June 30, 2009 diluted per share earnings of RMB0.74 (USD0.11) compared to basic per share earnings of RMB2.08 for the same
period of 2008, and diluted per share earnings of RMB2.03.

Liquidity and Capital Resources

Cash flows and working capital

Our accounts payable
cycle typically averages approximately one month, whereas our accounts receivable cycle typically averages approximately three months. Accordingly, working capital is needed to fund this time difference.

As of June 30, 2009, apart from the cash payable in relation to our acquisitions of the subsidiaries including the acquisition of Mega Smart, we had
no material commitments for capital expenditures.

As of June 30, 2009, the Company had RMB689,949 thousand (USD101,014 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 and available borrowings under banks lines of credit and factoring facilities. At
times, we evaluate possible acquisitions of, or investments in, businesses that are complementary to those of ours, which transactions may require the use of cash. We believe that our cash, other liquid assets, operating cash flows and credit
facility arrangements, taken together, provide adequate resources to fund ongoing operating expenditures. 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.

As of
June 30, 2009, we had working capital of RMB1,131,075 thousand (USD165,599 thousand), including RMB689,949 thousand (USD101,014 thousand) in cash, as compared with working capital of RMB1,172,313 thousand as of December 31, 2008.

Operating activities used cash of RMB16,329 thousand (USD2,391 thousand) for the six months ended June 30, 2009, compared to cash
generated of RMB42,123 thousand in the corresponding period in 2008. The increase in cash used in operating activities for the six months ended June 30, 2009 as compared to the corresponding period in 2008 is primarily due to the increase in
cash paid to inventory purchases of RMB49,974 thousand (USD7,317 thousand) near end of June 2009 to meet expected demand in coming months. Inventory turnover remain at 31 days due to increase in accounts receivable of RMB31,558 thousand (USD4,620
thousand) and a decrease in accounts payable of RMB12,770 thousand (USD1,870 thousand).

Investing activities used RMB10,967 thousand
(USD1,606 thousand) during the six months ended June 30, 2009, mainly for the acquisition of subsidiaries of RMB10,249 thousand (USD1,501 thousand). The remaining major investing activities was the purchases of property and equipment of RMB718
thousand (USD105 thousand).

Financing activities provided cash of RMB30,658 thousand (USD4,489 thousand) for the six months ended
June 30, 2009, mainly for proceeds from bank borrowings of RMB30,351 thousand (USD4,444 thousand) and proceeds from exercise of stock options of RMB307 thousand (USD45 thousand).

Indebtedness

Some of our customers enter into arrangements with their respective banks for purposes
of settling their bills. Under such arrangements, we are entitled to collect the amounts owed directly from the customers banks when the invoice becomes due. In certain circumstances, we have arranged to transfer with recourse certain of our
bills receivable to the bank. Under this discounting



23



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##### Table of Contents

arrangement, the bank pays a discounted amount to us and collects the amounts owed from the customers banks. The discount typically ranges from 1.6% to
1.7% of the balance transferred, which is recorded as interest expense. During the six months ended June 30, 2009 and 2008, we had received proceeds from the sale of the bills receivable amounting to RMB29,067 thousand (USD4,256 thousand) and
RMB42,108 thousand, respectively.



|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Foreign Exchange Risk

Our reporting currency is RMB. Transactions in other currencies are recorded in RMB at the rates of
exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are remeasured into RMB 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 PRC State Administration for Foreign Exchange (SAFE),
under the authority of the Peoples Bank of China (the PBC), controls the conversion of RMB into foreign currencies. The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules
(1996), as amended, or the Rules. Under the Rules, once various procedural requirements are met, RMB 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 China, without prior approval of the SAFE of the PRC, or its local counterparts.

Since July 2005, the RMB has not been pegged to the USD. Although currently the RMB exchange rate versus the USD is restricted to a rise or fall of no
more than 0.3% per day and the PBC regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the USD in the
medium to long term. Moreover, it is possible that in the future, the PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market. As of June 30, 2009, the exchange rate
between RMB and USD was USD1.00 to RMB6.8302.

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

Any devaluation of the RMB against the USD would consequently have an adverse effect on our financial performance and asset values when measured in terms
of USD. On the other hand, the appreciation of the RMB 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, from time to time we may have USD denominated borrowings, and therefore a decoupling of the RMB many affect our financial performance in the future.

We recognized a foreign currency translation gain of approximately RMB494 thousand (USD72 thousand) for the six months ended June 30,
2009. 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 RMB30,351 thousand (USD4,444 thousand) as of June 30, 2009. 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 rate, the net impact to earnings would be approximately RMB304 thousand (USD45 thousand). The potential change in earnings is calculated based on the change in the net interest expense over a one year period
due to an immediate 1% change in rate.



24



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##### Table of Contents

Inflation

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



|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Disclosure controls and
procedures

We maintain controls and procedures designed to ensure that we are able to collect the information we are required to
disclose in the reports we file with the SEC and to record, process, summarize, and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of our disclosure controls and procedures as of the end
of the period covered by this report conducted by our management, our chief executive and chief financial officers have concluded that, as of the end of the period covered by this report, these controls and procedures are effectively designed to
ensure we are able to record, collect, process, and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods.

Internal control over Financial Reporting

There were no changes in our internal controls or in other factors during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II  OTHER INFORMATION



|Item 1. | LEGAL PROCEEDINGS
|------- | -----------------

There have been no material
developments in the Companys legal proceedings from those previously disclosed in the Companys Form 10-K for the year ended December 31, 2008.



|Item 1A. | RISK FACTORS
|-------- | ------------

There have been no material changes
in the Companys risk factors from those previously disclosed in the Companys Form 10-K for the year ended December 31, 2008.



|Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

None.



|Item 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None.



|Item 5. | OTHER INFORMATION
|------- | -----------------

None.



25



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##### Table of Contents

|Item 6. | EXHIBITS
|------- | --------



|(b) | Exhibits
|--- | --------



|            |  |                                                                                                                                                                                                    
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Document Description                                                                                                                                                                               
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.        
|            | 
|31.2        |  | Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|            | 
|32.1        |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).                                                                               
|            | 
|32.2        |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).                                                                           



26



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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



|               |  |  |  |                  |  |                  |  |                                     
|-------------- |  |  |  | ---------------- |  | ---------------- |  | ------------------------------------
|               |  |  |  | COGO GROUP, INC.
|               |  |  | 
|August 7, 2009 |  |  |  | By:              |  | /s/ Jeffrey Kang
|               |  |  |  |                  |  |                  |  | Jeffrey Kang                        
|               |  |  |  |                  |  |                  |  | Chairman and Chief Executive Officer
|               |  |  |  |                  |  |                  |  | (Principal Executive Officer)       
|               |  |  | 
|August 7, 2009 |  |  |  | By:              |  | /s/ Frank Zheng 
|               |  |  |  |                  |  |                  |  | Frank Zheng                         
|               |  |  |  |                  |  |                  |  | Chief Financial Officer             
|               |  |  |  |                  |  |                  |  | (Principal Financial Officer)