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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on November 23, 2010

Registration No. 333-170350

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT NO. 4 TO
Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



SYSWIN Inc.
(Exact name of Registrant as specified in its charter)



Cayman Islands
(State or other jurisdiction of
incorporation or organization)
  6531
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification No.)

9/F Syswin Building
No. 316 Nan Hu Zhong Yuan, Chaoyang District
Beijing 100102
The People's Republic of China
(8610) 8497-8088

(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



CT Corporation System
111 Eighth Avenue
New York, New York 10011
(212) 894-8940

(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:
Peter X. Huang
Skadden, Arps, Slate, Meagher & Flom LLP
30th Floor, China World Office 2
No. 1 Jianguomenwai Avenue
Beijing 100004
The People's Republic of China
(8610) 6535-5500
  Alan Seem
Shearman & Sterling LLP
12/F, East Tower, Twin Towers
B-12 Jianguomenwai Dajie
Beijing 100022
The People's Republic of China
(8610) 5922-8000

          Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of
Securities to be Registered

  Amount to be
Registered(2)

  Proposed Maximum
Offering Price per
Ordinary Share

  Proposed Maximum
Aggregate Offering
Price(3)

  Amount of
Registration Fee

 

Ordinary shares, par value US$0.0000008 per share(1)

  44,160,000   US$2.00   US$88,320,000   US$6,297.22(4)

 

(1)
American depositary shares evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby will be registered pursuant to a separate registration statement on Form F-6 (Registration No.333-170510). Each American depositary share represents four (4) ordinary shares.

(2)
Includes (a) ordinary shares represented by American depositary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and (b) ordinary shares that may be purchased by the underwriters upon the exercise of the underwriters' over-allotment option to purchase additional ordinary shares. These ordinary shares are not being registered for the purposes of sales outside the United States.

(3)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act.

(4)
Previously paid.



          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


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Prospectus (Subject to completion)
Preliminary prospectus dated November 23, 2010

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

9,600,000 American Depositary Shares

LOGO

SYSWIN Inc.

REPRESENTING 38,400,000 ORDINARY SHARES



SYSWIN Inc. is offering 9,600,000 American depositary shares, or ADSs, each representing four (4) of our ordinary shares, par value US$0.0000008 per share. This is our initial public offering and no public market currently exists for our ordinary shares or ADSs. We currently anticipate the initial public offering price of our ADSs to be between US$7.00 and US$8.00 per ADS.



Our ADSs have been approved for listing on the New York Stock Exchange under the symbol "SYSW."



Investing in the ADSs involves risks. See "Risk Factors" beginning on page 15.



PRICE US$     AN ADS



 
 
Public
offering
price
 
Underwriting
discounts and
commissions
 
Proceeds,
before
expenses, to
SYSWIN Inc.

Per ADS

  US$        US$                 US$              

Total

  US$        US$                 US$              

We have granted the underwriters a 30-day option to purchase up to 1,440,000 additional ADSs at the initial public offering price less the underwriting discounts and commissions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the ADSs on or about                           , 2010.



MORGAN STANLEY



 
   
   
WILLIAM BLAIR & COMPANY   OPPENHEIMER & CO.   ROTH CAPITAL PARTNERS

                           , 2010


Table of Contents


TABLE OF CONTENTS

 
   
 

Prospectus Summary

    1  

Risk Factors

    15  

Forward-Looking Statements

    43  

Use of Proceeds

    44  

Dividend Policy

    46  

Capitalization

    47  

Dilution

    48  

Exchange Rate Information

    50  

Selected Consolidated Financial Data

    51  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    54  

Our Industry

    86  

Our Corporate History and Structure

    93  

Our Business

    100  

Management

    117  

Principal Shareholders

    123  

Related Party Transactions

    125  

Regulations

    128  

Description of Share Capital

    138  

Shares Eligible for Future Sale

    151  

Description of American Depositary Shares

    152  

Taxation

    163  

Enforceability of Civil Liabilities

    169  

Underwriting

    171  

Expenses Relating to this Offering

    177  

Legal Matters

    178  

Experts

    178  

Where You Can Find More Information

    179  

Index to Consolidated Financial Statements

    F-1  



        You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus may only be used where it is legal to offer and sell these securities. Unless otherwise indicated, the information in this document may only be accurate as of the date of this document.

        We have not taken any action to permit a public offering of the ADSs outside of the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside of the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States.

        Until                        , 2010, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.


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PROSPECTUS SUMMARY

        You should read the following summary together with the entire prospectus, including the more detailed information regarding us, the ADSs being sold in this offering, and our consolidated financial statements and related notes appearing elsewhere in this prospectus. Certain industry-related and other information and data contained in this section and elsewhere in this prospectus are derived from a research report that we commissioned China Index Academy, an independent market research firm, to prepare for purposes of illustrating our market position in China, which we believe would be useful to potential investors in our company. You should consider carefully, among other things, the matters discussed in the section entitled "Risk Factors."

Our Company

        We believe that we are a leading primary real estate service provider in China based on transaction value of properties sold, brand recognition and geographic presence. According to China Index Academy, an independent research firm, we are the largest primary real estate service provider in Beijing and Northern China, based on transaction value of properties sold in 2009. In 2010, we were ranked second among the top ten real estate consultancy and sales agency service providers in China in terms of brand value, according to 2010 China Real Estate Research Report on Brand Value of Consultancy and Sales Agency Service Providers, an independent research report issued by China Real Estate Top 10 Committee, a reputable research task force jointly organized by Enterprise Research Institute of Development Research Center of the State Council of PRC, Institute of Real Estate Studies of Tsinghua University and China Index Academy. We currently have operations in 17 cities throughout China. Our compound annual growth rate, or CAGR, in terms of aggregate gross floor area of properties sold from 2007 to 2009, was higher than each of the four publicly listed China-based primary real estate service providers, and our employee productivity, as measured by net revenue per employee in 2009, was also higher than these companies, according to China Index Academy.

        We primarily provide real estate sales agency services to property developers relating to new residential properties, and our net revenue derived from sales agency services represented 93.1%, 94.3%, 97.1% and 97.7%, respectively, of our total net revenue for 2007, 2008, 2009 and the nine months ended September 30, 2010. We also provide real estate consultancy services, which include project consultancy services offered to developer clients and primary land development consultancy and agency services provided to primary land developers. Our company began focusing on providing primary real estate services in the second half of 2004, initially in Beijing. We were the market leader in Beijing in 2008 and 2009 in terms of transaction value of properties sold as well as gross floor area of properties sold, according to China Index Academy. In the six months ended June 30, 2010, our market share in Beijing in terms of gross floor area of properties sold reached 13%, which was over four times that of our closest competitor, according to the same source.

        Capitalizing on our experience and capabilities gained in Beijing, we quickly replicated our success in a number of other markets. We are now one of the top three market players in Tianjin, Qingdao and Jinan, based on the aggregate planned gross floor area of properties under sale during the six months ended June 30, 2010, according to China Index Academy.

        We focus on servicing our key clients and seek to tailor our services to meet the demands of these clients. As a result, we have been successful in generating repeat business and increasing business volume from our major key clients. For example, as of December 31, 2007, 2008, 2009 and September 30, 2010, we had 1, 9, 12 and 22 contracted projects for China Vanke, a leading property developer in China. In 2007, 2008, 2009 and the nine months ended September 30, 2010, our aggregate gross floor area of properties sold on China Vanke's projects totaled 230 thousand square meters, 367 thousand square meters, 731 thousand square meters and 704 thousand square meters, respectively. In addition, of China's top 30 developers (including those that do not use sales agency services) according to China Index Academy, 14 are or had previously been our clients. Our clients include some

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of the most well-recognized national developers in China, including China Vanke, Longfor Properties, Sino-Ocean Land Holdings, Guangzhou R&F Properties and Gemdale Group.

        From 2007 to 2009, the number of our developer clients increased from 19 to 36, and the number of our projects increased from 27 to 68. During the same period, our aggregate gross floor area of properties sold increased from 896 thousand square meters to 2,858 thousand square meters, and our aggregate value of properties sold increased from RMB10.3 billion to RMB29.7 billion. During the nine months ended September 30, 2010, we had 42 developer clients with 79 projects, our aggregate gross floor area of properties sold was 2,962 thousand square meters, and our aggregate value of properties sold amounted to RMB33.4 billion. In 2007, 2008, 2009 and the nine months ended September 30, 2010, our net revenue totaled RMB327.0 million, RMB276.0 million, RMB432.7 million (US$64.7 million) and RMB431.8 million (US$64.5 million), respectively, and our net income from continuing operations totaled RMB120.9 million, RMB83.6 million, RMB164.5 million (US$24.6 million) and RMB152.7 million (US$22.8 million), respectively. As of September 30, 2010, we had a property contract pipeline of 16.5 million square meters.

        Due to restrictions under PRC law on foreign investment in primary real estate sales agency and consultancy businesses, we operate our business primarily through our consolidated entity and its subsidiaries in China. We do not hold equity interests in our consolidated entity. However, through a series of contractual arrangements with such consolidated entity and its shareholders, we, among other things, effectively exercise control over, and derive substantially all of the economic benefits from, such consolidated entity. See "Our Corporate History and Structure—Contractual Arrangements."

Industry Background

        China's real estate industry has grown rapidly in the past decade. Total gross floor area and the national average selling price of commodity properties sold in China both experienced significant increases. As a result, the total value from commodity properties sold experienced rapid growth during the period. With the rapid growth of China's real estate industry, leading developers have emerged and been gaining market shares by leveraging on their brand name, established execution capability and economies of scale. The significant growth of China's real estate industry is primarily attributed to (i) the growth of China's economy and increase in income level; (ii) the growing trend toward urbanization and an increasingly affluent urban population; and (iii) governmental reform of the real estate sector.

        As the real estate industry in China grows in size and complexity, it has become increasingly specialized. Services provided by real estate sales agency services companies also evolved from traditional primary agency services to comprehensive services throughout the project development, marketing and sales process, such as consultancy and planning. The growth of real estate sales agency services companies has further accelerated as a growing number of real estate developers have expanded from a local and regional level of operations to achieve a nationwide footprint. These developers have started to focus their resources on their core competencies and to outsource property sales function to professional real estate sales agency services companies that have, or are in the process of building, corresponding nationwide coverage.

        With over a decade of development, China's primary real estate agency services market has made significant progress in terms of both total value and sales volume of properties for which primary real estate agency services have been provided. Real estate developers are increasingly relying on real estate agency services companies for properties sales. The primary real estate agency services market in China is competitive and fragmented with increasing concentration evidenced by emergence of leading sales agency companies and increase in market share of the largest primary real estate agency services companies.

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Our Strengths and Strategy

        We believe that the following strengths enable us to compete effectively in the primary real estate services market and distinguish us from our competitors:

    we are one of the fastest-growing primary real estate services companies in China, with market leadership in Beijing and rapid expansion into other regions;

    we have successfully implemented a strategy of focusing on demands of key clients and penetrating existing markets, resulting in sustainable high growth;

    we have strong ability to attract and maintain clients through tailored and distinctive services;

    we benefit from strong brand recognition; and

    we are led by a highly experienced management team.

        We seek to become the largest real estate services provider in China. To this end, we intend to implement a growth strategy with the following key aspects:

    continue to increase market share in existing markets;

    develop new markets to build our nationwide network;

    expand our client base to enhance profitability;

    strengthen our operations and support functions; and

    pursue new business opportunities.

Our Challenges and Risks

        The successful execution of our strategies is subject to certain challenges and risks that may materially affect us, including:

    fluctuations in the real estate market in China;

    government policies and regulatory measures influencing China's real estate industry, including a series of measures adopted since April 2010 designed to cool down the property market;

    uncertainty in the further development and growth of the primary real estate services industry in China;

    our ability to compete successfully in the primary real estate services industry;

    fluctuations as a result of the project-by-project nature of our primary real estate sales agency and consultancy services business;

    our ability to manage our growth effectively and efficiently;

    our limited operating history in the primary real estate sales agency and consultancy services industry; and

    our significant reliance on business from a single project in Beijing in 2007, 2008 and 2009.

        In addition, we are subject to risks and uncertainties related to our corporate structure and doing business in China, including:

    our corporate structure and our control over our consolidated entity based on contractual arrangements, which were entered into on August 4, 2010, rather than equity ownership, including the risk that Syswin Zhi Di, our subsidiary, may be deemed to be providing real estate sales agency and consultancy services in violation of PRC Law;

    risks and uncertainties relating to the interpretation and implementation of statutory limitations on real estate sales agency commission rates as well as the associated potential administrative fines or other penalties, particularly in light of the fact that five of our projects, including the

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      Guo'ao Project, our largest project to date, yielded effective overall commission rates that may have exceeded statutory limitations;

    uncertainties with respect to obtaining licenses and permits applicable to primary real estate sales agency and consultancy services, particularly with respect to Syswin Qingdao and Syswin Shanxi, as a result of various implementation practices adopted by certain local real estate regulatory authorities;

    our holding company structure, which may restrict our ability to receive dividends and other distributions from our subsidiary in China to fund our cash and financing requirements and the limitation on the ability of our subsidiaries to make payments to us, as a result of the PRC legal restrictions;

    restrictions on our ability to use the proceeds from this offering to make loans or additional capital contributions to our subsidiary in China as a result of PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies; and

    our ability to utilize our net revenue effectively as a result of the PRC government controls on currency conversion transactions.

        Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these challenges and risks.

Corporate History and Structure

        We were incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands on December 5, 2007. We conduct substantially all of our operations in China through contractual arrangements with Syswin Xing Ye, our consolidated entity, in which we do not own any equity interest. Syswin Xing Ye is a PRC company founded by Mr. Chen, our CEO and controlling shareholder, in November 2004. Syswin Limited was incorporated in Hong Kong as our intermediary holding company in December 2007. Syswin Limited established Syswin Zhi Di, our PRC subsidiary, in July 2010.

        In January 2009, Qingling Company Limited, or Qingling, a limited liability company incorporated in Hong Kong and a wholly owned subsidiary of CDH China Fund III, L.P., invested RMB204.0 million (US$30.5 million) in exchange for a 19.29% equity interest in Syswin Xing Ye.

        In contemplation of this offering, we underwent a corporate restructuring in July and August 2010. We issued the same percentage of our ordinary shares to China Rebro Limited, or CDH Investments, as the percentage ownership of Qingling in Syswin Xing Ye in July 2010. CDH Investments is wholly owned by CDH China Fund III, L.P. Due to restrictions under PRC law on foreign investment in primary real estate sales agency and consultancy businesses, we entered into a series of contractual arrangements with Syswin Xing Ye and its shareholders on August 4, 2010, which resulted in the transfer of the effective control in Syswin Xing Ye from its shareholders to us. In particular, through these contractual arrangements, we:

    exercise effective control over our consolidated entity through, among other things, (i) exercising the shareholder rights of our consolidated entity pursuant to the power of attorney executed by such shareholders, (ii) directing its corporate governance and management by designating its key management members including its directors, supervisors, general manager and other senior management members, and (iii) exclusively providing services necessary for our consolidated entity's business operation;

    receive substantially all of the economic benefits from our consolidated entity for the services provided by us, including without limitation, technology consulting services, marketing consulting services and general management services; and

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    have an exclusive option to purchase all of the equity interests in our consolidated entity when and to the extent permitted under PRC law.

        As a result of our corporate restructuring and these contractual arrangements, we are the primary beneficiary of Syswin Xing Ye and its subsidiaries, and treat them as our variable interest entities under generally accepted accounting principles in the United States, or US GAAP. We have consolidated the financial results of Syswin Xing Ye and its subsidiaries into our consolidated financial statements in accordance with US GAAP. Accordingly, we refer to Syswin Xing Ye and its subsidiaries as our "consolidated entities." As a result of consolidating the financial results of Syswin Xing Ye, 100% of our net revenue during three years ended December 31, 2009 and the nine months ended September 30, 2010 was derived from Syswin Xing Ye and its subsidiaries.

        Syswin Xing Ye and its subsidiaries, other than Qingdao Syswin and Shanxi Syswin, have obtained all necessary licenses and permits from the PRC government to engage in the real estate sales agency and consultancy services businesses. Qingdao Syswin and Shanxi Syswin currently are not registered with the local regulatory authorities to conduct real estate agency and consultancy services. See "Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain or renew licenses and permits applicable to primary real estate sales agency and consultancy services, we may incur significant financial penalties and other government sanctions." Syswin Zhi Di, our PRC subsidiary, provides technology, marketing and general management consultation services to Syswin Xing Ye in accordance with the business scope under its license. For more details on how the services provided by Syswin Zhi Di correspond to the business scope under its license, see "Our Corporate History and Structure—Contractual Arrangements—Exclusive technology consulting and service agreements." As advised by Jingtian & Gongcheng Attorneys At Law, our PRC legal counsel, these businesses and services are not real estate sales agency and consultancy services and do not require a license or permit for conducting real estate sales agency and consultancy services. However, because the services from Syswin Zhi Di to Syswin Xing Ye are provided in connection with real estate sales agency and consultancy services, we cannot assure you that these services will not themselves be deemed as real estate sales agency and consultancy services, or that Syswin Zhi Di is not in violation of PRC law for providing such services.

        For a more detailed discussion of our contractual relationship with Syswin Xing Ye, its shareholders and our subsidiaries in the PRC and Hong Kong, see "Our Corporate History and Structure—Contractual Arrangements." For a more detailed discussion of the risk of potential conflicts of interest associated with our corporate structure, see "Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of our consolidated entity may have potential conflicts of interest with us."

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        The following diagram illustrates our corporate structure, including our subsidiaries, consolidated entity and its subsidiaries, immediately upon the completion of this offering assuming an initial public offering price of US$7.50 per ADS, being the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus:

GRAPHIC


Notes:

    (1)
    Held through Brilliant Strategy Limited, a company with limited liability incorporated in the British Virgin Islands and wholly owned by Mr. Chen.

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    (2)
    On October 28, 2010, SOL Investment Fund Limited and Kee Shing International Limited, each an entity controlled by Sino-Ocean Land Holdings Limited (a company listed on the Hong Hong Stock Exchange, stock code 3377), agreed to, subject to the completion of this offering, purchase our ordinary shares held by Brilliant Strategy Limited with an aggregate value of US$6.0 million and US$4.0 million respectively, at a price equal to the initial public offering price per ordinary share. Based on an initial public offering price of US$7.50 per ADS, being the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus, the number of ordinary shares SOL Investment Fund Limited and Kee Shing International Limited agreed to purchase from Brilliant Strategy Limited is 3,200,000 and 2,133,333, respectively. The closing of such share purchases shall take place upon and concurrently with the closing of this offering.

    (3)
    On November 4, 2010, SouFun Holdings Limited (a company listed on the New York Stock Exchange, ticker symbol "SFUN"), agreed to, subject to the completion of this offering, purchase our ordinary shares held by Brilliant Strategy Limited with an aggregate value of US$5.0 million at a price equal to the initial public offering price per ordinary share. Based on an initial public offering price of US$7.50 per ADS, being the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus, the number of ordinary shares SouFun Holdings Limited agreed to purchase from Brilliant Strategy Limited is 2,666,667. The closing of such share purchase shall take place upon and concurrently with the closing of this offering.

    (4)
    Consisting of Mr. Chen, Qingling Company Limited and Mr. Tao, holding 78.29%, 19.29% and 2.42% equity interest in Syswin Xing Ye, respectively.

Corporate Information

        Our principal executive offices are located at 9/F Syswin Building, No. 316 Nan Hu Zhong Yuan, Chaoyang District, Beijing 100102, the People's Republic of China. Our telephone number at this address is (8610) 8497-8088 and our fax number is (8610) 8497-8788. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011.

        Investor inquiries should be directed to us at the address and telephone number of our principal executive offices set forth above. Our website is http://www.syswin.com. The information contained on our website is not part of this prospectus.

Conventions That Apply to This Prospectus

        Unless otherwise indicated, references in this prospectus to:

    "we," "us," "our" and "our company" refer to SYSWIN Inc., a Cayman Islands company, its predecessor entities and its subsidiaries, and the consolidated entities;

    "our PRC entities" refer to Syswin Zhi Di and our consolidated entities;

    "our consolidated entity" refers to Syswin Xing Ye; and "our consolidated entities" refer to Syswin Xing Ye and its subsidiaries;

    "Mr. Chen" refers to Mr. Liangsheng Chen, a PRC citizen, our founder, chief executive officer and one of our shareholders;

    "Mr. Tao" refers to Mr. Hongbing Tao, a PRC citizen, our president and one of our shareholders;

    "CDH Investments" refers to China Rebro Limited, a company with limited liability incorporated in the British Virgin Islands and one of our shareholders. CDH Investments is a wholly-owned subsidiary of CDH China Fund III, L.P., an exempted limited partnership organized and existing under the laws of the Cayman Islands focusing on private equity investments;

    "Syswin Zhi Di" refers to Beijing Syswin Zhi Di Technology Limited, our subsidiary in the PRC;

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    "Syswin Xing Ye" refers to Beijing Syswin Xing Ye Real Estate Brokerage Company Limited, our consolidated variable interest entity;

    "ADSs" refer to our American depositary shares, each of which represents four of our ordinary shares;

    "ADRs" refer to the American depositary receipts, which, if issued, evidence our ADSs;

    "shares" or "ordinary shares" refer to our ordinary shares, par value US$0.0000008 per share;

    "China" and the "PRC" refer to the People's Republic of China excluding, for the purpose of this prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau;

    "Northern China" refers to the select major cities in northern China surveyed by China Index Academy in its research report, including Beijing, Tianjin, Shijiazhuang, Hohhot, Shenyang, Dalian, Changchun, Harbin, Taiyuan, Jinan, Qingdao, Yinchuan and Xining;

    "RMB" and "Renminbi" refer to the legal currency of China; and

    "US$" and "U.S. dollars" refer to the legal currency of the United States.

        We began operations of a secondary real estate brokerage services business in 2008, and transferred such business to entities controlled by Mr. Chen in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Acquisitions and disposals." As a result, the statements of operations information of such business have been presented as discontinued operations for all periods presented in this prospectus, and the statement of operations information in this prospectus relates to our continuing operations unless otherwise indicated.

        Unless otherwise indicated, information in this prospectus assumes that the underwriters do not exercise their option to purchase additional ADSs.

        This prospectus contains references to compound annual growth rate, or CAGR, which represents the rate of return on an annualized basis over the relevant time period.

        This prospectus contains translations of certain Renminbi amounts into U.S. dollars at specified rates. Unless otherwise stated, all translations from Renminbi to U.S. dollars were made at the noon buying rate on September 30, 2010 in New York City for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the H.10 weekly statistical release of the Federal Reserve Board, which was RMB6.6905 to US$1.00. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On November 19, 2010, the noon buying rate was RMB6.6398 to US$1.00.

        On November 3, 2010, we effected a 12,500-for-1 share split whereby all of our authorized (issued and unissued) ordinary shares of par value US$0.01 each were divided into ordinary shares of par value US$0.0000008 each. As a result, the number of our issued and outstanding ordinary shares increased from 12,390 shares to 154,875,000 shares. All share and per share information in this prospectus gives effect to the share split unless the context indicates otherwise.

Industry Terms and Data in This Prospectus

        For purposes of this prospectus:

    "base commission" refers to our sales agency services commission which is calculated as a fixed percentage of aggregate value of the property transactions to which we provide sales agency services. A number of property developers offer a progressive structure of base commissions based on sales progress in terms of sales value or volume of properties sold;

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    "incentive commission" refers to the bonus compensation property developers pay for properties sold beyond certain pre-agreed selling prices. Incentive commission is calculated as a percentage of the property transaction value exceeding a base transaction value calculated using a pre-determined average selling price. Occasionally, our sales agency agreements provide for a progressive incentive commission rate structure based on average selling price of properties sold;

    "supplemental commission" refers to the commission property developers pay in return for our agreement to undertake the overall project marketing and promotion activities and to pay all costs incurred in this regard prior to and during the project sales. Supplemental commission is calculated as a percentage of the aggregate value of properties sold;

    "quality assurance retention money" refers to the arrangement whereby we allow our developer clients to treat a portion of commissions, typically 5% to 20% of the aggregate agreed level commissions, as quality assurance retention money, upon our meeting certain pre-determined criteria. Such pre-determined criteria can be largely categorized into (i) those based on the level of satisfaction with our services as determined by our developer clients; and (ii) those based on the sales progress of a project, which may take into account factors such as gross floor area of properties sold and transaction value. We recognize the revenue represented by such retention money only upon the satisfaction of such pre-agreed conditions;

    "performance bond" refers to an upfront deposit we make to property developers prior to the sales commencement, which will be released periodically or upon the sales completion, and may be subject to certain pre-determined criteria similar to those applicable to the payment of quality assurance retention money;

    "commodity properties" refers to primary residential and commercial properties;

    "contract pipeline" refers to, as of a specified date, the aggregate gross floor area of the properties for which we have been engaged to provide sales agency services but have not yet recognized revenue as of such date based on the respective agency agreement;

    "aggregate planned gross floor area of projects under sale" refers to, with respect to a sales agent during a specified period, the aggregate planned gross floor area of those projects that the sales agent has derived sales agency service revenue. If any of the projects has multiple phases of development, such area would include the aggregate area of all phases of the project; and

    "net revenue per employee" is calculated by dividing (i) net revenue within a specified period, by (ii) the arithmetic mean of numbers of employees calculated using beginning and ending balances within that period.

        Because the primary real estate services industry is in an early stage of development, the size of the PRC market for this industry is difficult to estimate. We and China Index Academy are not aware of sufficiently accurate information on the total PRC market as represented by primary properties using third party sales agency services. An estimate of the PRC market based on all primary properties sold, including properties not using third party sales agency services, would represent a substantial over-estimate of the actual market size, as these properties comprise a significant percentage of all properties sold. Nevertheless, we present market share data for Beijing in this prospectus in terms of total gross floor area of commodity properties sold in Beijing during a specified period, including properties not using third party sales agency services. We have presented this information because we believe that information on Beijing, which is our largest market, is useful to our investors in making their investment decisions.

        References to the publicly listed China-based primary real estate services providers consist of E-house (China) Holdings Limited (listed on the New York Stock Exchange, ticker symbol "EJ"), World Union Properties Consultancy Co., Limited (listed on China's Shenzhen Stock Exchange, stock code 2285), Hopefluent Group Holdings Limited (listed on the Hong Kong Stock Exchange, stock code 733) and Fortune Sun (China) Holdings Limited (listed on the Hong Kong Stock Exchange, stock code 352).

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The Offering

ADSs offered by us

  9,600,000 ADSs.

Offering price

 

We estimate that the initial public offering price will be between US$7.00 and US$8.00 per ADS.

ADSs outstanding immediately after this offering

 

9,600,000 ADSs (or 11,040,000 ADSs if the underwriters exercise their option to purchase additional ADSs in full).

Ordinary shares outstanding immediately after this offering

 

193,275,000 ordinary shares (or 199,035,000 ordinary shares if the underwriters exercise their option to purchase additional ADSs in full).

ADSs

 

Each ADS represents four (4) of our ordinary shares, par value US$0.0000008 per ordinary share. The ADSs will be evidenced by American depositary receipts, or ADRs.

 

The depositary will be the holder of the ordinary shares underlying the ADSs and you will have the rights of an ADR holder as provided in the deposit agreement among us, the depositary and owners and beneficial owners of ADSs from time to time.

 

You may surrender your ADSs to the depositary to withdraw the ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange.

 

We may amend or terminate the deposit agreement for any reason without your consent. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.

 

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares." You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

Option to purchase additional ADSs

 

We have granted to the underwriters an option, which is exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of 1,440,000 additional ADSs at the initial public offering price, less underwriting discounts and commissions.

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Use of proceeds

 

We estimate that we will receive net proceeds of approximately US$64.0 million from this offering (or US$74.0 million if the underwriters exercise their option to purchase additional ADSs in full), after deducting the underwriter discounts, commissions and estimated offering expenses payable by us and assuming an initial public offering price of US$7.50 per ADS, being the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus. We intend to use our net proceeds from this offering to fund our business expansion, merger and acquisition activities, strengthening of operations and support functions, and for general corporate purposes.

 

See "Use of Proceeds."

Listing

 

Our ADSs have been approved for listing on the New York Stock Exchange under the symbol "SYSW." Our ordinary shares will not be listed on any exchange or quoted for trading on any automated quotation system or any over-the-counter trading system.

Lock-up

 

We have agreed with the underwriters to a lock-up of our shares for a period ending 180 days after the date of this prospectus. In addition, our current shareholders, directors and executive officers, as well as Kee Shing International Limited, SOL Investment Fund Limited and SouFun Holdings Limited who have agreed to purchase our ordinary shares held by Brilliant Strategy Limited upon the closing of this offering, have also agreed with the underwriters to a lock-up of their shares for a period of 180 days after the date of this prospectus. See "Shares Eligible For Future Sale" and "Underwriting."

Reserved ADSs

 

At our request, the underwriters have reserved for sale, at the public offering price, up to 480,000 ADSs offered in this offering to certain of our directors, officers, employees, business associates and related persons through a directed share program.

Risk factors

 

See "Risk Factors" in this prospectus beginning on page 11 and other information included in this prospectus for a discussion of the risks you should carefully consider before deciding to invest in our ADSs.

Depositary

 

JPMorgan Chase Bank, N.A.

Payment and settlement

 

We expect our ADSs to be delivered against payment on or about            , 2010.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        You should read the summary consolidated financial data in conjunction with our financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

        The following summary consolidated financial information for the periods and as of the dates indicated should be read in conjunction with our audited and unaudited consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Our summary consolidated statements of operations data for the years ended December 31, 2007, 2008 and 2009 and summary consolidated balance sheet data as of December 31, 2007, 2008 and 2009 have been derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. Our summary consolidated statements of operations data for the nine months ended September 30, 2009 and 2010 and summary consolidated balance sheet data as of September 30, 2010 have been derived from our unaudited consolidated financial statements, which are included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial data. The unaudited summary financial data include, in the opinion of our management team, all adjustments, consisting of only normal recurring adjustments that are necessary for a fair presentation of the financial position and the results of operations for the interim unaudited period. Our audited and unaudited consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the United States of America, or US GAAP. Our historical results are not necessarily indicative of results to be expected in any future period.

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  For the Year Ended December 31,   For the Nine Months Ended September 30,  
 
  2007   2008   2009   2009   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
  RMB
  RMB
  US$
 
 
   
   
   
   
  (unaudited)
  (unaudited)
  (unaudited)
 
 
  (In thousands, except for share and per share data)
 

Consolidated Statement of
Operations Data

                                           

Net revenue

    326,979     276,003     432,736     64,679     282,185     431,762     64,534  

Cost of revenues

    (72,303 )   (75,979 )   (131,193 )   (19,609 )   (97,787 )   (136,701 )   (20,432 )
                               

Gross profit

    254,676     200,024     301,543     45,070     184,398     295,061     44,102  

Selling, marketing and administrative expenses

    (65,563 )   (82,577 )   (84,545 )   (12,637 )   (54,006 )   (93,561 )   (13,984 )
                               

Income from operations

    189,113     117,447     216,998     32,433     130,392     201,500     30,118  

Interest expenses

        (922 )   (147 )   (22 )   (147 )        

Interest income

    112     81     864     129     521     2,005     300  

Foreign currency exchange loss

            (576 )   (86 )   (576 )        

Other (expenses) / income—net

    (10 )   (1,283 )   1,285     192     1,459     3,811     570  
                               

Income from continuing operations before income tax

    189,215     115,323     218,424     32,646     131,649     207,316     30,988  

Income tax

    (67,010 )   (31,646 )   (53,968 )   (8,066 )   (33,259 )   (54,589 )   (8,159 )
                               

Income from continuing operations

    122,205     83,677     164,456     24,580     98,390     152,727     22,829  

Loss from discontinued operations, net(1)

        (1,354 )   (12,039 )   (1,799 )   (7,459 )   (20,054 )   (2,997 )
                               

Net income

    122,205     82,323     152,417     22,781     90,931     132,673     19,832  

Non-controlling interest

    (1,288 )   (87 )                    
                               

Net income attributable to SYSWIN Inc

    120,917     82,236     152,417     22,781     90,931     132,673     19,832  

Amount attributable to SYSWIN Inc.

                                           

Income from continuing operations

    120,917     83,590     164,456     24,580     98,390     152,727     22,829  

Loss from discontinued operations, net

        (1,354 )   (12,039 )   (1,799 )   (7,459 )   (20,054 )   (2,997 )
                               

Net income attributable to SYSWIN Inc.

    120,917     82,236     152,417     22,781     90,931     132,673     19,832  

Income per share from continuing operations attributable to SYSWIN Inc., basic and diluted

    0.78     0.54     1.06     0.16     0.64     0.99     0.15  

Loss per share from discontinued operations, net attributable to SYSWIN Inc., basic and diluted

        (0.01 )   (0.08 )   (0.01 )   (0.05 )   (0.13 )   (0.02 )

Net income attributable to SYSWIN Inc. per share, basic and diluted

    0.78     0.53     0.98     0.15     0.59     0.86     0.13  

Shares used in calculating income per share, basic and diluted

    154,875,000     154,875,000     154,875,000     154,875,000     154,875,000     154,875,000     154,875,000  

Cash dividends per share

    0.13     0.68                 1.74     0.26  

(1)
We began operations of a secondary real estate brokerage services business in 2008, and transferred such business to entities controlled by Mr. Chen in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Acquisitions and disposals." As a result, the results of such business have been presented as discontinued operations for all periods presented in this prospectus.

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  As of December 31,   As of September 30,  
 
  Actual   Actual   As Adjusted(1)  
 
  2007   2008   2009   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
  RMB
  US$
  RMB
  US$
 
 
  (In thousands)
 

Consolidated Balance Sheet Data:

                                                 
   

Cash and cash equivalents

    25,597     20,929     194,828     29,120     185,992     27,799     614,023     91,775  
   

Accounts receivable, net

    94,838     107,761     238,450     35,640     239,441     35,788     239,441     35,788  
   

Other receivables

    8,359     16,650     16,549     2,474     19,248     2,877     19,248     2,877  
   

Property and equipment, net

    11,070     21,467     152,046     22,726     50,138     7,494     50,138     7,494  
   

Real estate properties held for lease, net

            13,699     2,048                  
 

Total assets

    234,942     237,790     642,388     96,016     545,327     81,507     973,358     145,483  
   

Accrued expenses and other current liabilities

    23,057     35,503     139,238     20,812     84,361     12,609     84,361     12,609  
   

Income tax payable

    62,464     56,817     21,763     3,253     9,446     1,412     9,446     1,412  
 

Total liabilities

    85,521     112,320     161,001     24,065     201,267     30,082     201,267     30,082  
 

Total shareholders' equity

    149,421     125,470     481,387     71,951     344,060     51,425     772,091     115,401  
 

Total liabilities and shareholders' equity

    234,942     237,790     642,388     96,016     545,327     81,507     973,358     145,483  

(1)
Our consolidated balance sheet data as of September 30, 2010 are adjusted to give effect to the issuance and sale of ADSs by us in this offering assuming an initial public offering price of US$7.50 per ADS (the mid-point of the estimated initial public offering price range), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. A US$1.00 increase (decrease) in the assumed initial public offering price of US$7.50 per ADS would increase (decrease) the amounts representing cash and cash equivalents, total assets and total shareholders' equity by US$8.93 million.

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RISK FACTORS

        You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

Our business is susceptible to fluctuations in the real estate market in China, which is volatile and at an early stage of development. Any significant fluctuations in this market could have a material adverse effect on our revenue, profitability and growth prospects.

        We conduct our real estate services business in China, and our business depends substantially on the conditions of the real estate market in China. The real estate market in China remains at an early stage of development, and social, political, economic and other factors may affect its development. The growth in demand for private residential property in China in recent years has often been coupled with volatile market conditions and fluctuations in property prices. The PRC property market may experience undersupply or oversupply of available-for-sale properties and property price fluctuations caused by economic, social, political and other factors. For example, following a period of rising property prices and transaction volumes in most major cities from 2003 to 2007, the property market of China experienced a downturn in 2008 which continued into the first quarter of 2009, with transaction volume in many major cities declining significantly compared to 2007. Average selling prices also declined in many cities during such period. Since early 2009, China's real estate market rebounded and many cities have experienced increases in property prices and transaction volumes. The recovery in 2009 coincided with a sharp rise in the volume of bank loans as part of China's response to the global economic crisis. Since April 2010, after the PRC government began adopting a series of measures to cool down the overheating property market and to curb the excessive lending in real estate industry, transaction volumes in the property market in selected cities in China, such as Beijing, Shanghai and Shenzhen, have declined significantly. In line with this trend, the aggregate gross floor area of our properties sold in the second and third quarters of 2010 was adversely affected by these measures. Any future downturns in the real estate sector or other adverse changes in the economic, social and political environment in China may result in decreases in property prices and overall transaction activities, which could materially and adversely affect our revenue, profitability and growth prospects.

Adverse developments in general business and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

        Consistent with the real estate market in China in general, our business and operations are sensitive to general business and economic conditions globally and in China. A number of general business and economic factors could contribute to a real estate market downturn and adversely affect our business, including:

    any systemic weakness in the banking and financial sectors;

    any substantial declines in the stock markets or continued stock market volatility;

    any increase in levels of unemployment;

    a lack of available credit and lack of confidence in the financial sector;

    changes in interest rates;

    changes in inflation or deflation levels; and

    any general economic downturn in China or the global economy, or a lack of consumer confidence in the economy.

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        In particular, the global financial crisis that began in 2008 has adversely affected the United States, Europe and other world economies, including China. Our 2008 operating results were also adversely affected as a result. In addition, the global financial crisis resulted in a tightening in credit markets, a low level of liquidity in many financial markets and increased volatility in credit and equity markets. Adverse developments in these general business and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

Our revenue, profitability and future prospects could be materially and adversely affected by any government policies and regulatory measures influencing China's real estate industry.

        The real estate market in China is typically affected by changes in government policies and regulatory measures affecting the property market, financial markets and related areas. In the past, the PRC government has adopted various government policies and regulatory measures to curb what it perceived as unsustainable growth in the real estate market, particularly at times when the real estate market in China has experienced rapid and significant growth. In 2007, property sales volumes and average selling prices in China increased rapidly to unprecedented levels, culminating in a property market downturn beginning in late 2007 due to the PRC government's intervention in the real estate market to stabilize market prices and reduce the level of speculation in the property market. Property sales in China recovered in 2009 and experienced significant growth thereafter until early 2010.

        On April 17, 2010, the State Council issued the Notice on Firmly Preventing Overly Fast Growth of Real Property Price in Certain Cities, or the April Notice, which stipulated that a property purchaser's down payment for such purchaser's first property purchase shall not be less than 30% of the purchase price if gross floor area of the property is larger than 90 square meters; a purchaser's down payment for such purchaser's second property purchase shall not be less than 50% of the purchase price and the mortgage loan interest rate shall not be less than 1.1 times the base lending rate published by the People's Bank of China, or the PBOC; and a purchaser's down payment and mortgage loan interest rate shall significantly increase for such purchaser's third and additional property purchases. In addition, in areas with short supply in residential properties and rapid property price increase, commercial banks may suspend the granting of mortgage loans for the third and additional property purchases or to non-residents without payment proof of tax or social security of more than one year. The local governments may adopt interim measures restricting the maximum number of residential properties that may be purchased by an individual buyer.

        On September 29, 2010, the Ministry of Housing and Urban-rural Development, the People's Bank of China, the China Banking Regulatory Commission and the Ministry of Finance promulgated a series of administrative rules, or the September Rules, to further implement the April Notice. The September Rules require that commercial banks suspend granting of mortgage loans on a nationwide basis (i) for any third or additional property purchases of any purchaser or (ii) to any non-resident purchaser unable to provide proof of tax or social security payment for more than one year. The September Rules stipulate that a property purchaser's down payment for the first property purchase shall not be less than 30% of the purchase price regardless of the gross floor area of the property purchased. The September Rules further require that legal requirements as set forth in the April Notice regarding a property purchaser's down payment for his or her second property purchase and the applicable loan interest rate be strictly implemented. The September Rules also revoke certain preferential individual income tax treatment to the purchaser who sells his or her residential property and purchases another residential property within one year of the sale.

        As a result of these PRC government's measures to cool down the overheating property market and to curb the excessive lending in real estate industry, transaction volumes in the property market in selected cities in China, such as Beijing, Shanghai and Shenzhen, have declined significantly. In line with this trend, the aggregate gross floor area of our properties sold in the second and third quarters of 2010 was adversely affected by these measures.

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        As a primary real estate services provider, we are significantly affected by these government policies and regulatory measures as we primarily generate revenue based on the successful property transactions to which we provide primary real estate sales agency and consultancy services. Consequently, any of the following could cause a decline in property sales volumes and average selling prices as well as the related revenue we generate from our business:

    any contractionary monetary policy adopted by the PRC government, including any significant rise in interest rates;

    any adverse development in the credit markets or mortgage financing markets resulting from PRC government policies, such as the recent government efforts to significantly increase the level of minimum down payment and applicable interest rate for property purchases based on the nature of the property and the number of properties already owned by the purchaser;

    any significant increase in transaction costs as a result of changes in PRC government policies regarding real estate transaction taxes, such as the recent announcement regarding the reinstatement of a business tax on residential property sales by individuals within five years of purchase;

    any adverse change in PRC government policies regarding the acquisition and/or ownership of real estate property;

    any adverse change in PRC national or local government policies or practices regarding primary real estate sales agency and consultancy business or related fees and commissions; or

    any other adverse change in PRC government policies or regulations regarding the real estate industry.

The primary real estate sales agency and consultancy services industry in China is relatively new and rapidly evolving, and if this industry does not develop or mature as quickly as we expect, the growth and success of our business may be materially and adversely affected.

        Our development has depended, and will continue to depend, substantially on the growth of the primary real estate sales agency and consultancy services industry in China and in specific regions where we operate, which is relatively new. We cannot predict the rate of growth, if any, of this industry. The development of the real estate services industry depends on, among others, real estate developers' continuing outsourcing of property sales and other functions to professional real estate services companies in specific regions where we operate in China. The failure of the real estate services industry to develop rapidly in China may materially and adversely affect the growth and success of our business.

It is difficult to evaluate our results of operations and future prospects due to our limited operating history in the primary real estate sales agency and consultancy services industry.

        We began focusing on providing primary real estate services in the second half of 2004, initially in Beijing. Accordingly, we have a limited operating history in the primary real estate sales agency and consultancy services industry from which you can evaluate our business and future prospects. Our net revenue from the primary real estate sales agency and consultancy services business increased significantly in a relatively short period of time, from RMB327.0 million in 2007 to RMB432.7 million (US$64.7 million) in 2009. Our net revenue from the primary real estate sales agency and consultancy services business in the nine months ended September 30, 2010 was RMB431.8 million (US$64.5 million), as compared to RMB282.2 million in the nine months ended September 30, 2009. We may not be able to continue our growth at similar rates, if at all, because, among other reasons, we may not be able to maintain the current level of business operations or to expand our business operations into other geographic regions in future periods. As a result, our historical operating results may not provide a meaningful basis for evaluating our business, results of operations and financial

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condition. Accordingly, you should not rely on our results of operations for any prior periods as an indication of our future performance.

We significantly relied on business from a single project in Beijing in 2007, 2008 and 2009.

        During the three years ended December 31, 2009, the Guo'ao Project had significantly affected our operating results in a number of aspects. In 2007, 2008 and 2009, net revenue derived from the Guo'ao Project accounted for approximately 63.4%, 50.8% and 35.1%, respectively, of our total net revenue. The Guo'ao Project was our single largest project in terms of revenue contribution during the three years ended December 31, 2009.

        Our historical effective commission rate has been positively affected by the Guo'ao Project. In 2007, 2008 and 2009 our effective commission rate was 2.9%, 2.4% and 1.4%, respectively. Excluding the Guo'ao Project, our effective commission rates would have been 1.7%, 1.3% and 1.0% in 2007, 2008 and 2009, respectively. Our effective commission rate for the Guo'ao Project primarily reflected the significant amount of net revenue derived from incentive commissions as a result of an increase in average selling price of the Guo'ao Project, coupled with a supplemental commissions of 1.2% for overall sales and marketing services we provided to our developer client. In particular, during the three years ended 2009, our net revenue derived from the Guo'ao Project's incentive commissions represented a majority of our total net revenue derived from the Guo'ao Project. We believe the historical effective commission rates for the Guo'ao Project will become relatively uncommon in the future. In addition, our overall gross margins in these periods were also affected by the Guo'ao Project. In 2007, 2008 and 2009, our gross margin was 77.9%, 72.5% and 69.7%, respectively. Excluding the impact of the Guo'ao Project, our gross margin would have been 55.5%, 56.4% and 63.0% in 2007, 2008 and 2009, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Specific Factors Affecting Our Financial Condition and Operating Results—Changes in commission rates" for a detailed discussion of the commission rates of the Guo'ao Project.

        During the nine months ended September 30, 2010, net revenue derived from the Guo'ao Project, a substantial majority of which was derived from incentive commissions, represented 19.4% of our total net revenue. Our effective commission rate was 1.3% and our gross margin was 68.3% for the nine-month period ended September 30, 2010. Excluding the Guo'ao Project, our effective commission rate would have been 1.0% and our gross margin would have been 67.5% during the same period. As of September 30, 2010, 4.8% of the Guo'ao Project in terms of the aggregate saleable gross floor area, or 18.4 thousand square meters, had not been sold yet. As the project comes to a conclusion and as we continue to diversify our client base, we expect net revenue from this project as a percentage of our total net revenue to decline. We may not be able to continue to benefit from the higher commission rates and gross margins from this project in future periods. As a result of the foregoing, any analysis of our future commission rates, net revenue, profit margins and other aspects of our operating results must be made in light of the historical and expected financial impact of the Guo'ao Project. We cannot assure you that we will be able to continue to generate the same level of commission rates, net revenue and gross margins in future periods.

We rely on business from a limited number of clients. Any loss of business from a significant client may materially and adversely affect our revenue, profit and other aspects of our results of operations.

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, net revenue derived from services we rendered to our largest five clients, which were all property developers, accounted for approximately 85.9%, 84.3%, 70.1% and 71.0%, respectively, of our total net revenue. Excluding net revenue derived from the Guo'ao Project, our largest four clients would have collectively accounted for 61.4%, 68.0%, 54.0% and 64.0% of our total net revenue in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. We cannot assure you that we will be able to maintain or improve our relationships with these major clients, or that we will be able to continue to render services to these clients at current levels, or at all. In addition, any decline in our major clients'

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business could lead to a decline in service engagements with these clients. Should these property developer clients terminate or substantially reduce their business with us and we fail to find alternative clients to provide us with revenue-generating business, our revenue, profit and other aspects of results of operations may be materially and adversely affected.

We may be subject to administrative fines or penalties in the event that the relevant PRC government authorities determine that we are in violation of the statutory limitation on real estate sales agency commission rates.

        Pursuant to the Real Property Intermediary Service Charges Circular promulgated by China's State Planning Commission (the predecessor authority of National Development and Reform Commission) and China's Ministry of Construction (the predecessor authority of China's Ministry of Housing and Urban-Rural Development) on July 7, 1995, or the Service Charges Circular, commission rates for real estate transactions may not exceed 2.5% of the transaction value if sales agency services are provided on a non-exclusive basis or 3% of the transaction value if sales agency services are provided on an exclusive basis. Local governments are authorized to adopt more specific limitations within these statutory limitations. For example, in Beijing, according to the relevant local administrative rules, commissions may not exceed 2.8% of the transaction value for sales agency services provided on an exclusive basis. The government authority in charge of pricing inspection is authorized to impose administrative fines or penalties if any sales agency services provider receives commissions exceeding the statutory limitation. However, the Service Charges Circular does not stipulate the method to calculate the commissions or specify the administrative fines or penalties for any violation. No implementation rule has been issued by any relevant authorities. It is unclear how the local pricing bureaus, which are in charge of pricing inspection, will implement the Service Charges Circular in practice. In addition to base commissions, a number of our engagements are structured to include possible supplemental and incentive commissions, which, if aggregated with our base commissions, may yield an effective overall commission rate that exceeds the statutory limitation. Historically, 5 of an aggregate of 124 sales agency projects, representing 533 thousand square meters of 7,847 thousand square meters of gross floor area of properties sold, including the Guo'ao Project, our single largest project in terms of revenue contributions during the three years ended December 31, 2009, from which we derived revenue in 2007, 2008, 2009 and the nine months ended September 30, 2010, yielded effective overall commission rates that may have exceeded the statutory limitations. Net revenue derived from such projects represented 75%, 61%, 40% and 19% of our total net revenue in 2007, 2008, 2009 and the nine months ended September 30, 2010. Based on our sales agency agreements entered into as of September 30, 2010, 26 of the 113 sales agency projects we entered into, representing 4,625 thousand square meters of 16,544 thousand square meters of gross floor area of properties in the contract pipeline, adopted a supplemental or incentive commission structure, which may result in these projects yielding effective overall commission rates that exceed the statutory limitation. We also expect to enter into other projects with similar commission structures in the future. As a result, if any relevant authority promulgates new interpretations or implementation rules whereby we are determined by such authority to be in violation of the statutory limitation on sales agency commission rate, we may be subject to administrative fines and other penalties, which may materially and adversely affect our reputation and results of operations.

We derive the majority of our net revenue from the Beijing market. Any significant downturn in Beijing real estate market will materially and adversely affect our results of operations.

        We derived approximately 92.2%, 92.4%, 74.6% and 79.0% of our total net revenue in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively, from Beijing, and expect to continue to derive a substantial portion of our revenue in this area in the future. As a result, any decrease in transaction activities or average selling prices in Beijing's real estate market, or any adverse development in the primary real estate services industry in Beijing could materially and adversely affect our business, financial condition and results of operations.

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Seasonality in the real estate market could adversely affect our results of operations and the trading price of our ADSs.

        The primary real estate sales agency and consultancy services business is subject to seasonal fluctuations. Historically, primary real estate sales agency and consultancy services revenue and transaction volumes have generally been low during January and February as a result of the relatively low level of property market activities during the winter and the Chinese New Year holiday period. However, many of our expenses, such as those relating to administrative or sales and marketing efforts, are fixed and cannot be reduced during a seasonal slowdown. As a result, our operating results have fluctuated from quarter to quarter. These fluctuations are likely to continue and operating results for any period may not be indicative of our performance in any future period. If our operating results for any quarterly period fall below investor expectations or the estimates of securities research analysts, the trading price of our ADSs may decline.

Our results of operations and cash flows may fluctuate due to the project-by-project nature of our primary real estate sales agency and consultancy services and billing cycles.

        We derived substantially all of our revenue from primary real estate sales agency and consultancy services in 2007, 2008, 2009 and the nine months ended September 30, 2010. Our developer clients generally engage us on a project-by-project basis, and we currently do not have long-term services agreements with any of our developer clients. Historically, we generated our revenue through providing services to a limited number of property projects. For example, in 2007, 2008, 2009 and the nine months ended September 30, 2010, we generated net revenue through providing primary real estate sales agency services to 27, 44, 68 and 79 projects, respectively. All these factors contributed, and are expected to continue to contribute, to the fluctuations in our period-to-period operating results. If we are unable to generate a substantial number of new engagements on a continual basis, our business and results of operations will be adversely affected. In addition, the time lag between the time we recognize revenue and the time we collect the related commissions, which generally lasts for three to six months, could make it difficult for us to forecast cash flows and could increase the likelihood and the magnitude of period-to-period fluctuations.

Competition in the primary real estate sales agency and consultancy services industry is intense. If we are unable to compete successfully, our market position, growth prospects and results of operations may be materially and adversely affected.

        We encounter intense competition in our primary real estate sales agency and consultancy services segment. Competition in the industry is primarily based on scope and quality of services offered, reputation and brand recognition, local expertise and agency commission rates. We primarily compete with national players, including E-house (China) Holdings Limited with primary markets in eastern China and based in Shanghai, and World Union Properties Consultancy Co., Limited with primary markets in southern China and based in Shenzhen, as well as local competitors in the regions in which we conduct our business. Some of these competitors may have greater resources than we do, including better client relationships in certain local areas and financial and informational resources. The limited capital resources required to enter into the primary real estate sales agency and consultancy services industry in any given region also means there are low entry barriers for our competitors to enter into our major markets. New and existing competitors may offer lower commission rates with wider ranges of services which could attract our existing developer clients away from us. Increased competition among primary real estate sales agency and consultancy companies could result in decreases in commission rates within the industry, increased operating costs relating to the provision of a wider range of services in order to compete effectively and higher administrative costs to attract or retain talented employees. We may not be able to continue to compete effectively and to maintain our current commission or margin levels. If we fail to compete effectively, our revenue and profitability and growth prospects will be negatively affected.

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        In addition to our competition from traditional real estate services providers, the advent of the Internet has introduced new ways of providing real estate services, as well as new entrants and competitors in our industry. If we are not successful in developing a strategy to address the challenges and to capture the business opportunities presented by technological changes and the emergence of e-business, our market position, growth prospects and results of operations could be materially and adversely affected.

We may not be able to successfully execute our business development strategy, including obtaining required financing, which could have a material adverse effect on our future growth, financial condition and results of operations.

        We plan to continue to expand our business into new geographical areas in China and to enter into new businesses to diversify our services portfolio. For instance, we have identified markets in the Yangtze River Delta region and the Pearl River Delta region as key markets in our next phase of expansion. Because China is a large and diverse market, property buying trends and demands may vary significantly by region, and our experience in the markets in which we currently operate may not be applicable in other parts of China. As a result, we may not be able to leverage our experience to expand into other parts of China or to enter into businesses with respect to new products or services. When we enter new markets, we may face intense competition from companies with greater experience and resources or from other companies with similar expansion targets. As a result, we may not be able to generate or increase revenue in new regions we enter into while incurring substantial costs. If we are not able to successfully execute our business development strategy, our future growth, financial condition and results of operations may be materially and adversely affected.

        Additionally, we expect that over the next several years, a substantial portion of our financial resources will be used to finance the expansion of primary real estate sales agency and consultancy operations to increase our market share in existing markets and to expand our geographical presence. The availability of financial resources to us and expected cash flows from our operations significantly depends on our management's ability to successfully execute its business plan, which includes increasing sales, generating positive operating cash flows and obtaining additional funding to support longer term capital requirements. We cannot assure you that we will obtain such financing at a reasonable cost or at all. Our inability to finance our planned capital expenditures or future expansions could materially and adversely affect our growth prospects, financial condition and results of operations.

If we cannot manage our growth, our future revenue, profitability and other aspects of results of operations could be materially and adversely affected.

        We have experienced substantial growth since we began focusing on providing primary real estate services in the second half of 2004. Our total net revenue amounted to RMB327.0 million in 2007, RMB276.0 million in 2008, RMB432.7 million (US$64.7 million) in 2009 and RMB431.8 million (US$64.5 million) in the nine months ended September 30, 2010. The number of our employees also increased significantly during this period, totaling 663, 1,202, 1,523 and 2,290 as of December 31, 2007, 2008, 2009 and September 30, 2010, respectively. We intend to continue to expand our operations, which will continue to place substantial demands on our managerial, operational, financial, technological and other resources. Our planned expansion will also place significant demands on us to ensure that our brand does not suffer as a result of any decreases, whether actual or perceived, in the quality of our services. In order to manage and support our growth, we must continue to improve our existing operational, administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified sales professionals as well as other administrative and sales and marketing personnel, particularly as we expand into new markets. We may not be able to effectively and efficiently manage the growth of our operations, recruit and retain qualified personnel or integrate new regions of coverage into our operations. We may also face other difficulties as a result of a number of factors, many of which are beyond our control, such as any

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general unfavorable conditions in the real estate market or delays or denials of required approvals by relevant government authorities. As a result, our future revenue, profitability and other aspects of results of operations could be materially and adversely affected.

        We may also grow our business through acquisition of third parties. Its success will depend upon our ability to identify suitable targets, to negotiate with acquisition targets on favorable terms, and to finance and complete these transactions. We also need to effectively integrate newly-acquired businesses into our existing operations, which may involve complex operational and personnel-related challenges, including rectifying possible inconsistencies in standards, controls, procedures and policies, maintaining important business relationships, overcoming local cultural differences, and controlling unanticipated expenses related to such integration. We may also incur material costs relating to such integration. A prolonged diversion of management's attention and any delays or difficulties we encounter in connection with the integration of any business that we have acquired or may acquire in the future could prevent us from realizing the anticipated cost savings and revenue growth from our acquisitions.

Compensation for our employees have increased in recent years and may continue to increase at a higher rate in the future, making us potentially less competitive and less profitable.

        In recent years, compensation in the primary real estate services industry in China has increased and may continue to increase in the future. In order to attract and retain skilled personnel, we may need to continue to increase the level of compensation of our employees. In addition, under the Regulations on Paid Annual Leave for Employees, which became effective on January 1, 2008, employees who have served more than one year for a specific employer are entitled to a paid vacation ranging from 5 to 15 days, depending on length of service. Employees who waive such vacation time at the request of employers shall be compensated for three times their normal salaries for each waived vacation day. This mandated paid-vacation regulation, coupled with the trend of increasing compensation, may result in increase in our staff-related costs and expenses and decrease in our profit margins.

We rely on our information technology systems to operate our business and maintain our competitiveness, and any disruption to them could harm our business operations. Any failure to upgrade or replace our current systems or introduce new systems could also adversely affect our market competitiveness.

        Our business depends upon the use of information technology systems, including our WBS system and our CRM system. See "Business—Our Information Technology Systems." We rely significantly on our in-house information technology team with support from third-party IT outsourcing firms, to develop, maintain and regularly upgrade our information technology systems. In addition, some operations of these systems depend upon third party technologies, systems and services. We cannot assure you that we will continue to have access to the products or services provided by our third party providers on commercially reasonable terms, or at all. There is no guarantee that we will continue to be able to effectively retain our key personnel for the maintenance and management of our information technology systems. In addition, we plan to refine, enhance and upgrade our information technology systems on an ongoing basis, and continue to introduce new advanced technologies and systems. We may not be able to upgrade or replace our existing information technology systems or introduce new information technology systems as quickly as our competitors or in a cost-effective manner, which may in turn adversely affect our market competitiveness.

        In addition, our information technology systems are vulnerable to damage or interruption from various causes, including (i) natural disasters, war and acts of terrorism, (ii) power losses, computer system failures, Internet and telecommunications or data network failures, operator error, losses and corruption of data, and similar events and (iii) computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information and other physical or electronic breaches of security. While we maintain certain disaster recovery capabilities for critical functions in most of our businesses,

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these capabilities may not successfully prevent a disruption to or a material adverse effect on our businesses or operations in the event of a disaster or other business interruption. We may be required to take additional steps to strengthen the safety and reliability of our information technology systems, which may be costly and could result in an increase in our operating costs and a decrease in our operating margin. Any extended interruption in our information technology systems could significantly reduce our ability to conduct our business and generate revenue. Additionally, we do not carry business interruption insurance for any losses that may occur.

Any failure to protect our brand, trademarks and other intellectual property rights could have a negative impact on our business.

        We believe that the brand name, trademarks, trade secrets, copyrights and other intellectual property rights owned or used by us are important to our success. Any unauthorized use of such intellectual property could negatively affect our competitive advantages and business. Historically, China has not protected intellectual property rights to the same extent as the United States and infringement of intellectual property rights continues to pose a serious risk of doing business in China. Monitoring and preventing unauthorized use is difficult. The measures we take to protect these intellectual property rights may not be adequate. Furthermore, the application and enforcement of laws governing intellectual property rights in China and abroad is uncertain and evolving, and could involve substantial risks. If we are unable to adequately protect the intellectual property rights that we own or use, we may lose these rights and our business, financial condition and results of operations may be materially and adversely affected.

        Our continuing reliance on our key information technology systems, our WBS system and our CRM system, which we developed in-house with the assistance of third-party outsourcing firms, depends in large part on retaining our proprietary rights to these systems. We have also imposed contractual obligations on employees and consultants and taken other precautionary measures to maintain the confidentiality of our proprietary information, and have restricted the use of that proprietary information other than for our company's benefit. If any of our sales professionals, other employees or any third party misappropriates our information technology systems, databases or other proprietary information, our business, financial condition and results of operations may be materially and adversely affected.

If the value of our brand or image diminishes, it could have a material adverse effect on our market competitiveness and growth prospects.

        Our brand "SYSWIN" is integral to our sales and marketing efforts. Our continued success in maintaining and enhancing our brand and image depends to a large extent on our ability to satisfy client needs by further developing and maintaining the quality of our services across our operations, as well as our ability to respond to competitive pressures. If we are unable to satisfy client needs or if our public image or reputation were otherwise diminished, the volume of our business may decline, which could in turn adversely affect the value of our brand, our market competitiveness and growth prospects.

Substantial defaults by our clients on accounts receivable could have a material adverse effect on our profitability and liquidity position.

        We typically confirm our commission bills with our developer clients pursuant to a pre-agreed schedule based on their progress in receiving the property purchase payment made by property buyers or commercial banks. There is generally a lag which lasts three to six months between the time we recognize revenue and the time we bill our developer clients for the related commissions. Our accounts receivable amounted to RMB94.8 million, RMB107.8 million, RMB238.5 million (US$35.6 million) and RMB239.4 million (US$35.8 million) as of December 31, 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. We seek to collect our accounts receivable within six months. The turnover days of our accounts receivable totaled 67 days, 134 days, 146 days and 149 days in 2007,

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2008, 2009 and September 30, 2010, respectively. Turnover days of our accounts receivable for a given period equals average accounts receivable divided by total net revenue and then multiplied by the number of days during the period. Average accounts receivable equals the arithmetic mean of the beginning and ending balances of accounts receivable during the period. If any of our developer clients with significant outstanding accounts receivable balances were to become insolvent or otherwise unable to make payments in a timely manner, or at all, we would have to make further provisions against such accounts receivable, or write off the relevant amounts, either of which could adversely affect our profitability and liquidity position.

Our contract pipeline may not be indicative of our future results of operations.

        Our contract pipeline as of a specified date represents the aggregate gross floor area of the properties for which we have been engaged to provide sales agency services but have not yet recognized revenue as of such date based on the respective agency agreements. In this prospectus, we have provided information regarding our contract pipeline. However, this information may not be indicative of future operating results.

        Under some of our agency agreements, our clients have the right to terminate or cancel the agreements. Some of our clients have the right to modify, terminate or cancel the agreements for defaults committed by us. We cannot assure you that we will not be subject to any material modifications, terminations or cancellations of our agreements by our clients, which would have a material adverse effect on our businesses and results of operations. In addition, in cases where we meet the requirements for collecting commissions, particularly supplemental and incentive commissions, our clients may fail to pay these commissions as agreed, or seek to re-negotiate the commissions to lower amounts. There also can be no assurance that the projects with respect to which we agreed to provide sales agency services will be constructed and developed without any significant delay or other issues due to reasons beyond our control. We cannot guarantee that we will be able to provide services to the projects which are reflected in our contract pipeline information in a timely manner, or at all, or that our provision of sales agency services to such projects will result in any profit. In addition, projects may remain in our contract pipeline for an extended period of time. As a result, investors are cautioned not to rely on our contract pipeline information presented in this prospectus as an indicator of our future performance or prospects.

The loss of any members of our senior management team, or any failure to recruit, train and retain key sales professionals and other employees, could adversely affect our financial performance.

        Our success depends on the continued service of our key executive officers, particularly Mr. Chen and Mr. Tao. We also significantly rely on other members of our senior management team for our business operations. Our ability to retain our management team is generally subject to numerous factors, including the compensation packages we offer, the competitive position of our company and our ability to maintain a cohesive company culture. If we lose the services of any of our key executive officers or other senior management members, we cannot assure you that we will be able to appoint or integrate adequate replacement personnel into our operations in a timely manner, or at all. The loss of the services of any such personnel could hinder our ability to effectively manage our business and implement our growth strategies. If any of such personnel joins a competitor or forms a competing company, we may lose clients, key sales professionals and employees.

        In addition, we rely on our team of key sales professionals and other employees to manage our operations and interact with our clients on a daily basis. They are critical to maintaining the quality and consistency of our services and our brand and reputation. It is important for us to attract qualified sales professionals and other employees who have experience in primary real estate sales agency and consultancy services. In some cities in China where we have operations or other cities into which we intend to expand, the supply of qualified sales professionals could be limited. We need to hire and train qualified sales professionals and other employees on a timely basis to keep pace with our rapid growth

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while maintaining consistent quality of services across our operations in various geographic locations. We must also provide continuous training to our sales professionals and other employees so that they are equipped with up-to-date knowledge of various aspects of our operations and can meet our requirement for high-quality services. If we fail to do so, the quality of our services may decrease in one or more of the markets where we operate, which in turn, may cause a negative perception of our brand and adversely affect our business. In addition, any prolonged downturn in the real estate market and any cost-cutting measures we implement could result in significant attrition among our current sales professionals and other employees. Any of the foregoing adverse developments could materially and adversely affect our business, financial condition and results of operations.

Our corporate actions are substantially controlled by Mr. Chen.

        Immediately following this offering, Mr. Chen, will beneficially own approximately 58.60% of our outstanding shares, or 56.90% if the underwriters exercise their option to purchase additional ADSs in full, assuming an initial public offering price of US$7.50 per ADS, being the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus. Accordingly, Mr. Chen will have significant influence in determining the outcome of any corporate transaction or other matters submitted to our shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, the election of directors and other significant corporate actions. This concentration of ownership may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our ADSs. These actions may be taken even if they are opposed by our other shareholders, including those who purchase our ADSs in this offering.

If we fail to obtain or renew licenses and permits applicable to primary real estate sales agency and consultancy services, we may incur significant financial penalties and other government sanctions.

        Due to the broad geographic scope of our operations, we are subject to numerous national, regional and local laws and regulations specific to the services we perform. If we fail to obtain or maintain the licenses and permits for conducting our primary real estate sales agency and consultancy services businesses required by law, the relevant governmental authorities may order us, or our relevant operating entities or branches offices, to suspend the related operations or impose upon us fines or other penalties. Currently, two subsidiaries of our consolidated entity, namely, Qingdao Syswin Xing Ye Real Estate Brokerage Co. Ltd., or Qingdao Syswin, and Shanxi Syswin Xing Ye Real Estate Brokerage Co. Ltd., or Shanxi Syswin, are not registered with their respective local regulatory authorities in Qingdao and Taiyuan to conduct real estate sales agency and consultancy services businesses. Pursuant to our verbal consultation with the local real estate regulatory authority in Qingdao, Qingdao Syswin is not required to register with the regulatory authority in Qingdao to conduct real estate sales agency and consultancy services in Qingdao. In addition, pursuant to our verbal consultation with the local real estate regulatory authority in Taiyuan, the regulatory authority currently in Taiyuan does not accept any application for registration by real estate service providers, such as Shanxi Syswin, to engage in real estate sales agency and consultancy services. However, our understanding of these implementation practices adopted by local real estate regulatory authorities for the registration and licensing requirements is based on our verbal consultation with relevant authorities, rather than published rules, regulations or guidance. As a result, we cannot assure you that our understanding of such implementation practices is correct or such regulatory authorities will not change their implementation practices in respect of the registration and licensing process in the future. In addition, there is no assurance that we will be able to continue to obtain or renew the licenses as required in a timely manner, or at all. If we fail to obtain or renew licenses and permits applicable to primary real estate sales agency and consultancy services, we may incur significant financial penalties and other government sanctions.

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We may not maintain sufficient insurance coverage for the risks associated with our business operations.

        Risks associated with our businesses and operations include but are not limited to claims for wrongful acts committed by our sales professionals, the loss of intellectual property rights or the failure of information technology systems crucial to our operations, the loss of key personnel and risks posed by natural disasters. Any of these risks may result in significant losses. We cannot assure you that our insurance coverage is sufficient to cover any losses that we may sustain, or that we will be able to successfully claim our losses under our existing insurance policies on a timely basis or at all. If we incur any loss not covered by our insurance policies, or the compensated amount is significantly less than our actual loss or is not timely paid, our business, financial condition and results of operations could be materially and adversely affected.

We are subject to risks related to litigation filed by or against us, and adverse litigation results may harm our reputation and results of operations.

        As a licensed real estate services provider, we and our licensed employees are subject to statutory obligations not to sell properties that fail to meet the statutory sales conditions or provide false statements on the conditions of any property in any advertisement. We must present clients with relevant sales permits of the properties and the related letter of authorization. Failure to fulfill these obligations could subject us or our employees to litigation from parties who purchased the properties from us, which in turn could harm our reputation and results of operations.

As a foreign private issuer, we are permitted to, and we will, rely on exemptions from certain New York Stock Exchange corporate governance standards applicable to U.S. issuers, including the requirements that a majority of an issuer's directors consist of independent directors. This may afford less protection to holders of our ordinary shares and ADSs.

        Section 303A of the Corporate Governance Rules of the New York Stock Exchange requires listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we will, follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Since a majority of our board of directors will not consist of independent directors as long as we rely on the foreign private issuer exemption, fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result.

When preparing our consolidated financial statements for the years ended December 31, 2007, 2008 and 2009, we noted one material weakness in our internal control over financial reporting. If we fail to implement and maintain effective internal control over financial reporting, our ability to accurately report our financial results may be impaired, which could adversely impact investor confidence and the market price of our ADSs.

        Prior to this offering, we have been a private company with limited accounting and other resources with which to adequately address our internal controls and procedures. When preparing our consolidated financial statements for the years ended December 31, 2007, 2008 and 2009, we noted one material weakness in our internal control over financial reporting relating to a lack of sufficient resources to perform period-end financial reporting procedures, address complex accounting issues under US GAAP and prepare and review financial statements and related disclosures under US GAAP. This material weakness resulted in adjustments to the company's consolidated financial statements for the years ended December 31, 2007, 2008 and 2009. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting" for a detailed discussion.

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        We have begun to undertake certain remedial steps to improve our internal controls, such as identifying and hiring additional personnel with US GAAP and SEC reporting experience, including a controller with US GAAP reporting experience who joined us in May 2010. We are also targeting additional key hires or external consultants for our financial reporting and accounting departments with US GAAP and SEC reporting experience, including an internal control consultant with Sarbanes-Oxley Section 404 experience. In addition, we are formulating internal policies relating to internal control over financial reporting, including preparing a comprehensive written accounting policies and procedures manual that can effectively and efficiently guide our finance and accounting personnel in addressing significant accounting issues and assist in preparing financial statements that are in compliance with US GAAP and SEC requirements. We also intend to implement new accounting procedures and controls and a comprehensive and well-tailored training program for all finance and accounting personnel. We currently do not anticipate that our costs related to these remedial steps to be material.

        If the material weakness is not remedied or recurs, or if we identify additional weaknesses or fail to timely and successfully implement new or improved controls, our ability to assure timely and accurate financial reporting may be adversely affected, we may be required to restate our financial statements, and we could suffer a loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the trading price of our ADSs, result in lawsuits being filed against us by our shareholders, or otherwise harm our reputation.

Risks Relating to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for operating our PRC businesses do not comply with PRC governmental restrictions on foreign investment in businesses involved in primary real estate sales agency and consultancy services, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to restructure our operations.

        Substantially all of our current operations are conducted through both our operating subsidiary in China and through our contractual arrangements with Syswin Xing Ye, our consolidated entity, and its shareholders in China. The applicable PRC regulations currently restrict foreign investment of companies that engage in primary real estate sales agency and consultancy services businesses. For a description of these regulations, see "Regulations—Restrictions on Foreign Investment in Real Estate Sales Agency and Consultancy Businesses." Due to such restrictions, we conduct our real estate sales agency and consultancy businesses through Syswin Xing Ye, our consolidated entity. Syswin Xing Ye and its subsidiaries, other than Qingdao Syswin and Shanxi Syswin, have obtained all necessary licenses and permits from the PRC government to engage in real estate sales agency and consultancy services businesses. Qingdao Syswin and Shanxi Syswin currently are not registered with the local regulatory authorities to conduct real estate agency and consultancy services. See "Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain or renew licenses and permits applicable to primary real estate sales agency and consultancy services, we may incur significant financial penalties and other government sanctions". The business scope of our PRC subsidiary, Syswin Zhi Di, as prescribed in its business license issued by the PRC government, includes software development, information technology management support, computer system services, data analysis, application software services, intellectual property services, enterprise management services, and economic information services. As part of our contractual arrangements with Syswin Xing Ye, Syswin Zhi Di provides technology, marketing and general management consultation services to Syswin Xing Ye. Such consultation services are within Syswin Zhi Di's business scope. However, because the services from Syswin Zhi Di to Syswin Xing Ye are provided in connection with real estate sales agency and consultancy services, we cannot assure you that these services will not themselves be deemed as real estate sales agency and consultancy services, or that Syswin Zhi Di is not in violation of PRC law for providing such services. For more details on

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how the services provided by Syswin Zhi Di correspond to the business scope under its license, see "Our Corporate History and Structure—Contractual Arrangements—Exclusive technology consulting and service agreements."

        We have entered into contractual arrangements with our consolidated entity and its shareholders, which enable us to, among other things, exercise effective control over, and derive substantially all of the economic benefits from, the entity and its subsidiaries. See "Our Corporate History and Structure—Contractual Arrangements."

        If any of us, our subsidiaries, our consolidated entity and its subsidiaries is found to be in violation of any existing or future PRC laws, rules or regulations, the relevant PRC regulatory authorities would have broad discretion in dealing with these violations, including:

    revoking the business and operating licenses of our PRC operating subsidiary or our consolidated entity and its subsidiaries;

    confiscating relevant income and imposing fines and other penalties;

    discontinuing or restricting the business and operations of our PRC operating subsidiary or our consolidated entity and its subsidiaries;

    requiring us or our PRC operating subsidiary or our consolidated entity and its subsidiaries to restructure the relevant ownership structure or operations;

    restricting or prohibiting our use of the proceeds of this offering to finance our businesses and operations in China; or

    imposing conditions or requirements with which we or our PRC operating subsidiary or our consolidated entity and its respective subsidiaries may not be able to comply.

        The imposition of any of these penalties would materially impair our ability to conduct our business, as well as have a material adverse effect on our financial condition and results of operations. In many cases, existing regulations with regard to investments from foreign investors in the primary real estate sales agency and consultancy industry lack detailed implementing rules and operational procedures, and are subject to interpretation, which may change over time. In addition, most of these regulations have not been interpreted by the relevant authorities in circumstances similar to our corporate structure. Accordingly, we cannot be certain how the regulations will be applied to our business, either currently or in the future. Moreover, new regulations may be adopted and the interpretation of existing regulations may change, any of which could have a material and adverse effect on business, financial condition and results of operations.

We rely on contractual arrangements with our consolidated entity, and its shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership.

        We rely on contractual arrangements with Syswin Xing Ye, our consolidated entity, and its shareholders to operate our primary real estate sales agency and consultancy services business in China. For a description of these contractual arrangements, see "Our Corporate History and Structure—Contractual Arrangements." These contractual arrangements may not be as effective in providing us with control over our consolidated entity and its subsidiaries as direct ownership. If we had direct ownership of these entities, we would be able to exercise our rights as a shareholder to effect changes in the boards of directors of these entities, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level for these entities.

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Any failure by our consolidated entity or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business and financial condition.

        If our consolidated entity or its shareholders fail to perform their respective obligations under these contractual arrangements, we may have to incur substantial costs and resources to enforce these arrangements, and rely on legal remedies available under applicable PRC laws, including seeking specific performance or injunctive relief, and claiming damages. In particular, if shareholders of the consolidated entity were to refuse to transfer their equity interests in such consolidated entity to us or our designated persons when we exercise the purchase option to the extent permitted under the PRC laws pursuant to these contractual arrangements, we may have to take a legal action to compel them to fulfill their contractual obligations.

        All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. The legal environment in China is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over our operating entity and we may be precluded from operating our business, which would have a material adverse effect on our financial condition and results of operations.

        If the applicable PRC authorities invalidate these contractual arrangements for violation of PRC laws and regulations, the consolidated entity or its shareholders terminate the contractual arrangements or the consolidated entity or its shareholders fail to perform their obligations under these contractual arrangements, our business operations in China would be materially disrupted, and the value of our ADSs could decrease substantially. Furthermore, if we fail to renew these contractual arrangements upon their expiration and the relevant foreign investment restrictions remain effective, we would not be able to continue our business operations.

        In addition, if the consolidated entity or all or part of its assets become subject to liens or rights of third party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If the consolidated entity undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of its assets, thereby hindering our ability to operate our business, which could materially harm our business and our ability to generate revenue and cause the market price of our ADSs to decline significantly.

The shareholders of our consolidated entity may have potential conflicts of interest with us.

        Mr. Chen and Mr. Tao, the beneficial owners of our consolidated entity, are also directors of our consolidated entity as well as our company. Conflicts of interest between their different roles may arise. In addition, although the respective equity interests of our current beneficial shareholders are identical to their beneficial interests in our consolidated entity, our current shareholders' equity interest in our company will be diluted as a result of this offering and any additional equity issuance, hence heightening the potential of conflicts of interest. We cannot assure you that when conflicts of interest arise, shareholders of our consolidated entity will act in the best interests of our company or that conflicts of interest will be resolved in our favor. In addition, these individuals may breach or cause the consolidated entity that they beneficially own to breach or refuse to renew the existing contractual arrangements, which will have a material adverse effect on our ability to effectively control the consolidated entity and receive economic benefits from it. If we cannot resolve any conflicts of interests or disputes between us and any of the shareholders of the consolidated entity, we would have to rely on legal proceedings, and may have to incur substantial costs and resources to seek legal remedies including specific performance or injunctive relief, and claiming damages the outcome of which is uncertain and which could be disruptive to our business.

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Contractual arrangements entered into among our PRC subsidiary, our consolidated entity and its shareholders may be subject to audits or challenges by the PRC tax authorities, and a finding that any of our subsidiary or consolidated entity owes additional taxes could materially and adversely impact our financial condition and results of operations.

        Under applicable PRC laws, rules and regulations, arrangements and transactions among related parties may be subject to audits or challenges by the PRC tax authorities. We cannot assure you that each of our transactions with our consolidated entity and its shareholders will be regarded by the PRC tax authorities as arm's-length transactions. The relevant tax authorities may determine that our contractual relationships with our consolidated entity and its shareholders were not entered into on an arm's-length basis. If the PRC tax authorities determine that any of the transactions entered into among our subsidiaries, our consolidated entity, and its shareholders are not on an arm's length basis, or result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, the PRC tax authorities may adjust the income, expenses, profits and losses of such consolidated entities, which could in turn increase our tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties for underpaid taxes. Our net income may be adversely and materially affected if the tax liabilities of any of our subsidiaries and our consolidated entity increase or if it is found to be subject to late payment fees or other penalties.

Risks Related to Doing Business in China

Adverse changes in economic and political policies of the PRC government could have a material adverse effect on overall economic growth in China, which could materially and adversely affect our business.

        We conduct substantially all of our business operations in China. As the real estate sector is highly sensitive to business and personal discretionary spending levels, it tends to decline during general economic downturns. Accordingly, our business, financial condition, results of operations and prospects depend to a significant degree on economic developments in China. China's economy differs from the economies of most other countries in many respects, including with respect to the amount of government involvement in the economy, the general level of economic development, growth rates and government control of foreign exchange and the allocation of resources. While the PRC economy has experienced significant growth in the past 30 years, this growth has remained uneven across different periods, regions and among various economic sectors. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. The PRC government also exercises significant control over China's economic growth through the allocation of resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Since late 2003, the PRC government has implemented a number of measures, such as increasing the People's Bank of China's statutory deposit reserve ratio and imposing commercial bank lending guidelines, which had the effect of slowing the growth of credit availability. In 2008 and 2009, in response to the global financial crisis, the PRC government has loosened such requirements. However, the PRC government increased the deposit reserve ratio on January 18, 2010, February 25, 2010 and May 10, 2010, in each case by 0.5%, to control the growth of the PRC economy. Any future actions and policies adopted by the PRC government could materially affect the Chinese economy and slow the growth of the real estate market in China, which could materially and adversely affect our business.

Uncertainties with respect to the Chinese legal system could have a material adverse effect on us.

        The PRC legal system is based on written statutes. Unlike under common law systems, decided legal cases have little value as precedents in subsequent legal proceedings. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, and forms of foreign investment (including wholly foreign-owned enterprises and joint ventures) in particular. These laws, regulations and legal requirements are relatively new and are

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often changing, and their interpretation and enforcement involve significant uncertainties that could limit the reliability of the legal protections available to us. We cannot predict the effects of future developments in the PRC legal system. We may be required in the future to procure additional permits, authorizations and approvals for our existing and future operations, which may not be obtainable in a timely fashion or at all. An inability to obtain such permits or authorizations may have a material adverse affect on our business, financial condition and results of operations.

Unmerited legal actions or threats by our employees, consultants or other associates in an attempt to extract payments or benefits from us could have an adverse effect on our business and reputation.

        In recent years, as the number of overseas listed companies based in China has increased, there has been an increasing number of unmerited legal actions and threats by current and former employees, consultants or other associates of these companies in an attempt to extract payments or benefits from them. As we become a public company upon completion of this offering, we may face increasing risks of similar legal actions and threats. Although we expect to vigorously defend ourselves against any such actions if we believe they are frivolous, we cannot assure you that we will prevail in these lawsuits, or will not be subject to any material liability as a result of these actions. Furthermore, regardless of success in our legal defenses, these legal actions and the threats of these actions would likely be time-consuming and expensive to resolve and would divert our management's time and attention. Our reputation and business operations may also be harmed as a result.

Our holding company structure may restrict our ability to receive dividends and other distributions from our subsidiary in China to fund our cash and financing requirements, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.

        We are a Cayman Islands holding company and conduct substantially all of our operations through our PRC entities. We rely principally on dividends and other distributions on equity by our subsidiary in China for our cash requirements, including for the service of any debt we may incur. Our subsidiaries' ability to distribute dividends is based upon their distributable earnings which are mainly derived from the service fees from Syswin Xing Ye. We do not hold any equity interest in, but are deemed as primary beneficiary of, Syswin Xing Ye as a result of our contractual arrangements. Current PRC regulations permit our subsidiary to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our subsidiary in China and Syswin Xing Ye are required to set aside a certain amount of its after-tax profits each year, if any, to fund certain statutory reserves. Under PRC law, our subsidiary in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Such subsidiary is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Our PRC subsidiary, Syswin Zhi Di, was established in July 2010, and has not set aside any amount for such statutory reserve. As a result, any future dividend or distribution that Syswin Zhi Di may declare or make is subject to such statutory reserve requirement until such reserve reaches 50% of its registered capital of US$2.0 million, namely, US$1.0 million, as well as any employee welfare fund contributions made at the discretion of its board of directors.

        Syswin Xing Ye is required to set aside a portion of its after-tax profits to fund a statutory reserve and employee welfare fund and enterprise expansion fund at the discretion of its board of directors. These reserves are not distributable as cash dividends. Syswin Xing Ye set aside RMB9.8 million, nil, and RMB12.6 million (US$1.9 million) statutory reserve in 2007, 2008 and 2009, respectively. Furthermore, if our subsidiary in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any

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limitation on the ability of our subsidiary to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

PRC regulation of loans to and direct investments in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our subsidiary in China.

        Any fund we transfer to our PRC subsidiary, either as a shareholder loan or as an increase in registered capital, is subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiary is subject to the approval of the PRC Ministry of Commerce or its local branches. Such authority is required to conclude its approval process on capital contribution within 30 days. In addition, any foreign loan procured by our subsidiaries or consolidated entities in the PRC is required to be registered with SAFE or its local branches. There is no statutory requirement in the PRC for SAFE or its local branches to complete such registration process within certain time period. The PRC government does not charge any fee for any of the foregoing approvals and registrations process. We may not obtain these government approvals or complete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our subsidiary. If we fail to receive such approvals or complete such registration, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

Governmental control of currency conversion may limit our ability to utilize our revenue effectively and affect the value of your investment.

        The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. During the three years ended December 31, 2009 and the nine months ended September 30, 2010, all of our revenue was in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from State Administration of Foreign Exchange by complying with certain procedural requirements. Approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. Although these regulatory requirements are administrative formalities and free of charge, the time required to complete the required procedures may vary significantly based on the circumstances of each case. This could affect the ability of our PRC subsidiary to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

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SAFE rules and regulations may limit our ability to convert and transfer the net proceeds from this offering to our consolidated entity, which may adversely affect the business expansion of our consolidated entity, and we may not be able to convert the net proceeds from this offering into Renminbi to invest in or acquire any other PRC companies or establish other consolidated entities in the PRC.

        On August 29, 2008, SAFE promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. The notice requires that the registered capital of a foreign-invested company settled in Renminbi converted from foreign currencies may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the registered capital of a foreign-invested company settled in Renminbi converted from foreign currencies. The use of such Renminbi capital may not be changed without SAFE's approval, and may be used to repay Renminbi loans. Violations of Circular 142 could result in severe penalties, such as heavy fines. As Circular 142 prohibits foreign-invested company to make equity investment with its foreign currency-denominated capital, we may not be able to make equity contributions to Syswin Xing Ye nor to establish new subsidiaries through Syswin Zhi Di in China. However, as Circular 142 only applies to foreign-invested companies incorporated in mainland China, even though our ability to make equity contributions to Syswin Xing Ye is limited, we are able to:

(i)
make equity contribution to our subsidiary in the PRC upon approval from Ministry of Commerce or its local branch. Pursuant to the Law of the PRC on Wholly Foreign-Owned Enterprises, or the WFOE Law, and its implementation rules, as amended, and the Provisions on Change of the Equity Interests of the Investors of a Foreign-Invested Enterprise, foreign investors may make equity contribution to the company unless foreign investment in its business is restricted by PRC laws, and such equity contribution is subject to approval from Ministry of Commerce or its local branches. Such regulatory authorities are required to conclude its approval process within 30 days;

(ii)
make loans to our subsidiary in the PRC through our offshore subsidiaries upon registration with SAFE or its local branches. Pursuant to the Interim Measures on Administration of Foreign Loans, a foreign-invested company is permitted to obtain foreign loans from its foreign shareholder or the related company of shareholder upon registration with SAFE or its local branches. Currently there is no statutory period within which such regulatory authorities are required to conclude its registration process;

(iii)
fund new investments in the PRC through establishing new subsidiaries of SYSWIN Inc. and/or SYSWIN Limited in the PRC upon approval from Ministry of Commerce or its local branches. Pursuant to the WFOE Law, upon approval from Ministry of Commerce or its local branches, SYSWIN Inc. and SYSWIN Limited may establish new subsidiaries engaging in businesses which foreign investor is not restricted to make investment in. Such regulatory authorities are required to conclude its approval process within 90 days; and

(iv)
fund the acquisition of business operations at an offshore level. Circular 142 only applies to foreign invested companies incorporated in mainland China, and any acquisition of business at an offshore level is not subject to PRC government's foreign exchange control.

In addition, Circular 142 does not limit the use of foreign currency-denominated capital by Syswin Zhi Di to fund its working capital. The PRC government does not charge any fee for any of the above mentioned approval or registration process.

        Circular 142 requires a foreign-invested company to apply with a commercial bank regarding the conversion of foreign currencies into Renminbi. The commercial bank is required to review documents submitted by the foreign-invested company to verify that the usage of the converted Renminbi is within the business scope as prescribed in the business license of the applicant. Once the usage is verified by

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the commercial bank, the foreign exchange may be converted into Renminbi. No approval by any governmental authority in the PRC is required for such currency conversion. As a result, Circular 142 may significantly limit our ability to transfer the net proceeds from this offering to Syswin Xing Ye, our consolidated entity, through our subsidiary in China, which may adversely affect the business expansion of our consolidated entity, and we may not be able to convert the net proceeds from this offering into Renminbi to invest in or acquire any other PRC companies, or establish other consolidated entities in the PRC.

        We expect that the PRC regulations of loans and direct investments by offshore holding companies to PRC entities may continue to limit our use of proceeds of this offering. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to our future plans to use the U.S. dollar proceeds we receive from this offering for our expansion and operations in China. If we fail to receive such registrations or approvals, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and ability to fund and expand our business.

Fluctuations in the value of the Renminbi may have a material adverse effect on your investment.

        The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. Following the removal of the U.S. dollar peg, the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. During the period between July 2008 and June 2010, the Renminbi has traded stably within a narrow range against the U.S. dollar. Since June 2010, the Renminbi has started to slowly appreciate further against the U.S. dollar. See "Exchange Rate Information."

        There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against foreign currencies. Our revenue and costs are mostly denominated in the Renminbi, and a significant portion of our financial assets are also denominated in the Renminbi. Any significant fluctuations in the exchange rate between the Renminbi and the U.S. dollar may materially and adversely affect our cash flows, revenue, earnings and financial position, and the amount of and any dividends we may pay on our ADSs in U.S. dollars. Any fluctuations in the exchange rate between the Renminbi and the U.S. dollar could also result in foreign currency translation losses for financial reporting purposes.

Dividends payable to us by our PRC subsidiary and gain on sale of our ADSs or shares may be subject to PRC withholding taxes, or we may be subject to PRC taxation on our worldwide income and dividends distributed to our investors may be subject to PRC withholding taxes under the Corporate Income Tax Law.

        Under the Corporate Income Tax Law, or CIT Law and its implementation rules, all domestic and foreign-invested companies are subject to a uniform corporate income tax at the rate of 25% and dividends from PRC subsidiaries to their foreign shareholders that are "non-resident enterprises" and any gain realized on the transfer of ADSs or shares by such shareholders will be subject to a withholding tax at the rate of 10% unless otherwise provided in a tax treaty. Pursuant to the tax treaty between the Hong Kong Special Administrative Region and the PRC, dividends payable on equity interests of a PRC company to individuals or entities in Hong Kong are entitled to enjoy a reduced withholding tax rate of 5%, provided that such individuals or entities hold more than a 25% equity interest in the PRC company and are deemed as the "beneficial owners" of those dividends as defined under such tax treaty. On October 27, 2009, the State Administration of Taxation, or SAT, promulgated

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the Circular on How to Understand and Recognize the "Beneficial Owner" in Tax Treaties, or Circular 601. Circular 601 clarifies that a beneficial owner shall be a person engaged in actual operation and such person could be an individual, a company or any other entity. Circular 601 expressly excludes a "conduit company," or any company established for the purposes of avoiding or reducing tax obligations or transferring or accumulating profits and not engaged in actual operations such as manufacturing, sales or management, from being a beneficial owner. It is still unclear how Circular 601 is being implemented by SAT or its local branches in practice and whether SYSWIN Limited, our subsidiary incorporated in Hong Kong and the sole shareholder of Syswin Zhi Di, would be recognized as a "beneficial owner" of our subsidiary in the PRC. If SYSWIN Limited is considered a non-resident enterprise but not qualified as a beneficial owner of our subsidiary in the PRC, SYSWIN Limited will not be entitled to a reduced 5% withholding tax rate and the 10% withholding tax rate will become applicable to the dividends from our PRC subsidiary. As a result, our business, financial condition and results of operations could be materially and adversely affected.

        In addition, under the CIT Law, enterprises organized under the laws of jurisdictions outside China with their "de facto management bodies" located within China may be considered PRC resident enterprises and therefore may be subject to PRC corporate income tax at the rate of 25% on their worldwide income. See "Taxation—The People's Republic of China Taxation." If we become a PRC resident enterprise under the new PRC tax system and receive income other than dividends, our profitability and cash flow would be adversely impacted due to our worldwide income being taxed in China under the CIT Law.

        If we were deemed to be a PRC resident enterprise, it is unclear whether dividends we pay with respect to our ordinary shares or ADSs, or the gain you may realize from the transfer of our ordinary shares or ADSs, would be treated as income derived from sources within the PRC and be subject to PRC tax. If we are required under the CIT Law to withhold PRC income tax on dividends payable to our non-PRC investors that are "non-resident enterprises" or individuals, or if you are required to pay PRC income tax on the transfer of our ordinary shares or ADSs, the value of your investment in our ordinary shares or ADSs may be materially and adversely affected. Due to the PRC dividend withholding tax, depending on the tax jurisdiction of the receiver, we may incur incremental PRC tax liabilities when PRC profits are distributed to ultimate shareholders.

Recent PRC regulations relating to the establishment of offshore special purpose companies by PRC domestic residents may subject our PRC resident beneficial owners to personal liability, limit our ability to inject capital into our PRC subsidiary, limit our subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.

        China has regulations that subject our PRC subsidiary to additional restrictions if we have beneficial owners of our company who are PRC residents that have not properly filed with authorities in China. See "Regulations—Foreign Exchange Regulations on Special Purpose Vehicles." The beneficial owners of our company who are PRC residents have completed the initial registration as required by the relevant regulations of the State Administration of Foreign Exchange and have duly amended such registrations to reflect the changes to the information included in the initial registration. We cannot provide any assurances that all of our shareholders subject to the SAFE regulations and any PRC resident who becomes our beneficial owner in the future will be able to comply with the SAFE regulations in a timely manner, or at all. Any failure or inability of our PRC resident beneficial owners to comply with the registration procedures may subject such PRC resident beneficial owners to certain fines and legal sanctions, restrict our cross-border investment and financing activities, or limit our PRC subsidiary's ability to distribute dividends or obtain foreign exchange-denominated loans.

        As it remains uncertain how the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to more stringent review and approval processes with respect to our foreign exchange

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activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our business, financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

        Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or Circular 698, issued by the State Administration of Taxation on December 10, 2009 with retroactive effect from January 1, 2008, where a foreign investor transfers its direct equity interest in a PRC subsidiary, or a Direct Transfer, gains derived from such Direct Transfer shall be subject to PRC withholding tax at a rate of up to 10%. For instance, if our Hong Kong subsidiary, SYSWIN Limited disposes any transfers or disposes of the equity interest in our PRC subsidiary, Syswin Zhi Di, by our Hong Kong Subsidiary, SYSWIN Limited, would constitute a Direct Transfer. It further provides that where a foreign investor or entity is the controlling shareholder of a PRC resident enterprise and transfers its indirect equity interest in a PRC resident enterprise by disposing of its equity interests in an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor or entity shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. The documents for reporting are:

    Equity transfer contract/agreement;

    Documents illustrating the relationship between the Non-PRC Resident Enterprises investor and the overseas intermediary holding company being transferred in respect of financing, operation, sales and purchase, etc.;

    Documents illustrating the operation, personnel, finance and properties of the overseas intermediary holding company being transferred;

    Documents illustrating the relationship between the overseas intermediary holding company being transferred and the PRC resident enterprise in respect of financing, operation, sales and purchase, etc.;

    Documents illustrating the reasonable commercial purpose of the Non-PRC Resident Enterprises investor in setting up the overseas intermediary holding company being transferred; and

    Other relevant documents required by the tax authority.

        The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of avoiding PRC tax. We may from time to time dispose or transfer the equity interest in our offshore subsidiaries holding equity interest in PRC resident enterprises. In particular, if we transfer or dispose of the equity interest in our Hong Kong subsidiary, SYSWIN Limited, which in turn holds equity interest in our PRC subsidiary, Syswin Zhi Di, such transfer or disposal may be deemed as an Indirect Transfer. Gains derived from any Direct Transfer or Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

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        As a result of the foregoing, if we engage in any Direct Transfer or Indirect Transfer, we may be subject to a PRC withholding tax under Circular 698. If we choose to establish that we should not be taxed under Circular 698, we may be required to allocate significant resources towards such efforts, which may have a material adverse effect on our financial condition and results of operations.

Foreign ownership of real estate sales agency and consultancy businesses in China is restricted under recent PRC regulations. This may limit our ability to establish new subsidiaries in China to engage in real estate sales agency and consultancy businesses in the future.

        On October 31, 2007, the PRC National Development and Reform Commission of China and the Ministry of Commerce of China jointly promulgated the amended Foreign Investment Industrial Guidance Catalogue, or the Catalogue, which came into effect on December 1, 2007. According to the Catalogue, real estate sales agency and consultancy companies are classified to be in the restricted category of foreign investment industries. It may be difficult or take a long time for us to obtain any approvals from the Ministry of Commerce or its local branch in order to establish any subsidiary in China to engage in real estate sales agency and consultancy businesses in the future. We cannot assure you that, if we are required to seek such approvals in the future, we will be able to obtain them from the Ministry of Commerce or its local branch on a timely basis, or at all.

The implementation of the PRC Labor Contract Law and the Implementation Regulation for the PRC Labor Contract Law may increase our operating expenses and may materially and adversely affect our business, financial condition and results of operations.

        As the PRC Labor Contract Law, or Labor Contract Law, and its Implementation Regulation for the PRC Labor Contract Law, or Implementation Regulation, have been enforced for only a short time, substantial uncertainty remains as to its potential impact on our business, financial condition and results of operations. See "Regulations—Labor Contract Law". The implementation of the Labor Contract Law and the Implementation Regulation may increase our operating expenses, in particular our human resources costs and our administrative expenses. In the event that we decide to significantly modify our employment or labor policy or practice, or reduce the number of our sales professionals, the Labor Contract Law may limit our ability to effectuate the modifications or changes in the manner that we believe to be most cost-efficient or otherwise desirable, which could materially and adversely affect our business, financial condition and results of operations.

Any requirement to obtain prior approval required under the M&A Rules and/or any other regulations promulgated by relevant PRC regulatory agencies in the future could delay this offering and failure to obtain this approval, if required, could have a material adverse effect on our business, operating results and reputation as well as the trading price of our ADSs, and could also create uncertainties for this offering.

        On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, or the MOC, the State-Owned Assets Supervision and Administration Commission, or the SASAC, the State Administration of Taxation, or the SAT, the State Administration of Industry and Commerce, or the SAIC, the China Securities Regulatory Commission, or the CSRC, and the SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 and was amended on June 22, 2009. The M&A Rules, among other things, include provisions that purport to require that an offshore special purpose vehicle formed for the purpose of an overseas listing of a PRC company obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.

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        The application of the M&A Rules with respect to this offering and our corporate structure for this offering established under contractual arrangements remains unclear. In particular, with respect to this offering, it is unclear whether the contractual arrangements within our corporate structure are deemed as an acquisition under the M&A Rules. The relevant PRC authorities, which jointly promulgated the M&A Rules, have not given any instruction, explanation or implementation guidance in this respect even after various companies using contractual arrangement structures have successfully been listed on overseas stock exchanges. Our PRC counsel, Jingtian & Gongcheng Attorneys At Law, has advised us that we are not required to apply to the relevant PRC regulatory agencies, including the CSRC, for approval of this offering or our current corporate structure. However, we cannot assure you that a relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC counsel. If prior approval is required but not obtained, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of our ADSs.

An occurrence of a widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

        Our business could be adversely affected by the effects of Influenza A virus subtype H1N1, or the H1N1 virus, Severe Acute Respiratory Syndrome, or SARS, avian influenza or other epidemics or outbreaks on the economic and business climate. A prolonged outbreak of any of these illnesses or other adverse public health developments in China or elsewhere in the world could have a material adverse effect on our business operations. Such outbreaks could significantly impact the real estate market and cause a temporary closure of the facilities we use for our operations. Such impact or closures would severely disrupt our operations and adversely affect our business, financial condition and results of operations. Our operations could be disrupted if any of our sales professionals, other employees or our clients were suspected of having the H1N1 virus, SARS or avian influenza, since this could require us to quarantine some or all of our employees or disinfect the facilities we use for our operations and may deter our clients or potential clients from visiting the relevant facilities. In addition, our business, financial condition and results of operations could be adversely affected to the extent that an outbreak harms the global or Chinese economy in general.

Risks Related to Our ADSs and this Offering

There has been no public market for our ordinary shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

        Prior to this initial public offering, there has been no public market for our ordinary shares or ADSs. Our ADSs have been approved for listing on the New York Stock Exchange. Our ordinary shares will not be listed or quoted for trading on any exchange. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially and adversely affected. The initial public offering price for our ADSs will be determined by

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negotiations between us and the underwriters and may bear no relationship to the market price for our ADSs after the initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

The market price for our ADSs may be volatile.

        In addition to the volatility in the price of our ADSs which could be caused by the materialization of any of the risks described in this section, the securities markets in the United States, China and elsewhere have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ADSs.

You will experience immediate dilution in the net tangible book value of ADSs purchased.

        When you purchase ADSs in the offering, you will incur immediate dilution of approximately US$5.12 per ADS, representing the difference between the purchase price per ADS in this offering of US$7.50, being the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, and our as adjusted net tangible book value per ADS as of September 30, 2010 after giving effect to this offering. See "Dilution." In addition, you may experience further dilution in the net tangible book value of the ADSs purchased to the extent that additional ordinary shares are issued upon exercise of options we may grant from time to time.

We may need additional capital, and the sale of additional ADSs or other equity securities or incurrence of additional indebtedness could result in additional dilution to our shareholders or increase our debt service obligations.

        Historically, we have relied principally on our operational sources of cash, as well as external sources of financing to fund our operations and capital expansion needs. We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity, equity-linked or debt securities or enter into a credit facility. The sale of additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

Substantial future sales of our ADSs in the public market, or the perception that these sales could occur, could cause the price of our ADSs to decline.

        Additional sales of our ordinary shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have 193,275,000 ordinary shares outstanding (or 199,035,000 ordinary shares outstanding if the underwriters exercise their option to purchase additional ADSs in full). All shares sold in this offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended. All of the remaining ordinary shares outstanding after this offering will be available for sale, upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 under the Securities Act. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the representative of the underwriters for this offering.

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You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote.

        Except as described in this prospectus and in the deposit agreement, holders of our ADSs will not be able to exercise voting rights attaching to the ordinary shares represented by our ADSs on an individual basis. Holders of our ADSs will appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the shares represented by the ADSs. You may not receive voting materials in time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.

        We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement for the ADSs, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. In addition, we may not be able to take advantage of any exemptions from registration under the Securities Act. Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

        Your ADSs evidenced by the ADRs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems doing so expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because we are incorporated under Cayman Islands law, conduct substantially all of our operations in China and all of our officers reside outside the United States.

        We are incorporated in the Cayman Islands. We conduct substantially all of our operations in China through our subsidiary in China. All of our officers reside outside the United States and some or all of the assets of those persons are located outside of the United States. As a result, it may be difficult or impossible for you to bring an original action against us or against these individuals in a Cayman Islands or PRC court if you believe that we or our officers have infringed your rights under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States. However, the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. For more information regarding the relevant laws of the Cayman Islands and China, see "Enforceability of Civil Liabilities."

        Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the Companies Law (2010 Revision) and common law of the Cayman Islands. The

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rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands have a less developed body of securities laws as compared to the United States, and provide significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States. As a result, your ability to protect your interests if you are harmed in a manner that would otherwise enable you to sue in a United States federal court may be limited to direct shareholder lawsuits.

        As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Our management will have considerable discretion as to the use of the net proceeds from this offering.

        We intend to use a significant portion of the net proceeds of this offering for general corporate purposes. As such, our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.

We will incur additional costs as a result of becoming a public company.

        As a public company, we will incur significant legal, accounting and other expenses that we did not have as a private company prior to this offering. In addition, new rules and regulations relating to information disclosure, financial reporting and control and corporate governance, which could be adopted by the SEC, the New York Stock Exchange and other regulatory bodies and exchange entities from time to time, could result in a significant increase in legal, accounting and other compliance costs and to make certain corporate activities more time-consuming and costly, which could materially affect our business, financial condition and results of operations.

We may be classified as a passive foreign investment company for United States federal income tax purposes, which could subject United States investors in the ADSs or ordinary shares to significant adverse tax consequences.

        Depending upon the value of our ordinary shares and ADSs and the nature of our assets and income over time, we could be classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes. Based on our current income and assets and projections as to the value of our ADSs and ordinary shares pursuant to this offering, we do not expect to be classified as a PFIC for the current taxable year or the foreseeable future. While we do not anticipate becoming a PFIC in the current taxable year, or the foreseeable future, fluctuations in the market price of our ADSs or ordinary shares may cause us to become a PFIC for the current or subsequent taxable years. In addition, if we are not treated as owning the stock of the consolidated entities for the purpose of determining whether we are a PFIC, we would likely be treated as a PFIC for our current taxable year and subsequent taxable years. Because there are uncertainties in the application of the relevant rules

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and PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and the value of our active versus passive assets, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

        If we were to be or become classified as a PFIC, a U.S. Holder (as defined in "Taxation—Material United States Federal Income Tax Considerations") would be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of United States federal income tax that a U.S. Holder could derive from investing in a non-United States corporation that does not distribute all of its earnings on a current basis. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares. You are urged to consult your tax advisor concerning the United States federal income tax consequences of an investment in our ADSs or ordinary shares if we are or become classified as a PFIC. For more information see "Taxation—Material United States Federal Tax Considerations."

Our amended and restated articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and ADSs.

        Our amended and restated articles of association, which will become effective upon the declaration of effectiveness of the registration statement of which this prospectus forms a part, contain provisions limiting the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADSs or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that relate to future events, including our future operating results and conditions, our prospects and our future financial performance and condition. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." These statements involve known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.

        Forward-looking statements typically are identified by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions or the negative of these words or expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements relating to:

    our anticipated growth strategies;

    our future business development, results of operations and financial condition;

    our contract pipeline amounts;

    expected changes in our revenue and certain cost or expense items;

    our ability to attract clients and further enhance our brand recognition; and

    trends and competition in the real estate services industry.

        The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from our expectations.

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USE OF PROCEEDS

        We estimate that we will receive net proceeds of approximately US$64.0 million (or US$74.0 million if the underwriters exercise their option to purchase additional ADSs in full) from this offering, after deducting the estimated underwriting discount and offering expenses payable by us. For the purpose of estimating net proceeds, we are assuming an initial public offering price of US$7.50 per ADS, the mid-point of the estimated range of the initial public offering price. A US$1.00 increase (decrease) in the assumed public offering price would increase (decrease) the net proceeds to us from this offering by US$8.9 million.

        We intend to use the net proceeds of this offering for the following purposes:

    approximately US$26 million towards business expansion, consisting of:

    approximately US$10 million towards the expansion into new markets;

    approximately US10 million towards the expansion of our primary land development consultancy and agency business and our commercial property business; and

    approximately US$6 million towards the establishment of real estate financial services;

    approximately US$15 million towards merger and acquisition activities;

    approximately US$10 million towards training programs, upgrading of IT systems and brand promotional activities; and

    the balance for general corporate purposes, including our working capital needs.

        As of the date of this prospectus, we cannot specify with certainty the particular uses for all of the net proceeds we will receive upon the completion of this offering. The foregoing represents our current intentions with respect to the use and allocation of the net proceeds of this offering based upon our present plans and business conditions. In addition, we have not identified any particular target which we intend to acquire with the proceeds of this offering. Accordingly, our management will have significant discretion in applying the net proceeds we will receive from the offering.

        As of the date of this prospectus, we believe that the estimated net proceeds of this offering, along with existing cash balances and ongoing operating cash flows, will provide necessary capital for our contemplated expansion plans. Pending use of the net proceeds, we intend to invest our net proceeds in short-term, interest-bearing, investment-grade obligations.

        On August 29, 2008, State Administration of Foreign Exchange, or SAFE, promulgated Circular 142, a notice regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may be used. As Circular 142 prohibits foreign-invested company to make equity investment with its foreign currency-denominated capital, we may not be able to make equity contributions to Syswin Xing Ye nor to establish new subsidiaries through Syswin Zhi Di in China. However, as Circular 142 only applies to foreign-invested companies incorporated in mainland China, even though our ability to make equity contributions to Syswin Xing Ye is limited, we are able to:

(i)
make equity contribution to Syswin Zhi Di, our subsidiary in the PRC, upon approval from Ministry of Commerce or its local branch. Pursuant to the Law of the PRC on Wholly Foreign-Owned Enterprises, or the WFOE Law, and its implementation rules, as amended, and the Provisions on Change of the Equity Interests of the Investors of a Foreign-Invested Enterprise, a foreign-invested company such as Syswin Zhi Di may increase its registered capital and receive additonal equity contribution from its foreign shareholders, subject to approval from Ministry of Commerce or its local branches. The regulatory authorities are required to conclude its approval process within 30 days;

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(ii)
make loans to Syswin Zhi Di through our offshore subsidiaries upon registration with SAFE or its local branches. Pursuant to the Interim Measures on Administration of Foreign Loans, a foreign-invested company is permitted to obtain loans from its foreign shareholder or an related company of the shareholder upon registration with SAFE or its local branches. Currently there is no statutory period within which the regulatory authorities are required to conclude the registration process;

(iii)
make new investments in the PRC through establishing new subsidiaries or acqusitions in the PRC, subject to approval from Ministry of Commerce or its local branches. Pursuant to the WFOE Law, upon approval from Ministry of Commerce or its local branches, SYSWIN Inc. or SYSWIN Limited may establish new subsidiaries or acquire companies in China to engage in businesses which are permitted for foreign investments. The regulatory authorities are required to conclude their approval process within 90 days; and

(iv)
fund any mergers and acquisitions outside China. Mergers and acquisitions undertaken by SYSWIN Inc. or SYSWIN Limited outside China are generally not subject to PRC government approval or foreign exchange control.

In addition, Circular 142 does not limit the use of foreign currency-denominated capital by Syswin Zhi Di to fund its working capital. The PRC government does not charge any fee for any of the above mentioned approvals and registrations.

        Circular 142 requires the foreign-invested company to apply with a commercial bank regarding the conversion of foreign currencies into Renminbi. The bank is required to review documents submitted by the foreign-invested company to verify that the usage of the converted Renminbi is within the business scope as prescribed in the business license of the applicant. Once the usage is verified by the commercial bank, the foreign exchange may be converted into Renminbi. No approval by any governmental authority in the PRC is required for such currency conversion process.

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DIVIDEND POLICY

        Syswin Xing Ye, our consolidated entity, distributed dividends in the amount of RMB20.0 million and RMB106.0 million in 2007 and 2008, respectively. In addition, in August 2010, Syswin Xing Ye declared a dividend of RMB270.0 million (US$40.4 million), of which RMB165.3 million (US$24.7 million) has been paid and RMB104.7 million (US$15.7 million) is expected to be paid.

        As we are a holding company, we rely, in part, on dividends paid to us by our subsidiary in China for our cash requirements, including funds to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. In China, the payment of dividends is subject to limitations. PRC regulations currently permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. Under current PRC laws and regulations, our subsidiary in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Such subsidiary is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund and enterprise expansion fund, although the amount to be set aside, if any, is determined at the discretion of the board. These reserves may not be distributed as cash dividends. Our PRC subsidiary, Syswin Zhi Di, was established in July 2010, and has not set aside any amount for such statutory reserve. As a result, any future dividend or distribution that Syswin Zhi Di may declare or make is subject to such statutory reserve requirement until such reserve reaches 50% of its registered capital of US$2.0 million, namely, US$1.0 million, as well as any employee welfare fund contribution made at the discretion of its board of directors. The amounts set aside pursuant to the applicable PRC laws and regulations by Syswin Xing Ye amounted to RMB9.8 million, nil, RMB12.6 million (US$1.9 million) and RMB12.5 million (US$1.9 million) in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. Further, if our subsidiary in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.

        Our board of directors has sole discretion on whether to pay dividends, subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that they may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our ADSs, if any, will be paid in U.S. dollars.

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CAPITALIZATION

        The following table shows our capitalization as of September 30, 2010:

    on an actual basis; and

    on an as adjusted basis to reflect the sale of 9,600,000 ADSs by us in this offering, assuming an initial public offering price of US$7.50 per ADS (which is the mid-point of the estimated initial public offering price range) after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        You should read this table in conjunction with our consolidated financial statements and related notes included in this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  As of September 30, 2010  
 
  Actual   As Adjusted(1)  
 
  RMB   US$   RMB   US$  
 
  (In thousands, except share numbers)
 
Shareholders' equity                          
Preferred shares (US$0.0000008 par value, 2,500,000,000 shares authorized; no shares issued and outstanding)                  
Ordinary shares, US$0.0000008 par value, 60,000,000,000 shares authorized, 154,875,000 shares issued and outstanding     1         1      
Additional paid-in capital     235,461     35,193     663,492     99,169  
Statutory reserve     35,124     5,250     35,124     5,250  
Retained earnings     73,474     10,982     73,474     10,982  
                       
Total shareholders' equity     344,060     51,425     772,091     115,401  
                   
Total capitalization     344,060     51,425     772,091     115,401  
                   

(1)
A US$1.00 increase (decrease) in the assumed initial public offering price of US$7.50 per ADS would increase (decrease) each of as adjusted additional paid-in capital, total shareholders' equity and total capitalization by RMB59.73 million (US$8.93 million), after deducting the estimated underwriting discounts and commissions and estimated aggregate offering expenses payable by us.

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DILUTION

        If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after the offering. Dilution results from the fact that the per ordinary share offering price of our ADSs is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

        Our net tangible book value at September 30, 2010 was US$51.05 million, or US$0.33 per ordinary share and US$1.32 per ADS. Net tangible book value represents total consolidated tangible assets less total consolidated liabilities.

        Without taking into account any other changes in such net tangible book value after September 30, 2010, other than to give effect to our sale of 9,600,000 ADSs in this offering at the initial public offering price of US$7.50 per ADS (which is the mid-point of the estimated initial public offering price range) and after deducting the underwriting discounts and commissions and estimated offering expenses, our as adjusted net tangible book value as of September 30, 2010 would have been US$115.02 million, or US$0.60 per share and US$2.38 per ADS. This represents an immediate increase in our net tangible book value of US$0.27 per ordinary share, or US$1.06 per ADS, to existing shareholders and an immediate dilution of US$1.28 per ordinary share, or US$5.12 per ADS, to investors purchasing ADSs in this offering. Dilution is determined by subtracting as adjusted net tangible book value per ADS after this offering from the amount of cash paid by a new investor for one ADS. The following table illustrates this per share dilution:

Initial public offering price per ordinary share

  US$ 1.88  

Net tangible book value per ordinary share as of September 30, 2010

  US$ 0.33  

Increase in net tangible book value per ordinary share attributable to this offering

  US$ 0.27  

As adjusted net tangible book value per ordinary share after giving effect to this offering

  US$ 0.60  

Dilution per ordinary share to new investors

  US$ 1.28  

Dilution per ADS to new investors

  US$ 5.12  

Dilution to new investors (percentage)(1)

    68.27 %

(1)
Calculated based on the dilution per ADS to new investors as a percentage of the initial public offering price of US$7.50 per ADS.

        A US$1.00 increase (decrease) in the assumed public offering price of US$7.50 per ADS would increase (decrease) our net tangible book value after giving effect to the offering by US$8.93 million, the as adjusted net tangible book value per ordinary share and per ADS after giving effect to this offering by US$0.05 per ordinary share and US$0.18 per ADS and the dilution per ordinary share and per ADS to new investors in this offering by US$0.20 per ordinary share and US$0.82 per ADS, assuming no change to the number of ADSs offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and other offering expenses. The as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.

        The following table summarizes, on an as adjusted basis as of September 30, 2010, the differences between existing shareholders and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per share and the average price per ADS, each paid before deducting the underwriting discounts and commissions and our estimated offering expenses, assuming our sale of ADSs in this offering at the initial public offering price of

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US$7.50 per ADS, being the mid-point of the range set forth on the cover of this prospectus. The as adjusted information discussed above is illustrative only.

 
  Shares purchased   Total consideration    
   
 
 
  Average
price
per share
  Average
price
per ADS
 
 
  Number   Percent   Amount   Percent  
 
   
   
  (In thousands)
   
   
 

Existing holders

    154,875,000     80.13 % US$ 35,193     32.83 % US$ 0.23   US$ 0.91  

New investors

    38,400,000     19.87 % US$ 72,000     67.17 % US$ 1.88   US$ 7.50  
                               
 

Total

    193,275,000     100 % US$ 107,193     100 %            
                               

        A US$1.00 increase (decrease) in the assumed initial public offering price of US$7.50 per ADS would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and the average price per ADS paid by all shareholders by US$9.60 million, US$9.60 million and US$0.20, respectively, assuming no change in the number of ADSs sold by us as set forth on the cover page of this prospectus and before deducting the underwriting discounts and commissions and our estimated offering expenses.

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EXCHANGE RATE INFORMATION

        Our business is primarily conducted in China, and all of our revenue and expenses are denominated in Renminbi. Unless otherwise noted, all translations from Renminbi to U.S. dollars have been made at a rate of RMB6.6905 to US$1.00, the noon buying rate as certified for customs purposes by the H.10 weekly statistical release of the Federal Reserve Board on September 30, 2010. We do not represent that Renminbi or U.S. dollar amounts could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates below or at all.

        The following table sets forth, for the periods indicated, information concerning exchange rates between the Renminbi and the U.S. dollar based on the noon buying rate in The City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by Federal Reserve Bank of New York for period ends indicated through December 2008 and the H.10 weekly statistical release of the Federal Reserve Board for period ends indicated from and after January 2009. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you.

 
  Noon buying rate  
Period (RMB per US$1.00)
  Period End   Average(1)   High   Low  

2005

    8.0702     8.1826     8.2765     8.0702  

2006

    7.8041     7.9579     8.0702     7.8041  

2007

    7.2946     7.5806     7.8127     7.2946  

2008

    6.8225     6.9193     7.2946     6.7800  

2009

    6.8259     6.8295     6.8470     6.8176  

2010

                         
 

May

    6.8305     6.8275     6.8310     6.8245  
 

June

    6.7815     6.8184     6.8323     6.7815  
 

July

    6.7735     6.7762     6.7807     6.7709  
 

August

    6.8069     6.7873     6.8069     6.7670  
 

September

    6.6905     6.7396     6.8102     6.6869  
 

October

    6.6705     6.6675     6.6912     6.6397  
 

November (through November 19, 2010)

    6.6398     6.6530     6.6906     6.6233  

(1)
Annual averages are calculated by using the average of the exchange rates on the last day of each month during the relevant year. Monthly averages are calculated by using the average of the daily rates during the relevant month.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected consolidated financial information for the periods and as of the dates indicated should be read in conjunction with our audited and unaudited consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Our selected consolidated statements of operations data for the years ended December 31, 2007, 2008 and 2009 and selected consolidated balance sheet data as of December 31, 2007, 2008 and 2009 have been derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. Our selected consolidated statements of operations data for the nine months ended September 30, 2009 and 2010 and selected consolidated balance sheet data as of September 30, 2010 have been derived from our unaudited consolidated financial statements, which are included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial data. The unaudited selected financial data include, in the opinion of our management team, all adjustments, consisting of only normal recurring adjustments that are necessary for a fair presentation of the financial position and the results of operations for the interim unaudited period. Our audited and unaudited consolidated financial statements have been prepared and presented in accordance with US GAAP. Our historical results are not necessarily indicative of results to be expected in any future period.

        We have not included financial information for the years ended December 31, 2005 and 2006, as such information is not available on a basis that is consistent with the consolidated financial

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information for the years ended December 31, 2007, 2008 and 2009, and cannot be provided on a US GAAP basis without unreasonable effort or expense.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,  
 
  2007   2008   2009   2009   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
  RMB
  RMB
  US$
 
 
   
   
   
   
  (unaudited)
  (unaudited)
  (unaudited)
 
 
  (In thousands, except for share and per share data)
 

Consolidated Statement of
Operations Data

                                           

Net revenue

    326,979     276,003     432,736     64,679     282,185     431,762     64,534  

Cost of revenues

    (72,303 )   (75,979 )   (131,193 )   (19,609 )   (97,787 )   (136,701 )   (20,432 )
                               

Gross profit

    254,676     200,024     301,543     45,070     184,398     295,061     44,102  

Selling, marketing and administrative expenses

    (65,563 )   (82,577 )   (84,545 )   (12,637 )   (54,006 )   (93,561 )   (13,984 )
                               

Income from operations

    189,113     117,447     216,998     32,433     130,392     201,500     30,118  

Interest expenses

        (922 )   (147 )   (22 )   (147 )        

Interest income

    112     81     864     129     521     2,005     300  

Foreign currency exchange loss

            (576 )   (86 )   (576 )        

Other (expenses) / income—net

    (10 )   (1,283 )   1,285     192     1,459     3,811     570  
                               

Income from continuing operations before income tax

    189,215     115,323     218,424     32,646     131,649     207,316     30,988  

Income tax

    (67,010 )   (31,646 )   (53,968 )   (8,066 )   (33,259 )   (54,589 )   (8,159 )
                               

Income from continuing operations

    122,205     83,677     164,456     24,580     98,390     152,727     22,829  

Loss from discontinued operations, net(1)

        (1,354 )   (12,039 )   (1,799 )   (7,459 )   (20,054 )   (2,997 )
                               

Net income

    122,205     82,323     152,417     22,781     90,931     132,673     19,832  

Non-controlling interest

    (1,288 )   (87 )                    
                               

Net income attributable to Syswin Inc

    120,917     82,236     152,417     22,781     90,931     132,673     19,832  

Amount attributable to Syswin Inc.

                                           

Income from continuing operations

    120,917     83,590     164,456     24,580     98,390     152,727     22,829  

Loss from discontinued operations, net

        (1,354 )   (12,039 )   (1,799 )   (7,459 )   (20,054 )   (2,997 )
                               

Net income attributable to Syswin Inc.

    120,917     82,236     152,417     22,781     90,931     132,673     19,832  

Income per share from continuing operations attributable to Syswin Inc., basic and diluted

    0.78     0.54     1.06     0.16     0.64     0.99     0.15  

Loss per share from discontinued operations, net attributable to Syswin Inc., basic and diluted

        (0.01 )   (0.08 )   (0.01 )   (0.05 )   (0.13 )   (0.02 )

Net income attributable to Syswin Inc. per share, basic and diluted

    0.78     0.53     0.98     0.15     0.59     0.86     0.13  

Shares used in calculating income per share, basic and diluted

    154,875,000     154,875,000     154,875,000     154,875,000     154,875,000     154,875,000     154,875,000  

Cash dividends per share

    0.13     0.68                 1.74     0.26  

(1)
We began operations of a secondary real estate brokerage services business in 2008, and transferred such business to entities controlled by Mr. Chen in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Acquisitions and disposals." As a result, the results of such business have been presented as discontinued operations for all periods presented in this prospectus.

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  As of December 31,   As of September 30,  
 
  Actual   Actual   As Adjusted(1)  
 
  2007   2008   2009   2009   2010   2010  
 
  RMB
  RMB
  RMB
  US$
  RMB
  US$
  RMB
  US$
 
 
  (In thousands)
 

Consolidated Balance Sheet Data:

                                                 
   

Cash and cash equivalents

    25,597     20,929     194,828     29,120     185,992     27,799     614,023     91,775  
   

Accounts receivable, net

    94,838     107,761     238,450     35,640     239,441     35,788     239,441     35,788  
   

Other receivables

    8,359     16,650     16,549     2,474     19,248     2,877     19,248     2,877  
   

Property and equipment, net

    11,070     21,467     152,046     22,726     50,138     7,494     50,138     7,494  
   

Real estate properties held for lease, net

            13,699     2,048                  
 

Total assets

    234,942     237,790     642,388     96,016     545,327     81,507     973,358     145,483  
   

Accrued expenses and other current liabilities

    23,057     35,503     139,238     20,812     84,361     12,609     84,361     12,609  
   

Income tax payable

    62,464     56,817     21,763     3,253     9,446     1,412     9,446     1,412  
 

Total liabilities

    85,521     112,320     161,001     24,065     201,267     30,082     201,267     30,082  
 

Total shareholders' equity

    149,421     125,470     481,387     71,951     344,060     51,425     772,091     115,401  
 

Total liabilities and shareholders' equity

    234,942     237,790     642,388     96,016     545,327     81,507     973,358     145,483  

(1)
Our consolidated balance sheet data as of September 30, 2010 and adjusted to give effect to the issuance and sale of ADSs by us in this offering assuming an initial public offering price of US$7.50 per ADS (the mid-point of the estimated initial public offering price range), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. A US$1.00 increase (decrease) in the assumed initial public offering price of US$7.50 per ADS would increase (decrease) the amount representing cash and cash aequivalents, total assets and total shareholders' equity by US$8.93 million.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial Information" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

Overview

        We believe that we are a leading primary real estate service provider in China based on transaction value of properties sold, brand recognition and geographic presence. According to China Index Academy, we are the largest primary real estate service provider in Beijing and Northern China, based on transaction value of properties sold in 2009. In 2010, we were ranked second among the top ten real estate consultancy and sales agency service providers in China in terms of brand value, according to 2010 China Real Estate Research Report on Brand Value of Consultancy and Sales Agency Service Providers, an independent research report issued by China Real Estate Top 10 Committee, a reputable research task force jointly organized by Enterprise Research Institute of Development Research Center of the State Council of PRC, Institute of Real Estate Studies of Tsinghua University and China Index Academy. We currently have operations in 17 cities throughout China. Our CAGR, in terms of aggregate gross floor area of properties sold from 2007 to 2009, was higher than each of the four publicly listed China-based primary real estate service providers, and our employee productivity, as measured by net revenue per employee in 2009, was also higher than these companies, according to China Index Academy.

        We primarily provide real estate sales agency services to property developers relating to new residential properties, and our net revenue derived from sales agency services represented 93.1%, 94.3%, 97.1% and 97.7%, respectively, of our total net revenue for 2007, 2008, 2009 and the nine months ended September 30, 2010. We also provide real estate consultancy services, which include project consultancy services offered to developer clients and primary land development consultancy and agency services provided to primary land developers. Our company began focusing on providing primary real estate services in the second half of 2004, initially in Beijing. We were the market leader in Beijing in 2008 and 2009 in terms of transaction value of properties sold as well as gross floor area of properties sold, according to China Index Academy. In the six months ended June 30, 2010, our market share in Beijing in terms of gross floor area of properties sold reached 13%, which was over four times that of our closest competitor, according to the same source.

        Capitalizing on our experience and capabilities gained in Beijing, we quickly replicated our success in a number of other markets. We are now one of the top three market players in Tianjin, Qingdao and Jinan, based on the aggregate planned gross floor area of properties under sale during the six months ended June 30, 2010, according to China Index Academy.

        We focus on servicing our key clients and seek to tailor our services to meet the demands of these clients. As a result, we have been successful in generating repeat business and increasing business volume from our major key clients. For example, as of December 31, 2007, 2008, 2009 and September 30, 2010, we had 1, 9, 12 and 22 contracted projects for China Vanke, a leading property developer in China. In 2007, 2008, 2009 and the nine months ended September 30, 2010, our aggregate gross floor area of properties sold on China Vanke's projects totaled 230 thousand square meters, 367 thousand square meters, 731 thousand square meters and 704 thousand square meters, respectively. In addition, of China's top 30 developers (including those that do not use sales agency services) according to China Index Academy, 14 are or had previously been our clients. Our clients include some

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of the most well-recognized national developers in China, including China Vanke, Longfor Properties, Sino-Ocean Land Holdings, Guangzhou R&F Properties and Gemdale Group.

        From 2007 to 2009, the number of our developer clients increased from 19 to 36, and the number of our projects increased from 27 to 68. During the same period, our aggregate gross floor area of properties sold increased from 896 thousand square meters to 2,858 thousand square meters, and our aggregate value of properties sold increased from RMB10.3 billion to RMB29.7 billion. During the nine months ended September 30, 2010, we had 42 developer clients with 79 projects, our aggregate gross floor area of properties sold was 2,962 thousand square meters, and our aggregate value of properties sold amounted to RMB33.4 billion. In 2007, 2008, 2009 and the nine months ended September 30, 2010, our net revenue totaled RMB327.0 million, RMB276.0 million, RMB432.7 million (US$64.7 million) and RMB431.8 million (US$64.5 million), respectively, and our net income from continuing operations totaled RMB120.9 million, RMB83.6 million, RMB164.5 million (US$24.6 million) and RMB152.7 million (US$22.8 million), respectively. As of September 30, 2010, we had a property contract pipeline of 16.5 million square meters.

General Factors Affecting Our Financial Condition and Operating Results

        Our financial condition and operating results are subject to general economic conditions and conditions affecting the primary real estate services industry in general, which include, among others:

    Growth trends in China's real estate market.  Our business depends substantially on the conditions of the real estate market in China. The real estate market in China remains at an early stage of development. As a result, China's real estate market is expected to continue its growth in the long term as it matures, though social, political, economic and other factors may contribute to short-term fluctuations in its development. In particular, the PRC government has adopted a series of measures since April 2010 to cool down the property market, which have affected our 2010 operating results. However, in the long term, we expect our profitability to increase as the scale of our business continues to grow.

    Increasing market penetration of sales agency services.  The use of sales agency services is a relatively recent development in China's primary real estate market. Penetration rate of sales agency services in China increased significantly in recent years but remains relatively low. In particular, the real estate development industry in China is experiencing a trend of increasing concentration, with China's top 100 developers gaining market share. We believe that these large developers are increasingly relying on sales agency service providers for sales. As a result, we expect penetration of sales agency services in China's primary real estate market to continue to increase.

    Increasing market concentration.  As competition in the primary real estate services industry continues to intensify, and as the national property developers continue to expand geographically, we expect such developers to increasingly seek primary real estate service providers with strong brand recognition, specialized and differentiated expertise in client service and comparable geographic reach and cost profile to support their business growth and geographic expansion.

Specific Factors Affecting Our Financial Condition and Operating Results

        Our operations are organized through operating entities located in each of the 17 cities in China where we have business operations. The overall operating results of our company largely reflect the development cycle and operating and financial performance of each of our subsidiaries in these cities. In addition, our financial condition and results of operations are also affected by the changes in our commission rates, our costs, expenses and profit margins and our contract pipeline.

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    Development cycle of our markets

        Our business is organized as operating entities in major cities, mostly provincial capitals or otherwise well-developed economic centers in China, where our markets are located. We began focusing on providing primary real estate services in the second half of 2004, initially in Beijing. We were the market leader in Beijing in 2008 and 2009 in terms of gross floor area and transaction value of properties sold. In 2007, 2008, 2009 and the nine months ended September 30, 2010, we entered one, six, two and three new cities, respectively. Based on the business development stage of our markets, our markets can be broadly grouped into one of four categories:

    Category 1 markets are our well-developed markets, and consist of operations in cities where we are the market leaders, with significant economies of scale as well as stable and high profitability and growth potential.

    Category 2 markets are our fast growing markets, and consist of operations that are profitable and exhibit increasing economies of scale and profitability. We typically have significant local presence with strong market positions in terms of number of projects and transaction value in these markets.

    Category 3 markets are our developing markets, and consist of our operations in markets where our sales and management team, our client base and our projects have reached a point of critical mass, in which we are experiencing strong revenue growth and may expect stable profitability in the near future.

    Category 4 markets consist of those markets that require further investment to ramp up operations, may generate little or no revenue and experience significant losses.

        The following table sets forth the current grouping of our markets broadly based on the above criteria for the period indicated.

 
  2007   2008   2009   2010

Category 1 markets

  Beijing   Beijing   Beijing   Beijing

Category 2 markets

      Hohhot, Tianjin   Chengdu, Chongqing, Qingdao, Tianjin, Hohhot, Dalian, Yantai, Yinchuan

Category 3 markets

  Hohhot   Hohhot, Tianjin   Chengdu, Chongqing, Dalian, Guiyang, Jinan, Qingdao, Yantai, Yinchuan   Guiyang, Jinan, Shenyang, Suzhou, Taiyuan

Category 4 markets

  Guiyang, Jinan, Tianjin, Yantai   Chengdu, Chongqing, Dalian, Guiyang, Jinan, Qingdao, Shenyang Yantai, Yinchuan   Shenyang, Suzhou, Taiyuan   Hangzhou, Shanghai, Nanjing

        Our overall revenue growth and profitability are primarily driven by the operating results of our operating entities in the first and second categories as well as the number of markets that progress into these categories in any period. Historically, the period of time required to develop a city market from one category to the next is generally between one to two years. As our industry knowledge and operating experience continues to strengthen, as our client base continues to expand, and as we continue to accumulate management resources through our Project 3-1-5, a management training program that seeks to train, by 2012, a core management team of 30 regional managers, 100 project managers and 500 sales and planning managers to support 200 to 250 projects per year, we will seek to shorten such period of time required to develop a market from one category to the next. To this end, we have set an objective to have, within two years, more than three category 1 markets and more than ten category 2 markets.

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    Changes in commission rates

        Commission structures of our projects, which are set out in our written sales agency agreements with our developer clients, generally consist of a base commission, and, on some projects, an incentive commission. Occasionally, our commissions also include a supplemental commission.

        Revenue from commissions is recognized when (i) the relevant property purchase contract between our developer client and the property buyer becomes unconditional or irrevocable, (ii) our services as stipulated in the agency agreements have been rendered, and (iii) with respect to incentive commissions, when we achieve the performance target. See "—Descriptions of Certain Line Items—Net Revenue—Real estate sales agency services."

        There is generally a lag which lasts three to six months between the time we recognize revenue and the time we bill our developer clients for the related commissions, as we confirm commission invoice amounts with our developer clients pursuant to pre-agreed schedules. Our developer clients generally confirm invoice amounts for the properties sold based on their progress in receiving property purchase payments made by property buyers or commercial banks. Historically, we have not experienced significant delays in payment between the time we bill our clients and the time of collection. See "—Our Liquidity and Capital Resources—Operating activities."

        In addition, from time to time, we may agree to quality assurance retention money or performance bond arrangements as part of our strategy to meet the demands of our developer clients for a high level of service quality throughout the sales cycles of their projects.

    Base commission

        We receive a fixed percentage of aggregate value of the property transactions to which we provide sales agency services as base commission. A number of property developers offer a progressive structure of base commissions based on sales progress. Under such progressive structure, a higher level of base commission rate is applied to our overall sales in the event that the property sales value or volume reaches the threshold amount pre-agreed with our developer client.

        Base commission rate negotiations on a particular project may reflect the expected pace of sales for the project as well as the experience and capabilities of the developer client in property development activities. For example, certain residential projects, including government-subsidized housing projects, are generally expected to be sold at a faster pace and demand less individualized services, and as a result typically offer lower commission rates than high-end apartment and villa projects and mid-range projects. In addition, smaller local developer clients tend to pay higher base commission rates than large-scale national developer clients. In 2007, 2008, 2009 and the nine months ended September 30, 2010, our effective base commission rate was 1.1%, 0.8%, 0.9% and 0.8%, respectively. Our effective base commission rate in 2008 was affected by a downturn in the market as well as our sales of government-subsidized housing projects. Based on our sales agency agreements entered into as of September 30, 2010, we expect our base commission rate levels to remain stable in the near future.

        The primary real estate service industry in China is increasingly adopting a base-commission only structure. As a result, to maintain and enhance our profitability, we must manage or reduce our selling, marketing and administration expenses as a percentage of our net revenue by capitalizing on economies of scale, such as general marketing and support functions that can be shared among its regional operations. Although the primary real estate services market is relatively fragmented on a national level, market share in a number of cities is relatively concentrated among a small number of market participants. As a result, to compete effectively at any of our current markets, we must expand the scale of our operations (as represented by transaction value of properties sold, which in turn reflects the number of projects, gross floor area and selling prices of properties sold) in such market through, among other things, the following:

    acquiring new project contracts in that market;

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    capitalizing on existing relationships with key clients to penetrate the market; and

    training additional management and sales professionals.

        We will also seek to selectively enter into new markets. Historically, we have derived relatively high profits and profit margins from markets that we classify as categories 1 and 2, even calculated solely based on base commission. For example, in our Tianjin, Dalian and Chengdu markets, in which we received only base commissions in 2009, our gross margin in 2009 was 72%, 74% and 60%, respectively. In the future, we will continue to seek to drive the operating results of our markets in the first and second categories as well as the number of markets that progress into these categories in any period. See also "—Development cycle of our markets."

    Supplemental commissions

        Occasionally, we enter into supplemental commission arrangements with our developer clients. Under this arrangement, we undertake the overall project-related marketing and promotion activities and pay all costs incurred in this regard prior to and during the project sales. Such costs are typically associated with:

    advertisement;

    promotional events;

    design and construction of mock-up rooms; and

    printing of promotional materials.

In return, our developer clients agree to pay us supplemental commissions, which are calculated as a percentage of the aggregate value of properties sold.

        Supplemental commission arrangements are relatively uncommon in the PRC real estate service industry, and are negotiated on case-by-case basis. We believe that supplemental commission arrangements provide us with opportunities to capitalize on our ability in efficiently managing project-related marketing and promotion activities to generate higher revenue. However, due to the risks and uncertainties associated with a supplemental commission structure, we are cautious in accepting projects that utilize such a structure. We seek to balance the risks associated with this commission structure with a return analysis of the project based on factors such as:

    the agreed supplemental commission rate and expected supplement commission amount;

    the estimated costs related to the marketing and promotion activities to be undertaken;

    the general market reputation of the developer clients, particularly its creditworthiness; and

    the characteristics of the project such as saleability.

        Our profitability on a project with such structure may vary significantly, depending on the reputation of the property developer and the characteristics of the project, as well as our ability to efficiently manage the project marketing and promotion efforts in addition to our project sales efforts. During the period between January 1, 2007 and September 30, 2010, and including the projects we had entered into as of September 30, 2010, we had a total of three projects adopting the supplemental commission structure. Based on our estimates, net revenue derived from supplemental commissions on each of these three projects exceeded the aggregate cost of revenue attributable to marketing and promotion activities on the same projects.

    Incentive commissions

        Incentive commissions are bonus compensation property developers offer to sales agency service providers for properties sold beyond certain pre-agreed selling prices. Incentive commission is calculated as a percentage of the property transaction value exceeding a base transaction value calculated using a pre-determined average selling price, which we believe represents property developers' anticipated selling price based on their market estimates. Occasionally, our sales agency

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agreements provide for a progressive incentive commission rate structure based on the average selling price of properties sold, under which a higher percentage applies when a pre-agreed average selling price threshold is achieved.

        Incentive commission arrangements are widely adopted in the primary real estate service industry. Under these arrangements, sales agency service providers are provided with the opportunity to share the property developers' increased profit as a result of the higher average selling price of properties sold. Developers are benefited from the enhanced profitability as a result of higher property sales prices exceeding the expected prices based on market estimate.

        As our scale of operations and national network continue to expand, our brand recognition continues to strengthen and our scope of services continues to grow, we expect our bargaining power for incentive commissions to increase. We may also capitalize on our ability to provide integrated sales agency services, such as primary land acquisition consultancy and agency services, to negotiate for incentive commissions.

    Quality assurance retention money and performance bond arrangements

        From time to time, we may agree to quality assurance retention money or performance bond arrangements. The adoption of any such arrangement is negotiated on a case-by-case basis, and is not necessarily linked to any commission structure. Our willingness to agree to quality assurance retention money arrangements and performance bond arrangements in general reflects our strategy to meet the demands of our developer clients for a high level of service quality throughout the sales cycles of their projects. Quality assurance retention money and performance bond arrangements, including the amounts of retention money and performance bond, are among a number of commercial terms subject to sales agency agreement negotiation. Other principal terms subject to negotiation may include base commission rate and the existence and amount of incentive commission.

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, we did not experienced any non-payment or material delay in the release of performance bond or payment of quality assurance retention money payable to us. All of our performance bonds generally have been released within three months of becoming due, and all of our quality assurance retention money generally has been paid within one to three months of becoming due. We do not enter into any title-sharing arrangements with our developer clients. In the event that any performance bond or retention money becomes payable but is not duly paid by our clients, we expect to resort to negotiation, mediation or other available legal remedies. We do not have residual rights on the properties we are engaged to sell.

    Quality assurance retention money

        From time to time, we enter into arrangements that allow our developer clients to treat a portion of commissions, typically 5% to 20% of the aggregate agreed level of commissions, as quality assurance retention money, to be paid only upon our meeting certain pre-determined criteria. Such pre-determined criteria can be largely categorized into (i) those based on the level of satisfaction with our services as determined by our developer clients; and (ii) those based on the sales progress of a project, which may take into account factors such as gross floor area of properties sold and transaction value. These arrangements are provided for in written sales agency agreements with our developer clients. We recognize revenue on the portion of commissions represented by quality assurance retention money only upon the satisfaction of these criteria. As a result, the amount of time required to recognize revenue represented by quality assurance retention money significantly depends on the sales pace of the relevant project. Our developer clients generally require one to three months to settle the payment of quality assurance retention money after we recognize the related revenue.

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, we had 1, 3, 16 and 28 projects out of 27, 44, 68 and 79 projects, respectively, which adopted such quality assurance retention money arrangements. As of September 30, 2010, we had 48 projects under pipeline contracts that adopted quality assurance retention money arrangement. We expect the number of projects with

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quality assurance retention money arrangements to continue to increase as our business continues to expand.

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, our commissions that were treated as quality assurance retention money amounted to approximately RMB41 million, RMB25 million, RMB52 million (US$8 million) and RMB36 million (US$5 million), respectively. Of these amounts, we have recognized as revenue and collected approximately RMB41 million, nil, RMB10 million (US$2 million) and nil, respectively, by September 30, 2010. As of December 31, 2007, 2008, 2009 and September 30, 2010, we had outstanding quality assurance retention money of approximately RMB41 million, RMB30 million, RMB68 million (US$10 million) and RMB103 million (US$15 million), respectively, based on which we expected to recognize additional revenue upon satisfaction of pre-agreed conditions. The increase in outstanding quality assurance retention money from December 31, 2008 to September 30, 2010 primarily reflected an increase in revenue derived from sales of existing projects adopting quality assurance retention money arrangements, as well as an increase in the number of projects adopting such arrangements. Of our quality assurance retention money outstanding as of September 30, 2010, nil, RMB25 million, RMB42 million (US$6 million) and RMB36 million (US$5 million) were incurred in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively.

        The quality assurance retention money relating to the Guo'ao Project, our single largest project in 2007, 2008 and 2009, accounted for 100.0%, 97.0%, 87.1% and 77.4%, respectively, of our total outstanding quality assurance retention money as of December 31, 2007, 2008 and 2009 and September 30, 2010. As of September 30, 2010, our outstanding quality assurance retention money related to the Guo'ao Project amounted to RMB80 million (US$12 million). Of such amounts, nil, RMB24 million, RMB36 million (US$5 million) and RMB20 million (US$3 million) were incurred in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively.

    Performance bond

        Performance bonds are upfront deposits we make to property developers prior to the sales commencement, which will be released periodically or upon the sales completion, and may be subject to certain pre-determined criteria, including (i) our developer clients' satisfaction with our overall service quality, and (ii) the sales progress on a project, which may take into account factors such as gross floor area of properties sold and transaction value.

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, the performance bond we paid amounted to RMB2.0 million, RMB8.0 million, RMB0.5 million (US$0.1 million) and RMB7.6 million (US$1.1 million), respectively. Of these amounts, RMB1.0 million, RMB4.4 million, RMB0.5 million (US$0.1 million) and RMB0.1 million have become due as a result of our satisfaction of the pre-determined criteria by September 30, 2010. By September 30, 2010, we have collected an aggregate of RMB5.3 million (US$0.8 million) in performance bond. In particular, such amount of performance bond collected included RMB1.0 million incurred in 2007, RMB4.2 million incurred in 2008, nil incurred in 2009 and RMB0.1 million incurred in the nine months ended September 30, 2010. Such amounts of collected performance bond represented 88.3% of the performance bond which has become due by September 30, 2010, or 29.3% of the total amount of performance bond we paid during the three years ended December 31, 2009 and the nine months ended September 30, 2010. Historically, all of our performance bonds generally have been released within three months of becoming due. As of September 30, 2010, our performance bonds balance amounted to RMB16.3 million (US$2.4 million).

    The Guo'ao Project

        The Guo'ao Project was our single largest project in terms of revenue contributions during the three years ended December 31, 2009. The Guo'ao Project consisted of properties used as the Olympic Village during the Beijing 2008 Olympic Games. We began working on the Guo'ao Project in 2005, which was two years prior to the expected commencement of sales. Furthermore, because the Olympic Village was expected to serve as dormitories for the athletes during the Olympic Games, properties in

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the Guo'ao Project were deliverable to the property buyers only after the Olympic Games. In addition, we agreed to use a base price that is significantly higher than the prices of properties in the surrounding area for the purpose of calculating our incentive commissions, and agreed to further raise such base price in 2008 as a result of the appreciation of the average selling price of the Guo'ao Project. We also committed to assist our developer client in the timely collection of sales proceeds from property sales. In addition, we (i) prepaid RMB3.0 million in the form of a performance bond ahead of sales commencement to guarantee the project's average selling price and our service quality, (ii) undertook the project's overall marketing and promotion starting in 2005, two years ahead of the project sales commencement, and incurred a cumulative sales and marketing cost of RMB71.5 million (US$10.7 million) from January 1, 2007 to September 30, 2010, (iii) provided nearly 100 employees to assist our developer client in promotional and welcoming services during the Beijing 2008 Olympic Games, and (iv) agreed to our developer client's retention of quality assurance retention money to guarantee our service quality, which amounted to a total of RMB79.7 million (US$11.9 million) as of September 30, 2010. Under the project sales agency agreement, the developer client is entitled to deduct any loss from the quality assurance retention money as a result of our default under the agreement, including, among others, (i) any property sold at a price lower than that approved by the developer client; (ii) any promotional event not pre-approved by the developer client; or (iii) any failure to maintain confidentiality of project information. A significant portion of such quality assurance retention money, represented by incentive commissions, becomes payable three months after the dispatch of property delivery notices on the final phase of the Guo'ao Project. The remaining portion, represented by base commissions and supplemental commissions, becomes payable upon the developer client's confirmation of our satisfaction of pre-agreed volume and average selling price of properties sold. We expect that the property developer of the Guo'ao Project to dispatch the property delivery notices on the final phase of the Guo'ao Project and to confirm our satisfaction of the pre-agreed volume and average selling price of properties sold by September 2012. As such, we expect to receive the commissions represented by quality assurance retention money of the Guo'ao Project by the end of 2012. As compensation for our significant financial and managerial commitment, the risks undertaken, as well as our successful promotion of the Guo'ao Project, we recognized revenue of RMB169.1 million, RMB124.6 million, RMB135.4 million (US$20.2 million) and RMB76.8 million (US$11.5 million) as incentive and supplemental commissions in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively.

    Cost, expenses and profit margins

        Our business is organized as operating entities in major cities in China where our markets are located. A majority of our cost of revenue in an operating entity consists of staff costs, office and leasing costs and other project-related costs, which amounts vary based on our scale of operations in that city. These variable costs increased during the historical period and are expected to continue to increase as we expand our operations. We generally seek to maintain the level of these variable costs at a relatively stable percentage of total net revenue.

        Our selling, marketing and administrative expenses primarily consist of expenses incurred in connection with our general marketing and planning activities as well as our back-office support functions, with a significant majority incurred at our headquarters level. Our selling, marketing and administrative expenses are less correlated with changes in sales from period to period than our cost of revenue.

        Our non-variable costs and expenses generally experience significant growth as our markets progress from categories 3 or 4 into categories 1 or 2, reflecting our efforts to establish a local presence by recruiting additional staff and incurring additional expenses for general corporate activities to support our geographic expansion. Certain markets, especially our category 4 markets, could incur operating losses during the period as the net revenue generated might not be sufficient to meet the non-variable costs and expenses incurred in entering such market. As we continue to increase our economies of scale and more of our markets progress into categories 1 and 2, our net profit margin is

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expected to be affected more by our variable costs and expenses, which we have managed at a relatively stable level compared to our total net revenue. Consequently, our profit margins have been, and are expected to continue to be, affected by our operational scale, which in turn reflects the total transaction value of properties sold as well as our commission rates.

    Contract pipeline

        Our contract pipeline as of a specified date represents the aggregate gross floor area of the properties for which we have been engaged to provide sales agency services but have not yet recognized revenue as of such date based on the relevant agency agreements. Based on our historical experience, there is generally a period of six months to one year between (i) the time when we are engaged by the property developer and record the contract pipeline amount for the project, and (ii) the time when the project sales commence and we start to recognize revenue on that project. Upon commencement of sales on a project, we typically expect to recognize revenue on that project in the following two to five years, depending on the pace of project sales.

        Our transaction volume in the near future is largely affected by the level of our contract pipeline, and our long-term growth potential and competitiveness are significantly affected by our ability to increase our contract pipeline. As of December 31, 2007, 2008, 2009 and September 30, 2010, our contract pipeline amount was 3.2 million square meters, 6.5 million square meters, 8.5 million square meters and 16.5 million square meters, respectively. The aggregate gross floor area of properties newly contracted during 2007, 2008, 2009 and the nine months ended September 30, 2010, was 2.1 million square meters, 4.6 million square meters, 4.8 million square meters and 11.0 million square meters, respectively. The increase reflects our geographical expansion in recent years coupled with our increasing ability to promote our services to our existing and new clients. In addition, a significant portion of our pipeline contracts is with our key clients.

        We present our historical contract pipeline amounts in this prospectus because we believe that they are a useful indicator for transaction volume in future periods, which in turn may be an indicator for our revenue and other operating results. However, any comparison between our historical contract pipeline and revenue amounts may not be indicative of future results due to a number of factors, such as changes in sales schedules by our clients and changes in market conditions. For more information, see "Risk Factors—Risks Related to Our Business and Industry—Our contract pipeline may not be indicative of our future results of operations."

Descriptions of Certain Line Items

    Net revenue

        We generate revenue by providing real estate sales agency services and real estate consultancy services. Our net revenue is presented net of PRC business taxes and related surcharges. The following table sets forth the components of our net revenue for the period indicated.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,  
 
  2007   2008   2009   2009   2010  
 
  RMB   % of total
net revenue
  RMB   % of total
net revenue
  RMB   % of total
net revenue
  RMB   % of total
net revenue
  RMB   % of total
net revenue
 
 
  (In thousands, except percentages)
 

Real estate sales agency services

    304,559     93.1 %   260,209     94.3 %   420,074     97.1 %   275,644     97.7 %   421,704     97.7 %

Real estate consultancy services

    22,420     6.9     15,794     5.7     12,662     2.9     6,541     2.3     10,058     2.3  
                                           
 

Total net revenue

    326,979     100.0 %   276,003     100.0 %   432,736     100.0 %   282,185     100.0 %   431,762     100.0 %
                                           

        We derive revenue from real estate sales agency services through commissions earned based on the properties sold, calculated as a percentage of the total value of a property transaction. We also derive revenue through service fees from real estate consultancy services provided to primary land developers and property developers. We began operations of a secondary real estate brokerage services business through E-home Park sales offices in 2008. We transferred such business to entities controlled by Mr. Chen in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Acquisitions

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and disposals." As a result, the results of such secondary brokerage services business have been presented as discontinued operations for all periods presented in this prospectus.

    Real estate sales agency services

        Our real estate sales agency services accounted for 93.1%, 94.3%, 97.1% and 97.7% of total net revenue for the years ended December 31, 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. We expect that real estate sales agency services to continue to represent a substantial majority of our total net revenue for the foreseeable future.

        Revenue of base commissions and supplemental commissions from our sales agency services is recognized when the relevant property purchase contract between our developer client and the property buyer becomes unconditional or irrevocable, and our services as stipulated in the agency agreements have been rendered. Generally, we deem a property purchase contract to be unconditional or irrevocable immediately upon (i) signing of the property purchase contract between our developer client and the property buyer, and (ii) payment of deposit by the property buyer on the purchased property.

        Incentive commissions represent the commissions would be earned if certain performance targets we pre-agreed with the developer clients have been achieved. Similar to base commissions and supplemental commissions, we recognize the revenue when the relevant purchase contracts between the property developers and property buyers become unconditional or irrevocable and we have achieved the performance targets.

        From time to time, we enter into quality assurance retention money arrangements, pursuant to which we allow our developer clients to pay a portion of commissions as quality assurance retention money upon our meeting certain pre-determined criteria. We recognize the revenue represented by such retention money only upon the satisfaction of such pre-agreed conditions. See "—Specific Factors Affecting Our Financial Condition and Operating Results—Changes in commission rates—Quality assurance retention money and performance bond arrangements."

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        The following table sets forth our net revenue derived from the real estate sales agency services segment, by the date on which we started operations in the relevant market, for the period indicated.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,
 
 
  2007   2008   2009   2010  
 
  Segment net
revenue
  % of segment
net revenue
  Segment net
revenue
  % of segment
net revenue
  Segment net
revenue
  % of segment
net revenue
  Segment net
revenue
  % of segment
net revenue
 
 
  (In thousands of RMB, except percentages)
 

Cities we entered by
December 31, 2007

                                                 

Beijing

    283,815     93.2 %   247,194     95.0 %   313,793     74.7 %   336,006     79.7 %

Tianjin

    974     0.3     1,311     0.6     20,452     4.8     18,933     4.5  

Hohhot

    8,541     2.8     4,114     1.6     9,836     2.3     4,759     1.1  

Jinan

                    7,459     1.8     1,881     0.4  

Guiyang

    8,786     2.9     372     0.1     6,553     1.6     3,256     0.8  

Yantai

    2,443     0.8     53     0.0     302     0.1     1,764     0.4  
                                   
   

Subtotal

    304,559     100.0     253,044     97.3     358,395     85.3     366,599     86.9  
                                   

Cities we entered by
December 31, 2008

                                                 

Dalian

            2,106     0.8     15,903     3.8     11,218     2.6  

Chengdu

            2,077     0.8     15,461     3.7     12,777     3.0  

Qingdao

            1,645     0.6     12,507     3.0     8,669     2.1  

Chongqing

                    6,553     1.6     4,462     1.1  

Yinchuan

            250     0.1     3,760     0.9     5,740     1.4  

Shenyang

            1,087     0.4     2,582     0.6     2,589     0.6  
                                   
 

Subtotal

            7,165     2.7     56,766     13.6     45,455     10.8  
                                   

Cities we entered by
December 31, 2009

                                                 

Suzhou

                    4,103     1.0     7,380     1.8  

Taiyuan

                    810     0.1     2,270     0.5  
                                   
 

Subtotal

                    4,913     1.1     9,650     2.3  
                                   

Cities we entered by September 30, 2010

                                                 

Nanjing

                                 

Shanghai

                                 

Hangzhou

                                 
                                   
 

Subtotal

                                 
     

Total

    304,559     100.0 %   260,209     100.0 %   420,074     100.0 %   421,704     100.0 %
                                   

        Our primary market has been Beijing during the three years ended December 31, 2009 and the nine months ended September 30, 2010. Our net revenue derived from sales agency services in the Beijing market increased by 26.9% in 2009 from 2008. As a result of our effort to expand geographically, we entered six new cities in 2008, two new cities in 2009 and three new city in the nine months ended September 30, 2010. Our net revenue derived from the markets outside of Beijing as a percentage of our total net revenue from sales agency services segment increased to 25.3% in 2009 and 20.3% in the nine months ended September 30, 2010, as compared to 6.8% and 5.0% in 2007 and 2008, respectively.

        The table below sets forth our net revenue derived from the sales agency services segment for our single largest client, our five largest clients and our other clients, for the period indicated.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,
 
 
  2007   2008   2009   2010  
 
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
 
 
  (In thousands of RMB, except percentages)
 

Single largest client

    207,411     68.1 %   140,164     53.9 %   151,785     36.1 %   83,653     19.8 %

Second through fifth largest clients

    73,386     24.1     92,383     35.5     151,578     36.1     222,960     52.9  

Other clients

    23,762     7.8     27,662     10.6     116,711     27.8     115,091     27.3  
                                   
 

Total

    304,559     100.0 %   260,209     100.0 %   420,074     100.0 %   421,704     100.0 %
                                   

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        Our single largest client during each of the three years ended December 31, 2009 was Guo'ao Investment Company and Development Co., Ltd., the property developer of the Guo'ao Project. Our single largest client during the nine months ended September 30, 2010 was Beijing Urban Construction Group Co. Ltd. In 2007, 2008, 2009 and the nine months ended September 30, 2010, for our sales agency services segment, we had an aggregate of 19, 22, 36 and 42 developer clients, respectively.

    Real estate consultancy services

        For our real estate consultancy services segment, we primarily provide project consultancy services to property developers, such as project planning services and overall sales and marketing consultancy services, and earn service fees for these project consultancy services. From time to time, we also provide primary land development consultancy and agency services to primary land developers, and earn fees and commissions for our services. Net revenue for real estate consultancy services accounted for 6.9%, 5.7%, 2.9% and 2.3% of our total net revenue for the years ended December 31, 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. The table below sets forth the components of our net revenue derived from real estate consultancy services for the period indicated.

 
  For the Year Ended December 31,    
   
 
 
  For the Nine Months Ended September 30,
2010
 
 
  2007   2008   2009  
 
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
  Net revenue   % of total
net revenue
 
 
  (In thousands of RMB, except percentages)
 

Project consultancy services

    20,275     90.4 %   10,953     69.3 %   11,089     87.6 %   9,491     94.4 %

Primary land development consultancy and agency services

    2,145     9.6     4,841     30.7     1,573     12.4     567     5.6  
                                   

Total

    22,420     100.0 %   15,794     100.0 %   12,662     100.0 %   10,058     100.0 %
                                   

    Cost of revenue

        Our cost of revenue primarily consists of staff costs, leasing and office expenses and marketing and promotion expenses incurred in connection with the development projects to which we are engaged to provide sales agency services. Staff costs primarily consist of base compensation, incentive-based compensation and benefits paid to our sales professionals and other staff for sales agency services. Our staff costs, which are generally the largest component of our cost of revenue, represented 54.6%, 56.7%, 69.2% and 72.5% of our cost of revenue for the years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, respectively. For those projects of which we are contractually responsible for project promotion and advertising costs, we include the project-related costs in our cost of revenue. Our overall cost of revenue amounted to 22.1%, 27.5%, 30.3% and 31.7% of net revenue for the years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, respectively. Excluding the net revenue and cost of revenue attributable to the Guo'ao Project, our cost of revenue would have represented 44.5%, 43.6%, 37.0% and 32.5% of our net revenue in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively.

    Selling, marketing and administrative expenses

        Our selling, marketing and marketing expenses primarily consist of staff costs, marketing and promotion expenses, traveling and transportation expenses as well as office and leasing expenses incurred in connection with our general marketing and planning activities as well as our expenses incurred as a result of our back-office support functions, such as legal, human resources and accounting departments at our headquarters. The staff costs, which are generally the largest component of our selling, marketing and administrative expenses, represented 38.8%, 51.3%, 51.9% and 48.7% of our total selling, marketing and administrative expenses for the years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, respectively. Selling, marketing and

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administrative expenses amounted to 20.1%, 29.9%, 19.5% and 21.7% of our net revenue for the years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, respectively.

    Taxation

        We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to profits, income or capital gain or appreciation tax. In addition, dividend payments made by us to our shareholders are not subject to withholding tax in the Cayman Islands.

        Payments of dividends by SYSWIN Limited, our subsidiary in Hong Kong, are not subject to any Hong Kong withholding tax. Other than holding equity interests in Syswin Zhi Di, SYSWIN Limited has had no significant operations in Hong Kong since its inception.

        Prior to January 1, 2008, our PRC entities were governed by the previous Enterprise Income Tax Provisional Rules (the "Previous EIT Rules") of China. Under the Previous EIT Rules, our PRC entities were generally subject to enterprise income taxes at a statutory rate of 33% (30% state income tax plus 3% local income tax). Effective January 1, 2008, the CIT Law in China supersedes the Previous EIT Rules and unifies the enterprise income tax rate for foreign-invested enterprises ("FIEs") at 25%. The CIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose "de facto management body" is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the CIT Law merely define the location of the "de facto management body" as "the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located." In the case of our company, each of SYSWIN Inc. and SYSWIN Limited has been incorporated outside the PRC in December 2007. Furthermore, we believe that neither SYSWIN Inc. nor SYSWIN Limited has its "de facto management body" in the PRC. Because our corporate restructuring was only completed recently in August 2010, SYSWIN Inc. and SYSWIN Limited have not conducted any significant operating activities to date, and as a result, have not maintained any accounting records or company seals. The minute books of the respective boards of directors and shareholders of these two entities have been maintained outside the PRC. In addition, upon completion of this offering, SYSWIN Inc. and SYSWIN Limited expect to hold their respective board meetings and shareholder meetings outside the PRC, and maintain their respective accounting records and company seals outside the PRC. Based on the foregoing facts and circumstances, we do not believe that our operations outside of the PRC should be considered a resident enterprise for PRC tax purposes. However, there is limited guidance and implementation history of the CIT Law. Should we be treated by the PRC tax authorities as a resident enterprise for PRC tax purposes, we will be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

        The CIT Law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company's jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the Previous EIT Rules. The Cayman Islands, where we are incorporated, does not have such a tax treaty with China. According to the arrangement between Mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). Our subsidiary in China is invested and held by an entity registered in Hong Kong. Dividends from our PRC subsidiary to our subsidiary in Hong Kong are subject to a withholding tax at the rate of 5%, subject to the approval of the tax authorities in the PRC. See "Risk Factors—Risks Relating to Doing Business in the China—Dividends payable to us by

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our PRC subsidiary and gain on sale of our ADSs or shares may be subject to PRC withholding taxes, or we may be subject to PRC taxation on our worldwide income and dividends distributed to our investors may be subject to PRC withholding taxes under the Corporate Income Tax Law." In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes. Based on the subsequently issued interpretation of the EIT, Article 4 of Cai Shui [2008] Circular No. 1, dividends on earnings prior to 2008 but distributed after 2008 are not subject to withholding income tax.

Critical Accounting Policies

        Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

        An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We believe that our accounting policies with respect to revenue recognition, property and equipment, share-based compensation, impairment of long-lived assets and accounts receivable represent critical accounting policies that reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements.

        The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included elsewhere in this prospectus. When reviewing our financial statements, you should consider (i) our selection of critical accounting policies, (ii) judgments and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.

    Revenue recognition

        We recognize revenue where there is persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Revenue is recorded, net of sales related taxes and discounts.

    Real estate sales agency services

        We provide sales agency services for primary real estate developers. For primary real estate sales agency services, we recognize base and supplemental commission income as revenue when the relevant purchase contracts between property developers and property buyers become unconditional or irrevocable, and the services as stipulated in the agency contracts have been rendered by us. Generally, we deem a property purchase contract to be unconditional and irrevocable immediately upon (i) signing of the property purchase contract between the buyer and the property developer and (ii) payment of deposits from the buyer on the purchased property.

        The incentive commissions represent the commissions would be earned if certain performance targets we pre-agreed with the developer clients have been achieved. Similar to the base commissions and supplemental commissions, we recognize the revenue when the relevant purchase contracts between the property developers and property buyers become unconditional or irrevocable and we have achieved the performance targets.

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        Quality assurance retention money represents the arrangement whereby the Company allows their developer clients to pay a portion of commissions upon meeting certain pre-determined criteria. Such pre-determined criteria can be largely categorized into (i) those based on the level of satisfaction with the services as determined by the developer clients; and (ii) those based on the sales progress on a project. The quality assurance retention money would be recognized as revenue only upon the satisfaction of pre-determined criteria.

    Real estate consultancy services

        We provide real estate consultancy services to clients in relation to land and property development. We recognize revenue when we have completed our obligations under the service contracts and the payment terms are no longer contingent.

    Property and equipment

        Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives:

Buildings (including the land use rights adhered to)

 

40 years

Motor vehicles

 

5 years

Office equipment, furniture and electronic equipment

 

5 years

Leasehold improvement

 

Shorter of lease term or estimated useful lives of assets

        If our estimations resulted in different useful lives for its property and equipment, the amount of depreciation expense recorded in each period would be correspondingly impacted.

    Share-based compensation

        We use a fair-value based method to account for share-based compensation. During the year ended December 31, 2007, Mr. Tao was granted a 3% equity interest in our company for his past services. Compensation expense of RMB 15.2 million was immediately recognized based on the fair value of this equity interest at the time of grant less consideration paid and the fact that Mr. Tao's requisite service period relating to the grant had been completed. We estimated the fair value of equity interest transferred based on enterprise valuation results, and using the discounted cash flow valuation model. The fair value of our company was estimated based on assumptions regarding our future operating performance, revenue, growth rates, future working capital, capital expenditure requirements, discount rates and terminal multiple. If different assumptions had been utilized, the amount of compensation expense would have been impacted.

    Impairment of long-lived assets

        We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, we assess the recoverability of the long-lived assets by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we will recognize an impairment loss to the excess of the carrying amount over the fair value of the assets. Determination of recoverability is based on estimates and changes in these estimates and assumptions could materially impact our financial position and results of operations. No impairment of long-lived assets was recognized for years ended December 31, 2007, 2008 and 2009 and the nine months ended September 30, 2010, respectively.

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Accounts Receivable

        Accounts receivable represent the amount due from customers, which are recognized and carried at the billable amount less an allowance for any potential uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. We review the accounts receivable on a periodic basis and make specific allowances based on an assessment of specific evidence indicating doubtful collection, historical experience, account balance aging and prevailing economic conditions.

        If any of our developer clients with significant outstanding accounts receivable balances were to become insolvent or unable to make payments in a timely manner, or refuse to pay us, we would have to make further provisions or write off the relevant amounts.

Results of Operations

        The following table sets forth a summary of our consolidated results of operations for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,  
 
  2007   2008   2009   2009   2010  
 
  Amount   % of total
net revenue
  Amount   % of total
net revenue
  Amount   % of total
net revenue
  Amount   % of total
net revenue
  Amount   % of total
net revenue
 
 
  (In thousands of RMB, except percentages)
 

Net revenue

    326,979     100.0 %   276,003     100.0 %   432,736     100.0 %   282,185     100.0 %   431,762     100.0 %

Cost of revenue

    (72,303 )   (22.1 )   (75,979 )   (27.5 )   (131,193 )   (30.3 )   (97,787 )   (34.7 )   (136,701 )   (31.7 )
                                           

Gross profit

    254,676     77.9     200,024     72.5     301,543     69.7     184,398     65.3     295,061     68.3  

Selling, marketing and administrative expenses

    (65,563 )   (20.1 )   (82,577 )   (29.9 )   (84,545 )   (19.5 )   (54,006 )   (19.1 )   (93,561 )   (21.7 )
                                           

Income from operations

    189,113     57.8     117,447     42.6     216,998     50.1     130,392     46.2     201,500     46.7  

Interest expenses

            (922 )   (0.3 )   (147 )   (0.0 )   (147 )   (0.1 )        

Interest income

    112     0.0     81     0.0     864     0.2     521     0.2     2,005     0.5  

Foreign currency exchange loss

                    (576 )   (0.1 )   (576 )   (0.2 )        

Other (expenses) / income—net

    (10 )   (0.0 )   (1,283 )   (0.5 )   1,285     0.3     1,459     0.5     3,811     0.9  
                                           

Income from continuing operations before income tax

    189,215     57.9     115,323     41.8     218,424     50.5     131,649     46.7     207,316     48.0  

Income tax

    (67,010 )   (20.5 )   (31,646 )   (11.5 )   (53,968 )   (12.5 )   (33,259 )   (11.8 )   (54,589 )   (12.6 )
                                           

Income from continuing operations

    122,205     37.4     83,677     30.3     164,456     38.0     98,390     34.9     152,727     35.4  

Loss from discontinued operations, net

            (1,354 )   (0.5 )   (12,039 )   (2.8 )   (7,459 )   (2.6 )   (20,054 )   (4.6 )
                                           

Net income

    122,205     37.4     82,323     29.8     152,417     35.2     90,931     32.2     132,673     30.7  

Non-controlling interest

    (1,288 )   (0.4 )   (87 )   (0.0 )                        
                                           

Net income attributable to SYSWIN Inc.

    120,917     37.0     82,236     29.8     152,417     35.2     90,931     32.2     132,673     30.7  

Amount attributable to SYSWIN Inc.

                                                             

Income from continuing operations

    120,917     37.0     83,590     30.3     164,456     38.0     98,390     34.9     152,727     35.4  

Loss from discontinued operations, net

            (1,354 )   (0.5 )   (12,039 )   (2.8 )   (7,459 )   (2.6 )   (20,054 )   (4.6 )
                                           

Net income attributable to SYSWIN Inc.

    120,917     37.0 %   82,236     29.8 %   152,417     35.2 %   90,931     32.2 %   132,673     30.7 %

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        The table below sets forth selected financial information and operating data relating to our sales agency services business for the period indicated.

 
  For the Year Ended December 31,   For the Nine Months Ended September 30,  
 
  2007   2008   2009   2009   2010  

Number of cities

    6     12     14     13     17  

Net revenue (in thousands of RMB)

                               

Beijing

    283,815     247,194     313,793     203,906     336,006  

Other cities

    20,744     13,015     106,281     71,738     85,698  

Total

    304,559     260,209     420,074     275,644     421,704  

Aggregate gross floor area of the properties sold (in thousands of square meters)

                               

Beijing

    650     911     1,323     881     1,361  

Other cities

    246     220     1,535     1,054     1,601  

Total

    896     1,131     2,858     1,935     2,962  

Aggregate transaction value (in millions of RMB)

                               

Beijing

    9,460     9,480     18,954     13,297     22,256  

Other cities

    877     1,361     10,724     7,422     11,124  

Total

    10,337     10,841     29,678     20,719     33,380  

Effective commission rates (%)

                               

Beijing

    3.0%     2.6%     1.7%     1.5%     1.5%  

Other cities

    2.4%     1.0%     1.0%     1.0%     0.8%  

Overall

    2.9%     2.4%     1.4%     1.3%     1.3%  

Effective base commission rates (%)

                               

Beijing

    1.0%     0.8%     0.9%     0.7%     0.9%  

Other cities

    2.0%     0.9%     1.0%     0.9%     0.7%  

Overall

    1.1%     0.8%     0.9%     0.8%     0.8%  

Number of projects

                               

Beijing

    22     27     34     29     39  

Other cities

    5     17     34     34     40  

Total

    27     44     68     63     79  

Nine months ended September 30, 2010 compared to nine months ended September 30, 2009

        Net revenue.    Our net revenue increased by RMB149.6 million, from RMB282.2 million in the nine months ended September 30, 2009 to RMB431.8 million (US$64.5 million) in the nine months ended September 30, 2010. The increase primarily reflected an increase in net revenue generated by our sales agency services.

        Sales agency services.    Net revenue from our sales agency services increased by RMB146.1 million, from RMB275.6 million in the nine months ended September 30, 2009 to RMB421.7 million (US$63.0 million) in the nine months ended September 30, 2010. The increase primarily reflected an increase in the aggregate gross floor area sold as well as the average selling price of properties sold.

        The aggregate gross floor area of properties sold increased from 1,935 thousand square meters in the nine months ended September 30, 2009 to 2,962 thousand square meters in the nine months ended September 30, 2010. The increase primarily reflected a significant increase in aggregate gross floor area of properties sold in Beijing, our largest market in terms of net revenue, from 881 thousand square meters in the nine months ended September 30, 2009 to 1,361 thousand square meters in the nine months ended September 30, 2010, which in turn reflected the continued increase in scale of our

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operations in Beijing. The increase in our aggregate gross floor area of properties sold also reflected an increase in aggregate gross floor area of properties sold in Yinchuan, from 15 thousand square meters in the nine months ended September 30, 2009 to 488 thousand square meters in the nine months ended September 30, 2010. Such increase in the Yinchuan market reflected the sales derived from a new government-subsidized housing project in the nine months ended September 30, 2010. The aggregate gross floor area of properties sold in markets such as Yantai, Taiyuan, Dalian and Suzhou also experienced growth. Despite growth in these markets, in the second and third quarters of 2010, the aggregate gross floor area of our properties sold was adversely affected by a series of measures adopted by the PRC government since April 2010 designed to cool down the property market.

        The average selling price of the projects to which we provided sales agency services increased from RMB10,706 per square meter in the nine months ended September 30, 2009 to RMB11,270 per square meter in the nine months ended September 30, 2010, primarily reflecting a general increase in the average selling price of properties in China in 2009 and the first quarter of 2010. As a result of increases in both transaction volume and the average selling prices of properties sold, our aggregate transaction value of property sales in the Beijing market increased from RMB13.3 billion in the nine months ended September 30, 2009 to RMB22.3 billion in the nine months ended September 30, 2010. Our aggregate transaction value of property sales in cities outside Beijing increased from RMB7.4 billion in the nine months ended September 30, 2009 to RMB11.1 billion in the nine months ended September 30, 2010.

        Our commission rates remained relatively stable during the same period. Our effective overall commission rates were 1.3% and our effective base commission rates were 0.8% during both nine-month periods ended September 30, 2009 and 2010.

        Real estate consultancy services.    Net revenue from our real estate consultancy services increased by RMB3.6 million, or 55.4%, from RMB6.5 million in the nine months ended September 30, 2009 to RMB10.1 million (US$1.5 million) in the nine months ended September 30, 2010, reflecting increases in sales in the Jinan, Qingdao and Taiyuan markets.

        Cost of revenue.    Our cost of revenue increased by RMB38.9 million, or 39.8%, from RMB97.8 million in the nine months ended September 30, 2009 to RMB136.7 million (US$20.4 million) in the nine months ended September 30, 2010. The increase primarily reflected an increase in our staff costs and our renovation expenses, partially offset by a decrease in our marketing and promotion service fees. In the nine months ended September 30, 2010, the number of our sales professionals and other staff increased as a result of our continued geographic expansion. In addition, our average staff cost per person increased, reflecting our increased sales and sales commissions paid to our employees during the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009. We also incurred additional renovation expenses in connection with the renovation of the mock-up room of the Guo'ao Project in the nine months ended September 30, 2010. Our marketing and promotion service fees decreased, primarily reflecting a decrease in sales service fees we paid to third parties for sales assistance in connection with the Guo'ao Project. Such sales service fees decreased from RMB16.0 million in the nine months ended September 30, 2009 to RMB9.2 million (US$1.4 million) in the nine months ended September 30, 2010.

        Gross margin.    Our gross margin was 68.3% in the nine months ended September 30, 2010, as compared to gross margin of 65.3% in the nine months ended September 30, 2009. Gross margin derived from the Guo'ao Project was 78.6% during the nine months ended September 30, 2009 and 71.9% during the nine months ended September 30, 2010. The decrease primarily reflected a decrease in sales as the project reached the later stages of sales. Excluding net revenue derived from, and cost of revenue incurred with respect to, the Guo'ao Project, our gross margin would have been 67.5% in the nine months ended September 30, 2010, as compared to 56.4% in the nine months ended September 30, 2009. Such increase primarily reflected the continued increase in economies of scale of our operations in Beijing, our largest market in terms of net revenue. The increase in gross margin was

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partially offset by the decrease in gross margins from our operations in certain cities outside the Beijing market, particularly Tianjin, Chengdu, Dalian and Qingdao, reflecting our increased hiring of sales professionals and staff in preparation for projects expected to commence sales during the last quarter of 2010.

        Selling, marketing and administrative expenses.    Our selling, marketing and administrative expenses increased by RMB39.6 million, or 73.3%, from RMB54.0 million in the nine months ended September 30, 2009 to RMB93.6 million (US$14.0 million) in the nine months ended September 30, 2010. The increase primarily reflected an increase in our staff costs and depreciation and amortization expenses. The increase in our staff costs reflected (i) our continued hiring of additional management members and marketing, planning and administrative staff to support our business growth and geographic expansion, and (ii) increased staff costs per person as a result of our increased bonus paid to employees in the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009. The increase in depreciation and amortization expenses reflected the commencement of operations of the Syswin Building in September 2009.

        Interest expense.    Our interest expenses amounted to RMB0.1 million in the nine months ended September 30, 2009. We had no interest expenses in the nine months ended September 30, 2010, as we did not have any borrowings in that period.

        Interest income.    Our interest income increased by RMB1.5 million, from RMB0.5 million in the nine months ended September 30, 2009 to RMB2.0 million (US$0.3 million) in the nine months ended September 30, 2010. The increase primarily reflected an increase in bank deposits in the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009, reflecting the deposit of proceeds from CDH Investments' investment in our company.

        Foreign currency exchange loss.    Our foreign currency exchange loss amounted to RMB0.6 million in the nine months ended September 30, 2009, as we converted the proceeds from our private placement from U.S. dollars into Renminbi and incurred losses as a result of the U.S. dollar's depreciation against the Renminbi in May 2009. We did not have any gain or loss from foreign currency exchange during the nine months ended September 30, 2010.

        Other (expenses)/income-net.    Our other income increased by RMB2.3 million to RMB3.8 million (US$0.6 million) in the nine months ended September 30, 2010, from RMB1.5 million in the nine months ended September 30, 2009. The financial incentive grants we received from the local government in Beijing increased by RMB2.4 million to RMB4.0 million (US$0.6 million) in the nine months ended September 30, 2010, from RMB1.6 million in the nine months ended September 30, 2009.

        Income tax.    Our income tax increased by RMB21.3 million, from RMB33.3 million in the nine months ended September 30, 2009 to RMB54.6 million (US$8.2 million) in the nine months ended September 30, 2010. Our effective tax rate was 26.3% in the nine months ended September 30, 2010, as compared to 25.3% in the nine months ended September 30, 2009. The increase in the effective tax rate was due to an increase in expenses not qualified for tax deductions.

        Income from continuing operations.    As a result of the foregoing, our net income from continuing operations increased by RMB54.3 million, from RMB98.4 million in the nine months ended September 30, 2009 to RMB152.7 million (US$22.8 million) in the nine months ended September 30, 2010.

        Loss from discontinued operations, net.    We began operations of a secondary real estate brokerage services business in 2008, and transferred such business to entities controlled by Mr. Chen in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Acquisitions and disposals." Our net loss from discontinued operations was RMB20.1 million (US$3.0 million) for the nine months ended September 30, 2010, as compared to a net loss of RMB7.5 million for the nine months ended

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September 30, 2009. Such increased loss reflected an increase in expansion costs associated with the opening of additional secondary brokerage sales offices during the nine months ended September 30, 2010.

        Net income.    As a result of the foregoing, our net income increased by RMB41.8 million, from RMB90.9 million in the nine months ended September 30, 2009 to RMB132.7 million (US$19.8 million) in the nine months ended September 30, 2010.

Year ended December 31, 2009 compared to year ended December 31, 2008

        Net revenue.    Our net revenue increased by RMB156.7 million, or 56.8%, from RMB276.0 million for the year ended December 31, 2008 to RMB432.7 million (US$64.7 million) for the year ended December 31, 2009, primarily reflecting an increase in net revenue generated by our sales agency services.

        Sales agency services.    Net revenue from our sales agency services increased by RMB159.9 million, or 61.5%, from RMB260.2 million for the year ended December 31, 2008 to RMB420.1 million (US$62.8 million) for the year ended December 31, 2009. The increase primarily reflected increases in the aggregate gross floor area of the properties sold as well as our effective base commission rates, partially offset by a decrease in our net revenue derived from our incentive commissions.

        The aggregate gross floor area of the properties sold increased particularly significantly for cities outside Beijing, from 220 thousand square meters to 1,535 thousand square meters. A number of the cities we entered in 2007 and 2008 experienced significant increases in gross floor area of properties sold, reflecting a combination of our expansion efforts (which in turn is reflected in an increase in the number of our projects) and favorable market conditions in 2009. Our sales in Beijing also increased from 2008 to 2009, reflecting a combination of increased sales in our existing projects as a result of favorable market conditions in 2009 as well as an increase in the number of our projects.

        The decrease of our effective overall commission rate from 2.4% in 2008 to 1.4% in 2009 primarily reflected (i) a decrease in incentive commissions derived from the Beijing market, and (ii) a decrease in net revenue derived from the Guo'ao Project as a percentage of our total net revenue in 2009, reflecting our more diversified clients and project portfolio. The Guo'ao Project, which historically yielded a relatively high level of effective commission rate, contributed 35.1% of our total net revenue in 2009, as compared to 50.8% in 2008. The increase in our effective base commission rate from 0.8% in 2008 to 0.9% in 2009 primarily reflected a higher level of sales on projects achieving the pre-determined threshold amounts for higher levels of base commissions under the progressive structure of the base commissions, which in turn reflected a general recovery in China's real estate market in 2009.

        The average selling price of the projects to which we provided services increased from RMB9,589 per square meter in 2008 to RMB10,385 per square meter in 2009, primarily reflecting an increase in the average selling price of properties in Beijing, as the real estate market conditions in China recovered after the market downturn in 2008. As a result of increases in both transaction volume and the average selling price of the properties sold, the aggregate transaction value of property sales in cities other than Beijing increased from RMB1.4 billion in 2008 to RMB10.7 billion in 2009, and the aggregate transaction value of property sales in Beijing market increased from RMB9.5 billion in 2008 to RMB19.0 billion in 2009.

        Real estate consultancy services.    Net revenue from our real estate consultancy services decreased by RMB3.1 million, or 19.6%, from RMB15.8 million for the year ended December 31, 2008 to RMB12.7 million (US$1.9 million) for the year ended December 31, 2009, primarily reflecting a decrease in net revenue derived from our consultancy services provided to a primary land developer in Hohhot.

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        Cost of revenue.    Our cost of revenue increased by RMB55.2 million, or 72.6%, from RMB76.0 million for the year ended December 31, 2008 to RMB131.2 million (US$19.6 million) for the year ended December 31, 2009. The increase primarily reflected an increase in our staff costs as well as the marketing and promotion service fees we incurred in 2009. In 2009, our number of sales professionals and other staff increased as a result of our continued geographic expansion. In addition, our average staff cost per person increased, reflecting our increased sales in 2009 as a result of a general recovery in China's real estate market after the 2008 market downturn. The increase in our cost of revenue in 2009 from 2008 also reflected sales service fees of RMB16.0 million we paid to a third party for its sales assistance in connection with the Guo'ao Project.

        Gross margin.    Our gross margin was 69.7% in 2009, as compared to gross margin of 72.5% in 2008. Gross margin derived from the Guo'ao Project was 88.0% in 2008 and 82.0% in 2009. The decrease primarily reflected an increase in cost of revenue due to an increased level in sales and promotional efforts and activities in 2009. Excluding net revenue derived from and cost of revenue incurred on the Guo'ao Project, our gross margin would have been 63.0% in 2009, as compared to 56.4% in 2008. Such increase primarily reflected an increase in the economies of scale of our operations, particularly in markets such as Tianjin, Dalian, Qingdao and Chengdu, which progressed from category 4 markets to categories 2 and 3 markets. See "—Specific Factors Affecting Our Financial Condition and Operating Results—Development cycles of our markets."

        Selling, marketing and administrative expenses.    Our selling, marketing and administrative expenses increased by RMB1.9 million, or 2.3%, from RMB82.6 million for the year ended December 31, 2008 to RMB84.5 million (US$12.6 million) for the year ended December 31, 2009. The increase reflected an increase in our staff costs and depreciation and amortization expenses and traveling and transportation expenses, partially offset by a decrease in consulting fees. The increase in our staff costs reflected (i) our continued hiring of additional management members and marketing, planning and administrative staff to support our business growth and geographic expansion, and (ii) our increased staff costs per person as a result of our increased bonus paid in 2009 as compared to 2008. The increase in depreciation and amortization expenses reflected the commencement of operation of the Syswin Building in 2009. The decrease in consulting fees in 2009 reflected the consulting fees we incurred in preparing for our private placement in 2008.

        Interest expense.    Our interest expenses decreased by RMB0.8 million, or 88.9%, from RMB0.9 million for the year ended December 31, 2008 to RMB0.1 million for the year ended December 31, 2009. The decrease primarily reflected a decrease in the average balance of our bank borrowing.

        Interest income.    Our interest income increased by RMB0.8 million, from RMB0.1 million for the year ended December 31, 2008 to RMB0.9 million (US$0.1 million) for the year ended December 31, 2009. The increase primarily reflected an increase in bank deposits in 2009 as a result of CDH Investments' investment in our company.

        Foreign currency exchange loss.    Our foreign currency exchange loss amounted to RMB0.6 million (US$0.1 million) for the year ended December 31, 2009, as we converted the proceeds from our private placement from U.S. dollar into Renminbi and incurred losses as a result of the U.S. dollar's depreciation against the Renminbi in 2009.

        Other (expenses)/income-net.    We generated RMB1.3 million (US$0.2 million) of other income for the year ended December 31, 2009, as compared to other expenses of RMB1.3 million for the year ended December 31, 2008. Our subsidy income increased from RMB0.6 million for the year ended December 31, 2008 to RMB1.6 million (US$0.2 million) for the year ended December 31, 2009. The increase primarily reflected increased financial incentive grants from the local government in Beijing. We incurred a tax-related late payment interest of RMB1.3 million and made a payment of RMB0.5 million in connection with our withdrawal from a project in 2008.

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        Income tax.    Our income tax increased by RMB22.4 million, or 70.9%, from RMB31.6 million for the year ended December 31, 2008 to RMB54.0 million (US$8.1 million) for the year ended December 31, 2009. Our effective tax rate was 24.7% in 2009, as compared to 27.4% in 2008. The decrease in the effective tax rate was due to the utilization of previously unrecognized tax losses coupled with a lower amount of expenses which did not qualify for tax deductions.

        Income from continuing operations.    As a result of the foregoing, our net income from continuing operations increased by RMB80.9 million, or 96.8%, from RMB83.6 million for the year ended December 31, 2008 to RMB164.5 million (US$24.6 million) for the year ended December 31, 2009.

        Loss from discontinued operations, net.    Our net loss on discontinued operations was RMB12.0 million (US$1.8 million) for the year ended December 31, 2009, as compared to a net loss of RMB1.4 million for the year ended December 31, 2008. Such increase reflected an increase in selling, marketing and administrative expenses associated with our significant efforts in developing the secondary brokerage business in 2009.

        Net income.    As a result of the foregoing, our net income increased by RMB70.2 million, from RMB82.2 million in the year ended December 31, 2008 to RMB152.4 million (US$22.8 million) in the year ended December 31, 2009.

Year ended December 31, 2008 compared to year ended December 31, 2007

        Net revenue.    Our net revenue decreased by RMB51.0 million, or 15.6%, from RMB327.0 million for the year ended December 31, 2007 to RMB276.0 million for the year ended December 31, 2008, primarily reflecting a decrease in net revenue generated by our sales agency services.

        Sales agency services.    Net revenue from our sales agency services decreased by RMB44.4 million, or 14.6%, from RMB304.6 million for the year ended December 31, 2007 to RMB260.2 million for the year ended December 31, 2008. This decrease primarily reflected decreases in our effective commission rate and the average selling price of the properties sold, partially offset by an increase in the aggregate gross floor area of the properties sold.

        Our effective overall commission rate decreased from 2.9% in 2007 to 2.4% in 2008, reflecting a decrease in our effective base commission rate from 1.1% in 2007 to 0.8% in 2008, as well as a decrease in supplemental and incentive commissions. The decrease in our effective base commission rate reflected (i) a lower level of sales on projects achieving the pre-determined threshold amounts for higher levels of base commissions under the progressive structure of the base commissions, which in turn reflected the real estate market downturn in China in 2008; and (ii) an increase in sales of government-subsidized housing projects in Beijing in 2008, which yielded lower levels of base commissions, to maintain our level of sales in response to the market downturn in China in 2008. Net revenue derived from our supplemental and incentive commissions in the Beijing market decreased from RMB190.0 million in 2007 to RMB170.9 million in 2008. The decrease primarily reflected our decreased net revenue attributable to the supplemental and incentive commissions from the Guo'ao Project as a result of our decreased sales due to the real estate market downturn in China in 2008, partially offset by an increase in incentive commissions derived from the Beijing market.

        Our aggregate gross floor area of the properties sold in Beijing increased from 650 thousand square meters in 2007 to 911 thousand square meters in 2008, primarily reflecting an increase in the number of our projects. We experienced a decrease in the gross floor area of the properties sold outside Beijing from 2007 to 2008, reflecting a combination of our decreased sales in Guiyang, as our first major sales project in Guiyang was completed by 2007 and a new sales project only commenced in Guiyang in late 2008, and the increase in the gross floor area of properties sold in cities we entered in 2008.

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        The average selling price of the projects sold decreased from RMB11,535 per square meter in 2007 to RMB9,589 per square meter in 2008, reflecting the more commercial properties sold in 2007 as compared to 2008, as well as a higher level of sales of government-subsidized housing projects in 2008, which yielded relatively lower average selling price. The decrease in average selling price of the properties sold also reflected the market downturn in China's real estate industry in 2008. As a result of the foregoing, the aggregate transaction value of property sales increased from RMB10.3 billion in 2007 to RMB10.8 billion in 2008.

        Real estate consultancy services.    Net revenue from our real estate consultancy services decreased by RMB6.6 million, or 29.5%, from RMB22.4 million for the year ended December 31, 2007 to RMB15.8 million for the year ended December 31, 2008, primarily reflecting a decrease in net revenue derived from consultancy services rendered to a development project in Beijing.

        Cost of revenue.    Our cost of revenue increased by RMB3.7 million, or 5.1%, from RMB72.3 million for the year ended December 31, 2007 to RMB76.0 million for the year ended December 31, 2008. This increase primarily reflected an increase in staff costs and leasing expenses, primarily reflecting our geographic expansion in 2008, partially offset by a decrease in renovation expenses. The increase in staff costs reflected our increased hiring of additional sales professionals and other staff to support our geographic expansion in 2008, partially offset by the lowered level of staff costs per person as a result of our decreased incentive based compensation due to the real estate market downturn in 2008. In addition, our leasing expenses increased in 2008, reflecting our leasing of an office space for the Guo'ao Project in 2008. The decrease in renovation expenses reflected a decrease in expenses incurred in connection with the renovation of mock-up rooms for the Guo'ao Project.

        Gross margin.    Our gross margin was 77.9% in 2007, as compared to gross margin of 72.5% in 2008. Gross margin derived from the Guo'ao Project was 90.8% in 2007 and 88.0% in 2008. The decrease was primarily due to a decrease in sales, affected by the Beijing 2008 Olympic Games in 2008. Excluding net revenue derived from and cost incurred for the Guo'ao Project, our gross margin would have remained relatively stable at 56.4% in 2008 and 55.5% in 2007. In 2008, we expanded into a number of new markets, including Qingdao, Chongqing, Chengdu and Dalian. See "—Specific Factors Affecting Our Financial Condition and Operating Results—Development cycle of our markets."

        Selling, marketing and administrative expenses.    Our selling, marketing and administrative expenses increased by RMB17.0 million, or 25.9%, from RMB65.6 million for the year ended December 31, 2007 to RMB82.6 million for the year ended December 31, 2008. This increase primarily reflected an increase in staff costs, leasing expenses, marketing promotion expenses and traveling and transportation expenses, which reflected our significant efforts in geographic expansion in 2008. In 2008, we entered six new cities, resulting in the increase in hiring of additional managerial and planning staff as well as leasing, traveling and transportation expenses. We also allocated more resources in marketing efforts to support our geographic expansion. In addition, we started to hire additional management members to support our business growth and geographic expansion in 2008, which also contributed to the increase in staff costs in 2008. We also incurred RMB15.2 million in expenses relating to the share-based compensation granted from Mr. Chen to Mr. Tao in 2007.

        Interest expense.    We incurred RMB 0.9 million in interest expense for the year ended December 31, 2008, reflecting our bank borrowing in 2008. We did not have any interest expense in 2007.

        Interest income.    Our interest income decrease by RMB31 thousand, from RMB112 thousand for the year ended December 31, 2007 to RMB81 thousand for the year ended December 31, 2008.

        Other (expenses)/income-net.    Our other expenses increased by RMB1.3 million, from RMB10 thousand for the year ended December 31, 2007 to RMB1.3 million for the year ended

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December 31, 2008. This increase primarily reflected the tax-related late payment interest of RMB1.3 million and a payment of RMB0.5 million made in connection with our withdrawal from a project in 2008, as well as RMB0.6 million in financial incentive grants from the local government in Beijing.

        Income tax.    Our income tax decreased by RMB35.4 million, or 52.8%, from RMB67.0 million for the year ended December 31, 2007 to RMB31.6 million for the year ended December 31, 2008. Our effective tax rate was 35.4% in 2007, as compared to 27.4% in 2008. The decrease in the effective tax rate was primarily due to the new CIT law in China which requires a unified 25% tax rate as opposed to the previous rate of 33%.

        Income from continuing operations.    As a result of the foregoing, our net income from continuing operations decreased by RMB37.3 million, or 30.9%, from RMB120.9 million for the year ended December 31, 2007 to RMB83.6 million for the year ended December 31, 2008.

        Loss from discontinued operations, net.    We commenced our secondary real estate brokerage services business in 2008, and incurred net loss on such operations of RMB1.4 million for the year ended December 31, 2008.

        Net income.    As a result of the foregoing, our net income decreased by RMB38.7 million, from RMB120.9 million in the year ended December 31, 2007 to RMB82.2 million in the year ended December 31, 2008.

Selected Quarterly Results of Operations

        The following table presents our selected unaudited consolidated quarterly results of operations for the seven quarterly periods ended September 30, 2010. This information should be read together with our audited consolidated financial statements and unaudited interim consolidated financial statements, and related notes included elsewhere in this prospectus. We have prepared the unaudited interim consolidated financial information on the same basis as our audited consolidated financial statements. The unaudited consolidated financial information for the seven quarterly periods ended September 30, 2010 include all adjustments that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented. The quarter-to-quarter comparison of operating

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results should not be relied upon as being indicative of the results that may be expected for any future quarters or periods.

 
  For the Three Months Ended  
 
  March 31,
2009
  June 30,
2009
  September 30,
2009
  December 31,
2009
  March 31,
2010
  June 30,
2010
  September 30,
2010
 
 
  (In thousands of RMB)
 

Net revenue

    45,333     100,607     136,245     150,551     122,495     167,884     141,383  

Costs of revenue

    (19,880 )   (37,726 )   (40,181 )   (33,406 )   (37,692 )   (50,437 )   (48,572 )
                               

Gross Profict

    25,453     62,881     96,064     117,145     84,803     117,447     92,811  

Selling, marketing and administrative expenses

    (15,355 )   (16,904 )   (21,747 )   (30,539 )   (27,156 )   (29,147 )   (37,258 )
                               

Income from operations

    10,098     45,977     74,317     86,606     57,647     88,300     55,553  

Interest expense

    (140 )   (7 )                    

Interest income

    40     250     231     343     451     528     1,026  

Foreign currency exchange loss

    (101 )   (475 )                    

Other (expenses) / income—net

    (7 )   (86 )   1,552     (174 )       2,529     1,282  
                               

Income from continuing operations before income tax

    9,890     45,659     76,100     86,775     58,098     91,357     57,861  

Income tax

    (2,504 )   (11,522 )   (19,233 )   (20,709 )   (15,520 )   (23,666 )   (15,403 )
                               

Income from continuing operations

    7,386     34,137     56,867     66,066     42,578     67,691     42,458  

Loss from discontinued operations, net

    (1,962 )   (2,159 )   (3,338 )   (4,580 )   (5,802 )   (10,166 )   (4,086 )
                               

Net income

    5,424     31,978     53,529     61,486     36,776     57,525     38,372  
                               

Our Liquidity and Capital Resources

        Through September 30, 2010, our principal sources of liquidity were cash generated from our operating activities, issuance of shares through private placements and bank borrowings. Our net cash generated from operating activities amounted to RMB121.6 million, RMB41.1 million, RMB18.6 million (US$2.8 million) and RMB87.1 million (US$13.0 million) for the years ended December 31, 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. As of December 31, 2007, 2008, 2009 and September 30, 2010, our cash and cash equivalents amounted to RMB25.6 million, RMB20.9 million, RMB194.8 million (US$29.1 million) and RMB186.0 million (US$27.8 million), respectively. Our cash and cash equivalents consist of cash on hand, demand deposits and other short-term investments with high level of liquidity which are unrestricted as to withdrawal or use and which have maturities of three months or less. We currently anticipate that we will be able to meet our needs to fund operations for at least the next twelve months following this offering with operating cash flow and existing cash balances.

        In January 2007, we entered into the property purchase agreement to acquire Syswin Building from Beijing City Development Group Company, a property developer in Beijing. In contemplation of this offering, as part of our restructuring, we terminated this purchase agreement in August 2010. As of the date of termination, the total consideration paid for the acquisition of Syswin Building amounted to RMB114.6 million (US$17.1 million), which Beijing City Development Group Company refunded in August 2010. Mr. Chen acquired Syswin Building through one of his investment entities and we entered into a lease agreement with such entity to lease a portion of Syswin Building for our headquarters office space in August 2010. See "Related Party Transactions—Transactions with Mr. Chen—Purchase of services."

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        Our working capital, calculated as the difference between current assets and current liabilities, as of December 31, 2007, 2008, 2009 and September 30, 2010 was RMB124.6 million, RMB41.9 million, RMB301.6 million (US$45.1 million) and RMB279.6 million (US$41.8 million), respectively. In the future, we may finance our working capital from further issuance of equity or debt securities as well as bank borrowings.

        We are a holding company and we conduct our operations primarily through our PRC entities in China. As a result, our ability to pay dividends and to finance any debt we may incur depends upon dividends paid by our subsidiary in China. In addition, if our subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. Our subsidiary in the PRC is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with accounting standards and regulations applicable to such subsidiaries. Under PRC law, our subsidiary in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Our PRC subsidiary is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund and enterprise expansion fund at the discretion of the board. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings, the reserve funds are not distributable as cash dividends except in the event of liquidation of such subsidiary. In addition, dividend payments from our PRC subsidiary could be delayed as such dividends may only be distributed upon completion of an annual audit of such subsidiary. The amounts we set aside pursuant to the applicable PRC laws and regulations amounted to RMB9.8 million, nil, RMB12.6 million (US$1.9 million) and RMB12.5 million (US$1.9 million) in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively, which were made through our consolidated entity, Syswin Xing Ye. Our PRC subsidiary, Syswin Zhi Di, was established in July 2010, and has not set aside any amount for such statutory reserve. As a result, any future dividend or distribution that Syswin Zhi Di may declare or make is subject to such statutory reserve requirement until such reserve reaches 50% of its registered capital of US$2.0 million (i.e. US$1.0 million), as well as any employee welfare fund contribution made at the discretion of its board of directors. See "Risk Factors—Risk Related to Doing Business in China—Our holding company structure may restrict our ability to receive dividends and other distributions from our subsidiary in China to fund our cash and financing requirements, and any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business." Although we consolidate the results of our consolidated entities, we do not have direct access to their cash and cash equivalents or future earnings. However, we are entitled to receive service fees from them in exchange for certain technology consulting and other services provided by us and the use of certain intellectual properties owned by us. See "Our Corporate History and Structure."

        In 2007, 2008, 2009 and the nine months ended September 30, 2010, we, through Syswin Xing Ye, our consolidated entity, declared dividend of RMB20.0 million, RMB106.0 million, nil and RMB270.0 million, respectively. During the same periods, calculating based on 154,875,000 shares, 154,875,000 shares, 154,875,000 shares and 154,875,000 shares, using the exchange rate as of each of the respective payment date, our dividend per share amounted to RMB0.13 (US$0.02), RMB0.68 (US$0.1), nil and RMB1.74 (US$0.26), respectively.

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        The following table sets forth a summary of our cash flows for the period indicated.

 
  For the Year Ended December 31,   For the Nine Months
Ended September 30,
 
 
  2007   2008   2009   2009   2010   2010  
 
  RMB
  RMB
  RMB
  (US$)
  RMB
  (US$)
 
 
  (In thousands)
 

Net cash provided by operating activities

    121,633     41,122     18,632     2,786     87,135     13,023  

Net cash (used in) provided by investing activities

    (69,104 )   38,779     (27,311 )   (4,083 )   69,307     10,359  

Net cash (used in) provided by financing activities

    (31,600 )   (84,569 )   182,578     27,289     (165,278 )   (24,703 )

Net increase (decrease) in cash and equivalents

    20,929     (4,668 )   173,899     25,992     (8,836 )   (1,321 )

Cash and cash equivalents at the beginning of the period

    4,668     25,597     20,929     3,128     194,828     29,120  

Cash and cash equivalents at the end of the period

    25,597     20,929     194,828     29,120     185,992     27,799  

Operating activities

        Net cash provided by operating activities in the nine months ended September 30, 2010 was RMB87.1 million (US$13.0 million), which was primarily attributable to net income of RMB132.7 million (US$19.8 million), partially offset by changes in certain working capital accounts, which in turn primarily reflected an increase in accounts receivable of RMB36.8 million (US$5.5 million), partially offset by an increase in accrued expenses and other current liabilities. The increase in accounts receivable reflected our increased sales during the same period. The increase in accrued expenses and other current liabilities reflected an increase in salary payable due to the increased sales in the same period.

        Net cash provided by operating activities in 2009 was RMB18.6 million (US$2.8 million), which was primarily attributable to net income of RMB152.4 million (US$22.8 million), partially offset by changes in certain working capital accounts, primarily reflecting an increase of RMB140.6 million (US$21.0 million) in accounts receivable, a decrease of RMB35.1 million (US$5.2 million) in income tax payable, and an increase of RMB45.4 million (US$6.8 million) in accrued expenses and other current liabilities. The increase in accounts receivable reflects our increased sales in 2009 as compared to 2008. The increase in accrued expenses and other current liabilities reflected an increased salary payable and business tax payable, both due to the increased sales in 2009. The decrease in income tax payable reflected the tax paid in 2009.

        Net cash provided by operating activities in 2008 was RMB41.1 million, which was primarily attributable to net income of RMB82.3 million, partially offset by changes in certain working capital accounts, primarily reflecting an increase of RMB22.2 million in other non-current assets, an increase of RMB12.9 million in accounts receivable and an increase of RMB9.4 million in accrued expenses and other current liabilities. The increase in other non-current assets was due to the prepayment for the acquisition of the Syswin Building. The increase in accounts receivable reflects the relatively longer period our developer clients required to settle our sales commissions as a result of the real estate market downturn in 2008. The increase in accrued expenses and other current liabilities was primarily due to an increased salary payable in 2008, reflecting the more sales professionals and other staff we recruited in 2008 as a result of our business expansion.

        Net cash provided by operating activities in 2007 was RMB121.6 million, which was primarily attributable to net income of RMB122.2 million, partially offset by changes in certain working capital accounts, primarily reflecting an increase of RMB70.1 million in accounts receivable and an increase of RMB56.0 million in income tax payable. The increase in accounts receivable reflected our increased

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sales in 2007 in Beijing. The increase in income tax payable primarily reflected the increased sales in 2007 in Beijing.

        We typically confirm our commission bills with our developer clients pursuant to a pre-agreed schedule. Our developer clients generally confirm commission bills for the properties based on their progress in receiving the property purchase payment made by property buyers or commercial banks. There is generally a lag which lasts three to six months between the time we recognize revenue and the time we bill our developer clients for the related commissions. We have not experienced significant delay in payment between the time we bill our clients and the time we actually collect the commission. Our accounts receivable amounted to RMB94.8 million, RMB107.8 million, RMB238.5 million (US$35.6 million) and RMB239.4 million (US$35.8 million) as of December 31, 2007, 2008, 2009 and September 30, 2010, respectively. We seek to collect our accounts receivable within six months. The turnover days of our accounts receivable totaled 67 days, 134 day, 146 days and 149 days in 2007, 2008, 2009 and the nine months ended September 30, 2010, respectively. Turnover days of our accounts receivable for any given period equals average accounts receivable divided by total net revenue and then multiplied by the number of days during the period. Average accounts receivable equals the arithmetic mean of the beginning and ending balances of accounts receivable during the period.

Investing activities

        Net cash generated from investing activities in the nine months ended September 30, 2010 was RMB69.3 million (US$10.4 million), which reflected proceeds from disposal of the Syswin Building of RMB114.6 million (US$17.1 million) received in August 2010, partially offset by the payments for purchases of property and equipment of RMB47.4 million (US$7.1 million). We terminated our purchase agreement relating to the Syswin Building and were refunded the purchase consideration of RMB114.6 million (US$17.1 million) in August 2010. See "—Our Liquidity and Capital Resources." The purchases of property and equipment in the nine months ended September 30, 2010 reflected our payments for the acquisition of the Syswin Building prior to its disposal, as well as the purchase of office equipment and automobiles.

        Net cash used in investing activities in 2009 was RMB27.3 million (US$4.1 million), which was primarily attributable to (i) RMB31.8 million (US$4.8 million) in payments for property and equipments, primarily including payments relating to the acquisition and renovation of the Syswin Building, partially offset by (ii) RMB4.5 million (US$0.7 million) in proceeds from disposal of subsidiaries to related parties.

        Net cash generated from investing activities in 2008 was RMB38.8 million, which was primarily attributable to (i) RMB75.8 million in proceeds from the settlement of funds advanced to related parties, see "Related Party Transactions—Related Party Loans and Other Payments," partially offset by (ii) RMB34.2 million in payments for property and equipments, primarily including payments relating to the acquisition of the Syswin Building and motor vehicles as well as development expenses relating to our CRM system.

        Net cash used in investing activities in 2007 was RMB69.1 million, which was primarily attributable to (i) RMB45.6 million funds advanced to related parties, see "Related Party Transactions—Related Party Loans and Other Payments," and (ii) RMB13.0 million in payments for property and equipment, including payments relating to the acquisition of the Syswin Building and costs relating to our development of the CRM system.

Financing activities

        Net cash used in financing activities in the nine months ended September 30, 2010 was RMB165.3 million (US$24.7 million), reflecting the dividends we paid during the same period.

        Net cash provided by financing activities in 2009 was RMB182.6 million (US$27.3 million), which primarily reflected RMB204.0 million (US$30.5 million) in capital contribution from Qingling Company

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Limited as a result of our private placement in 2009. See "Our Corporate History and Structure—Our Corporate History."

        Net cash used in financing activities in 2008 was RMB84.6 million, which was primarily attributable to RMB104.6 million in dividends distributed in 2008, partially offset by RMB20.0 million in proceeds from our bank borrowings. Our dividend of RMB104.6 million distributed in 2008 was financed through a cash inflow of RMB75.8 million from settlement of funds advanced to related parties, and the remaining through cash generated from operating activities. See "Related Party Transactions—Related Party Loans and Other Payments."

        Net cash used in financing activities in 2007 was RMB31.6 million, reflecting the RMB20.0 million in dividends paid to our shareholders and RMB11.6 million in repayment of payable due to a third party in 2007.

Contractual Obligations

Purchase Commitments

        Our purchase commitments, which totaled RMB1.9 million (US$0.3 million) as of December 31, 2009, were principally for the purchase of office equipment and software.

Operating Lease

        Our operating lease agreements are principally for our administrative offices. These leases expire by 2015 and are renewable upon negotiation. Rental expenses under operating leases for the years ended December 31, 2007, 2008, 2009 and for the nine months ended September 30, 2010 were RMB7.1 million, RMB12.1 million, RMB8.0 million (US$1.2 million), and RMB7.1 million (US$1.1 million), respectively. The table below sets forth our future minimum lease payments under our operating leases agreements as of December 31, 2009.

(in thousands of RMB)
  Total   Less than
1 year
  1 - 3
years
  3 - 5
years
  More than
5 years
 

Operating lease obligations

    4,732     4,297     435          

        The table below sets forth our future minimum lease payments under our operating lease agreements as of September 30, 2010.

(in thousands of RMB)
  Total   Less than
1 year
  1 - 3
years
  3 - 5
years
  More than
5 years
 

Operating lease obligations

    27,297     11,547     15,750          

        The increase in the operating lease obligations is primarily attributable to the leasing of a portion of the Syswin Building in August 2010.

Off-Balance Sheet Commitments and Arrangements

        We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

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Internal Control Over Financial Reporting

        When preparing our consolidated financial statements for the years ended December 31, 2007, 2008 and 2009, we noted one material weakness in our internal control over financial reporting relating to a lack of sufficient resources to perform period-end financial reporting procedures, to address complex accounting issues under US GAAP and to prepare and review financial statements and related disclosures under US GAAP. This material weakness resulted in adjustments to our consolidated financial statements for the years ended December 31, 2007, 2008 and 2009. A material weakness is defined in PCAOB Standards and Related Rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

        Following the identification of this material weakness, we have expended additional resources from our management team and additional expenses to implement and maintain effective controls and procedures to remedy this material weakness and any additional weaknesses we may identify in our internal control over financial reporting in the future. In addition, we have hired and will continue to hire more staff for financial reporting and analysis and an external consultant to strengthen our control procedures over financial statement reviews for external reporting. Furthermore, we have expanded our training programs to our new and existing accounting staff on US GAAP financial statement preparation and reporting.

        We plan to take additional measures to improve our internal control over financial reporting. These measures include (i) establishing an audit committee to oversee the accounting and financial reporting processes as well as external and internal audits of our company, (ii) hiring additional qualified professionals with relevant experience for our finance and accounting department, (iii) providing additional accounting and financial reporting training for our existing personnel, and (iv) increasing the level of interaction among our management, audit committee, independent registered public accounting firm and other external advisors. However, the process of designing and implementing an effective financial reporting system represents a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations.

        We believe that the actions we have taken to date have enhanced the reliability and effectiveness of our internal control over financial reporting as of the date of this prospectus. However, our independent registered public accounting firm has not evaluated the effectiveness of the measures we have taken to improve our internal control over financial reporting since such material weakness was noted in connection with the recently completed 2007, 2008 and 2009 audits. We cannot assure you that the measures we have taken to date or any measures we take in the future will be sufficient to remediate the material weakness reported by our independent registered public accounting firm and to avoid potential future material weaknesses. See "Risk Factors—Risks Related to Our Business and Industry—When preparing our consolidated financial statements for the years ended December 31, 2007, 2008 and 2009, we noted one material weakness in our internal control over financial reporting. If we fail to implement and maintain effective internal control over financial reporting, our ability to accurately report our financial results on a timely basis may be impaired, which could adversely impact investor confidence and the market price of our ADSs."

Inflation

        Inflation in China has not materially impacted our results of operations in recent years. According to the National Bureau of Statistics of China, the change of consumer price index in China was 4.8%, 5.9% and (0.7)% in 2007, 2008 and 2009, respectively.

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Quantitative and Qualitative Disclosure About Market Risk

Interest rate risk

        Our exposure to interest rate risk primarily relates to the interest rates for our outstanding debt and the interest income generated by excess cash invested in liquid investments with original maturities of three months or less. We have not used any derivative financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in interest rates. An increase in interest rates, however, may raise the cost of any debt we incur in the future. In addition, our future interest income may be lower than expected due to changes in market interest rates.

Foreign exchange risk

        Substantially all of our net revenue and most of our expenses are denominated in Renminbi. Our exposure to foreign exchange risk primarily relates to cash and cash equivalents denominated in U.S. dollars as a result of our past issuances of shares through a private placement and proceeds from this offering. We do not believe that we currently have any significant direct foreign exchange risk and have not hedged exposures denominated in foreign currencies or any other derivative financial instruments. Although in general, our exposure to foreign exchange risks should be limited, the value of your investment in our ADSs will be affected by the foreign exchange rate between U.S. dollars and Renminbi because the value of our business is effectively denominated in Renminbi, while the ADSs will be traded in U.S. dollars.

        The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions. The conversion of Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the PBOC. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an appreciation of approximately 20.6% of the Renminbi against the U.S. dollar from December 31, 2005 to September 30, 2010. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar. Since June 2010, the Renminbi has started to slowly appreciate further against the U.S. dollar. To the extent that we need to convert U.S. dollars we receive from this offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion.

        Assuming we were to convert the net proceeds received in this offering into the Renminbi, a 1.0% increase in the value of the Renminbi against the U.S. dollar would decrease the amount of the Renminbi we receive by RMB4.24 million. We have not used any forward contracts or currency borrowings to hedge our exposure to foreign currency exchange risk.

Recent Accounting Pronouncements

        In October 2009, the FASB issued revenue recognition guidance for arrangements that involve the delivery of multiple elements. This guidance addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (i) vendor-specific objective evidence; (ii) third-party evidence; or (iii) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. In addition, this guidance significantly expands

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required disclosures related to a vendor's multiple-deliverable revenue arrangements. This accounting standard will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. We are currently evaluating the potential impact, if any, on our consolidated financial statements.

        In January 2010, the FASB issued an amendment to improve the disclosures about fair value measurements. It adds new requirements for disclosures about (i) the different classes of assets and liabilities measured at fair value, (ii) the valuation techniques and inputs used, (iii) the activity in Level 3 fair value measurements, and (iv) the transfers between Levels 1, 2, and 3. The amendment is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. In the period of initial adoption, entities will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. However, those disclosures are required for periods ending after initial adoption. Early adoption is permitted. We adopted the amendments for the period beginning January 1, 2010 except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis. we will adopt the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis for the period beginning January 1, 2011 and expect the adoption will not have significant impact on our consolidated financial statements.

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OUR INDUSTRY

Fast Growing Real Estate Industry in China

        China's real estate industry has grown rapidly in the past decade. According to China Index Academy, total gross floor area, or GFA, of commodity properties, including primary residential and commercial properties, sold in China grew at a compound annual growth rate, or CAGR, of 19.6% from 2001 to 2009. Over the same period, the national average selling price of commodity properties sold also increased significantly at a CAGR of 10.1%. As a result, the aggregate transaction value of commodity properties sold grew at a CAGR of 31.7% for the same period. The table below shows a summary of certain data regarding China's real estate industry for the periods indicated.

 
  2001   2002   2003   2004   2005   2006   2007   2008   2009   CAGR
(2001-2009)
 

Total GFA of commodity properties sold (in millions of square meters)

    224.1     268.1     337.2     382.3     554.9     618.6     761.9     620.9     937.1     19.6 %

Average selling price of commodity properties sold (RMB per square meter)

    2,169     2,250     2,359     2,714     3,168     3,367     3,885     3,877     4,695     10.1  

Aggregate transaction value of commodity properties sold (in billions of RMB)

    486.2     603.2     795.5     1,037.5     1,757.6     2,082.5     2,960.4     2,407.1     4,399.5     31.7 %

Source: China Index Academy

        According to China Index Academy's forecast, total GFA of commodity properties sold in China is estimated to grow at a CAGR of 14.0% from 2010 to 2015, and the aggregate transaction value of commodity properties sold and the national average selling price of commodity properties sold is estimated to grow at CAGRs of 19.7% and 5.0%, respectively, for the same period.

        The growth of China's real estate industry is primarily attributable to the following factors:

    growth of the Chinese economy and increase in income levels;

    the accelerating trend toward urbanization and an increasingly affluent urban population; and

    government reform in the real estate sector.

Growth of the Chinese economy and increase in income levels

        The Chinese economy has grown significantly since the adoption of reform policies in the early 1980s. Fueled by the increasing trading activities after China entered the World Trade Organization, or WTO, in 2001, the gross domestic product in nominal terms, or nominal GDP, grew at a CAGR of 15.0% to RMB 33.5 trillion in 2009, according to the National Bureau of Statistics of China. As a result of the economic growth, urban disposable income per capita, in nominal terms, had increased at a CAGR of 12.2% from 2001 to 2009. The following table shows a summary of certain data regarding nominal GDP, GDP per capita and urban disposable income per capita for the periods indicated.

 
  2001   2002   2003   2004   2005   2006   2007   2008   2009   CAGR
(2001-2009)
 

Nominal GDP (in billions of RMB)

    10,966     12,033     13,582     15,988     18,322     21,192     25,731     30,067     33,535     15.0 %

GDP per capita (RMB)

    8,592     9,368     10,510     12,299     14,012     16,122     19,474     22,640     25,125     14.4  

Urban disposable income per capita (RMB)

    6,860     7,703     8,472     9,422     10,493     11,759     13,786     15,781     17,175     12.2 %

Source: National Bureau of Statistics of China

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Accelerating trend toward urbanization and an increasingly affluent urban population

        Substantial economic growth in China during the past decades has resulted in the accelerating trend toward urbanization. According to the National Bureau of Statistics of China, the urban population's growth has outpaced the total population's growth, which has led to a surge in the urbanization rate (urban population divided by total population). In 2009, the urbanization rate reached 46.6% from 37.7% in 2001. This accelerating urbanizing trend coupled with the increasingly affluent urban population has created increasing demand for privately owned residential housing in urban areas in China from either first-time buyers or from buyers upgrading their current homes. The table below shows China's urbanization rate for the periods indicated.

 
  2001   2002   2003   2004   2005   2006   2007   2008   2009  

China's urbanization rate (%)

    37.7 %   39.1 %   40.5 %   41.8 %   43.0 %   43.9 %   44.9 %   45.7 %   46.6 %

Source: National Bureau of Statistics of China

Government reform in the real estate sector

        The PRC real estate sector remained part of a centrally planned economy until the late 1980s, when the Chinese government initiated reforms to transition the sector to a market-oriented system. The PRC constitution was amended in 1988 to allow the transfer of long-term land use rights in China. This constitutional amendment opened the real estate sector to private ownership of real properties and commenced the development of a real estate market in China.

        The PRC government promulgated rules in 1994 requiring companies to establish housing purchase benefit plans for their urban employees. Jointly funded by employers and employees, these plans provided substantial financial assistance to employees for home purchases. In addition, the PRC government ended its practice of allocating and exchanging housing units for its urban population in 1998. In 1998, to further stimulate the housing market, commercial banks began offering mortgage loans to individual property buyers. In 1999, the maximum term of mortgage loans was extended to 30 years and the maximum financed portion of the purchase price of a property was increased to 80%.

        China's real estate sector is generally affected by changes in government policies and regulatory measures. With over 20 years' development, the real estate sector has become a pillar sector of China's economy. Real estate development and investments accounted for 10.8% of China's GDP and 16.1% of fixed investment in 2009 according to the National Bureau of Statistics of China. As such, it is crucial for the Chinese real estate sector to remain stable and maintain a healthy growth trend to support China's overall economy. In the past, the Chinese government has adopted various policies and regulatory measures to curb what is perceived to be unsustainable growth of the sector, which resulted in market downturns in the real estate sector. However, with positive fundamentals, such as China's economic growth, increase in per capita income and rapid urbanization, remaining unchanged, the impact of such government policies and regulatory measures is expected to be relatively short term.

Increasing Consolidation of China's Real Estate Industry

        With the rapid growth of China's real estate industry, leading developers have emerged and are gaining market share by leveraging their brand names, established execution capabilities and economies of scale. According to China Index Academy, aggregate market share of the top 100 real estate developers in China in terms of transaction value of properties sold increased from 15.8% in 2005 to 22.1% in 2009. Aggregate annual transaction value of the top 100 real estate developers increased from RMB277.4 billion in 2005 to RMB974.2 billion in 2009, representing a CAGR of 36.9%, as compared to a CAGR of 25.8% for the annual transaction value of primary properties sold in China's real estate

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industry over the same period. The table below shows the top 100 real estate developers' aggregate market share and aggregate annual transaction value of properties sold for the periods indicated.

 
  2005   2006   2007   2008   2009   CAGR
(2005-2009)
 

Top 100 developers' aggregate market share (%)

    15.8 %   17.1 %   17.9 %   20.3 %   22.1 %   n/a  

Top 100 developers' aggregate annual transaction value (in billions of RMB)

    277.4     350.3     529.4     489.6     974.2     36.9 %

Source: China Index Academy

        With the real estate development market becoming increasingly consolidated, many of the real estate developers started off as local operations have subsequently expanded into other markets and became a national brand. As a result of such expansions, these developers face increasing management complexity and operational risks. In order to focus on their property development business, developers have been increasingly outsourcing their project sales and marketing activities to real estate sales agency and consultancy services companies.

Emergence and Development of the China Real Estate Services Industry

        As the real estate industry in China has grown in size and complexity, it has become increasingly specialized. Professional real estate services companies emerged in response to the specialization trends in China's real estate industry in the mid-1990s.

        China's real estate services industry continued to grow with the development of the real estate industry, especially in more developed regions such as the Pearl River Delta region, the Yangtze River Delta region and first-tier cities during the late-1990s and early-2000s. Services provided by real estate services companies also expanded from primary sales agency services to comprehensive services including consultancy, sales and marketing and other services throughout the project development, marketing and sales process.

        The growth of real estate services companies further accelerated as a growing number of real estate developers expanded from local and regional operations to nationwide operations and increased their desire to focus on their core competencies of property development and outsource property marketing and sales functions to professional real estate services companies that have, or are in the process of building, corresponding nationwide coverage.

        Services provided by real estate services companies cover the entire real estate industry value chain. These services include, among others, consultancy, agency, brokerage, valuation, property management and can be broadly classified into three categories:

    (1)
    Land consultancy services

    During the land development phase, real estate services companies advise local governments or land operation institutions on government policies, land planning, feasibility studies and auction strategies.

    (2)
    Sales planning and agency services

    During the property development phase, real estate services companies provide consultancy services on market entry strategy, land bidding strategy and property development strategy; and

    In primary property transactions, real estate services companies provide agency services for the sales of newly built properties.

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    (3)
    Brokerage services

    In secondary property transactions, real estate services companies provide brokerage services for the sale and leasing of existing properties and intermediary services such as mortgage services.

        The following diagram illustrates the real estate industry value chain and the corresponding services provided by real estate services companies.

GRAPHIC

Fast Growing Primary Real Estate Agency Services Market in China

        With over a decade of development, China's primary real estate agency services market has grown significantly. The following table shows the aggregate GFA and aggregate transaction value of primary properties sold by the top 100 real estate sales agency and consultancy services companies, for the periods indicated.

 
  2005   2006   2007   2008   2009   CAGR
(2005-2009)
 

Aggregate GFA of primary properties sold by the top 100 real estate sales agency and consultancy services companies (in millions of square meters)

    55.4     89.1     125.8     110.0     130.3     23.8 %

Aggregate transaction value of primary properties sold by the top 100 real estate sales agency and consultancy services companies (in billions of RMB)

    314.9     597.0     876.0     774.4     1456.2     46.6 %