The SMG is compact weapon that is featured in Mercenaries: Playground of Destruction and Mercenaries 2: World in Flames (Playstation 2 only).
Mercenaries: Playground of Destruction
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The Russian thugs, Chinese, and North Korean officers are all very fond of this small weapon. It has the firepower of an assault rifle, but in a smaller and more agile frame. The SMG's magazine holds 45 rounds, has a high rate of fire and makes a fairly effective close-combat weapon due to the spray that also reduces its ranged effectiveness.
Tactics
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Due to the high weapon spray, the overall range is reduced and the weapon becomes rather ineffective at long ranges. In short-medium range engagements aim for the chest/head area and the weapon should be fairly effective at disposing most early infantry, with headshots becoming more necessary with elite soldiers. While very effective in close range firefights, its shortcomings may necessitate the switch to an assault type weapon such as the Carbine or Light MG for a better survival rate.
Mercenaries 2: World in Flames
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The PlayStation 2 version ported several weapons, and thus can be found in the hands of UP mercenaries and Pirates.
Real Life
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The SMG is based on the Chinese Built Type 85 SMG. Also the real-life equivalent only has a 30 round mag instead of the 45 round mag that the game gives. Presumably, this is to distinguish it from the Assault Rifle.