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What changed in Yatsen Holding Ltd's 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of Yatsen Holding Ltd's 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+609 added−570 removedSource: 20-F (2025-04-22) vs 20-F (2024-04-26)

Top changes in Yatsen Holding Ltd's 2024 20-F

609 paragraphs added · 570 removed · 491 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

230 edited+58 added−39 removed704 unchanged
Biggest changeRisk Factors—Risks Relating to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds from our securities offering to make loans or additional capital contributions to our PRC subsidiaries and the VIE in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Financial Information Related to the VIE The following tables present the condensed consolidating schedule of financial position for Yatsen Holding Limited, its subsidiaries, the VIE and other entities as of the dates presented. 11 Selected Condensed Consolidated Statements of Income Information For the Year Ended December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues - 1,683,769 1,547,268 183,737 - 3,414,774 Inter-company revenues (1) - 4,665 470,013 - (474,678 ) - Third-party costs and expense (40,814 ) (1,814,787 ) (2,358,980 ) (113,548 ) - (4,328,129 ) Inter-company costs and expense - (386,079 ) (31 ) (89,816 ) 475,926 - (Loss) income from subsidiaries and VIE (738,768 ) (314,153 ) 2,922 - 1,049,999 - Income from non-operations 34,794 79,581 22,994 22,549 - 159,918 (Loss) income before income tax expenses (744,788 ) (747,004 ) (315,814 ) 2,922 1,051,247 (753,437 ) Income tax benefit (expenses) - 3,296 (86 ) - - 3,210 Net (loss) income (744,788 ) (743,708 ) (315,900 ) 2,922 1,051,247 (750,227 ) Less: net loss attributable to non-controlling interests and redeemable non-controlling interests - (4,940 ) (499 ) - - (5,439 ) Accretion to redeemable non-controlling interests - 2,975 - - - 2,975 Net (loss) income attributable to Yatsen Holding Limited’s shareholders (744,788 ) (741,743 ) (315,401 ) 2,922 1,051,247 (747,763 ) For the Year Ended December 31, 2022 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues - 1,336,588 2,046,288 323,246 - 3,706,122 Inter-company revenues (1) - 12,187 440,931 - (453,118 ) - Third-party costs and expense (19,329 ) (1,198,946 ) (3,274,416 ) (142,329 ) - (4,635,020 ) Inter-company costs and expense - (278,810 ) 2,654 (175,110 ) 451,266 - Income (loss) from subsidiaries and VIE (812,151 ) (675,698 ) 16,624 - 1,471,225 - Income (loss) from non-operations 16,109 (10,905 ) 94,249 10,817 - 110,270 Income (loss) before income tax expenses (815,371 ) (815,584 ) (673,670 ) 16,624 1,469,373 (818,628 ) Income tax (expenses) benefit - (2,173 ) (532 ) - - (2,705 ) Net income (loss) (815,371 ) (817,757 ) (674,202 ) 16,624 1,469,373 (821,333 ) Less: net income (loss) attributable to non-controlling interests and redeemable non-controlling interests - (5,606 ) (356 ) - - (5,962 ) Net income (loss) attributable to Yatsen Holding Limited’s shareholders (815,371 ) (812,151 ) (673,846 ) 16,624 1,469,373 (815,371 ) 12 For the Year Ended December 31, 2021 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues - 951,001 4,367,137 521,835 - 5,839,973 Inter-company revenues (1) - 11,972 413,617 - (425,589 ) - Third-party costs and expense (28,484 ) (1,040,549 ) (6,091,570 ) (303,614 ) - (7,464,217 ) Inter-company costs and expense - (176,817 ) - (248,772 ) 425,589 - Income (loss) from subsidiaries and VIE (1,527,645 ) (1,336,728 ) (27,886 ) - 2,892,259 - Income (loss) from non-operations 15,395 54,538 3,611 2,741 - 76,285 Income (loss) before income tax expenses (1,540,734 ) (1,536,583 ) (1,335,091 ) (27,810 ) 2,892,259 (1,547,959 ) Income tax (expenses) benefit - 2,634 (1,637 ) (76 ) - 921 Net income (loss) (1,540,734 ) (1,533,949 ) (1,336,728 ) (27,886 ) 2,892,259 (1,547,038 ) Less: net income (loss) attributable to non-controlling interests and redeemable non-controlling interests - (6,304 ) - - - (6,304 ) Net income (loss) attributable to Yatsen Holding Limited’s shareholders (1,540,734 ) (1,527,645 ) (1,336,728 ) (27,886 ) 2,892,259 (1,540,734 ) Selected Condensed Consolidated Balance Sheets Information As of December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Cash and cash equivalents 275,722 243,101 305,863 12,202 - 836,888 Restricted cash 21,248 - - - - 21,248 Short-term investments 1,076,775 141,706 - - - 1,218,481 Accounts receivable, net - 112,106 80,317 6,428 - 198,851 Inventories, net - 237,918 113,824 348 - 352,090 Prepayments and other current assets 1,715 120,106 174,278 7,742 - 303,841 Amounts due from related parties - 5,741 14,459 - - 20,200 Amounts due from Group companies (2) 4,564,637 2,548 676,107 10 (5,243,302 ) - Investments - 133,357 193,430 291,965 - 618,752 Investments in subsidiaries and VIEs - 1,363,112 10,253 - (1,373,365 ) - Property and equipment, net - 10,671 52,601 1,606 - 64,878 Goodwill, net - 553,309 3,258 - - 556,567 Intangible assets, net - 648,205 23,191 - - 671,396 Deferred tax assets - 1,375 - - - 1,375 Right-of-use assets, net - 35,982 78,366 - - 114,348 Other non-current assets - 1,986 25,114 - - 27,100 Total assets 5,940,097 3,611,223 1,751,061 320,301 (6,616,667 ) 5,006,015 Accounts payable - 39,323 58,723 7,645 - 105,691 Advances from customers - 8,599 6,170 26,810 - 41,579 Accrued expenses and other liabilities 10,662 141,804 230,105 8,646 - 391,217 Amounts due to related parties - 9,395 36 - - 9,431 Income tax payables - 3,351 13,666 929 - 17,946 Lease liabilities due within one year - 10,771 34,693 - - 45,464 Amounts due to Group companies - 4,975,362 1,923 266,018 (5,243,303 ) - Deferred tax liabilities - 111,591 - - - 111,591 Deficit of investments in subsidiaries and VIE (3) 1,763,842 - - - (1,763,842 ) - Deferred income non-current 30,556 - - - - 30,556 Lease liabilities - 25,169 42,598 - - 67,767 Total liabilities 1,805,060 5,325,365 387,914 310,048 (7,007,145 ) 821,242 Redeemable non-controlling interests - 51,466 - - - 51,466 Total shareholders’ equity (deficit) 4,135,037 (1,765,608 ) 1,363,147 10,253 390,478 4,133,307 Total liabilities, redeemable non-controlling interests and shareholders' equity (deficit) 5,940,097 3,611,223 1,751,061 320,301 (6,616,667 ) 5,006,015 13 As of December 31, 2022 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Cash and cash equivalents 115,480 1,047,733 340,808 8,924 - 1,512,945 Restricted cash 41,383 - - - - 41,383 Short-term investments 345,171 627,679 100,017 - - 1,072,867 Accounts receivable - 81,472 117,324 2,047 - 200,843 Inventories - 184,721 237,486 1,080 - 423,287 Prepayments and other current assets 483 103,236 179,383 9,723 - 292,825 Amounts due from related parties - 2,188 3,466 - - 5,654 Amounts due from Group companies (2) 5,550,398 6,802 589,473 - (6,146,673 ) - Investments - 116,811 224,128 161,640 - 502,579 Investments in subsidiaries and VIEs - 1,601,560 - - (1,601,560 ) - Property and equipment, net - 5,757 64,117 5,745 - 75,619 Goodwill - 853,887 3,258 - - 857,145 Intangible assets, net - 662,850 26,817 2 - 689,669 Deferred tax assets - 1,951 - - - 1,951 Right-of-use assets, net - 14,102 118,828 74 - 133,004 Other non-current assets - 1,707 51,178 - - 52,885 Total assets 6,052,915 5,312,456 2,056,283 189,235 (7,748,233 ) 5,862,656 Accounts payable - 35,955 75,079 8,813 - 119,847 Advances from customers - 8,278 2,482 5,892 - 16,652 Accrued expenses and other liabilities 6,689 116,059 183,887 16,624 - 323,259 Amounts due to related parties - 7,165 20,077 - - 27,242 Income tax payables - 7,162 13,735 929 - 21,826 Lease liabilities due within one year - 4,068 75,440 78 - 79,586 Amounts due to Group companies 13,084 5,935,642 2,558 195,389 (6,146,673 ) - Deferred tax liabilities - 113,441 - - - 113,441 Deficit of investments in subsidiaries and VIE (3) 1,268,420 - 38,490 - (1,306,910 ) - Deferred income 45,280 - - - - 45,280 Lease liabilities - 10,008 42,989 - - 52,997 Total liabilities 1,333,473 6,237,778 454,737 227,725 (7,453,583 ) 800,130 Redeemable non-controlling interests - 339,924 - - - 339,924 Total shareholders' equity (deficit) 4,719,442 (1,265,246 ) 1,601,546 (38,490 ) (294,650 ) 4,722,602 Total liabilities, redeemable non-controlling interests and shareholders' equity (deficit) 6,052,915 5,312,456 2,056,283 189,235 (7,748,233 ) 5,862,656 14 Movements of investments in subsidiaries and VIE / (deficit of investments in subsidiaries and VIE) in Yatsen Holding Limited’s separate financial statements are as follows: RMB (in thousands) As of January 1, 2021 526,582 Capital contribution to subsidiaries 25,856 Share-based compensation costs incurred on behalf of subsidiaries 530,440 Share of loss of subsidiaries and VIE (1,527,645 ) Share of changes in accumulated other comprehensive income of subsidiaries 12,679 Foreign currency translation (26,272 ) As of December 31, 2021 (458,360 ) Capital contribution to subsidiaries - Share-based compensation costs incurred on behalf of subsidiaries 340,860 Share of loss of subsidiaries and VIE (812,151 ) Share of changes in accumulated other comprehensive income of subsidiaries (429,657 ) Foreign currency translation 90,888 As of December 31, 2022 (1,268,420 ) Share-based compensation costs incurred on behalf of subsidiaries 77,502 Share of loss of subsidiaries and VIE (738,768 ) Share of changes in additional paid-in capital of subsidiaries 154,981 Share of changes in accumulated other comprehensive income of subsidiaries (21,275 ) Foreign currency translation 32,138 As of December 31, 2023 (1,763,842 ) Selected Condensed Consolidated Cash Flows Information For the Year Ended December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) (11,400 ) 239,051 (371,566 ) 36,473 - (107,442 ) Capital contribution to Group companies - - - - - - Advances to Group companies (245,424 ) - (359,355 ) - 604,779 - Receival of advances repayment from Group companies 1,335,355 - 607,602 - (1,942,957 ) - Purchases of short-term investments (1,439,145 ) (902,388 ) - - - (2,341,533 ) Maturities of short-term investments 709,230 1,413,146 100,000 - - 2,222,376 Purchases of intangible assets - - (321 ) - - (321 ) Purchases of property and equipment - (8,108 ) (35,540 ) - - (43,648 ) Proceeds from disposal of investments - - 22,233 - - 22,233 Investments on equity investments - (13,547 ) - (108,000 ) - (121,547 ) Other investing activities - 144 1,530 279 - 1,953 Net cash provided by (used in) Investing Activities 360,016 489,247 336,149 (107,721 ) (1,338,178 ) (260,487 ) Capital contribution from Group companies - - - - - - Proceeds from advances from Group companies - 487,780 - 117,000 (604,780 ) - Repayment of advances from Group companies - (1,900,958 ) - (42,000 ) 1,942,958 - Repurchases of Ordinary Shares (212,693 ) - - - - (212,693 ) Repurchase of redeemable non-controlling interests - (134,664 ) - - - (134,664 ) Other financing activities 4,902 - 474 (474 ) - 4,902 Net cash provided by (used in) Financing Activities (207,791 ) (1,547,842 ) 474 74,526 1,338,178 (342,455 ) 15 For the Year Ended December 31, 2022 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) (25,271 ) 221,798 (77,625 ) 17,306 - 136,208 Capital contribution to Group companies - - - - - - Advances to Group companies (1,396,460 ) - (154,158 ) - 1,550,618 - Receival of advances repayment from Group companies 2,539,576 - 474,286 - (3,013,862 ) - Purchases of short-term investments (342,380 ) (1,879,422 ) (200,000 ) - - (2,421,802 ) Maturities of short-term investments - 1,359,564 100,000 - - 1,459,564 Purchases of intangible assets - (351 ) (8,199 ) - - (8,550 ) Purchases of property and equipment - (2,553 ) (47,948 ) (277 ) - (50,778 ) Acquisition of businesses, net of cash and cash equivalents acquired - (2,107 ) - - - (2,107 ) Investments on equity investments - (1,842 ) (104,000 ) (30,000 ) - (135,842 ) Payment on behalf of Group companies - - - - - - Other investing activities - - 4,099 - - 4,099 Net cash provided by (used in) Investing Activities 800,736 (526,711 ) 64,080 (30,277 ) (1,463,244 ) (1,155,416 ) Capital contribution from Group companies - - - - - - Proceeds from advances from Group companies - 1,550,618 - - (1,550,618 ) - Repayment of advances from Group companies - (3,013,862 ) - - 3,013,862 - Issuance costs of issuance of Ordinary Shares in IPO (1,706 ) - - - - (1,706 ) Proceeds from issuance of Preferred Shares, net of issuance costs - - - - - - Repayment of a shareholder receivable resulting from Reorganization - - - - - - Repurchases of Ordinary Shares (654,650 ) - - - - (654,650 ) Repurchases of Preferred Shares - - - - - - Other financing activities 1,906 - 5,644 (5,644 ) - 1,906 Net cash provided by (used in) Financing Activities (654,450 ) (1,463,244 ) 5,644 (5,644 ) 1,463,244 (654,450 ) 16 For the Year Ended December 31, 2021 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) 45,330 (218,176 ) (864,773 ) 17,178 - (1,020,441 ) Capital contribution to Group companies (25,856 ) (1,466,874 ) (7,450 ) - 1,500,180 - Advances to Group companies (2,060,287 ) - (391,564 ) - 2,451,851 - Receival of advances repayment from Group companies 1,165,010 - 149,664 - (1,314,674 ) - Purchases of intangible assets - (10,648 ) (14,590 ) (66 ) - (25,304 ) Purchases of property and equipment - (4,321 ) (135,942 ) (1,170 ) - (141,433 ) Acquisition of businesses, net of cash and cash equivalents acquired - (992,408 ) 2,756 - - (989,652 ) Investments on equity investments - (97,326 ) (105,499 ) (120,000 ) - (322,825 ) Other investing activities - (5,043 ) - - - (5,043 ) Net cash provided by (used in) Investing Activities (921,133 ) (2,576,620 ) (502,625 ) (121,236 ) 2,637,357 (1,484,257 ) Capital contribution from Group companies - 25,856 1,466,874 7,450 (1,500,180 ) - Proceeds from advances from Group companies - 2,322,187 - 129,664 (2,451,851 ) - Repayment of advances from Group companies - (1,278,010 ) - (36,664 ) 1,314,674 - Other financing activities (2,202 ) 596 (100 ) - - (1,706 ) Net cash provided by (used in) Financing Activities (2,202 ) 1,070,629 1,466,774 100,450 (2,637,357 ) (1,706 ) Notes: * The payment by Primary Beneficiary of VIE (WFOE and its subsidiaries) on behalf of Group companies was reclassified on consolidation level in accordance with nature. ** As of December 31, 2021, 2022 and 2023, amounts due to non-VIE subsidiaries included RMB93.0 million, RMB93.0 million and RMB168.0 million (US$23.7 million) for net debt financing from Group companies to the consolidated VIE not yet returned. *** Pursuant to the Exclusive Business Cooperation Agreement entered into in July 2019 between the Primary Beneficiary of VIE (WFOE and its subsidiaries) and the VIE, the VIE engages the Primary Beneficiary of VIE (WFOE and its subsidiaries) as the exclusive service provider of technical support, consulting services and other services to the VIE.
Biggest changeSelected Condensed Consolidated Statements of Income Information For the Year Ended December 31, 2024 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues — 1,865,403 1,360,692 167,319 — 3,393,414 Inter-company revenues (1) — 7,897 359,439 — (367,336 ) — Third-party costs and expense (23,204 ) (2,064,396 ) (2,028,584 ) (102,121 ) — (4,218,305 ) Inter-company costs and expense — (318,832 ) (4,846 ) (43,616 ) 367,294 — (Loss) income from subsidiaries and VIE (774,577 ) (263,076 ) 37,463 — 1,000,190 — Income from non-operations 89,607 (17,100 ) 12,568 26,509 — 111,584 (Loss) income before income tax expenses (708,174 ) (790,104 ) (263,268 ) 48,091 1,000,148 (713,307 ) Income tax benefit (expenses) — 13,714 — (10,628 ) — 3,086 Net (loss) income (708,174 ) (776,390 ) (263,268 ) 37,463 1,000,148 (710,221 ) Less: net loss attributable to non-controlling interests and redeemable non-controlling interests — (1,813 ) (234 ) — — (2,047 ) Net (loss) income attributable to Yatsen Holding Limited’s shareholders (708,174 ) (774,577 ) (263,034 ) 37,463 1,000,148 (708,174 ) For the Year Ended December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues — 1,683,769 1,547,268 183,737 — 3,414,774 Inter-company revenues(1) — 4,665 470,013 — (474,678 ) — Third-party costs and expense (40,814 ) (1,814,787 ) (2,358,980 ) (113,548 ) — (4,328,129 ) Inter-company costs and expense — (386,079 ) (31 ) (89,816 ) 475,926 — (Loss) income from subsidiaries and VIE (738,768 ) (314,153 ) 2,922 — 1,049,999 — Income from non-operations 34,794 79,581 22,994 22,549 — 159,918 (Loss) income before income tax expenses (744,788 ) (747,004 ) (315,814 ) 2,922 1,051,247 (753,437 ) Income tax benefit (expenses) — 3,296 (86 ) — — 3,210 Net (loss) income (744,788 ) (743,708 ) (315,900 ) 2,922 1,051,247 (750,227 ) Less: net loss attributable to non-controlling interests and redeemable non-controlling interests — (4,940 ) (499 ) — — (5,439 ) Accretion to redeemable non-controlling interests — 2,975 — — — 2,975 Net (loss) income attributable to Yatsen Holding Limited’s shareholders (744,788 ) (741,743 ) (315,401 ) 2,922 1,051,247 (747,763 ) 11 For the Year Ended December 31, 2022 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Third-party revenues — 1,336,588 2,046,288 323,246 — 3,706,122 Inter-company revenues (1) — 12,187 440,931 — (453,118 ) — Third-party costs and expense (19,329 ) (1,198,946 ) (3,274,416 ) (142,329 ) — (4,635,020 ) Inter-company costs and expense — (278,810 ) 2,654 (175,110 ) 451,266 — Income (loss) from subsidiaries and VIE (812,151 ) (675,698 ) 16,624 — 1,471,225 — Income (loss) from non-operations 16,109 (10,905 ) 94,249 10,817 — 110,270 Income (loss) before income tax expenses (815,371 ) (815,584 ) (673,670 ) 16,624 1,469,373 (818,628 ) Income tax (expenses) benefit — (2,173 ) (532 ) — — (2,705 ) Net income (loss) (815,371 ) (817,757 ) (674,202 ) 16,624 1,469,373 (821,333 ) Less: net income (loss) attributable to non-controlling interests and redeemable non-controlling interests — (5,606 ) (356 ) — — (5,962 ) Net income (loss) attributable to Yatsen Holding Limited’s shareholders (815,371 ) (812,151 ) (673,846 ) 16,624 1,469,373 (815,371 ) 12 Selected Condensed Consolidated Balance Sheets Information As of December 31, 2024 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Cash and cash equivalents 428,267 169,814 215,347 3,967 — 817,395 Short-term investments 539,130 — — — — 539,130 Accounts receivable, net — 115,046 88,876 10,636 — 214,558 Inventories, net — 281,337 104,432 285 — 386,054 Prepayments and other current assets 2,716 182,991 183,706 11,991 — 381,404 Amounts due from related parties — 1,648 7,465 — — 9,113 Amounts due from Group companies (2) 4,704,788 21,756 696,134 2 (5,422,680 ) — Investments — 120,075 184,402 360,102 — 664,579 Investments in subsidiaries and VIEs — 1,291,076 47,717 — (1,338,793 ) — Property and equipment, net — 16,402 57,923 48 — 74,373 Goodwill, net — 155,029 — — — 155,029 Intangible assets, net — 535,939 23,769 — — 559,708 Deferred tax assets — 1,381 — — — 1,381 Right-of-use assets, net — 16,440 131,061 — — 147,501 Other non-current assets — 1,969 18,673 — — 20,642 Total assets 5,674,901 2,910,903 1,759,505 387,031 (6,761,473 ) 3,970,867 Accounts payable — 30,744 37,865 3,481 — 72,090 Advances from customers — 4,724 3,786 11,064 — 19,574 Accrued expenses and other liabilities 99,258 126,598 227,648 6,639 — 460,143 Amounts due to related parties — 8,935 19,949 — — 28,884 Income tax payables — 5,493 13,666 929 — 20,088 Lease liabilities due within one year — 5,174 34,235 — — 39,409 Amounts due to Group companies — 5,083,420 32,687 306,573 (5,422,680 ) — Deferred tax liabilities — 92,678 — 10,628 — 103,306 Deficit of investments in subsidiaries and VIE (3) 2,505,485 — — — (2,505,485 ) — Deferred income non-current 14,832 — — — — 14,832 Lease liabilities — 10,734 98,792 — — 109,526 Total liabilities 2,619,575 5,368,500 468,628 339,314 (7,928,165 ) 867,852 Redeemable non-controlling interests — 50,984 — — — 50,984 Total shareholders’ equity (deficit) 3,055,326 (2,508,581 ) 1,290,877 47,717 1,166,692 3,052,031 Total liabilities, redeemable non-controlling interests and shareholders' equity (deficit) 5,674,901 2,910,903 1,759,505 387,031 (6,761,473 ) 3,970,867 13 As of December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Cash and cash equivalents 275,722 243,101 305,863 12,202 — 836,888 Restricted cash 21,248 — — — — 21,248 Short-term investments 1,076,775 141,706 — — — 1,218,481 Accounts receivable, net — 112,106 80,317 6,428 — 198,851 Inventories, net — 237,918 113,824 348 — 352,090 Prepayments and other current assets 1,715 120,106 174,278 7,742 — 303,841 Amounts due from related parties — 5,741 14,459 — — 20,200 Amounts due from Group companies (2) 4,564,637 2,548 676,107 10 (5,243,302 ) — Investments — 133,357 193,430 291,965 — 618,752 Investments in subsidiaries and VIEs — 1,363,112 10,253 — (1,373,365 ) — Property and equipment, net — 10,671 52,601 1,606 — 64,878 Goodwill, net — 553,309 3,258 — — 556,567 Intangible assets, net — 648,205 23,191 — — 671,396 Deferred tax assets — 1,375 — — — 1,375 Right-of-use assets, net — 35,982 78,366 — — 114,348 Other non-current assets — 1,986 25,114 — — 27,100 Total assets 5,940,097 3,611,223 1,751,061 320,301 (6,616,667 ) 5,006,015 Accounts payable — 39,323 58,723 7,645 — 105,691 Advances from customers — 8,599 6,170 26,810 — 41,579 Accrued expenses and other liabilities 10,662 141,804 230,105 8,646 — 391,217 Amounts due to related parties — 9,395 36 — — 9,431 Income tax payables — 3,351 13,666 929 — 17,946 Lease liabilities due within one year — 10,771 34,693 — — 45,464 Amounts due to Group companies — 4,975,362 1,923 266,018 (5,243,303 ) — Deferred tax liabilities — 111,591 — — — 111,591 Deficit of investments in subsidiaries and VIE (3) 1,763,842 — — — (1,763,842 ) — Deferred income non-current 30,556 — — — — 30,556 Lease liabilities — 25,169 42,598 — — 67,767 Total liabilities 1,805,060 5,325,365 387,914 310,048 (7,007,145 ) 821,242 Redeemable non-controlling interests — 51,466 — — — 51,466 Total shareholders' equity (deficit) 4,135,037 (1,765,608 ) 1,363,147 10,253 390,478 4,133,307 Total liabilities, redeemable non-controlling interests and shareholders' equity (deficit) 5,940,097 3,611,223 1,751,061 320,301 (6,616,667 ) 5,006,015 Movements of investments in subsidiaries and VIE / (deficit of investments in subsidiaries and VIE) in Yatsen Holding Limited’s separate financial statements are as follows: RMB (in thousands) As of January 1, 2022 (458,360 ) Share-based compensation costs incurred on behalf of subsidiaries 340,860 Share of loss of subsidiaries and VIE (812,151 ) Share of changes in accumulated other comprehensive income of subsidiaries (429,657 ) Foreign currency translation 90,888 As of December 31, 2022 (1,268,420 ) Share-based compensation costs incurred on behalf of subsidiaries 77,502 Share of loss of subsidiaries and VIE (738,768 ) Share of changes in additional paid-in capital of subsidiaries 154,981 Share of changes in accumulated other comprehensive income of subsidiaries (21,275 ) Foreign currency translation 32,138 As of December 31, 2023 (1,763,842 ) Share-based compensation costs incurred on behalf of subsidiaries 91,174 Share of loss of subsidiaries and VIE (774,577 ) Share of changes in accumulated other comprehensive income of subsidiaries (76,553 ) Foreign currency translation 18,313 As of December 31, 2024 (2,505,485 ) 14 Selected Condensed Consolidated Cash Flows Information For the Year Ended December 31, 2024 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) 42,546 (151,565 ) (142,888 ) 8,241 — (243,666 ) Capital contribution to Group companies — (99,823 ) — — 99,823 — Advances to Group companies (474,150 ) — (277,074 ) — 751,224 — Receival of advances repayment from Group companies 402,416 — 268,185 — (670,601 ) — Purchases of short-term investments (1,316,051 ) — — — — (1,316,051 ) Maturities of short-term investments 1,863,161 141,934 — — — 2,005,095 Purchases of intangible assets — (533 ) (3,747 ) — — (4,280 ) Purchases of property and equipment — (15,865 ) (36,857 ) (18 ) — (52,740 ) Investments on equity investments — — — (42,000 ) — (42,000 ) Other investing activities — 15 2,042 42 — 2,099 Net cash provided by (used in) Investing Activities 475,376 25,728 (47,451 ) (41,976 ) 180,446 592,123 Capital contribution from Group companies — — 99,823 — (99,823 ) — Proceeds from advances from Group companies — 705,724 — 45,500 (751,224 ) — Repayment of advances from Group companies — (650,601 ) — (20,000 ) 670,601 — Repurchases of Ordinary Shares (405,792 ) — — — — (405,792 ) Other financing activities 11,566 — — — — 11,566 Net cash provided by (used in) Financing Activities (394,226 ) 55,123 99,823 25,500 (180,446 ) (394,226 ) 15 For the Year Ended December 31, 2023 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) (11,400 ) 239,051 (371,566 ) 36,473 — (107,442 ) Capital contribution to Group companies — — — — — — Advances to Group companies (245,424 ) — (359,355 ) — 604,779 — Receival of advances repayment from Group companies 1,335,355 — 607,602 — (1,942,957 ) — Purchases of short-term investments (1,439,145 ) (902,388 ) — — — (2,341,533 ) Maturities of short-term investments 709,230 1,413,146 100,000 — — 2,222,376 Purchases of intangible assets — — (321 ) — — (321 ) Purchases of property and equipment — (8,108 ) (35,540 ) — — (43,648 ) Proceeds from disposal of investments — — 22,233 — — 22,233 Investments on equity investments — (13,547 ) — (108,000 ) — (121,547 ) Other investing activities — 144 1,530 279 — 1,953 Net cash provided by (used in) Investing Activities 360,016 489,247 336,149 (107,721 ) (1,338,178 ) (260,487 ) Capital contribution from Group companies — — — — — — Proceeds from advances from Group companies — 487,780 — 117,000 (604,780 ) — Repayment of advances from Group companies — (1,900,958 ) — (42,000 ) 1,942,958 — Repurchases of Ordinary Shares (212,693 ) — — — — (212,693 ) Repurchase of redeemable non-controlling interests — (134,664 ) — — — (134,664 ) Other financing activities 4,902 — 474 (474 ) — 4,902 Net cash provided by (used in) Financing Activities (207,791 ) (1,547,842 ) 474 74,526 1,338,178 (342,455 ) 16 For the Year Ended December 31, 2022 Yatsen Holding Limited Other Subsidiaries Primary Beneficiary of VIE (WFOE and its subsidiaries) VIE and VIE’s Subsidiaries Eliminating adjustments Consolidated Totals (RMB in thousands) Net cash provided by (used in) Operating Activities (4) (25,271 ) 221,798 (77,625 ) 17,306 — 136,208 Capital contribution to Group companies — — — — — — Advances to Group companies (1,396,460 ) — (154,158 ) — 1,550,618 — Receival of advances repayment from Group companies 2,539,576 — 474,286 — (3,013,862 ) — Purchases of short-term investments (342,380 ) (1,879,422 ) (200,000 ) — — (2,421,802 ) Maturities of short-term investments — 1,359,564 100,000 — — 1,459,564 Purchases of intangible assets — (351 ) (8,199 ) — — (8,550 ) Purchases of property and equipment — (2,553 ) (47,948 ) (277 ) — (50,778 ) Acquisition of businesses, net of cash and cash equivalents acquired — (2,107 ) — — — (2,107 ) Investments on equity investments — (1,842 ) (104,000 ) (30,000 ) — (135,842 ) Payment on behalf of Group companies — — — — — — Other investing activities — — 4,099 — — 4,099 Net cash provided by (used in) Investing Activities 800,736 (526,711 ) 64,080 (30,277 ) (1,463,244 ) (1,155,416 ) Capital contribution from Group companies — — — — — — Proceeds from advances from Group companies — 1,550,618 — — (1,550,618 ) — Repayment of advances from Group companies — (3,013,862 ) — — 3,013,862 — Issuance costs of issuance of Ordinary Shares in IPO (1,706 ) — — — — (1,706 ) Proceeds from issuance of Preferred Shares, net of issuance costs — — — — — — Repayment of a shareholder receivable resulting from Reorganization — — — — — — Repurchases of Ordinary Shares (654,650 ) — — — — (654,650 ) Repurchases of Preferred Shares — — — — — — Other financing activities 1,906 — 5,644 (5,644 ) — 1,906 Net cash provided by (used in) Financing Activities (654,450 ) (1,463,244 ) 5,644 (5,644 ) 1,463,244 (654,450 ) Notes: * The payment by Primary Beneficiary of VIE (WFOE and its subsidiaries) on behalf of Group companies was reclassified on consolidation level in accordance with nature. ** As of December 31, 2022, 2023 and 2024, amounts due to non-VIE subsidiaries included RMB93.0 million, RMB168.0 million and RMB193.5 million (US$26.5 million) for net debt financing from Group companies to the consolidated VIE not yet returned. *** Pursuant to the Exclusive Business Cooperation Agreement entered into in July 2019 between the Primary Beneficiary of VIE (WFOE and its subsidiaries) and the VIE, the VIE engages the Primary Beneficiary of VIE (WFOE and its subsidiaries) as the exclusive service provider of technical support, consulting services and other services to the VIE.
For more detailed information, see “Item 3. Key Information—D.
For more detailed information, see “Item 3. Key Information—D.
We may also incur significant losses in the future for a number of reasons, including as a result of the materialization of the following risks and the other risks described in this annual report, and we may encounter unforeseen difficulties, complications, delays and other unknown factors: • we may be unsuccessful in predicting and capturing industry trends and consumer preferences; • we may be unable to introduce new products that appeal to consumers; • we may be unsuccessful in protecting or enhancing the recognition and reputation of our brands; • we may be unsuccessful in competing for market share with our existing or new competitors; • the ability of our third-party suppliers, manufacturers and logistics providers to produce and deliver our products in a timely way and in accordance with ever changing customer expectations could be disrupted; • we may fail to adjust our sales and marketing strategies fast enough to stay current with consumers’ behavioral changes in using internet and mobile devices; • we may not be able to maintain and improve our customer experience; • we may experience service interruptions, data corruption, cyber-based attacks or network security breaches which may result in the disruption of our operating systems or the loss of confidential information of our consumers; • we may be unable to retain key members of our senior management team or attract and retain other qualified personnel; • we may fail to successfully implement our new business initiatives, especially expansion into new offerings or new business lines in which we have limited or no prior experience, including sustaining continued expansion of Perfect Diary , Little Ondine, Pink Bear, EANTiM , Galénic , the mainland China business of DR.WU and Eve Lom as well as any new brand we may launch or acquire in the future; 20 • we may fail to successfully operate our offline experience store network; and • we may be affected by international trade tension and any adverse economic conditions in China or internationally.
We may also incur significant losses in the future for a number of reasons, including as a result of the materialization of the following risks and the other risks described in this annual report, and we may encounter unforeseen difficulties, complications, delays and other unknown factors: • we may be unsuccessful in predicting and capturing industry trends and consumer preferences; • we may be unable to introduce new products that appeal to consumers; • we may be unsuccessful in protecting or enhancing the recognition and reputation of our brands; • we may be unsuccessful in competing for market share with our existing or new competitors; • the ability of our third-party suppliers, manufacturers and logistics providers to produce and deliver our products in a timely way and in accordance with ever changing customer expectations could be disrupted; • we may fail to adjust our sales and marketing strategies fast enough to stay current with consumers’ behavioral changes in using internet and mobile devices; • we may not be able to maintain and improve our customer experience; 20 • we may experience service interruptions, data corruption, cyber-based attacks or network security breaches which may result in the disruption of our operating systems or the loss of confidential information of our consumers; • we may be unable to retain key members of our senior management team or attract and retain other qualified personnel; • we may fail to successfully implement our new business initiatives, especially expansion into new offerings or new business lines in which we have limited or no prior experience, including sustaining continued expansion of Perfect Diary , Little Ondine, Pink Bear, EANTiM , Galénic , the mainland China business of DR.WU and Eve Lom as well as any new brand we may launch or acquire in the future; • we may fail to successfully operate our offline experience store network; and • we may be affected by international trade tension and any adverse economic conditions in China or internationally.
In addition, we have completed the consignor/consignee registration for export and import of goods to carry out import of goods to facilitate the operation of our portfolio brands and to implement our sales of products to overseas markets.
In addition, we have completed the consignor/consignee registration for export and import of goods to carry out import of goods to facilitate the operation of our portfolio brands and to implement our sales of products to overseas markets.
We have filed the franchise agreement in effect with the Department of Commerce of Guangdong Province for the launch of our franchise business model for our products under the Perfect Dairy brand.
We have filed the franchise agreement in effect with the Department of Commerce of Guangdong Province for the launch of our franchise business model for our products under the Perfect Dairy brand.
The cost of identifying and consummating investments and acquisitions could be high and there can be no assurance that we will be able to identify suitable acquisition candidates, be the successful bidder or consummate acquisitions on favorable terms, or have the funds to acquire desirable acquisitions.
The cost of identifying and consummating investments or acquisitions could be high and there can be no assurance that we will be able to identify suitable investments or acquisition candidates, be the successful bidder or consummate acquisitions on favorable terms, or have the funds to acquire desirable investments or acquisitions.
Holders of our ADSs hold equity interest in Yatsen Holding Limited, our Cayman Islands holding company, and do not have direct or indirect equity interest in the VIE.
Holders of our ADSs hold equity interest in Yatsen Holding Limited, our Cayman Islands holding company, and do not have direct or indirect equity interest in the VIE.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
We cannot predict what effect, if any market sales of securities held by a principal shareholder or any other shareholder or the availability of these securities for future sale will have on the market price on our ADSs.
We cannot predict what effect, if any market sales of securities held by a principal shareholder or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs.
If we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, (a) in the event that the foreign debt management mechanism as provided in the Measures for Foreign Debts Registration and Administration and other relevant rules applies, the balance of such loans cannot exceed the difference between the total investment and the registered capital of the subsidiaries and we will need to register such loans with the SAFE or its local branches, or (b) in the event that the mechanism as provided in the Notice of the People’s Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, applies, the balance of such loans will be subject to the risk-weighted approach and the net asset limits and we will need to file the loans with the SAFE in its information system pursuant to applicable requirements and guidelines issued by the SAFE or its local branches.
If we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, (a) in the event that the foreign debt management mechanism as provided in the Measures for Foreign Debts Registration and Administration and other relevant rules applies, the balance of such loans cannot exceed the difference between the total investment and the registered capital of the subsidiaries and we will need to register such loans with the SAFE or its local branches, or (b) in the event that the mechanism as provided in the Notice of the People’s Bank of China on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, applies, the balance of such loans will be subject to the risk-weighted approach and the net asset limits and we will need to file the loans with the SAFE in its information system pursuant to applicable 63 requirements and guidelines issued by the SAFE or its local branches.
If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals to operate our business, the PRC governmental authorities would have broad discretion to take action in dealing with such violations or failures, including: • revoking the business licenses and/or operating licenses of such entities; • imposing fines on us; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or placing restrictions or onerous conditions on our operations; • placing restrictions on our right to collect revenues; • shutting down our servers or blocking our app/websites; or • requiring us to restructure our ownership structure or operations.
If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals to operate our business, the PRC governmental authorities would have broad discretion to take action in dealing with such violations or failures, including: • revoking the business licenses and/or operating licenses of such entities; 51 • imposing fines on us; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or placing restrictions or onerous conditions on our operations; • placing restrictions on our right to collect revenues; • shutting down our servers or blocking our app/websites; or • requiring us to restructure our ownership structure or operations.
Risks Relating to Doing Business in China We are also subject to risks and uncertainties relating to doing business in China in general, including, but not limited to, the following: • Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations; • Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs; • The PRC government has significant oversight and discretion over the conduct of our business, and may influence our operations as the government deems appropriate to advance regulatory and societal goals and policy positions, which could result in a material adverse change in our operation and/or the value of our ADSs.
Risks Relating to Doing Business in China We are also subject to risks and uncertainties relating to doing business in China in general, including, but not limited to, the following: • Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations; 19 • Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs; • The PRC government has significant oversight and discretion over the conduct of our business, and may influence our operations as the government deems appropriate to advance regulatory and societal goals and policy positions, which could result in a material adverse change in our operation and/or the value of our ADSs.
Our holding company, the VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as a whole; • We rely on contractual arrangements with the VIE and its shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership; • Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business; and • The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business.
Our holding company, the VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as a whole; • We rely on contractual arrangements with the VIE and its shareholders for our operations and investments in China, which may not be as effective in providing operational control as direct ownership; • Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business; and • The shareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business.
Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or be worthless; • The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections; 19 • Our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or be worthless; • The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections; • Our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016 and amended on December 4, 2023, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against 66 using such capital to issue loans to non-associated enterprises.
The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016 and amended on December 4, 2023, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to future loans by us to our PRC subsidiaries or the VIE or its subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries, neither can we guarantee that we will be able to provide loans in such amount as needed by our PRC subsidiaries or the VIE in a timely manner.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to 64 future loans by us to our PRC subsidiaries or the VIE or its subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries, neither can we guarantee that we will be able to provide loans in such amount as needed by our PRC subsidiaries or the VIE in a timely manner.
Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year and participate in any stock incentive plan of an overseas publicly listed company are required to register with the State Foreign Exchange Administration of the PRC, through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures, unless certain exceptions are available.
Pursuant to these rules, PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year and participate in any stock incentive plan of an overseas publicly listed company are required to register with the State Foreign 61 Exchange Administration of the PRC, through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures, unless certain exceptions are available.
Risk Factors—Risks Relating to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10.
Risk Factors—Risks Relating to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” 9 For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10.
If 55 our control over the VIE through contractual arrangements is deemed as foreign investment in the future, and any business of the VIE is “restricted” or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over the VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.
If our control over the VIE through contractual arrangements is deemed as foreign investment in the future, and any business of the VIE is “restricted” or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over the VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.
If such platform’s services or operations are interrupted, if such platforms fail to provide satisfactory customer experience and fail to attract new and retain existing users, if our cooperation with such third-party e-commerce platforms terminates, deteriorates or becomes more costly, or if we fail to incentivize such platforms to drive traffic to our flagship stores or promote the sale of our products, our business and results of operations may be materially and adversely affected.
If such platform’s services or operations are interrupted, if such platforms fail to provide satisfactory customer experience and fail to attract new and retain existing users, if our cooperation with such third-party e-commerce platforms terminates, deteriorates or becomes more costly, or if we fail to incentivize such platforms to drive traffic to our flagship stores or promote the sale of our products, our business and results of operations may be 24 materially and adversely affected.
In addition, any of our future proposed offering of securities in an overseas market or the listing of the listed securities, including but not 59 limited to follow-on offerings and secondary listings, will be subject to the filing requirements with the CSRC under the New Overseas Listing Rules, and we cannot assure you that we will be able to comply with such filing requirements in a timely manner, or at all.
In addition, any of our future proposed offering of securities in an overseas market or the listing of the listed securities, including but not limited to follow-on offerings and secondary listings, will be subject to the filing requirements with the CSRC under the New Overseas Listing Rules, and we cannot assure you that we will be able to comply with such filing requirements in a timely manner, or at all.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 77 We are required to file an annual report on Form 20-F within four months of the end of each fiscal year.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD. 75 We are required to file an annual report on Form 20-F within four months of the end of each fiscal year.
Risk Factors—Risks Relating to Our Business and Industry—If the content we produce and distribute through online social and content 8 platforms, or content available on our website, is deemed to violate PRC laws or regulations, our business and results of operations may be materially and adversely affected.” The PRC governmental authorities have promulgated PRC laws and regulations relating to cybersecurity review and overseas listings.
Risk Factors—Risks Relating to Our Business and Industry—If the content we produce and distribute through online social and content platforms, or content available on our website, is deemed to violate PRC laws or regulations, our business and results of operations may be materially and adversely affected.” The PRC governmental authorities have promulgated PRC laws and regulations relating to cybersecurity review and overseas listings.
Uncertainties and/or negative publicity regarding these PRC regulations could have a material adverse effect on the trading price of our listed securities. 60 You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
Uncertainties and/or negative publicity regarding these PRC regulations could have a material adverse effect on the trading price of our listed securities. You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the annual report based on foreign laws.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect State Administration of 61 Taxation’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect State Administration of Taxation’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
If we are unable to conduct our sales and marketing efforts in a cost-effective and efficient manner, our results of operations and financial conditions may be materially and adversely affected.” We cannot assure you, however, that these activities are and will be successful or that we can achieve the brand promotion effect we expect.
If we are unable to conduct our sales and marketing efforts in a cost-effective and efficient manner, our results of operations and financial conditions may be materially and adversely affected.” We cannot assure you, however, that these activities are and will be successful or that we can achieve the brand promotion effect as we expect.
If the market for beauty products in China does not grow as quickly as expected or at all, or if we fail to benefit from such growth by successfully implementing our business strategies, our business and prospects may be negatively affected. Changes to the pricing of our products could adversely affect our results of operations.
If the market for beauty products in China does not grow as quickly as expected or at all, or if we fail to benefit from such growth by successfully implementing our business strategies, our business and prospects may be negatively affected. 27 Changes to the pricing of our products could adversely affect our results of operations.
In addition, once invited into our online communities, our customers can add each 38 other as contacts and communicate and interact privately. We have no control over our customers’ behaviors off our online communities and cannot rule out the possibility that some of them may engage in immoral, disrespectful, fraudulent or illegal activities.
In addition, once invited into our online communities, our customers can add each other as contacts and communicate and interact privately. We have no control over our customers’ behaviors off our online communities and cannot rule out the possibility that some of them may engage in immoral, disrespectful, fraudulent or illegal activities.
While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure, or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.
While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure, or at all. 49 In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.
Competition in the beauty industry is intense and is affected by multiple factors, including the ability to launch new products, pricing of products, quality of products and packaging, brand awareness, perceived value and quality, innovation, offline sales capabilities, customers’ functional and emotional satisfaction, promotional activities, advertising, editorials, e-commerce and mobile-commerce initiatives and other activities.
Competition in the beauty industry is intense and is affected by multiple factors, including the ability to launch new products, pricing of products, quality of products and packaging, brand awareness, perceived value and quality, innovation, offline sales and distribution capabilities, customers’ functional and emotional satisfaction, promotional activities, advertising, editorials, e-commerce and mobile-commerce initiatives and other activities.
These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events.
These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components, power 38 outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors or catastrophic events.
If these actions are not successful, the return of adverse economic conditions may cause a significant impact on our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all. 49 We face risks related to natural disasters, health epidemics and other outbreaks.
If these actions are not successful, the return of adverse economic conditions may cause a significant impact on our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all. We face risks related to natural disasters, health epidemics and other outbreaks.
If any of these occurrences results in our inability to direct the activities of any of the VIE that most significantly impact its economic performance, and/or our failure to receive the economic benefits from any of the VIE, we may not be able to consolidate such entity in our consolidated financial statements in accordance with U.S.
If any of these occurrences results in our inability to direct the activities of any of the VIE that most significantly impact its economic performance, and/or our failure to receive the economic benefits from any of the VIE, we may not be able to consolidate such entity in our consolidated financial statements in accordance with U.S. GAAP.
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 the ADSs. 67 It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
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 the ADSs. It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
GAAP, and we consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. 6 GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the VIE and Its Shareholders.” Our corporate structure is subject to risks associated with our contractual arrangements with the VIE.
GAAP, and we consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the VIE and Its Shareholders.” Our corporate structure is subject to risks associated with our contractual arrangements with the VIE.
Any of the above may materially and adversely affect our business, financial condition and results of operations. 25 Our business and prospects depend on our ability to build our brands and reputation, which could be harmed by negative publicity with respect to us, our products and operations, our management, brand ambassadors, KOLs, or other business partners.
Any of the above may materially and adversely affect our business, financial condition and results of operations. Our business and prospects depend on our ability to build our brands and reputation, which could be harmed by negative publicity with respect to us, our products and operations, our management, brand ambassadors, KOLs, or other business partners.
We cannot 41 rule out the possibility that some of these use cases are not properly authorized by the relevant performers and/or proprietary right holders, which may expose us to potential liabilities for infringement of portrait rights or rights to network dissemination of information under Chinese laws.
We cannot rule out the possibility that some of these use cases are not properly authorized by the relevant performers and/or proprietary right holders, which may expose us to potential liabilities for infringement of portrait rights or rights to network dissemination of information under Chinese laws.
If we fail to respond to technological change or to adequately maintain and upgrade our systems and infrastructure in response to changing business needs in a timely, effective and cost-efficient fashion, our business could be adversely affected. 39 Real or perceived inaccuracies in our operating metrics may harm our reputation and negatively affect our business.
If we fail to respond to technological change or to adequately maintain and upgrade our systems and infrastructure in response to changing business needs in a timely, effective and cost-efficient fashion, our business could be adversely affected. Real or perceived inaccuracies in our operating metrics may harm our reputation and negatively affect our business.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by the government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our business in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals.
Given the uncertainties of interpretation and implementation of relevant laws 7 and regulations and the enforcement practice by the government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our business in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals.
See “Item 6. Directors, Senior Management and Employees—E. Share 70 Ownership.” As a result of the dual-class share structure and the concentration of ownership, Mr. Jinfeng Huang has decisive influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate actions.
See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” As a result of the dual-class share structure and the concentration of ownership, Mr. Jinfeng Huang has decisive influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate actions.
If we are deemed to have violated the labor laws and regulations at any time, we could be required to provide additional compensation to our employees or face administrative proceedings or civil actions and our business, financial condition and results of operations could be materially and adversely affected.
If we are deemed to have violated 47 the labor laws and regulations at any time, we could be required to provide additional compensation to our employees or face administrative proceedings or civil actions and our business, financial condition and results of operations could be materially and adversely affected.
Risk Factors.” Risks Relating to Our Business and Industry Risks and uncertainties related to our business and industry include, but are not limited to, the following: • We may not be successful in executing our growth strategy or otherwise achieving revenue growth in the future; • The beauty industry is highly competitive.
Risk Factors.” Risks Relating to Our Business and Industry Risks and uncertainties related to our business and industry include, but are not limited to, the following: • We may not be successful in executing our growth strategy or otherwise achieving revenue growth in the future; 18 • The beauty industry is highly competitive.
However, we cannot assure you that we will be able to successfully anticipate and respond to consumers’ preferences and behavior at all times, especially as we continue to maintain or broaden our customer base and diversify our product offerings aimed at customers with differing characteristics.
We cannot assure you that we will be able to successfully anticipate and respond to consumers’ preferences and behavior at all times, especially as we continue to maintain or broaden our customer base and diversify our product offerings aimed at customers with differing characteristics.
As a result, we may not always be aware of any potential violation of these policies and rules. Such unpredictability towards our contractual, property (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations.
As a result, we may not always be aware of any potential violation of these policies and rules. Such unpredictability towards our contractual, property 55 (including intellectual property) and procedural rights could adversely affect our business and impede our ability to continue our operations.
On November 2, 2023, we received 68 a letter from the NYSE notifying us that (i) we are below NYSE compliance standards due to the trading price of our ADSs and (ii) the applicable cure period for us to regain compliance expires on May 2, 2024.
On November 2, 2023, we received a letter from the NYSE notifying us that (i) we are below NYSE compliance standards due to the trading price of our ADSs and (ii) the applicable cure period for us to regain compliance expires on May 2, 2024.
New Overseas Listing Rules establish a new filing-based regime to regulate both direct and indirect overseas offerings and listings by domestic companies. According to the New Overseas Listing Rules, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC.
New Overseas Listing Rules establish a new filing-based regime to regulate both direct and indirect overseas offerings and listings by domestic companies. 57 According to the New Overseas Listing Rules, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC.
Jinfeng Huang. A series of contractual agreements, including proxy agreement and power of attorney, equity pledge agreement, exclusive business cooperation agreement and exclusive call option agreement, have been entered into by and among our subsidiary, the VIE and its shareholders.
Jinfeng Huang. 5 A series of contractual agreements, including proxy agreement and power of attorney, equity pledge agreement, exclusive business cooperation agreement and exclusive call option agreement, have been entered into by and among our subsidiary, the VIE and its shareholders.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
In May 2022, the SEC conclusively listed us as a 56 Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
Our directors have discretion under our ninth amended and restated articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders.
Our directors have discretion under our ninth amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders.
We will be classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the “asset test.” Although the law in this regard is unclear, we intend to treat the VIE (including its subsidiaries) as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits and, as a result, we consolidate their results of operations in our consolidated financial statements.
We will be classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the “asset test.” Although the law in this regard is unclear, we intend to treat the VIE (including its subsidiaries) as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entity but also because we are entitled to substantially all of its economic benefits and, as a result, we consolidate its results of operations in our consolidated financial statements.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. 75 As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. 73 As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
As a 45 result of the seasonal fluctuations in our operating results, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.
As a result of the seasonal fluctuations in our operating results, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.
See “—Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.
See 52 “—Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.
The relevant intercompany payables and cash flows resulting from such contractual arrangements are also set forth in the footnotes below. (1) Represents the elimination of the intercompany transaction at the consolidation level.
The relevant intercompany payables and cash flows resulting from such contractual arrangements are also set forth in the footnotes below. 17 (1) Represents the elimination of the intercompany transaction at the consolidation level.
Such acquisitions and investments may also require approval from the PRC governmental authorities, which may result in high compliance costs and add uncertainty to the transaction despite the commercial efforts made.
Such investments or acquisitions may also require approval from the PRC governmental authorities, which may result in high compliance costs and add uncertainty to the transaction despite the commercial efforts made.
The share repurchase program could affect the price of our ADSs and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our ADSs.
The share repurchase program could affect the price of our ADSs and increase 68 volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our ADSs.
In addition, if we issue additional ordinary shares, either through private transactions or in the public markets in the United States or other jurisdiction, your ownership interests in our company would be diluted and this, in turn, would have an adverse effect on the price of our ADSs. 72 Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and the ADSs.
In addition, if we issue additional ordinary shares, either through private transactions or in the public markets in the United States or other jurisdiction, your ownership interests in our company would be diluted and this, in turn, would have an adverse effect on the price of our ADSs. 70 Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and the ADSs.
The PRC government has recently published new policies that significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could also result in a material adverse change in our operation and/or the value of our ADSs.
Historically, the PRC government has published new policies that significantly affected certain industries, and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could also result in a material adverse change in our operation and/or the value of our ADSs.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for the taxable year ended December 31, 2023 and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for the taxable year ended December 31, 2024 and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
According to the New Overseas Listing Rules, an overseas offering and listing by a domestic company, whether 7 directly or indirectly, shall be filed with the CSRC.
According to the New Overseas Listing Rules, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC.
As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations.
As a result, in certain 42 circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations.
No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us or the depositary from our respective obligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any holder or beneficial owner of ADSs of compliance with any provision of the Securities Act and the Exchange Act. 76 An ADS holder’s right to pursue claims against the depositary is limited by the terms of the deposit agreement.
No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us or the depositary from our respective obligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any holder or beneficial owner of ADSs of compliance with any provision of the Securities Act and the Exchange Act. 74 An ADS holder’s right to pursue claims against the depositary is limited by the terms of the deposit agreement.
The VIE conducts operations in China, and its financial results have been consolidated into our consolidated financial statement for accounting purposes under U.S. GAAP. Revenues contributed by the VIE and its subsidiaries accounted for 8.9%, 8.7% and 5.4% of our total revenues for the years ended December 31, 2021, 2022 and 2023, respectively.
The VIE conducts operations in China, and its financial results have been consolidated into our consolidated financial statement for accounting purposes under U.S. GAAP. Revenues contributed by the VIE and its subsidiaries accounted for 8.7%, 5.4% and 4.9% of our total revenues for the years ended December 31, 2022, 2023 and 2024, respectively.
Besides the Exclusive Business Cooperation Agreement, all intercompany transactions between (i) Primary Beneficiary of VIE (WFOE and its subsidiaries) and (ii) VIE and VIE’s subsidiaries, which are set forth in the footnotes below, were conducted in accordance with the relevant agreements for the years ended December 31, 2021, 2022 and 2023.
Besides the Exclusive Business Cooperation Agreement, all intercompany transactions between (i) Primary Beneficiary of VIE (WFOE and its subsidiaries) and (ii) VIE and VIE’s subsidiaries, which are set forth in the footnotes below, were conducted in accordance with the relevant agreements for the years ended December 31, 2022, 2023 and 2024.
We also operate two customer service centers which provide service daily from 8:00 a.m. to midnight, handling all kinds of customer queries and complaints regarding our products and services. As of December 31, 2023, we had a group of customer service representatives at our customer service centers, consisting of our own employees and representatives from third-party service providers.
We also operate two customer service centers which provide service daily from 8:00 a.m. to midnight, handling all kinds of customer queries and complaints regarding our products and services. As of December 31, 2024, we had a group of customer service representatives at our customer service centers, consisting of our own employees and representatives from third-party service providers.
We also have adopted customer-friendly return and exchange policies that make it convenient and easy for customers to change their minds within seven days after completing direct online purchases from us. We may also be legally required to adopt new or amend existing return and exchange policies from time to time.
We also have adopted customer-friendly return and exchange policies that make it convenient and easy for customers to change their minds within at least seven days after completing direct online purchases from us. We may also be legally required to adopt new or amend existing return and exchange policies from time to time.
If we are unable to compete effectively, we may lose our market share and our business, results of operations and financial condition may be materially and adversely affected; • Our success is dependent on the continued popularity of our products and our ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; • Our new product introductions may not be as successful as we anticipate, which could have a material adverse effect on our business, prospects, financial condition and results of operations; • Our business depends, in part, on the quality, effectiveness and safety of our products; • We may not be able to successfully or effectively implement our business strategy; • We may be unable to manage our growth effectively or efficiently; • We have a history of net losses, and we may not be able to achieve profitability in the future; 18 • We rely on third-party e-commerce platforms to sell our products online.
If we are unable to compete effectively, we may lose our market share and our business, results of operations and financial condition may be materially and adversely affected; • Our success is dependent on the continued popularity of our products and our ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; • Our new product introductions may not be as successful as we anticipate, which could have a material adverse effect on our business, prospects, financial condition and results of operations; • Our business depends, in part, on the quality, effectiveness and safety of our products; • We may not be able to successfully or effectively implement our business strategy; • We have a history of net losses, and we may not be able to achieve profitability in the future; • We rely on third-party e-commerce platforms to sell our products online.
Currently, we rely on third-party e-commerce platforms such as Tmall, Douyin and JD.com, among others, for online sales of our products and derive a material portion of our online sales revenue through and from such platforms. In 2021, 2022 and 2023, a majority of our net revenues were generated through our store on third-party e-commerce platforms.
Currently, we rely on third-party e-commerce platforms such as Douyin, Tmall and JD.com, among others, for online sales of our products and derive a material portion of our online sales revenue through and from such platforms. In 2022, 2023 and 2024, a majority of our net revenues were generated through our store on third-party e-commerce platforms.
The share-based compensation expenses recorded in 2023 were lower as compared with those recorded in 2022, primarily attributable to a reversal of recognized share-based compensation expenses of RMB109.4 million due to the forfeiture of unvested awards granted to our former chief technology officer upon his resignation in the first quarter of 2023.
The share-based compensation expenses recorded in 2023 were lower as compared with those recorded in 2022 and 2024, primarily attributable to a reversal of recognized share-based compensation expenses of RMB109.4 million due to the forfeiture of unvested awards granted to our former chief technology officer upon his resignation in the first quarter of 2023.
This means that you may not receive distributions 74 we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us or the depositary to make them available to you. These restrictions may cause a material decline in the value of our ADSs.
This means that you may not receive distributions 72 we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us or the depositary to make them available to you. These restrictions may cause a material decline in the value of our ADSs.
For the years ended December 31, 2021, 2022 and 2023, the Primary Beneficiary of VIE (WFOE and its subsidiaries) decided not to charge any service fee from the VIE in relation to the Exclusive Business Cooperation Agreement, and no service fees were paid by the VIE to the Primary Beneficiary of VIE (WFOE and its subsidiaries) during the respective periods.
For the years ended December 31, 2022, 2023 and 2024, the Primary Beneficiary of VIE (WFOE and its subsidiaries) decided not to charge any service fee from the VIE in relation to the Exclusive Business Cooperation Agreement, and no service fees were paid by the VIE to the Primary Beneficiary of VIE (WFOE and its subsidiaries) during the respective periods.
In addition, any negative publicities about such third-party e-commerce platforms, any public perception or claims that non-authentic, counterfeit or defective goods are sold on such platforms, be it with merit or proven or not, most of which are beyond our control, may deter visits to the platforms and result in less customer traffics to our flagship stores or fewer sales of our products, which may negatively impact our business and results of operations.
In addition, any negative publicities about such third-party e-commerce platforms, any public perception or claims that non-authentic, counterfeit or defective goods are sold on such platforms, be it with merit or proven or not, most of which are beyond our control, may deter visits to the platforms and result in less customer traffics to our flagship stores or fewer sales of our products through other sales channels, which may negatively impact our business and results of operations.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2023, which could subject United States investors in our ADSs or Class A ordinary shares to significant adverse United States income tax consequences.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2024, which could subject United States investors in our ADSs or Class A ordinary shares to significant adverse United States income tax consequences.
Where any matter is to be put to a vote at a general meeting, then upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary shares represented by your ADSs in accordance with 73 your instructions.
Where any matter is to be put to a vote at a general meeting, then upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary shares represented by your ADSs in accordance with 71 your instructions.
For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred between the Cayman Islands holding company and a subsidiary, the VIE or its subsidiaries, no subsidiaries paid dividends or made other distributions to the holding company, and no dividends or distributions were paid or made to U.S. investors.
For the years ended December 31, 2022, 2023 and 2024, no assets other than cash were transferred between the Cayman Islands holding company and a subsidiary, the VIE or its subsidiaries, no subsidiaries paid dividends or made other distributions to the holding company, and no dividends or distributions were paid or made to U.S. investors.
Our experience stores have required substantial investment in equipment and leasehold improvements, information systems, inventory and personnel, often times even prior to generating any sales in these stores. We also have entered into substantial operating lease commitments for store space.
Our experience stores have required investments in equipment and leasehold improvements, information systems, inventory and personnel, often times even prior to generating any sales in these stores. We also have entered into substantial operating lease commitments for store space.
In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
Risk Factors—Risks Relating to Our Corporate Structure.” 5 The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business, as of the date of this annual report: Note: (1) Mr.
Risk Factors—Risks Relating to Our Corporate Structure.” 4 The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business, as of the date of this annual report: Note: (1) Mr.
We also expect to continue to make significant future expenditures related to the development and expansion of our business, including: • investments in our product development team and research and development team and in the development of new products; • investments in sales and marketing, enlarging our customer base and promoting market awareness of our brands and products; • investments in expansion or maintenance of our online and offline distribution channels in a measured manner, including the buildout of our offline experience store footprint; and • investment in enhancing data and information technology and improving operating efficiency, including improving the efficiency in supply chain management, warehouse management and inventory control.
We also expect to continue to make significant future expenditures related to the development and expansion of our business, including: • investments in our product development team and research and development team and in the development of new products; • investments in sales and marketing, enlarging our customer base and promoting market awareness of our brands and products; • investments in expansion or maintenance of our online and offline distribution channels in a measured manner; and • investment in enhancing data and information technology and improving operating efficiency, including improving the efficiency in supply chain management, warehouse management and inventory control.
Additional Information—E. Taxation.” 10 The VIE may transfer cash to our WFOE by paying service fees according to the contractual arrangements. For the years ended December 31, 2021, 2022 and 2023, no service fees were paid by the VIE to our WFOE. For details of the financial position, cash flows and results of operations of the VIE, see “Item 3.
Additional Information—E. Taxation.” The VIE may transfer cash to our WFOE by paying service fees according to the contractual arrangements. For the years ended December 31, 2022, 2023 and 2024, no service fees were paid by the VIE to our WFOE. For details of the financial position, cash flows and results of operations of the VIE, see “Item 3.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeRegulations Relating to Franchising Operations The Administrative Regulations on Commercial Franchise Operations were promulgated by the State Counsel on February 6, 2007, effective as of May 1, 2007, under which a franchisor shall have a well-established operation model, be able to provide the franchisee with long-term management guidance, technical support, business training and other services, and have at least two direct sales stores and have undertaken the business for more than a year.
Biggest changeRisk Factors—Risks Relating to Our Business and Industry—If we fail to obtain and maintain the requisite licenses, permits, registrations and filings applicable to our business, or fail to obtain additional licenses, permits, registrations or filings that become necessary as a result of new enactment or promulgation of government policies, laws or regulations or the expansion of our business, our business and results of operations may be materially and adversely affected.” Regulations Relating to Franchising Operations The Administrative Regulations on Commercial Franchise Operations were promulgated by the State Counsel on February 6, 2007, effective as of May 1, 2007, under which a franchisor shall have a well-established operation model, be able to provide the franchisee with long-term management guidance, technical support, business training and other services, and have at least two direct sales stores and have undertaken the business for more than a year.
Our most popular skincare products include: (i) Galénic N°1 Poudre Vitamine C Pure Eclaircissante serum, featuring highly-concentrated, 20% Vitamin C extract designed for dark spot reductions and skin brightening applications, a core technology that was published in the Journal of Cosmetics, Dermatological Sciences and Applications, (ii) Eve Lom Cleanser, our iconic cleanser balm that cleanses, hydrates, tones, removes makeup, and exfoliates skin, which is embraced by those who believe the first step to radiant skin is the perfect cleanse and (iii) DR.WU Intensive Renewal Serum with Mandelic Acid, which has been among the top-selling products in the acne-treating serum category on both Tmall and Douyin.
Our most popular skincare products include: (i) Galénic N°1 Poudre Vitamine C Pure Eclaircissante serum, featuring highly-concentrated, 20% Vitamin C extract designed for dark spot reductions and skin brightening applications, a core technology that was published in the Journal of Cosmetics, Dermatological Sciences and Applications, (ii) DR.WU Intensive Renewal Serum with Mandelic Acid, which has been among the top-selling products in the acne-treating serum category on both Douyin and Tmall and (iii) Eve Lom Cleanser, our iconic cleanser balm that cleanses, hydrates, tones, removes makeup, and exfoliates skin, which is embraced by those who believe the first step to radiant skin is the perfect cleanse.
PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure, which include the Decision of the Standing Committee of the National People’s Congress on Internet Security Protection enacted and amended by the Standing Committee of the National People’s Congress on December 28, 2000 and August 27, 2009, respectively, the Provisions on the Technical Measures for Internet Security Protection issued by the Ministry of Public Security on December 13, 2005 and took effect on March 1, 2006, the Decision of the Standing Committee of the National People’s Congress on Strengthening Network Information Protection promulgated by the Standing Committee of the National People’s Congress on December 28, 2012, the Several Provisions on Regulating the Market Order of Internet Information Services promulgated by the Ministry of Industry and Information Technology on December 29, 2011, and the Provisions on Protection of Personal Information of Telecommunication and Internet Users released by the Ministry of Industry and Information Technology on July 16, 2013.
PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure, which include the Decision of the Standing Committee of the National People’s Congress on Internet Security Protection enacted and amended by the Standing Committee of the National People’s Congress on December 28, 2000 and August 27, 2009, respectively, the Provisions on the Technical Measures for Internet Security Protection issued by the Ministry of Public Security on December 13, 2005 and took effect on March 1, 2006, the Decision of the Standing Committee of the National People’s Congress on Strengthening Network Information Protection 102 promulgated by the Standing Committee of the National People’s Congress on December 28, 2012, the Several Provisions on Regulating the Market Order of Internet Information Services promulgated by the Ministry of Industry and Information Technology on December 29, 2011, and the Provisions on Protection of Personal Information of Telecommunication and Internet Users released by the Ministry of Industry and Information Technology on July 16, 2013.
It is clarified that “Personal information” refers to all kinds of information related to identified or identifiable natural persons that are electronically or otherwise recorded, excluding information that has been 105 anonymized, “Sensitive personal information” refers to the personal information of which the leakage or illegal use could easily lead to the violation of the personal dignity of a natural person or harm to personal or property safety, including information on biometric identification, religious beliefs, specific identity, health care, financial accounts, and personal whereabouts, and personal information of minors under the age of fourteen, and “Personal information processing” includes, but is not limited to, the collection, storage, use, processing, transmission, provision, disclosure, and deletion of personal information.
It is clarified that “Personal information” refers to all kinds of information related to identified or identifiable natural persons that are electronically or otherwise recorded, excluding information that has been anonymized, “Sensitive personal information” refers to the personal information of which the leakage or illegal use could easily lead to the violation of the personal dignity of a natural person or harm to personal or property safety, including information on biometric identification, religious beliefs, specific identity, health care, financial accounts, and personal whereabouts, and personal information of minors under the age of fourteen, and “Personal information processing” includes, but is not limited to, the collection, storage, use, processing, transmission, provision, disclosure, and deletion of personal information.
Pursuant to the Administrative Regulations on Commercial Franchise Operations , a franchising contract shall include but not be limited to the following terms: the basic information of the franchisor and franchisees, the term of the contract, the type, amount and payment(s) of the franchising fees, the specific content of operation guidance, 101 technical supports and business training as well as the method for providing the same, the quality requirements and quality control measures, the marketing and advertisements arrangements, the consumer protection and indemnification, the change, cancelation or termination of the contract, the breach of the contract, and the dispute resolution, which shall all be put in writing.
Pursuant to the Administrative Regulations on Commercial Franchise Operations , a franchising contract shall include but not be limited to the following terms: the basic information of the franchisor and franchisees, the term of the contract, the type, amount and payment(s) of the franchising fees, the specific content of operation guidance, technical supports and business training as well as the method for providing the same, the quality requirements and quality control measures, the marketing and advertisements arrangements, the consumer protection and indemnification, the change, cancelation or termination of the contract, the breach of the contract, and the dispute resolution, which shall all be put in writing.
Pursuant to the Administrative Measures for Reporting Details Regarding Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Construction on April 7, 2000 and amended on October 19, 2009, and the Provisions on Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Housing and Urban-Rural Development on December 2, 2013, the construction enterprise shall complete the project inspection required by the above provisions and shall go through the filing procedures with the competent governmental authorities where the construction project is located within 15 days after the inspection is completed.
Pursuant to the Administrative Measures for Reporting Details Regarding Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Construction on April 7, 2000 and amended on October 19, 2009, and the Provisions on Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Housing and Urban-Rural Development on December 2, 101 2013, the construction enterprise shall complete the project inspection required by the above provisions and shall go through the filing procedures with the competent governmental authorities where the construction project is located within 15 days after the inspection is completed.
Regulations Relating to Foreign Investment The Foreign Investment Law of the PRC , or the Foreign Investment Law, and the Implementing Regulations of the Foreign Investment Law of the PRC , or the Implementing Regulations of the Foreign Investment Law, provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries.
Regulations Relating to Foreign Investment The Foreign Investment Law of the PRC , or the Foreign Investment Law, and the Implementing Regulations of the Foreign Investment Law of the PRC , or the Implementing Regulations of the Foreign Investment Law, provide 91 that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries.
For example, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors require that Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. 113 In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and taking effect as of March 3, 2011, and the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by Ministry of Commerce on August 25, 2011 and taking effect as of September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by Ministry of Commerce, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.
For example, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors require that Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. 112 In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and taking effect as of March 3, 2011, and the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by Ministry of Commerce on August 25, 2011 and taking effect as of September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by Ministry of Commerce, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.
On January 6, 2017, the State Administration for Industry and Commerce issued the Interim Measures for Seven-day Unconditional Return of Online Purchased Goods , which became effective on March 15, 2017 and was amended on October 23, 2020, further clarifying the scope of consumers’ rights to make returns without a reason, including exceptions, return procedures and online trading platform operators’ responsibility to formulate seven-day unconditional return rules and related consumer protection systems, and supervise the merchants for compliance with these rules. 98 Regulations Relating to Import and Export Goods Pursuant to the Customs Law of the PRC , promulgated by the Standing Committee of the National People’s Congress on January 22, 1987 and last amended on April 29, 2021, unless otherwise stipulated, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers that have registered with the Customs.
On January 6, 2017, the State Administration for Industry and Commerce issued the Interim Measures for Seven-day Unconditional Return of Online Purchased Goods , which became effective on March 15, 2017 and was amended on October 23, 2020, further clarifying the scope of consumers’ rights to make returns without a reason, including exceptions, return procedures and online trading platform operators’ responsibility to formulate seven-day unconditional return rules and related consumer protection systems, and supervise the merchants for compliance with these rules. 96 Regulations Relating to Import and Export Goods Pursuant to the Customs Law of the PRC , promulgated by the Standing Committee of the National People’s Congress on January 22, 1987 and last amended on April 29, 2021, unless otherwise stipulated, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers that have registered with the Customs.
With respect to any company established before the effective date of the Amended PRC Company Law, the period of capital contribution provided in its articles of association shall be 92 amended to meet the time limit provided in the Amended PRC Company Law if such period of capital contribution in its articles of association exceeds that as required by the Amended PRC Company Law; with respect to any company whose period of capital contribution or amount of the registered capital are obviously abnormal, the competent governmental authority may require such company to adjust its period of capital contribution or amount of the registered capital in a timely manner.
With respect to any company established before the effective date of the Amended PRC Company Law, the period of capital contribution provided in its articles of association shall be amended to meet the time limit provided in the Amended PRC Company Law if such period of capital contribution in its articles of association exceeds that as required by the Amended PRC Company Law; with respect to any company whose period of capital contribution or amount of the registered capital are obviously abnormal, the competent governmental authority may require such company to adjust its period of capital contribution or amount of the registered capital in a timely manner.
Our track record of successful IP-based marketing exemplifies how we attract customers with trendy products backed by consumer insights, introduce popular concepts validated by customer feedback and launch campaigns with effective social media marketing. Cost-effective In-house Marketing Engine We attract and retain consumers across the various official accounts we own and operate on the various e-commerce and social media platforms.
Our track record of successful IP-based marketing exemplifies how we attract customers with trendy products backed by consumer insights, introduce popular concepts validated by customer feedback and launch campaigns with effective social media marketing. 83 Cost-effective In-house Marketing Engine We attract and retain consumers across the various official accounts we own and operate on the various e-commerce and social media platforms.
Under the Regulations on the Protection of the Right to Network Dissemination of Information that took effect on July 1, 2006 and was amended on January 30, 2013, it further provides that an internet information service provider may be held liable under various situations: (i) if it knows or should reasonably have known a copyright infringement through the internet and the service provider fails to take effective measures to remove, block or disconnect links to the relevant contents; or (ii) upon the receipt of the copyright holder’s notice of such infringement, the service provider fails to take aforementioned measures. 106 In order to further implement the Regulations on Computer Software Protection , promulgated by the State Council on December 20, 2001 and amended on January 8, 2011 and January 30, 2013, respectively, the National Copyright Administration issued the Measures for the Registration of Computer Software Copyright on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.
Under the Regulations on the Protection of the Right to Network Dissemination of Information that took effect on July 1, 2006 and was amended on January 30, 2013, it further provides that an internet information service provider may be held liable under various situations: (i) if it knows or should reasonably have known a copyright infringement through the internet and the service provider fails to take effective measures to remove, block or disconnect links to the relevant contents; or (ii) upon the receipt of the copyright holder’s notice of such infringement, the service provider fails to take aforementioned measures. 105 In order to further implement the Regulations on Computer Software Protection , promulgated by the State Council on December 20, 2001 and amended on January 8, 2011 and January 30, 2013, respectively, the National Copyright Administration issued the Measures for the Registration of Computer Software Copyright on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.
We have direct control over the quality of customer engagement via the Xiaowanzi Weixin Shop, as our technology engineers are fully responsible for its content development and user interface. Featuring rich content, a seamless ordering experience, an interactive membership program and personalized offerings, Xiaowanzi Weixin Shop is a meaningful part of the seamless omni-channel shopping experience we are offering.
We have direct control over the quality of customer engagement via the Xiaowanzi Weixin Shop, as our technology engineers are fully responsible for its content development and user interface. Featuring rich content, a seamless ordering experience, an 84 interactive membership program and personalized offerings, Xiaowanzi Weixin Shop is a meaningful part of the seamless omni-channel shopping experience we are offering.
Other notable technologies developed with significant contribution from our R&D team in 2021 include the nano-targeting delivery system used in DR.WU ’s new Mandelik Multiple Acid Renewal Mask, as well as the patented anti-skin darkening technology deployed in Little Ondine ’s long-wear foundation product.
Other notable technologies developed with significant contribution from our R&D team in 2021 include the nano-targeting delivery system used in DR.WU ’s new Mandelik 82 Multiple Acid Renewal Mask, as well as the patented anti-skin darkening technology deployed in Little Ondine ’s long-wear foundation product.
Founded in 2016, we have launched and acquired numerous color cosmetics brands and skincare brands including Perfect Diary , Little Ondine , Pink Bear , Galénic , DR.WU (its mainland China business), Eve Lom and EANTiM . Our flagship brand, Perfect Diary , is one of the leading color cosmetics brands in China in terms of retail sales value.
Founded in 2016, we have launched and acquired numerous color cosmetics brands and skincare brands including Perfect Diary , Little Ondine , Pink Bear , Galénic , DR.WU (its 77 mainland China business), Eve Lom and EANTiM . Our flagship brand, Perfect Diary , is one of the leading color cosmetics brands in China in terms of retail sales value.
Pursuant to the Revised Measures for Cybersecurity Review, operators of critical information infrastructure that intend to purchase network products and services that affect or may affect national security must apply for a cybersecurity review. In addition, any online platform operator holding over one million users’ individual information must apply for a cybersecurity review before listing abroad.
Pursuant to the Revised Measures for Cybersecurity Review, operators of critical information infrastructure that intend to purchase network products and services that affect or may affect national security must apply for a cybersecurity 104 review. In addition, any online platform operator holding over one million users’ individual information must apply for a cybersecurity review before listing abroad.
We terminate our collaboration with the partners who fail to meet our quality standards. In addition, we built our own testing laboratory with advanced equipment and our experienced team to validate finished products in 2021. 87 Fulfilment and Logistics Our fulfilment team ensures orders are quickly, efficiently and accurately processed, packed, shipped and delivered to customers.
We terminate our collaboration with the partners who fail to meet our quality standards. In addition, we built our own testing laboratory with advanced equipment and our experienced team to validate finished products in 2021. Fulfilment and Logistics Our fulfilment team ensures orders are quickly, efficiently and accurately processed, packed, shipped and delivered to customers.
The State Council implements a licensing system for food production and transaction. To engage in food production, sale or catering services, the business operator shall obtain a license in accordance with the laws. Furthermore, the State Council implements strict supervision and administration for special categories of foods such as healthcare foods, and formula 97 foods for special medical purposes.
The State Council implements a licensing system for food production and transaction. To engage in food production, sale or catering services, the business operator shall obtain a license in accordance with the laws. Furthermore, the State Council implements strict supervision and administration for special categories of foods such as healthcare foods, and formula foods for special medical purposes.
The live broadcasting platforms are required to implement real-name registration system by real-name verification, face recognition, manual review and other measures to prevent minors from making rewards. The platform shall limit the maximum amount of rewards each user may give per time, day and month.
The live broadcasting platforms are required to implement real-name registration system by real-name verification, face 98 recognition, manual review and other measures to prevent minors from making rewards. The platform shall limit the maximum amount of rewards each user may give per time, day and month.
Yatsen primarily reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China. 79 The beauty industry in China is evolving rapidly. For many Chinese beauty consumers, massive e-commerce platforms have become default shopping destinations.
Yatsen primarily reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China. The beauty industry in China is evolving rapidly. For many Chinese beauty consumers, massive e-commerce platforms have become default shopping destinations.
According to the Notice on Strengthening the Administration of the Internet Live Streaming Service jointly promulgated by the Ministry of Industry and Information Technology, the Ministry of Public Security of the PRC and other government agencies on August 1, 2018, internet live streaming service providers shall go through the 100 procedures of filing with the competent department of telecommunications.
According to the Notice on Strengthening the Administration of the Internet Live Streaming Service jointly promulgated by the Ministry of Industry and Information Technology, the Ministry of Public Security of the PRC and other government agencies on August 1, 2018, internet live streaming service providers shall go through the procedures of filing with the competent department of telecommunications.
We frequently test the popularity of new concepts and adjust our designs based on further customer surveys and feedback. We engage in discussion with customers directly to develop ideas for new products and are able to launch products with concepts that target the specific niche that appeals most to our customers.
We frequently test the popularity of new concepts and adjust our designs based on further customer surveys and feedback. We engage in discussion with customers directly to develop ideas for new products and are able to launch products with concepts that target the 81 specific niche that appeals most to our customers.
Pursuant to the aforementioned laws and regulations, third-party platform providers of online transactions of food shall conduct real name registration for participating food business operators, and specify their food safety management responsibilities, and examine their licenses if such licenses are required in accordance with the laws and regulations.
Pursuant to the aforementioned laws and regulations, third-party platform providers of online transactions of food shall conduct real name registration for participating food business operators, 95 and specify their food safety management responsibilities, and examine their licenses if such licenses are required in accordance with the laws and regulations.
The spouse of Jinfeng Huang unconditionally and irrevocably disclaimed her rights to the relevant equity interest in Huizhi Weimei and any associated economic rights or interest to which she may be entitled pursuant to applicable laws, and has undertaken not to make any assertion of rights to such equity interest and 116 the underlying assets.
The spouse of Jinfeng Huang unconditionally and irrevocably disclaimed her rights to the relevant equity interest in Huizhi Weimei and any associated economic rights or interest to which she may be entitled pursuant to applicable laws, and has undertaken not to make any assertion of rights to such equity interest and the underlying assets.
The third-party manufacturers with whom we cooperate adopt strict internal guidelines and conduct regular inspections to ensure the product quality meets our rigorous standards. We cooperate with several internationally renowned quality inspection companies with China Metrology Accreditation, to ensure our products meet global and local standards.
The third-party manufacturers with whom we cooperate adopt strict internal guidelines and conduct regular inspections to ensure the product quality meets our rigorous standards. 85 We cooperate with several internationally renowned quality inspection companies with China Metrology Accreditation, to ensure our products meet global and local standards.
This team mainly drives our product creativity and focuses on the originality and creativity of product concepts. Our product development approach is customer-centric and data-driven. 83 Our Research and Development Capabilities Our dedicated R&D team works closely with our product development and marketing teams to create and improve our formulas.
This team mainly drives our product creativity and focuses on the originality and creativity of product concepts. Our product development approach is customer-centric and data-driven. Our Research and Development Capabilities Our dedicated R&D team works closely with our product development and marketing teams to create and improve our formulas.
To this end, we participated in SEE Foundation’s “Preserve China’s Beauty” campaign to protect the red-crowned crane in March 2021, which occurred at the same time as the launch of our Perfect Diary Red-crowned Crane Eyeshadow Palette product that month.
To this end, we participated in SEE Foundation’s “Preserve China’s Beauty” campaign to protect the 87 red-crowned crane in March 2021, which occurred at the same time as the launch of our Perfect Diary Red-crowned Crane Eyeshadow Palette product that month.
The Amended PRC Company Law has made material amendments on corporate governance and shareholders rights of the PRC companies, including, among others, the statutory period for payment of registered capital, the setting of the board of directors and the board of supervisors, and transfer of equity interests in a company.
The Amended PRC Company Law has made material amendments on corporate governance and shareholders rights of the PRC companies, including, among others, the statutory period for payment of registered capital, the setting of the board of directors and the board of supervisors, and transfer of equity interests 90 in a company.
Foreign investments beyond the negative list will be granted national treatment. Foreign investors shall not invest in 93 the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with certain special requirements on shareholding and senior management personnel, etc.
Foreign investments beyond the negative list will be granted national treatment. Foreign investors shall not invest in the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with certain special requirements on shareholding and senior management personnel, etc.
To comply with PRC laws and regulations, we conduct the business of online sales of cosmetics 115 products and skincare products in China through Huizhi Weimei, the VIE in China, through a series of contractual arrangements by and among Guangzhou Yatsen, the VIE and its nominee shareholders.
To comply with PRC laws and regulations, we conduct the business of online sales of cosmetics products and skincare products in China through Huizhi Weimei, the VIE in China, through a series of contractual arrangements by and among Guangzhou Yatsen, the VIE and its nominee shareholders.
Pursuant to the exclusive business cooperation agreement entered into in July 2019 between our WFOE and Huizhi Weimei, our WFOE has the exclusive right to provide to Huizhi Weimei services related to, among other things, software technology development, technology consulting, and technical services required by Huizhi Weimei’s business.
Pursuant to the exclusive business cooperation agreement entered into in July 2019 between our WFOE and Huizhi Weimei, our WFOE has the exclusive right to provide to 115 Huizhi Weimei services related to, among other things, software technology development, technology consulting, and technical services required by Huizhi Weimei’s business.
In addition, in September 2023, we entered into strategic cooperation with the Lubrizol Corporation, a leader in specialty chemicals, to jointly research new ingredients, collaborate on anti-aging product research, and expand Yatsen Open Lab’s research and development boundaries.
In September 2023, we entered into strategic cooperation with the Lubrizol Corporation, a leader in specialty chemicals, to jointly research new ingredients, collaborate on anti-aging product research, and expand Yatsen Open Lab’s research and development boundaries.
Regulations Relating to Stock Incentive Plans According to the Notice of the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company , which was issued on February 15, 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are 109 required to register with the SAFE.
Regulations Relating to Stock Incentive Plans According to the Notice of the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company , which was issued on February 15, 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are 108 required to register with the SAFE.
In September 2018, Yatsen (HK) Limited acquired all of the equity interests in Guangzhou Yatsen, from its shareholders to engage in the development, manufacturing and sales of cosmetics and skincare products as well as general administration of the business of the group in China. 78 In April 2019, Guangzhou Yatsen established Guangzhou Yiyan Cosmetics Co., Ltd. as its wholly owned subsidiary to engage in sales of cosmetic and skincare products under the brand of Perfect Diary on certain platforms other than Tmall and the operation of our online product sales business in Southeastern Asia through our international website www.perfectdiary.com.
In September 2018, Yatsen (HK) Limited acquired all of the equity interests in Guangzhou Yatsen, from its shareholders to engage in the development, manufacturing and sales of cosmetics and skincare products as well as general administration of the business of the group in China. 76 In April 2019, Guangzhou Yatsen established Guangzhou Yiyan Cosmetics Co., Ltd. as its wholly owned subsidiary to engage in sales of cosmetic and skincare products under the brand of Perfect Diary on certain platforms other than Tmall and the operation of our online product sales business in Southeastern Asia through our international website www.perfectdiary.com.
On April 4, 2018, the Ministry 111 of Finance and the State Administration of Taxation jointly promulgated the Circular of the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates , or the Circular 32, according to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%.
On April 4, 2018, the Ministry 110 of Finance and the State Administration of Taxation jointly promulgated the Circular of the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates , or the Circular 32, according to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%.
The SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment. 108 Regulations Relating to Dividend Distributions The principal regulations governing distribution of dividends of wholly foreign-owned enterprise, include the PRC Company Law, the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law.
The SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment. 107 Regulations Relating to Dividend Distributions The principal regulations governing distribution of dividends of wholly foreign-owned enterprise, include the PRC Company Law, the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law.
For example, monetary penalties on production of cosmetics without requisite permits, production of unregistered special cosmetics, use of banned materials and illegal use of materials may be subject to a fine of 30 times the value of the concerned products. 91 Violations of the provisions of the Regulations on the Supervision and Administration of Cosmetics will result in different penalties ranging from fines (fixed range or, in cases of severe violations, based on the values of the illegally manufactured goods), confiscation of raw materials, products illegally manufactured or sold and illegally obtained gains, revoking licenses, and suspension of business.
For example, monetary penalties on production of cosmetics without requisite permits, production of unregistered special cosmetics, use of banned materials and illegal use of materials may be subject to a fine of 30 times the value of the concerned products. 89 Violations of the provisions of the Regulations on the Supervision and Administration of Cosmetics will result in different penalties ranging from fines (fixed range or, in cases of severe violations, based on the values of the illegally manufactured goods), confiscation of raw materials, products illegally manufactured or sold and illegally obtained gains, revoking licenses, and suspension of business.
For example, pursuant to the E-Commerce Law, 96 the e-commerce business operators shall disclose information about goods or services provided comprehensively, truthfully, accurately and promptly in order to protect the consumers’ rights to know and rights to choose.
For example, pursuant to the E-Commerce Law, the e-commerce business operators shall disclose information about goods or services provided comprehensively, truthfully, accurately and promptly in order to protect the consumers’ rights to know and rights to choose.
This interpretation applies to all contractual disputes arising from the acquisition of the relevant rights and interests by a foreign investor by way of gift, division of property, merger of enterprises, division of enterprises. 94 Regulations Relating to Value-Added Telecommunications Services Foreign investment in value-added telecommunications Foreign direct investment in telecommunications companies in China is regulated by the Administrative Provisions on Foreign-Invested Telecommunications Enterprises , which was issued by the State Council on December 11, 2001, and most recently amended on May 1, 2022.
This interpretation applies to all contractual disputes arising from the acquisition of the relevant rights and interests by a foreign investor by way of gift, division of property, merger of enterprises, division of enterprises. 92 Regulations Relating to Value-Added Telecommunications Services Foreign investment in value-added telecommunications Foreign direct investment in telecommunications companies in China is regulated by the Administrative Provisions on Foreign-Invested Telecommunications Enterprises , which was issued by the State Council on December 11, 2001, and most recently amended on May 1, 2022.
If our current ownership structure is found to be in violation of current or future PRC laws, rules or regulations regarding the legality of foreign investment in the PRC internet sector, we could be subject to severe penalties. 95 Telecommunications regulations The Telecommunications Regulations of the PRC promulgated on September 25, 2000 and amended on July 29, 2014 and February 6, 2016 respectively, are the primary PRC regulations governing telecommunications services, which set out the general framework for the provision of telecommunications services within the PRC.
If our current ownership structure is found to be in violation of current or future PRC laws, rules or regulations regarding the legality of foreign investment in the PRC internet sector, we could be subject to severe penalties. 93 Telecommunications regulations The Telecommunications Regulations of the PRC promulgated on September 25, 2000 and amended on July 29, 2014 and February 6, 2016 respectively, are the primary PRC regulations governing telecommunications services, which set out the general framework for the provision of telecommunications services within the PRC.
Under this OpenLab framework, we seek to identify, develop and commercialize the latest innovations in skincare and cosmetics globally by collaborating with a network of highly capable partners and research institutions.
Under this framework, we seek to identify, develop and commercialize the latest innovations in skincare and cosmetics globally by collaborating with a network of highly capable partners and research institutions.
To ensure data security and avoid data leakage, we have established stringent internal protocols under which we grant classified access to confidential personal data only to limited employees with strictly defined and layered access authority.
To ensure data security and avoid data leakage, we have established stringent internal protocols under which we grant classified access to 86 confidential personal data only to limited employees with strictly defined and layered access authority.
Although our wholly foreign-owned subsidiaries produce a significant majority of our revenues and hold a significant majority of our operational assets, the VIE holds certain assets that may be critical to the operation of our business.
Although our wholly foreign-owned subsidiaries produce a significant majority of our revenues and hold a significant majority of our operational assets, the VIE holds certain assets that may be critical 114 to the operation of our business.
This section sets forth a summary of the most significant rules and regulations that affect our business activities in mainland China and Hong Kong. 90 Regulations Relating to Cosmetic Products Regulatory authorities The National Medical Products Administration, under the State Administration for Market Regulation, is the government authority that monitors and supervises the administration of cosmetics, medical devices, and foods.
This section sets forth a summary of the most significant rules and regulations that affect our business activities in mainland China and Hong Kong. 88 Regulations Relating to Cosmetic Products Regulatory authorities The National Medical Products Administration, under the State Administration for Market Regulation, is the government authority that monitors and supervises the administration of cosmetics, medical devices, and foods.
The e-commerce business operators shall not fabricate transactions or users’ comments to conduct false or misleading business promotions so as to defraud or mislead consumers.
The 94 e-commerce business operators shall not fabricate transactions or users’ comments to conduct false or misleading business promotions so as to defraud or mislead consumers.
Regulations Relating to Foreign Exchange The principal regulations governing foreign currency exchange in China are the Administrative Regulations on Foreign Exchange of the PRC , which were promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was mostly amended on August 5, 2008 and the Administrative Regulations on Foreign Exchange Settlement, Sales and Payment which was promulgated by the People’s Bank of China, on June 20, 1996 and became 107 effective on July 1, 1996.
Regulations Relating to Foreign Exchange The principal regulations governing foreign currency exchange in China are the Administrative Regulations on Foreign Exchange of the PRC , which were promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was mostly amended on August 5, 2008 and the Administrative Regulations on Foreign Exchange Settlement, Sales and Payment which was promulgated by the People’s Bank of China, on June 20, 1996 and became 106 effective on July 1, 1996.
Penalty of up to HK$200 shall also be payable for late lodgment of a declaration. 114 C. Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business, as of the date of this annual report: Note: (1) Mr.
Penalty of up to HK$200 shall also be payable for late lodgment of a declaration. 113 C. Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business, as of the date of this annual report: Note: (1) Mr.
Customers can also discover and purchase our products through various social and content platforms, such as Douyin, Kuaishou, Xiaohongshu and Bilibili . The various social and content platforms combine digital and community-driven marketing with opportunities for direct purchase and have demonstrated great potential to access and convert customers into purchasers through introducing interesting and compelling digital contents.
Customers can also discover and purchase our products through various social and content platforms, such as Douyin, Kuaishou, RedNote and Bilibili . The various social and content platforms combine digital and community-driven marketing with opportunities for direct purchase and have demonstrated great potential to access and convert customers into purchasers through introducing interesting and compelling digital contents.
Working safety and health facilities shall meet national standard. Enterprises and institutions shall provide workers with working safety and health conditions meeting national rules and standards on labor protection. 112 The Labor Contract Law of the PRC , or the Labor Contract Law, and its implementation rules provide requirements concerning employment contracts between an employer and its employees.
Working safety and health facilities shall meet national standard. Enterprises and institutions shall provide workers with working safety and health conditions meeting national rules and standards on labor protection. 111 The Labor Contract Law of the PRC , or the Labor Contract Law, and its implementation rules provide requirements concerning employment contracts between an employer and its employees.
Our Seamless and Engaging Omni-channel Shopping Experience Online Channels We entered JD.com in April 2017, Tmall in August 2017, Xiaohongshu’s e-commerce channel in September 2017, Vipshop in April 2018 and commenced operating company channels on Weixin in 2018. We also entered Pinduoduo, Douyin and Kuaishou’s e-commerce channels in 2019 and Dewu in 2021.
Our Seamless and Engaging Omni-channel Shopping Experience Online Channels We entered JD.com in April 2017, Tmall in August 2017, RedNote’s e-commerce channel in September 2017, Vipshop in April 2018 and commenced operating company channels on Weixin in 2018. We also entered Pinduoduo, Douyin and Kuaishou’s e-commerce channels in 2019 and Dewu in 2021.
Certain provisions of the SAT Circular 37 were repealed by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents . According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount 110 for equity transfer income.
Certain provisions of the SAT Circular 37 were repealed by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents . According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount 109 for equity transfer income.
We have engaged some of these emerging celebrities as our brand ambassadors, including Xun Zhou, Haoran Liu and Lusi Zhao, each of them with millions of followers on their official Weibo accounts, and created interactive content and gift kits that appealed to the fans of such brand ambassadors to enhance our brand awareness by and connection with Gen-Z and millennials.
We have engaged some of these emerging celebrities as our brand ambassadors, including Xun Zhou, Lusi Zhao and Liying Zhao, each of them with millions of followers on their official Weibo accounts, and created interactive content and gift kits that appealed to the fans of such brand ambassadors to enhance our brand awareness by and connection with Gen-Z and millennials.
Our current experience stores are located in shopping malls across different cities in China based on our big data analysis of the geographical locations of our targeted customers. Supply Chain Our supply chain capability is vital to our business.
Our current experience stores are located in shopping malls across different cities in China based on our analysis of the geographical locations of our targeted customers. Supply Chain Our supply chain capability is vital to our business.
Insurance We maintain a range of insurance coverage in relation to our business that is customary for our industry, including, without limitation, property damage, product liability insurance and carriage of goods insurance. We have not made any material claims on any insurance policy maintained by us during the period beginning January 1, 2023 to the date of this annual report.
Insurance We maintain a range of insurance coverage in relation to our business that is customary for our industry, including, without limitation, property damage, public liability insurance and carriage of goods insurance. We have not made any material claims on any insurance policy maintained by us during the period beginning January 1, 2024 to the date of this annual report.
The team has developed a series of in-house systems across the value chain, including Supplier Relationship Management (SRM), Office Automation (OA), KOL Management System, Product Management System, Ecommerce Store (Xiaowanzi Weixin Shop), and Real-time Big Data Platform. Technologies Empowered by World-class Partners To build direct connections with our customers, we built a flexible and adaptable technology infrastructure with world-class partners.
The team has developed a series of in-house systems across the value chain, including Supplier Relationship Management (SRM), Office Automation (OA), KOL Management System, Product Management System and Ecommerce Store (Xiaowanzi Weixin Shop). Technologies Empowered by World-class Partners To build direct connections with our customers, we built a flexible and adaptable technology infrastructure with world-class partners.
We have also established a beauty manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising 60,593 square meters, which commenced operations in August 2023, enabling further optimization of our supply chain.
We have also established a beauty manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising 66,462 square meters, which commenced operations in August 2023, enabling further optimization of our supply chain.
For example, we typically generate a substantial portion of our net revenues in the second and the fourth calendar quarters as a result of higher sales during series of shopping festivals across online e-commerce platforms, such as “618” on June 18, “Singles’ Day” on November 11 and “Double Twelve” on December 12.
For example, we typically generate a substantial portion of our net revenues in the second and the fourth calendar quarters as a result of higher sales during series of shopping festivals across online e-commerce platforms, such as “618” on June 18, “Double 11” on November 11 and “Double 12” on December 12.
Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” D. Property, Plants and Equipment Our principal executive offices are located on leased premises comprising approximately 39,577 square meters in Guangzhou, China.
Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” 116 D. Property, Plants and Equipment Our principal executive offices are located on leased premises comprising approximately 4,790 square meters in Guangzhou, China.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Administrative Measures (Negative List) for Foreign Investment Access (2021 Version), as promulgated on December 27, 2021 by the National Development and Reform Commission, and the Ministry of Commerce, and taking effect on January 1, 2022, and the Encouraged Industry Catalogue for Foreign Investment (2022 Version), as promulgated by the National Development and Reform Commission and the Ministry of Commerce on October 26, 2022 and became effective on January 1, 2023.
The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Version), as promulgated on September 6, 2024 by the National Development and Reform Commission, and the Ministry of Commerce, and taking effect on November 1, 2024, and the Encouraged Industry Catalogue for Foreign Investment (2022 Version), as promulgated by the National Development and Reform Commission and the Ministry of Commerce on October 26, 2022 and became effective on January 1, 2023.
Specifically, revenue contribution from our Skincare Brands grew from 33.5% in 2022 to 40.5% in 2023, primarily due to the solid performance of our three clinical and premium Skincare Brands, i.e., Galénic, DR.WU (mainland China business) and Eve Lom .
Specifically, revenue contribution from our Skincare Brands grew from 33.5% in 2022 to 40.5% in 2023 and further increased to 41.1% in 2024, primarily due to the overall solid performance of our three clinical and premium Skincare Brands, i.e., Galénic, DR.WU (mainland China business) and Eve Lom .
We launched Perfect Diary in 2017 to provide high-quality and innovative color cosmetics with exquisite designs. With a broad and growing portfolio of products that spans the color cosmetics, skincare, beauty tools and kits categories, Perfect Diary offers comprehensive beauty solutions at a mass-market price point.
We launched Perfect Diary, providing high-quality and innovative color cosmetics with exquisite designs. With a broad and growing portfolio of products that spans the color cosmetics, skincare, beauty tools and kits categories, Perfect Diary offers comprehensive beauty solutions at a mass to mid-end market price point.
In addition, advertisements for cosmetic products are prohibited from publishing on any internet medium targeting minors. 102 Regulations Relating to Leasing Pursuant to the Law on Administration of Urban Real Estate of the PRC promulgated by the Standing Committee of the National People’s Congress on July 5, 1994 and amended on August 30, 2007, August 27, 2009, August 26, 2019 and took effect on January 1, 2020, and the Administrative Measures for Commodity House Leasing promulgated by the Ministry of Housing and Urban-Rural Development on December 1, 2010 and taking effect on February 1, 2011, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing such provisions as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties.
Regulations Relating to Leasing Pursuant to the Law on Administration of Urban Real Estate of the PRC promulgated by the Standing Committee of the National People’s Congress on July 5, 1994 and amended on August 30, 2007, August 27, 2009, August 26, 2019 and took effect on January 1, 2020, and the Administrative Measures for Commodity House Leasing promulgated by the Ministry of Housing and Urban-Rural Development on December 1, 2010 and taking effect on February 1, 2011, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing such provisions as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties.
In addition to these trends, Chinese consumers, particularly those in the demographics of Gen-Z, i.e., the group of people born between 1996 and 2005 (aged between 18 and 27 in 2023), and millennials, i.e., the group of people born between 1986 and 1995 (aged between 28 and 37 in 2023), prefer brands that offer personalized products and represent strong local Chinese identities.
In addition to these trends, Chinese consumers, particularly those in the demographics of Gen-Z, i.e., the group of people born between 1996 and 2005 (aged between 19 and 28 in 2024), and millennials, i.e., the group of people born between 1986 and 1995 (aged between 29 and 38 in 2024), prefer brands that offer personalized products and represent strong local Chinese identities.
Moreover, we continued to improve our gross margin, which increased from 68.0% in 2022 to 73.6% in 2023 and improve our net loss margin, which narrowed from 22.2% in 2022 to 22.0% in 2023.
Moreover, we continued to improve our gross margin, which increased from 68.0% in 2022 to 73.6% in 2023 and further increased to 77.1% in 2024 and improve our net loss margin, which narrowed from 22.2% in 2022 to 22.0% in 2023 and further to 20.9% in 2024.
In 2021, 2022 and 2023, our R&D expenses totaled RMB142.1 million, RMB126.9 million and RMB111.7 million (US$15.7 million), representing 2.4%, 3.4% and 3.3% of our net revenues, respectively.
In 2022, 2023 and 2024, our R&D expenses totaled RMB126.9 million, RMB111.7 million and RMB109.3 million (US$15.0 million), representing 3.4%, 3.3% and 3.2% of our net revenues, respectively.
For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests, on June 10, 2021, the Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republic of China , or the Data Security Law, which took effect on September 1, 2021.
These measures establish the basic framework and principle for national cybersecurity reviews of network products and services. 103 For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests, on June 10, 2021, the Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republic of China , or the Data Security Law, which took effect on September 1, 2021.
In 2021, 2022 and 2023, we generated net revenues of RMB4.87 80 billion, RMB2.42 billion and RMB1.97 billion (US$278.0 million) from the sales of products under our Color Cosmetics Brands, respectively, representing 83.4%, 65.2% and 57.8% of our net revenues in 2021, 2022 and 2023, respectively. Perfect Diary Perfect Diary is our first and largest brand.
In 2022, 2023 and 2024, we generated net revenues of RMB2.42 billion, RMB1.97 billion and RMB1.97 billion (US$269.7 million) from the sales of products under our Color Cosmetics Brands, respectively, representing 65.2%, 57.8% and 58.0% of our net revenues in 2022, 2023 and 2024, respectively. Perfect Diary Perfect Diary is our first and largest brand.
Galénic ’s N°1 Poudre Vitamine C Pure Eclaircissante, which features facial serums with highly-concentrated, 20% Vitamin C extract designed to reduce dark spots and brighten the skin, won numerous recognitions from industry publications such as Elle and Bazaar since its launch.
Galénic ’s N°1 Poudre Vitamin C Pure Eclaircissante, which features facial serums with highly-concentrated, 20% Vitamin C extract designed to reduce dark spots and brighten the skin, won numerous recognitions from industry publications such as Elle and Bazaar since its launch. The product has also won the Essence of the Year Award at the Bazaar Beauty Awards 2024.
We have a manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising approximately 60,593 square meters, which commenced operations in August 2023. Beyond China, we have a laboratory for the Galénic brand in France, comprising approximately 650 square meters.
We have a manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising approximately 66,462 square meters, which commenced operations in August 2023. Beyond China, we have a facility that serves as both office and laboratory for the Galénic brand in France, comprising approximately 683 square meters.
As part of the acquisition of Galénic , we established a long-term R&D and product innovations collaboration with Pierre Fabre to support the Galénic brand going forward.
As part of the acquisition of Galénic , we established a long-term R&D and product innovations collaboration with Pierre Fabre to support the Galénic brand going forward. Today, Galénic ’s products are sold in Asia and Europe.
We currently operate a 1,303-square-meter R&D center located in Guangzhou, China, and a 3,819-square-meter business complex that serves as both office building and R&D center located in Shanghai, China.
We currently operate a 1,977-square-meter R&D center located in Guangzhou, China, a 3,819-square-meter business complex that serves as both office building and R&D center and a 324-square-meter joint laboratory with Ruijin Hospital located in Shanghai, China.
In 2021, 2022 and 2023, we generated net revenues of RMB855.2 million, RMB1.24 billion and RMB1.38 billion (US$194.9 million) from the sales of products under our Skincare Brands, respectively, representing 14.6%, 33.5% and 40.5% of our net revenues in 2021, 2022 and 2023, respectively. Galénic Originated in France, Galénic was founded in 1978 by Mr.
In 2022, 2023 and 2024, we generated net revenues of RMB1.24 billion, RMB1.38 billion and RMB1.39 billion (US$190.9 million) from the sales of products under our Skincare Brands, respectively, representing 33.5%, 40.5% and 41.1% of our net revenues in 2022, 2023 and 2024, respectively. 79 Galénic Originated in France, Galénic was founded in 1978 by Mr.
Furthermore, any individual or entity that (i) sells or distributes personal information in a manner which violates the regulations, or (ii) steals or illegally obtain any personal information is subject to criminal penalty under severe circumstances. 104 On June 1, 2017, the Cyber Security Law of the PRC , promulgated by the Standing Committee of the National People’s Congress, took effect, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data.
On June 1, 2017, the Cyber Security Law of the PRC , promulgated by the Standing Committee of the National People’s Congress, took effect, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data.
After the release of the Cyber Security Law of the PRC , on May 2, 2017, the Cyberspace Administration of China, together with another ten regulatory authorities jointly issued the Measures for Cybersecurity Review, which become effective on June 1, 2020. These measures establish the basic framework and principle for national cybersecurity reviews of network products and services.
After the release of the Cyber Security Law of the PRC , on May 2, 2017, the Cyberspace Administration of China, together with another ten regulatory authorities jointly issued the Measures for Cybersecurity Review, which become effective on June 1, 2020.
Experience Stores Empowered by our data and technology capabilities, our offline experience store network provides customers with seamless omni-channel shopping experiences and completes their journey of beauty discovery.
Experience Stores Empowered by our data and technology capabilities, our offline experience store network provides customers with seamless omni-channel shopping experiences and completes their journey of beauty discovery. As of December 31, 2024, we operated a total of 88 stores.
Unauthorized construction without obtaining construction permit and projects which do not satisfy the criteria for commencement of work may face orders to stop construction and fines by construction administrative authorities. 103 Under the Administrative Provisions on Construction Permit of Construction Projects , construction and decoration of all kinds of buildings and ancillary facilities shall apply for the permission before starting construction project unless the amount investment of the project less than RMB300,000 or the area of the construction project is less than 300 square meters (the administrative department of Housing and Urban-Rural development in provincial level may adjust the limitation capital based on the reality of different regions).
Under the Administrative Provisions on Construction Permit of Construction Projects , construction and decoration of all kinds of buildings and ancillary facilities shall apply for the permission before starting construction project unless the amount investment of the project less than RMB300,000 or the area of the construction project is less than 300 square meters (the administrative department of Housing and Urban-Rural development in provincial level may adjust the limitation capital based on the reality of different regions).
We completed the acquisition of DR.WU ’s mainland China business in January 2021. Post-closing, we re-launched the DR.WU brand in mainland China market by simplifying the product line-up to the core Mandelik Acid serum series.
DR.WU ’s products have received numerous awards and recognition from beauty media and platforms. We completed the acquisition of DR.WU ’s mainland China business in January 2021. Post-closing, we re-launched the DR.WU brand in mainland China market by simplifying the product line-up to the core Mandelik Acid serum series.
All of our properties are leased and we plan to renew our leases as needed. We believe that our existing facilities are sufficient for our current needs, and we will obtain additional facilities, principally through leasing, to accommodate our future expansion plans. Item 4A. UNRESOL VED STAFF COMMENTS Not Applicable. 118
We believe that our existing facilities are sufficient for our current needs, and we will obtain additional facilities, principally through leasing, to accommodate our future expansion plans. item 4a. UNRESOL VED STAFF COMMENTS Not Applicable. 117
Today, Galénic ’s products are sold in Europe and Asia. 81 In 2021, we launched Galénic in China and embarked on a number of marketing initiatives to increase brand awareness of Galénic among Chinese consumers.
In 2021, we launched Galénic in China and embarked on a number of marketing initiatives to increase brand awareness of Galénic among Chinese consumers.
As of December 31, 2023, we had registered a total of 203 patents, including 8 utility model patents, 104 design patents and 57 invention patents (some of which are in the process of being transferred to us), and we had submitted applications for 34 patents which are currently pending approval worldwide.
As of December 31, 2024, we had registered a total of 245 patents, including 9 utility model patents, 137 design patents and 64 invention patents (some of which are in the process of being transferred to us), and we had submitted applications for 35 patents which are currently pending approval worldwide.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Total net revenues 5,839,973 100.0 3,706,122 100.0 3,414,774 480,961 100.0 Total cost of revenues (1,941,177 ) (33.2 ) (1,187,370 ) (32.0 ) (901,455 ) (126,967 ) (26.4 ) Gross profit 3,898,796 66.8 2,518,752 68.0 2,513,319 353,994 73.6 Operating expenses: Fulfilment expenses (434,018 ) (7.4 ) (269,886 ) (7.3 ) (229,021 ) (32,257 ) (6.7 ) Selling and marketing expenses (4,005,589 ) (68.6 ) (2,330,480 ) (62.9 ) (2,230,974 ) (314,226 ) (65.3 ) General and administrative expenses (941,347 ) (16.1 ) (720,409 ) (19.4 ) (500,942 ) (70,556 ) (14.7 ) Research and development expenses (142,086 ) (2.4 ) (126,875 ) (3.4 ) (111,698 ) (15,732 ) (3.3 ) Impairment of goodwill - - - - (354,039 ) (49,865 ) (10.3 ) Total operating expenses (5,523,040 ) (94.5 ) (3,447,650 ) (93.0 ) (3,426,674 ) (482,636 ) (100.3 ) Loss from operations (1,624,244 ) (27.7 ) (928,898 ) (25.0 ) (913,355 ) (128,642 ) (26.7 ) Financial income 45,658 0.8 34,656 0.9 89,020 12,538 2.6 Foreign currency exchange (loss) gain (1,751 ) 0.0 (35,357 ) (1.0 ) 7,218 1,017 0.2 Income from equity method investments, net 5,978 0.1 12,548 0.3 10,122 1,426 0.3 Impairment of investments (1,375 ) 0.0 (5,078 ) (0.1 ) - - - Other income, net 27,775 0.5 103,501 2.8 53,558 7,543 1.6 Loss before income tax expenses (1,547,959 ) (26.3 ) (818,628 ) (22.1 ) (753,437 ) (106,118 ) (22.1 ) Income tax benefits (expenses) 921 - (2,705 ) (0.1 ) 3,210 452 0.1 Net loss (1,547,038 ) (26.3 ) (821,333 ) (22.2 ) (750,227 ) (105,666 ) (22.0 ) Segment Information In 2021, we only reported our overall performance.
Biggest changeFor the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Total net revenues 3,706,122 100.0 3,414,774 100.0 3,393,414 464,896 100.0 Total cost of revenues (1,187,370 ) (32.0 ) (901,455 ) (26.4 ) (776,236 ) (106,344 ) (22.9 ) Gross profit 2,518,752 68.0 2,513,319 73.6 2,617,178 358,552 77.1 Operating expenses: Fulfilment expenses (269,886 ) (7.3 ) (229,021 ) (6.7 ) (216,540 ) (29,666 ) (6.4 ) Selling and marketing expenses (2,330,480 ) (62.9 ) (2,230,974 ) (65.3 ) (2,268,793 ) (310,823 ) (66.9 ) General and administrative expenses (720,409 ) (19.4 ) (500,942 ) (14.7 ) (444,373 ) (60,879 ) (13.1 ) Research and development expenses (126,875 ) (3.4 ) (111,698 ) (3.3 ) (109,287 ) (14,972 ) (3.2 ) Impairment of goodwill — — (354,039 ) (10.3 ) (403,076 ) (55,221 ) (11.9 ) Total operating expenses (3,447,650 ) (93.0 ) (3,426,674 ) (100.3 ) (3,442,069 ) (471,561 ) (101.4 ) Loss from operations (928,898 ) (25.0 ) (913,355 ) (26.7 ) (824,891 ) (113,009 ) (24.3 ) Financial income 34,656 0.9 89,020 2.6 86,136 11,801 2.5 Foreign currency exchange (loss) gain (35,357 ) (1.0 ) 7,218 0.2 (20,399 ) (2,795 ) (0.6 ) Income from equity method investments, net 12,548 0.3 10,122 0.3 1,386 190 0.0 Impairment of investments (5,078 ) (0.1 ) — — — — — Other income, net 103,501 2.8 53,558 1.6 44,461 6,091 1.3 Loss before income tax expenses (818,628 ) (22.1 ) (753,437 ) (22.1 ) (713,307 ) (97,722 ) (21.0 ) Income tax benefits (expenses) (2,705 ) (0.1 ) 3,210 0.1 3,086 423 0.1 Net loss (821,333 ) (22.2 ) (750,227 ) (22.0 ) (710,221 ) (97,299 ) (20.9 ) 125 Segment Information The following table sets forth our segment operating results for the years ended December 31, 2022, 2023 and 2024.
Sales of product by channel. We generate net revenues primarily from selling our beauty products (i) directly to end customers through various DTC online channels as well as offline stores, and (ii) to e-commerce platform and offline distributors who then sell to end customers.
Sales of product by channel. We generate net revenues primarily from selling our beauty products (i) directly to end customers through various DTC online channels as well as offline stores, and (ii) to e-commerce platform distributors and offline distributors who then sell to end customers.
Research and development expenses. Research and development expenses primarily consist of personnel costs for research and development staff, which includes IT engineers and product development personnel, as well as general expenses and depreciation expenses associated with our research and development activities. Impairment of goodwill .
Research and development expenses primarily consist of personnel costs for research and development staff, which includes IT engineers and product development personnel, as well as general expenses and depreciation expenses associated with our research and development activities. Impairment of goodwill .
We expect to gradually improve our gross margin over time as we continue to focus on improving product and channel mix, as well as implementing more disciplined pricing and discount policies. Effectiveness of Our Marketing Strategies Our results of operations also depend on our ability to attract and retain customers while maintaining reasonable marketing expenses.
We expect to gradually improve our gross margin over time as we continue to focus on improving product and channel mix, as well as implementing more disciplined pricing and discount policies. 119 Effectiveness of Our Marketing Strategies Our results of operations also depend on our ability to attract and retain customers while maintaining reasonable marketing expenses.
On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily 134 apparent from other sources.
On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The continual improvement of our gross margin for the past three years is also the result of higher revenue contribution from our skincare products, which generally have higher gross margins compared to our color cosmetic products. We 120 also intend to incrementally introduce more premium products under our Perfect Diary brand.
The continual improvement of our gross margin for the past three years is also the result of higher revenue contribution from our skincare products, which generally have higher gross margins compared to our color cosmetic products. We also intend to incrementally introduce more premium products under our Perfect Diary brand.
Our product costs fluctuate with the prices that we are able to negotiate with our OEM/ODM partners and our raw material and packaging material suppliers. We intend to leverage our economy of scale to limit any upward pressure on our procurement costs going forward.
Our product costs fluctuate with the prices 121 that we are able to negotiate with our OEM/ODM partners and our raw material and packaging material suppliers. We intend to leverage our economy of scale to limit any upward pressure on our procurement costs going forward.
We expect to further optimize our operating expenses by leveraging our technology- and data-driven supply chain management systems and outsourcing our warehouse and handling operations. Key Components of Results of Operations Net revenues Our net revenues are net of refunds and value-added tax.
We expect to further optimize our operating expenses by leveraging our technology- and data-driven supply chain management systems and outsourcing our warehouse and handling operations. 120 Key Components of Results of Operations Net revenues Our net revenues are net of refunds and value-added tax.
In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
In addition, our wholly foreign-owned subsidiaries in China are permitted to pay 133 dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
If our Hong Kong subsidiary satisfies all the requirements under the tax 123 arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2024 that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2025 that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
As we have strategically expanded our business focus to the Skincare Brands, which typically feature higher gross margin as well as a higher level of customer loyalty as compared to Color Cosmetics Brands, we have recorded higher revenue contribution from Skincare Brands while maintaining and strengthening our existing competitive edge within the color cosmetics market. 119 In late 2020 we acquired Galénic , an iconic premium skincare brand, from Pierre Fabre, a French pharmaceutical and dermo-cosmetics group.
As we have strategically expanded our business focus to the Skincare Brands, which typically feature higher gross margin as well as a higher level of customer loyalty as compared to Color Cosmetics Brands, we have recorded higher revenue contribution from Skincare Brands while maintaining and strengthening our existing competitive edge within the color cosmetics market. 118 In late 2020 we acquired Galénic , an iconic premium skincare brand, from Pierre Fabre, a French pharmaceutical and dermo-cosmetics group.
Fulfilment expenses are primarily expenses related to the warehousing, shipping and delivery of products to customers, which mainly include rental and personnel costs for warehouses, third-party shipping costs and customer service-related expenses. 123 Selling and marketing expenses.
Fulfilment expenses are primarily expenses related to the warehousing, shipping and delivery of products to customers, which mainly include rental and personnel costs for warehouses, third-party shipping costs and customer service-related expenses. Selling and marketing expenses.
Risk Factors—Risks Relating to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 125 Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our net revenues for the years presented.
Risk Factors—Risks Relating to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 124 Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our net revenues for the years presented.
Our net loss position in 2023 was mainly due to (i) goodwill impairment in relation to the Eve Lom reporting unit, (ii) investments in marketing and branding expenses for our brands, some of which are going through brand upgrades, and some are still in their early development stage, (iii) R&D, personnel and administrative expenses and (iv) share-based compensation expenses recorded in accordance with U.S.
Our net loss position in 2024 was mainly due to (i) goodwill impairment mainly in relation to the Eve Lom reporting unit, (ii) investments in marketing and branding expenses for our brands, some of which are going through brand upgrades, and some are still in their early development stage, (iii) R&D, personnel and administrative expenses and (iv) share-based compensation expenses recorded in accordance with U.S.
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 product development services with us. Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023.
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 product development services with us. Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2024.
Risk Factors—Risks Relating to Our Business and Industry—Fluctuations in exchange rates could have a material and adverse effect on the value of your investment and our results of operations.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign exchange risk.” Impact of Governmental Policies See “Item 3. Key Information—D.
Impact of Foreign Currency Fluctuation See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Fluctuations in exchange rates could have a material and adverse effect on the value of your investment and our results of operations.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign exchange risk.” Impact of Governmental Policies See “Item 3. Key Information—D.
While the above indicates our material cash requirements as of December 31, 2023, the actual amounts we are eventually required to pay may be different in the event that any agreements are renegotiated, cancelled or terminated. Holding Company Structure Yatsen Holding Limited is a holding company with no material operations of its own.
While the above indicates our material cash requirements as of December 31, 2024, the actual amounts we are eventually required to pay may be different in the event that any agreements are renegotiated, cancelled or terminated. Holding Company Structure Yatsen Holding Limited is a holding company with no material operations of its own.
We cooperate with leading manufacturers with strong capabilities, as well as physical proximity to our customers, enabling us to further shorten the production and fulfilment process, thereby improving customer experience. Fulfilment expenses as a percentage of total net revenues decreased from 7.4% in 2021 to 7.3% in 2022 and further decreased to 6.7% in 2023.
We cooperate with leading manufacturers with strong capabilities, as well as physical proximity to our customers, enabling us to further shorten the production and fulfilment process, thereby improving customer experience. Fulfilment expenses as a percentage of total net revenues decreased from 7.3% in 2022 to 6.7% in 2023 and further decreased to 6.4% in 2024.
Risk Factors—Risks Relating to Doing Business in China” and “Item 4. Information on the Company—B. Business Overview—Regulations.” 130 B.
Risk Factors—Risks Relating to Doing Business in China” and “Item 4. Information on the Company—B. Business Overview—Regulations.” B.
General and administrative expenses. General and administrative expenses primarily consist of personnel costs including share-based compensation expenses and other expenses which are related to the general corporate functions, including accounting, finance, tax, legal and human resources, costs of facilities and equipment associated with use by these functions, such as depreciation expenses, rental and other general corporate related expenses.
General and administrative expenses primarily consist of personnel costs including share-based compensation expenses and other expenses which are related to the general corporate functions, including accounting, finance, tax, legal and human resources, costs of facilities and equipment associated with use by these functions, such as depreciation expenses, rental and other general corporate related expenses. Research and development expenses.
Impairment of goodwill represents the amount by which the carrying value of the net assets exceeds its fair value in connection with certain reporting unit. Taxation Cayman Islands The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciations.
Impairment of goodwill represents the amount by which the carrying value of the net assets exceeds its fair value in connection with certain reporting units. Taxation Cayman Islands The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciations.
With our focus on growing our sustainability and achieving profitability, we plan to further optimize our expenses for performance-based marketing on our e-commerce channels while allocating resources to strengthen the brand equities for our existing brands.
With our focus on growing our sustainability and achieving profitability, we plan to further optimize our channel mix and expenses for performance-based marketing on our e-commerce channels while allocating resources to strengthen the brand equities for our existing brands.
We generate net revenues through sales (i) directly to end customers through various DTC online channels as well as offline stores, and (ii) to e-commerce platforms and offline distributors who then sell to end customers.
We generate net revenues through sales (i) directly to end customers through various DTC online channels as well as offline stores, and (ii) to e-commerce platform distributors and offline distributors who then sell to end customers.
Income (loss) from operations We generated net loss from operations of RMB928.9 million in 2022 and net loss from operations of RMB913.4 million (US$128.6 million) in 2023 as a result of the foregoing. The decrease in net loss from operations is primarily attributable to our stricter pricing and discount policies as well as the closure of underperforming offline stores.
Income (loss) from operations We generated net loss from operations of RMB928.9 million in 2022 and net loss from operations of RMB913.4 million in 2023 as a result of the foregoing. The decrease in net loss from operations is primarily attributable to our stricter pricing and discount policies as well as the closure of underperforming offline stores.
Operating Results Founded in 2016, we have launched and acquired several color cosmetics brands and skincare brands, including Perfect Diary , Little Ondine , Pink Bear , Galénic , DR.WU (its mainland China business), Eve Lom , Abby’s Choice and EANTiM . We achieved success through our digitally native DTC business model that was new to China’s beauty industry.
Operating Results Founded in 2016, we have launched and acquired several color cosmetics brands and skincare brands, including Perfect Diary , Little Ondine , Pink Bear , Galénic , DR.WU (its mainland China business), Eve Lom and EANTiM , among others. We achieved success through our digitally native DTC business model that was new to China’s beauty industry.
Total cost of revenues Our cost of revenues decreased by 24.1% from RMB1.19 billion in 2022 to RMB901.5 million (US$127.0 million) in 2023, primarily due to the decrease in overall sales volume of our beauty products in 2023 and cost optimization across all of our brand portfolio.
Total cost of revenues Our cost of revenues decreased by 24.1% from RMB1.19 billion in 2022 to RMB901.5 million in 2023, primarily due to the decrease in overall sales volume of our beauty products in 2023 and cost optimization across all of our brand portfolio.
Selling and marketing expenses Our selling and marketing expenses decreased from RMB2.33 billion in 2022 to RMB2.23 billion (US$314.2 million) in 2023, primarily attributable to (i) a decrease in expenses for offline experience stores from RMB404.0 million in 2022 to RMB149.4 million (US$21.0 million) due to the closure of underperforming offline experience stores and (ii) a decrease in share-based compensation expenses from RMB62.2 million in 2022 to RMB23.5 million (US$3.3 million) in 2023, partially offset by an increase in advertising, marketing and brand promotion costs from RMB1.06 billion in 2022 to RMB1.26 billion (US$177.5 million) in 2023.
Selling and marketing expenses Our selling and marketing expenses decreased from RMB2.33 billion in 2022 to RMB2.23 billion in 2023, primarily attributable to (i) a decrease in expenses for offline experience stores from RMB404.0 million in 2022 to RMB149.4 million due to the closure of underperforming offline experience stores and (ii) a decrease in share-based compensation expenses from RMB62.2 million in 2022 to RMB23.5 million in 2023, partially offset by an increase in advertising, marketing and brand promotion costs from RMB1.06 billion in 2022 to RMB1.26 billion in 2023.
Income tax benefits/(expenses) We recorded income tax expenses of RMB2.7 million in 2022 and income tax benefits of RMB3.2 million (US$0.5 million) in 2023. The change was primarily due to a reduction of income tax expenses provided for profitable entities.
Income tax benefits/(expenses) We recorded income tax expenses of RMB2.7 million in 2022 and income tax benefits of RMB3.2 million in 2023. The change was primarily due to a reduction of income tax expenses provided for profitable entities.
Utilizing data insights gained through our direct engagement with customers, we are able to develop new popular products more efficiently. Having a broad, attractive and updated product portfolio for each of our skincare business and color cosmetics business helps to maintain the popularity of our brands, increases customer loyalty and encourages customer purchases.
Utilizing our strengthened R&D capability and insights gained through our direct engagement with customers, we are able to develop new popular products more efficiently. Having a broad, attractive and updated product portfolio for each of our skincare business and color cosmetics business helps to maintain the popularity of our brands, increases customer loyalty and encourages customer purchases.
Gross profit and gross margin As a result of the foregoing, our gross profit decreased by 0.2% from RMB2.52 billion in 2022 to RMB2.51 billion (US$354.0 million) in 2023, and our gross margins increased from 68.0% in 2022 to 73.6% in 2023, which increases are primarily due to (i) increasing sales of higher-gross margin products from Skincare Brands, (ii) more disciplined pricing and discount policies, and (iii) cost optimization across all of our brand portfolio.
Gross profit and gross margin As a result of the foregoing, our gross profit decreased by 0.2% from RMB2.52 billion in 2022 to RMB2.51 billion in 2023, and our gross margins increased from 68.0% in 2022 to 73.6% in 2023, primarily due to (i) increasing sales of higher-gross margin products from Skincare Brands, (ii) more disciplined pricing and discount policies, and (iii) cost optimization across all of our brand portfolio.
General and administrative expenses Our general and administrative expenses decreased from RMB720.4 million in 2022 to RMB500.9 million (US$70.6 million) in 2023, primarily due to a decrease in share-based compensation expenses from RMB248.4 million in 2022 to RMB46.9 million (US$6.6 million) in 2023.
General and administrative expenses Our general and administrative expenses decreased from RMB720.4 million in 2022 to RMB500.9 million in 2023, primarily due to a decrease in share-based compensation expenses from RMB248.4 million in 2022 to RMB46.9 million in 2023.
In general, we strive to gradually improve our gross margin by introducing higher-margin new products and stricter discounts and promotions, despite facing heavy price competition in the market place. As a result of our integrated approach, our gross margin was 66.8%, 68.0% and 73.6% for the years ended December 31, 2021, 2022 and 2023, respectively.
In general, we strive to gradually improve our gross margin by introducing higher-margin new products and stricter discounts and promotions, despite facing heavy price competition in the market place. As a result of our integrated approach, our gross margin was 68.0%, 73.6% and 77.1% for the years ended December 31, 2022, 2023 and 2024, respectively.
The reduction was to strategically adjust our offline footprint while maintaining a certain number of stores for in-person interactions with customers. We believe that maintaining a certain number of experience stores enables us to drive stronger engagement with our customers by providing a physical space to sample our products and engage with our brands.
The reduction was due to our strategical adjustment to our offline footprint while maintaining a certain number of stores for in-person interactions with customers. We believe that maintaining a certain number of experience stores enables us to drive stronger engagement with our customers by providing a physical space to sample our products and engage with our brands.
We have also leveraged our offline experience store network to increase our presence and to reach and serve our customers at different touchpoints. As of December 31, 2023, we operated 114 experience stores, compared with 164 stores as of December 31, 2022.
We have also leveraged our offline experience store network to increase our presence and to reach and serve our customers at different touchpoints. As of December 31, 2024, we operated 88 experience stores, compared with 114 stores as of December 31, 2023.
The difference between our net cash used in operating activities in 2023 of RMB107.4 million (US$15.1 million) and net loss of RMB750.2 million (US$105.7 million) in the same period was primarily due to certain non-cash items, primarily consisting of (i) impairment of goodwill of RMB354.0 million (US$49.9 million) due to impairment of Eve Lom reporting unit, (ii) amortization of right-of-use assets of RMB88.6 million (US$12.5 million), (iii) share-based compensation of RMB77.5 million (US$10.9 million), (iv) amortization of intangible assets of RMB61.0 million (US$8.6 million) and (v) depreciation of property and equipment of RMB53.7 million (US$7.6 million).
The difference between our net cash used in operating activities in 2023 of RMB107.4 million and net loss of RMB750.2 million in the same period was primarily due to certain non-cash items, primarily consisting of (i) impairment of goodwill of RMB354.0 million due to impairment of Eve Lom reporting unit, (ii) amortization of right-of-use assets of RMB88.6 million, (iii) share-based compensation of RMB77.5 million, (iv) amortization of intangible assets of RMB61.0 million and (v) depreciation of property and equipment of RMB53.7 million.
Year ended December 31, 2023 compared to year ended December 31, 2022 Total net revenues Our net revenues decreased by 7.9% from RMB3.71 billion in 2022 to RMB3.41 billion (US$481.0 million) in 2023, primarily attributable to the decline in net revenues from Color Cosmetics Brands, partially offset by the increase in net revenues from Skincare Brands.
Year ended December 31, 2023 compared to year ended December 31, 2022 Total net revenues Our net revenues decreased by 7.9% from RMB3.71 billion in 2022 to RMB3.41 billion in 2023, primarily attributable to the decline in net revenues from Color Cosmetics Brands, partially offset by the increase in net revenues 128 from Skincare Brands.
The adjustment for changes in operating assets and liabilities primarily consisted of (i) a decrease of RMB109.4 million (US$15.4 million) in inventories, (ii) a decrease of RMB89.3 million (US$12.6 million) in lease liabilities, and (iii) an increase in accrued expenses and other liabilities of RMB65.3 million (US$9.2 million). Net cash generated from operating activities in 2022 was RMB136.2 million.
The adjustment for changes in operating assets and liabilities primarily 131 consisted of (i) a decrease of RMB109.4 million in inventories, (ii) a decrease of RMB89.3 million in lease liabilities, and (iii) an increase in accrued expenses and other liabilities of RMB65.3 million. Net cash generated from operating activities in 2022 was RMB136.2 million.
Fulfilment expenses 127 Our fulfilment expenses decreased from RMB270.0 million in 2022 to RMB229.0 million (US$32.3 million) in 2023, which was primarily attributable to a decrease in warehouse and logistics cost from RMB213.0 million in 2022 to RMB181.7 million (US$25.6 million) in 2023 mainly due to lower sales volume of our beauty products, and a decrease in customer service cost from RMB38.9 million in 2022 to RMB29.4 million (US$4.1 million) in 2023.
Fulfilment expenses Our fulfilment expenses decreased from RMB270.0 million in 2022 to RMB229.0 million in 2023, which was primarily attributable to a decrease in warehouse and logistics cost from RMB213.0 million in 2022 to RMB181.7 million in 2023 mainly due to lower sales volume of our beauty products, and a decrease in customer service cost from RMB38.9 million in 2022 to RMB29.4 million in 2023.
Investing activities Net cash used in investing activities in 2023 was RMB260.5 million (US$36.7 million), primarily due to (i) purchase of short-term investments of RMB2.34 billion (US$329.8 million), (ii) investments on equity investments of RMB121.5 million (US$17.1 million) mainly related to our participation as a limited partner in a venture capital fund, and (iii) purchase of property and equipment of RMB43.6 million (US$6.1 million), which was partially offset by sales of short-term investments of RMB2.22 billion (US$313.0 million).
Net cash used in investing activities in 2023 was RMB260.5 million, primarily due to (i) purchase of short-term investments of RMB2.34 billion, (ii) investments on equity investments of RMB121.5 million mainly related to our participation as a limited partner in a venture capital fund, and (iii) purchase of property and equipment of RMB43.6 million, which was partially offset by sales of short-term investments of RMB2.22 billion.
For the years ended December 31, 2021, 2022 and 2023, our net revenues generated through DTC channels as a percentage of total net revenues were 83.5%, 84.9% and 84.6%, respectively.
For the years ended December 31, 2022, 2023 and 2024, our net revenues generated through DTC channels as a percentage of total net revenues were 84.9%, 84.6% and 82.9%, respectively.
As of December 31, 2023, 50.2% of our cash, cash equivalents and restricted cash were held in China, and 50.2% were denominated in Renminbi. Although we consolidate the results of the VIE and its subsidiaries, we only have access to the assets or earnings of the VIE and its subsidiaries through our contractual arrangements with the VIE and its shareholders.
As of December 31, 2024, 34.3% of our cash, cash equivalents and restricted cash were held in China, and 34.4% were denominated in Renminbi. Although we consolidate the results of the VIE and its subsidiaries, we only have access to the assets or earnings of the VIE and its subsidiaries through our contractual arrangements with the VIE and its shareholders.
Hangzhou Taimei Biotechnology Co., Ltd was entitled to claim the special deduction in 2022 and 2023. 124 Dividends paid by our wholly foreign-owned subsidiaries in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the tax authority.
Dividends paid by our wholly foreign-owned subsidiaries in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the tax authority.
Except for the guarantees provided to the depositary bank and a joint venture, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We will continue to monitor the performance of the joint venture and assess the risks associated with the guarantees. Except for the guarantees provided to the depositary bank and a joint venture, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties.
Research and development expenses Our research and development expenses decreased from RMB126.9 million in 2022 to RMB111.7 million (US$15.7 million) in 2023, primarily due to a decrease in share-based compensation expenses from RMB26.0 million in 2022 to RMB5.0 million (US$0.7 million) in 2023.
Research and development expenses Our research and development expenses decreased from RMB111.7 million in 2023 to RMB109.3 million (US$15.0 million) in 2024, primarily due to a decrease in share-based compensation expenses from RMB5.0 million in 2023 to RMB0.9 million (US$0.1 million) in 2024.
The following table sets forth our cost of revenues by amounts and percentages of our total net revenues for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Cost of revenues 1,941,177 33.2 1,187,370 32.0 901,455 126,967 26.4 The following table sets forth our gross profit in absolute amount and gross profit margin for the years presented.
The following table sets forth our cost of revenues by amounts and percentages of our total net revenues for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Cost of revenues 1,187,370 32.0 901,455 26.4 776,236 106,344 22.9 The following table sets forth our gross profit in absolute amount and gross profit margin for the years presented.
Impairment of goodwill We recorded impairment of goodwill of nil in 2022 and of RMB354.0 million (US$49.9 million) in 2023. The impairment represents the amount by which the carrying value of the Eve Lom reporting unit exceeded its fair value, based on quantitative goodwill impairment test, primarily due to weaker operating results than expected at the time of acquisition.
Impairment of goodwill We recorded impairment of goodwill of RMB354.0 million in 2023 and RMB403.1 million (US$55.2 million) in 2024. The impairment mainly represents the amount by which the carrying value of the Eve Lom reporting unit exceeded its fair value, based on quantitative goodwill impairment test, primarily due to weaker operating results than expected.
However, approval from or registration with competent government authorities is required where the 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.
However, approval from or registration with competent government authorities is required where the 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. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future.
The security bank deposit will be forfeited up to US$6.0 million if the depositary bank is not able to collect the contractual minimum annual service fees from ADR holders. In 2023, we have received US$3.0 million security deposit back from the depositary bank.
The security bank deposit will be forfeited up to US$6.0 million if the depositary bank is not able to collect the contractual minimum annual service fees from ADR holders. During the year ended December 31, 2023 and 2024, we received US$3.0 million and US3.0 million security deposit back from the depositary bank respectively.
This led to the recognition of an impairment of goodwill of RMB354.0 million (US$49.9 million). The key assumptions in estimating the fair value of the Eve Lom reporting unit were the revenue growth rates, gross profit ratios, discount rate and terminal value. See Note 10 of the Notes to the Consolidated Financial Statements for information regarding goodwill. 136
The key assumptions in estimating the fair value of the Eve Lom reporting unit were the revenue growth rates, gross profit ratios, discount rate and terminal value. See Note 10 of the Notes to the Consolidated Financial Statements for information regarding goodwill. 135
We leverage technology and data to manage supplier partners, ODM/OEM and packaging supply partners and other service partners, and adjust such partners’ operations to maintain optimal inventory levels as well as ensure smooth 121 product launches.
We have also developed an efficient supply chain involving manufacturing, warehousing and logistics. We leverage technology and data to manage supplier partners, ODM/OEM and packaging supply partners and other service partners, and adjust such partners’ operations to maintain optimal inventory levels as well as ensure smooth product launches.
We work with KOLs to market our products cost-effectively through our proprietary KOL management system, which allows us to predominantly work directly with these KOLs rather than through intermediaries. Our close cooperation with KOLs provides us with valuable insights into the impact these KOLs have on our targeted consumers, and helps us increase marketing efficiency and effectiveness.
We work with KOLs to market our products cost-effectively, and the close cooperation with KOLs provides us with valuable insights into the impact these KOLs have on our targeted consumers, and helps us increase marketing efficiency and effectiveness.
Selling and marketing expenses primarily consist of (i) advertising and marketing promotion expenses, (ii) platform commissions, (iii) personnel costs for sales and marketing staff, (iv) rental, depreciation expenses, personnel and other costs for offline experience stores and (v) share-based compensation expenses. We typically allocate more selling and marketing budget during launches of our new products and introduction of new brands.
Selling and marketing expenses primarily consist of (i) advertising and marketing promotion expenses, (ii) platform and other commissions, (iii) personnel costs for sales and marketing staff, (iv) rental, depreciation expenses, personnel and other costs for offline experience stores and (v) share-based compensation expenses.
The following table sets forth the breakdown of our net revenues by segment both in absolute amounts and as a proportion of our total net revenues for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues Segment -Color Cosmetics Brands 4,869,279 83.4 2,415,500 65.2 1,973,726 277,994 57.8 -Skincare Brands 855,241 14.6 1,241,528 33.5 1,383,578 194,873 40.5 -Others 115,453 2.0 49,094 1.3 57,470 8,094 1.7 Total net revenues 5,839,973 100.0 3,706,122 100.0 3,414,774 480,961 100.0 As we have been continually expanding our Skincare Brands business, we expect net revenues from the Skincare Brands segment to increase.
The following table sets forth the breakdown of our net revenues by segment both in absolute amounts and as a proportion of our total net revenues for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues Segment -Color Cosmetics Brands 2,415,500 65.2 1,973,726 57.8 1,968,350 269,663 58.0 -Skincare Brands 1,241,528 33.5 1,383,578 40.5 1,393,259 190,876 41.1 -Others 49,094 1.3 57,470 1.7 31,805 4,357 0.9 Total net revenues 3,706,122 100.0 3,414,774 100.0 3,393,414 464,896 100.0 As we have been continually expanding our Skincare Brands business, we expect net revenues from the Skincare Brands segment to increase.
Revenue of Eve Lom units did not meet our fourth quarter expectations and the reduction in selling and marketing expenses was less than anticipated, and therefore our short and long term forecasts for Eve Lom were revised downwards with an adverse impact on future expected cash flows.
Revenue of Eve Lom units did not meet our expectations and therefore our short and long term forecasts for Eve Lom were revised downwards with an adverse impact on future expected cash flows.
In 2023, due to the strong brand positioning and product offerings of Galénic , DR.WU (mainland China business) and Eve Lom , our net revenues from Skincare Brands grew by 11.4% year-over-year to RMB1.38 billion (US$194.9 million), representing 40.5% of total net revenues.
In 2023, due to the strong brand positioning and product offerings of Galénic, DR.WU (mainland China business) and Eve Lom , our net revenues from Skincare Brands reached RMB1.38 billion. This represents an increase of 11.4% year-over-year from RMB1.24 billion in 2022 and accounts for 40.5% of total net revenues in 2023.
As of December 31, 2021, 2022 and 2023, respectively, our cash, cash equivalents and restricted cash were RMB3.14 billion, RMB1.55 billion and RMB858.1 million (US$120.9 million). We had short-term investments with an aggregate outstanding amount of RMB1.22 billion (US$171.6 million) as of December 31, 2023.
As of December 31, 2022, 2023 and 2024, respectively, our cash, cash equivalents and restricted cash were RMB1.55 billion, RMB858.1 million and RMB817.4 million (US$112.0 million). We had short-term investments with an aggregate outstanding amount of RMB539.1 million (US$73.9 million) as of December 31, 2024.
The assumptions used in such valuations such as projected future cash flows, discount rates, revenue growth rates, and determination of appropriate market comparables and recent transactions, are subject to volatility and may differ from actual results.
The assumptions used in such valuations such as projected future cash flows, discount rates, revenue growth rates, and determination of appropriate market comparables and recent transactions, are subject to volatility and may differ from actual results. Under a qualitative assessment, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses.
Going forward, we will continue to diversify our sales channels, including content and livestreaming platforms such as Douyin and Kuaishou, e-commerce platforms such as Dewu, and third-party distributors as well as beauty-focused offline retail store. We historically used the number of DTC customers as an indicator of the performance of our DTC channels.
Going forward, we will continue to diversify our sales channels, including content and livestreaming platforms such as Douyin, shelf-based e-commerce platforms such as Tmall and third-party distributors as well as beauty-focused offline retail store.
Liquidity and Capital Resources The following table sets forth a summary of our cash flows for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data Net cash (used in)/generated from operating activities (1,020,441 ) 136,208 (107,442 ) (15,133 ) Net cash used in investing activities (1,484,257 ) (1,155,416 ) (260,487 ) (36,689 ) Net cash used in financing activities (1,706 ) (654,450 ) (342,455 ) (48,234 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash (88,980 ) 89,978 14,192 1,999 Net decrease in cash and cash equivalents and restricted cash (2,595,384 ) (1,583,680 ) (696,192 ) (98,057 ) Cash and cash equivalents and restricted cash at the beginning of the year 5,733,392 3,138,008 1,554,328 218,923 Cash and cash equivalents and restricted cash at the end of the year 3,138,008 1,554,328 858,136 120,866 To date, we have financed our operating and investing activities primarily through cash generated by historical equity financing activities.
Liquidity and Capital Resources The following table sets forth a summary of our cash flows for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data Net cash generated from/(used in) operating activities 136,208 (107,442 ) (243,666 ) (33,382 ) Net cash (used in)/provided by investing activities (1,155,416 ) (260,487 ) 592,123 81,121 Net cash used in financing activities (654,450 ) (342,455 ) (394,226 ) (54,009 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 89,978 14,192 5,028 689 Net decrease in cash and cash equivalents and restricted cash (1,583,680 ) (696,192 ) (40,741 ) (5,581 ) Cash and cash equivalents and restricted cash at the beginning of the year 3,138,008 1,554,328 858,136 117,564 Cash and cash equivalents and restricted cash at the end of the year 1,554,328 858,136 817,395 111,983 130 To date, we have financed our operating and investing activities primarily through cash generated by historical equity financing activities.
Our DTC channels include our online stores operated on Tmall, the e-commerce platforms of Douyin and Kuaishou and our offline stores. Our primary e-commerce platform distributors are JD.com and Vipshop.
Our DTC channels include content and livestreaming platforms such as Douyin, shelf-based e-commerce platforms such as Tmall, and our offline stores. Our primary e-commerce platform distributors are JD.com and Vipshop.
The following table sets forth the breakdown of our net revenues by channel both in absolute amounts and as a proportion of our total net revenues for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues Sales of product by channel -Sales to end customers 4,878,453 83.5 3,145,807 84.9 2,890,229 407,081 84.6 -Sales to distributor customers 941,322 16.1 546,543 14.7 514,781 72,505 15.1 -Others 20,198 0.4 13,772 0.4 9,764 1,375 0.3 Total net revenues 5,839,973 100.0 3,706,122 100.0 3,414,774 480,961 100.0 With the goal to achieve sustainable growth in 2024 and beyond, we intend to improve return on investment on all our key sales channels, improve gross margins of our products and diversify our sales channels, including content and livestreaming platforms such as Douyin, new e-commerce platforms as well as third-party distributors and other beauty-focused offline retail stores. 122 Cost of revenues Our cost of revenues consists primarily of material costs, which includes ingredient costs and costs associated with raw materials and packaging materials, manufacturing cost and other related costs that are directly attributable to the production of our products.
The following table sets forth the breakdown of our net revenues by channel both in absolute amounts and as a proportion of our total net revenues for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues Sales of product by channel -Sales to end customers 3,145,807 84.9 2,890,229 84.6 2,812,370 385,293 82.9 -Sales to distributor customers 546,543 14.7 514,781 15.1 572,541 78,438 16.9 -Others 13,772 0.4 9,764 0.3 8,503 1,165 0.2 Total net revenues 3,706,122 100.0 3,414,774 100.0 3,393,414 464,896 100.0 With the goal to achieve sustainable growth in 2025 and beyond, we intend to improve return on investment on all our key sales channels, improve gross margins of our products and diversify our sales channels, including e-commerce platforms besides Douyin and Tmall as well as third-party distributors.
Rebates, discounts and other cash consideration received from a vendor related to inventory purchases are reflected as reductions in the cost of the related inventory item, and are therefore reflected in the “Cost of Revenues” line in our Consolidated Statements of Operations when the related inventory item is sold.
While we believe that adequate write-downs for inventory obsolescence have been provided in the consolidated financial statements, consumer tastes and preferences will continue to change and we could experience additional inventory write-downs in the future. 134 Rebates, discounts and other cash consideration received from a vendor related to inventory purchases are reflected as reductions in the cost of the related inventory item, and are therefore reflected in the “Cost of Revenues” line in our Consolidated Statements of Operations when the related inventory item is sold.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands, except for percentages) Gross profit 3,898,796 2,518,752 2,513,319 353,994 Gross profit margin 66.8% 68.0% 73.6% 73.6% Operating expenses The following table sets forth the components of our operating expenses by amounts and percentages of our total net revenues for the years presented: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating expenses Fulfilment expenses 434,018 7.4 269,886 7.3 229,021 32,257 6.7 Selling and marketing expenses 4,005,589 68.6 2,330,480 62.9 2,230,974 314,226 65.3 General and administrative expenses 941,347 16.1 720,409 19.4 500,942 70,556 14.7 Research and development expenses 142,086 2.4 126,875 3.4 111,698 15,732 3.3 Impairment of goodwill - - - - 354,039 49,865 10.3 Total operating expenses 5,523,040 94.5 3,447,650 93.0 3,426,674 482,636 100.3 Fulfilment expenses.
For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands, except for percentages) Gross profit 2,518,752 2,513,319 2,617,178 358,552 Gross profit margin 68.0 % 73.6 % 77.1 % 77.1 % Operating expenses The following table sets forth the components of our operating expenses by amounts and percentages of our total net revenues for the years presented: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating expenses Fulfilment expenses 269,886 7.3 229,021 6.7 216,540 29,666 6.4 Selling and marketing expenses 2,330,480 62.9 2,230,974 65.3 2,268,793 310,823 66.9 General and administrative expenses 720,409 19.4 500,942 14.7 444,373 60,879 13.1 Research and development expenses 126,875 3.4 111,698 3.3 109,287 14,972 3.2 Impairment of goodwill — — 354,039 10.3 403,076 55,221 11.9 Total operating expenses 3,447,650 93.0 3,426,674 100.3 3,442,069 471,561 101.4 Fulfilment expenses.
From 2021 to 2023, to control our selling and marketing expenses, we selectively closed underperforming offline stores, reduced marketing event-related expenses and streamlined our online marketing activities. As a result, our selling and marketing expenses decreased from RMB4.01 billion in 2021 to RMB2.33 billion in 2022, and further decreased to RMB2.23 billion (US$314.2 million) in 2023.
From 2021 to 2023, to control our selling and marketing expenses, we selectively closed underperforming offline stores, reduced marketing event-related expenses and streamlined our online marketing activities.
As of December 31, 2023, the financial guarantee was still within the validity period of the contract and will persist until the guarantee period expires. In addition, we provided financial guarantees to a joint venture for the purpose of enabling it to obtain bank loans.
As of December 31, 2024, the financial guarantee period expired. In addition, we provided financial guarantees to a joint venture for the purpose of enabling it to obtain bank loans. As of December 31, 2024, the total amount of financial guarantees provided to the joint venture was RMB96.6 million (US$13.2 million).
Nevertheless, we have assessed the associated risks and potential liabilities and have recognized a contingent liability in our financial statements. We will continue to monitor the performance of the joint venture and assess the risks associated with the guarantees.
The guarantees are typically secured by the assets of the joint venture, and we believe that the probability of having to make payments under the guarantees is remote. Nevertheless, we have assessed the associated risks and potential liabilities and have recognized a contingent liability in our financial statements.
The difference between our net cash used in operating activities in 2021 of RMB1.02 billion and net loss of RMB1.55 billion in the same period was primarily due to certain non-cash items, primarily consisting of (i) share-based compensation of RMB530.4 million, (ii) amortization of right-of-use assets of RMB245.9 million, and (iii) depreciation of property and equipment of RMB130.7 million.
The difference between our net cash used in operating activities in 2024 of RMB243.7 million (US$33.4 million) and net loss of RMB710.2 million (US$97.3 million) in the same period was primarily due to certain non-cash items, primarily consisting of (i) impairment of goodwill of RMB403.1 million (US$55.2 million) mainly due to impairment of Eve Lom reporting unit, (ii) amortization of intangible assets of RMB112.6 million (US$15.4 million), (iii) share-based compensation of RMB91.2 million (US$12.5 million), (iv) amortization of right-of-use assets of RMB69.4 million (US$9.5 million) and (v) depreciation of property and equipment of RMB38.0 million (US$5.2 million).
Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our audited consolidated financial statements included elsewhere in this annual report. Impact of Foreign Currency Fluctuation See “Item 3. Key Information—D.
Net (loss) income We generated a net loss of RMB821.3 million in 2022 and of RMB750.2 million in 2023 as a result of the foregoing. Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our audited consolidated financial statements included elsewhere in this annual report.
No asset information is provided for reportable segments as no such information provides to the chief operating decision-maker to evaluate the segment performance and most assets are managed at the group level. Substantially all our revenues and long-lived assets are derived from and located in the PRC.
(c) Unallocated expenses represent share-based compensation and amortization of intangible assets resulting from assets and business acquisitions, which are not allocated to segments. No asset information is provided for reportable segments as no such information provides to the chief operating decision-maker to evaluate the segment performance and most assets are managed at the group level.
Commitments and Obligations The following table sets forth our capital commitment, products and services purchase commitment and operating lease obligations as of December 31, 2023: Payment due by December 31, Total 1 Year 1-3 Years 3-5 Years Over 5 Years (RMB in thousands) Capital commitment 346,692 184,692 162,000 - - Products and services purchase commitment 149,702 149,702 - - - Operating lease obligations (1) 2,974 1,880 1,094 - - Total 499,368 336,274 163,094 - - Note: (2) Operating lease obligations consist of the obligations under the lease agreements covering our warehouses, stores and office spaces.
We expect to moderate our spending on capital expenditures to reserve resources to support our strategic transformation. 132 Commitments and Obligations The following table sets forth our capital commitment, products and services purchase commitment and operating lease obligations as of December 31, 2024: Payment due by December 31, Total 1 Year 1-3 Years 3-5 Years Over 5 Years (RMB in thousands) Capital commitment 4,243 2,703 1,540 - - Products and services purchase commitment 146,844 146,844 - - - Operating lease obligations (1) 938 478 460 - - Total 152,025 150,025 2,000 - - Note: (1) Operating lease obligations consist of the obligations under the lease agreements covering our warehouses, stores and office spaces.
Our growth in sales volume has primarily been driven by the growing popularity and recognition of our brands, the increased selection and attractive prices of the innovative beauty products we offer, consumer preferences for our engaging shopping experience and quality customer service, and the effectiveness of our marketing initiatives.
We strive to grow the popularity of our products with recognition of our brands, increased selection of innovative beauty products at attractive price points, our engaging shopping experience and quality customer service, and the effectiveness of our marketing initiatives.
As part of our strategic transformation plan to cut costs and improve efficiency, we took measures to optimize our structure. Our general and administrative expenses decreased from RMB941.3 million in 2021 to RMB720.4 million in 2022, and further decreased to RMB500.9 million in 2023.
As a result, our selling and marketing expenses decreased from RMB2.33 billion in 2022 to RMB2.23 billion in 2023, and slightly increased to RMB2.27 billion (US$310.8 million) in 2024. As part of our strategic transformation plan to cut costs and improve efficiency, we took measures to optimize our structure.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
PRC Generally, our PRC subsidiaries, the VIE and its subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
Net cash used by financing activities in 2022 was RMB654.5 million, primarily attributable to payments for repurchases of ordinary shares of RMB654.7 million.
Net cash used by financing activities in 2022 was RMB654.5 million, primarily attributable to payments for repurchases of ordinary shares of RMB654.7 million. Material Cash Requirements Our material cash requirements as of December 31, 2024 and any subsequent interim period primarily include our capital expenditures, capital commitment, products and services purchase commitment and operating lease commitments.
Our Skincare Brands, on the other hand, enjoyed strong growth due to each brand’s superior product performance, strong brand positioning and our continual development of these brands during the year. Our net revenues generated through Skincare Brands as a percentage of total net revenues increased from 14.6% in 2021 to 33.5% in 2022.
Our Skincare Brands experienced continued growth primarily due to the solid performance of our premium brands and our continued development of these brands during the year. Our net revenues generated through Skincare Brands as a percentage of total net revenues increased from 40.5% in 2023 to 41.1% in 2024.
Net (loss) income We generated a net loss of RMB821.3 million in 2022 and of RMB750.2 million (US$105.7 million) in 2023 as a result of the foregoing. 128 Year ended December 31, 2022 compared to year ended December 31, 2021 Total net revenues Our total net revenues decreased by 36.5% from RMB5.84 billion in 2021 to RMB3.71 billion in 2022, primarily attributable to the decline in net revenues from Color Cosmetics Brands, partially offset by the increase in net revenues from Skincare Brands.
Year ended December 31, 2024 compared to year ended December 31, 2023 Total net revenues Our net revenues slightly decreased by 0.6% from RMB3.41 billion in 2023 to RMB3.39 billion (US$464.9 million) in 2024, primarily attributable to the decline in net revenues from Color Cosmetics Brands, partially offset by the increase in net revenues from Skincare Brands.
We determined the lower than forecasted revenue growth, and the shift in strategy, were triggering events which indicated we should conduct an impairment test as of December 31, 2023. We used a discounted cash flow model to estimate the fair value of the Eve Lom reporting unit based on our updated strategic plans, supplemented by market comparable analysis.
We used a discounted cash flow model to estimate the fair value of the Eve Lom reporting unit based on our updated strategic plans, supplemented by market comparable analysis. This led to the recognition of an impairment of goodwill of RMB403.1 million (US$55.2 million).
Our most iconic, best-selling products include Perfect Diary ReadMe Lip Gloss, Galénic N°1 Poudre Vitamine C Pure Eclaircissante serum, Eve Lom Cleanser and DR.WU Intensive Renewal Serum with Mandelic Acid. Through our DTC model, we gain insights through direct engagement with customers, which drives product development, content creation, and further improvement of our omni-channel customer experience.
Our most iconic, best-selling products include Galénic N°1 Poudre Vitamine C Pure Eclaircissante serum, Perfect Diary Biolip Essense Lipstick (including the first and second generations), DR.WU Intensive Renewal Serum with Mandelic Acid and Eve Lom Cleanser.
Gross profit and gross margin As a result of the foregoing, our gross profit decreased by 35.4% from RMB3.90 billion in 2021 to RMB2.52 billion in 2022.
Gross profit and gross margin As a result of the foregoing, our gross profit increased by 4.1% from RMB2.51 billion in 2023 to RMB2.62 billion (US$358.6 million) in 2024, and our gross margins increased from 73.6% in 2023 to 77.1% in 2024.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

42 edited+2 added−7 removed86 unchanged
Biggest changeName Ordinary Shares Underlying Outstanding Options Exercise Price (US$/Share) Grant Date Expiration Date Bonnie Yi Zhang * 0.025 March 25, 2021 November 19, 2034 * 0.025 March 1, 2022 November 18, 2035 Jiming Ha * 0.025 March 25, 2021 March 11, 2035 * 0.025 March 1, 2022 November 18, 2035 Sidney Xuande Huang * 0.025 March 25, 2021 November 19, 2034 * 0.025 March 1, 2022 November 18, 2035 Jing Cheng * 0.025 February 28, 2023 February 1, 2037 Zhenjie (Jack) Xu * 0.025 September 30, 2023 September 30, 2038 Total 25,629,212 — — — Notes: * The options held by each of these directors and executive officers represent less than 1% of our total Class A ordinary shares on an as-converted basis outstanding as of February 29, 2024.
Biggest changeName Ordinary Shares Underlying Outstanding Options Exercise Price (US$/Share) Grant Date Expiration Date Bonnie Yi Zhang * 0.025 March 25, 2021 November 19, 2034 * 0.025 March 1, 2022 November 18, 2035 * 0.025 January 1, 2025 November 18, 2038 Jiming Ha * 0.025 March 25, 2021 March 11, 2035 * 0.025 March 1, 2022 November 18, 2035 * 0.025 January 1, 2025 November 18, 2038 Sidney Xuande Huang * 0.025 March 25, 2021 November 19, 2034 * 0.025 March 1, 2022 November 18, 2035 Jing Cheng * 0.025 February 28, 2023 February 1, 2037 Total 16,781,255 — — — Note: * The options held by each of these directors and executive officers represent less than 1% of our total Class A ordinary shares on an as-converted basis outstanding as of February 28, 2025. 139 The following table summarizes, as of February 28, 2025, the number of restricted ordinary shares related to the options granted to our officers and directors under the 2018 Share Option Plan and the 2022 Share Incentive Plan.
The audit committee is responsible for, among other things: • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; 142 • meeting separately and periodically with management and the independent auditors; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; • meeting separately and periodically with management and the independent auditors; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
However, without the prior written consent or sanction of such number of award recipients as shall together hold options in respect of not less than one half in nominal value of all Class A ordinary shares then subject to the then outstanding options, no alteration may adversely affect the terms of issue of any outstanding award previously granted or agreed to be granted pursuant to the 2018 Share Option Plan. 139 2022 Share Incentive Plan Our board of directors have approved and authorized the adoption of the 2022 Share Incentive Plan, effective on January 1, 2023.
However, without the prior written consent or sanction of such number of award recipients as shall together hold options in respect of not less than one half in nominal value of all Class A ordinary shares then subject to the then outstanding options, no alteration may adversely affect the terms of issue of any outstanding award previously granted or agreed to be granted pursuant to the 2018 Share Option Plan. 2022 Share Incentive Plan Our board of directors have approved and authorized the adoption of the 2022 Share Incentive Plan, effective on January 1, 2023.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they 141 conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
Mainland China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. As such, the courts of mainland China will review and determine the applicability of the reciprocity principle on a case-by-case basis.
Mainland China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. As such, the courts of mainland China will review 145 and determine the applicability of the reciprocity principle on a case-by-case basis.
Awards may not be assigned in any manner by the participant other than in accordance with the exceptions provided in the 2022 Share Incentive Plan. 140 Termination and Amendment of the Plan . Unless terminated earlier, the 2022 Share Incentive Plan has a term of ten years from January 1, 2023.
Awards may not be assigned in any manner by the participant other than in accordance with the exceptions provided in the 2022 Share Incentive Plan. Termination and Amendment of the Plan . Unless terminated earlier, the 2022 Share Incentive Plan has a term of ten years from January 1, 2023.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 140 Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
Courts of mainland China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between mainland China 147 and the country where the judgment is made or on principles of reciprocity between jurisdictions.
Courts of mainland China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between mainland China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
The administrator determines, among others, the employees eligible to receive awards, the number of options to be granted to each eligible employee, and the terms and conditions of each award grant. Award Agreement .
The administrator determines, among others, the 137 employees eligible to receive awards, the number of options to be granted to each eligible employee, and the terms and conditions of each award grant. Award Agreement .
The administrator determines, among others, the employees eligible to receive awards, the number of options to be granted to each eligible employee, and the terms and conditions of each award grant. Award Agreement .
The administrator determines, among others, the employees eligible to receive awards, the number of options to be granted to each eligible employee, and the terms and conditions of each award grant. 138 Award Agreement .
Ha received his Ph.D degree in economics from the University of Kansas, and his master’s degree and bachelor’s degree in science from Fudan University. 138 B.
Ha received his Ph.D degree in economics from the University of Kansas, and his master’s degree and bachelor’s degree in science from Fudan University. B.
Yang received his bachelor’s degree in international economics from Nankai University in 1993 and his MBA from Harvard Business School in 2003. Jing Cheng has over 25 years of experience in research and development in the beauty industry. Prior to joining the Company, Ms.
Yang received his bachelor’s degree in international economics from Nankai University in 1993 and his MBA from Harvard Business School in 2003. Jing Cheng has over 27 years of experience in research and development in the beauty industry. Prior to joining the Company, Ms.
Jinfeng Huang is the sole director of Yellow Bee Limited. The business address of Yellow Bee Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. The business address of Slumdunk Holding Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands.
Jinfeng Huang is the sole director of Yellow Bee Limited. The business address of Yellow Bee Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. The business address of Slumdunk Holding Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands.
As of February 29, 2024, a total of 79,226,352 Class A ordinary shares and 0 Class B ordinary shares related to options granted to our employees, officers and directors were held by the two trusts for the grantees’ benefit, which have been and will continue to be subject to satisfaction of the service conditions set forth in the applicable equity award agreements.
As of February 28, 2025, a total of 79,226,352 Class A ordinary shares and 0 Class B ordinary shares related to options granted to our employees, officers and directors were held by the two trusts for the grantees’ benefit, which have been and will continue to be subject to satisfaction of the service conditions set forth in the applicable equity award agreements.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of February 29, 2024 by: • each of our directors and executive officers; and • each of our principal shareholders who beneficially owns 5% or more of our total outstanding shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of February 28, 2025 by: • each of our directors and executive officers; and • each of our principal shareholders who beneficially owns 5% or more of our total outstanding shares.
We did not make additional payments to our executive officers for their role as directors for the year ended December 31, 2023.
We did not make additional payments to our executive officers for their role as directors for the year ended December 31, 2024.
Compensation For the year ended December 31, 2023, we paid to our executive officers an aggregate of RMB7.1 million (US$1.0 million) in cash and RMB0.3 million (US$46 thousand) for benefits including certain contributions equal to certain percentages of each officer’s salary for his or her pension insurance, medical insurance, supplementary medical insurance, unemployment insurance and other statutory benefits and a housing provident fund as required by PRC law, and US$0.2 million to our independent directors.
Compensation For the year ended December 31, 2024, we paid to our executive officers an aggregate of RMB9.5 million (US$1.3 million) in cash and RMB0.5 million (US$67 thousand) for benefits including certain contributions equal to certain percentages of each officer’s salary for his or her pension insurance, medical insurance, supplementary medical insurance, unemployment insurance and other statutory benefits and a housing provident fund as required by PRC law, and US$0.2 million to our independent directors.
The following table summarizes, as of February 29, 2024, the outstanding options that were granted to our directors and executive officers under the 2018 Share Option Plan and the 2022 Share Incentive Plan.
The following table summarizes, as of February 28, 2025, the outstanding options that were granted to our directors and executive officers under the 2018 Share Option Plan and the 2022 Share Incentive Plan.
As of February 29, 2024, none of our Class B ordinary shares were held by U.S. record holders. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
As of February 28, 2025, none of our Class B ordinary shares were held by U.S. record 144 holders. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
As of December 31, 2023, options to purchase an aggregate amount of 249,234,508 Class A ordinary shares under the 2018 Share Option Plan had been granted, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the 2018 Share Option Plan. Type of Awards .
As of December 31, 2024, options to purchase an aggregate amount of 219,328,442 Class A ordinary shares under the 2018 Share Option Plan had been granted, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the 2018 Share Option Plan. Type of Awards .
As of December 31, 2023, options to purchase an aggregate amount of 7,168,734 Class A ordinary shares under the 2022 Share Incentive Plan had been granted, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the 2022 Share Incentive Plan. Type of Awards .
As of December 31, 2024, options to purchase an aggregate amount of 10,798,054 Class A ordinary shares under the 2022 Share Incentive Plan had been granted, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the 2022 Share Incentive Plan. Type of Awards .
Name Number of Shares Underlying Options Donghao Yang 28,012,572 Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Name Number of Shares Underlying Options Donghao Yang 11,205,020 Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Our officers are elected by and serve at the discretion of our board of directors. 144 D. Employees We had 3,497 full-time employees as of December 31, 2021, 1,837 full-time employees as of December 31 2022 and 1,505 full-time employees as of December 31, 2023, and most of our full-time employees are located in China.
Our officers are elected by and serve at the discretion of our board of directors. 142 D. Employees We had 1,837 full-time employees as of December 31 2022, 1,505 full-time employees as of December 31, 2023 and 1,350 full-time employees as of December 31, 2024, and most of our full-time employees are located in China.
Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans”) and 666,572,880 Class B ordinary shares outstanding as of February 29, 2024. 145 Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans”) and 600,572,880 Class B ordinary shares outstanding as of February 28, 2025. 143 Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
(3) Represents (i) 166,673,701 Class A ordinary shares and 55,557,900 Class A ordinary shares in the form of ADSs held by Zhen Partners Fund IV, L.P., (ii) 637,328 Class A ordinary shares in the form of ADSs held by Zhen Advisors Ltd., and (iii) 1,417,312 Class A ordinary shares in the form of ADSs held by Success Origin Limited, based on the information contained in the Schedule 13G/A filed by the relevant reporting persons with the SEC on February 14, 2024.
(3) Represents (i) 166,673,701 Class A ordinary shares and 55,557,900 Class A ordinary shares in the form of ADSs held by Zhen Partners Fund IV, L.P. and (ii) 637,320 Class A ordinary shares in the form of ADSs held by Zhen Advisors Ltd., based on the information contained in the Schedule 13G/A filed by the relevant reporting persons with the SEC on November 12, 2024.
It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience.
Our directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 143 Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; 141 • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
The calculations in the table below are based on 1,478,275,692 Class A ordinary shares (excluding the 440,571,764 Class A ordinary shares underlying the ADSs repurchased by our company pursuant to the share repurchase program, the 32,527,075 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans and the 79,226,352 Class A ordinary shares held under the trusts for the benefit of certain employees, directors and officers of our company as disclosed in “Item 6.
The calculations in the table below are based on 1,236,592,748 Class A ordinary shares (excluding 860,008,135 Class A ordinary shares, which consisted of shares underlying the ADSs repurchased by our company pursuant to the share repurchase program, shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans, and shares held under the trusts for the benefit of certain employees, directors and officers of our company as disclosed in “Item 6.
(1) Represents (i) 666,572,880 Class B ordinary shares held by Slumdunk Holding Limited, a British Virgin Islands business company, and (ii) 5,736,314 Class A ordinary shares held by Yellow Bee Limited, a British Virgin Islands business company. Slumdunk Holding Limited owns the entire voting shares of Yellow Bee Limited and Mr.
(1) Represents (i) 39,081,080 Class A ordinary shares and 600,572,880 Class B ordinary shares held by Slumdunk Holding Limited, a British Virgin Islands business company, and (ii) 4,470,234 Class A ordinary shares held by Yellow Bee Limited, a British Virgin Islands business company. Slumdunk Holding Limited owns the entire voting shares of Yellow Bee Limited and Mr.
(4) Represents 137,796,850 Class A ordinary shares directly held by Banyan Fund III, L.P. and 23,751,819 Class A ordinary shares directly held by Banyan Fund III-A, L.P., based on the information contained in the Schedule 13G/A filed by the relevant reporting persons with the SEC on February 13, 2024.
(4) Represents 77,409,586 Class A ordinary shares directly held by Banyan Fund III, L.P. and 13,337,759 Class A ordinary shares directly held by Banyan Fund III-A, L.P., based on the information contained in the Schedule 13G/A filed by the relevant reporting persons with the SEC on February 13, 2025.
Directors and Executive Officers Age Position/Title Jinfeng Huang 40 Chairman of the Board of Directors and Chief Executive Officer Donghao Yang 52 Director and Chief Financial Officer Jing Cheng 52 Chief Scientific Officer Zhenjie (Jack) Xu 45 Chief Human Resources Officer Sidney Xuande Huang 58 Independent Director Bonnie Yi Zhang 50 Independent Director Jiming Ha 61 Independent Director Jinfeng Huang is our founder and has served as our director and chief executive officer since our inception.
Directors and Executive Officers Age Position/Title Jinfeng Huang 41 Chairman of the Board of Directors and Chief Executive Officer Donghao Yang 53 Director and Chief Financial Officer Jing Cheng 53 Chief Scientific Officer Sidney Xuande Huang 59 Independent Director Bonnie Yi Zhang 51 Independent Director Jiming Ha 62 Independent Director Jinfeng Huang is our founder and has served as our director and chief executive officer since our inception.
Ordinary Shares Beneficially Owned Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Beneficial Ownership % of Aggregate Voting Power*** Directors and Executive Officers**: Jinfeng Huang (1) 5,736,314 666,572,880 672,309,194 31.3% 90.1% Donghao Yang 50,422,620 — 50,422,620 2.4% 0.3% Jing Cheng * — * * * Zhenjie Xu — — — — — Sidney Xuande Huang * — * * * Bonnie Yi Zhang * — * * * Jiming Ha * — * * * All Directors and Executive Officers as a Group 60,745,666 666,572,880 727,318,546 33.9% 90.4% Principal Shareholders: Entities affiliated with Jinfeng Huang (1) 5,736,314 666,572,880 672,309,194 31.3% 90.1% Hillhouse Entities (2) 300,560,602 — 300,560,602 14.0% 2.0% ZhenFund Entities (3) 224,286,241 — 224,286,241 10.5% 1.5% Banyan Partners Entities (4) 161,548,669 — 161,548,669 7.5% 1.1% Notes: * Less than 1% of our total Class A ordinary shares on an as-converted basis outstanding as of February 29, 2024. ** Except as indicated otherwise below, the business address of our directors and executive officers is Building No. 35, Art Port International Creation Center, No. 2519 Xingang East Road, Haizhu District, Guangzhou 510330, Guangdong Province, People’s Republic of China *** For each person or group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Ordinary Shares Beneficially Owned Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Beneficial Ownership % of Aggregate Voting Power*** Directors and Executive Officers**: Jinfeng Huang (1) 43,551,314 600,572,880 644,124,194 35.1% 91.0% Donghao Yang 67,230,160 — 67,230,160 3.7% 0.5% Jing Cheng * — * * * Sidney Xuande Huang * — * * * Bonnie Yi Zhang * — * * * Jiming Ha * — * * * All Directors and Executive Officers as a Group 118,901,168 600,572,880 719,474,048 39.0% 91.6% Principal Shareholders: Entities affiliated with Jinfeng Huang (1) 43,551,314 600,572,880 644,124,194 35.1% 91.0% Hillhouse Entities (2) 300,560,602 — 300,560,602 16.4% 2.3% ZhenFund Entities (3) 222,868,921 — 222,868,921 12.1% 1.7% Banyan Partners Entities (4) 90,747,345 — 90,747,345 4.9% 0.7% Notes: * Less than 1% of our total Class A ordinary shares on an as-converted basis outstanding as of February 28, 2025. ** Except as indicated otherwise below, the business address of our directors and executive officers is Floor 39, Poly Development Plaza, No. 832 Yue Jiang Zhong Road, Haizhu District, Guangzhou 510335, Guangdong Province, People’s Republic of China *** For each person or group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Banyan Partners Fund III, L.P. and Banyan Partners Fund III-A, L.P. are incorporated in the Cayman Islands and Banyan Partners III Ltd., a Cayman Islands company, is their general partner.
Banyan Partners Fund III, L.P. and Banyan Partners Fund III-A, L.P. are incorporated in the Cayman Islands and Banyan Partners III Ltd., a Cayman Islands company, is their general partner. The business address of both Banyan Partners Fund III, L.P. and Banyan Partners Fund III-A, L.P. is Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9008, Cayman Islands.
(NASDAQ: JD; HKSE: 9618) and was its chief financial officer from September 2013 until his retirement in September 2020, including the last three months as an executive coach to his successor. Mr. Huang has been a member of the board of directors of Kuaishou Technology (HKSE: 1024) since February 2021 and Tuya Inc.
Louis and Fudan University in 2009. Sidney Xuande Huang has served as our independent director since November 2020. Mr. Huang is currently a senior advisor to JD.Com, Inc. (NASDAQ: JD; HKSE: 9618) and was its chief financial officer from September 2013 until his retirement in September 2020, including the last three months as an executive coach to his successor. Mr.
He also served as the co-president of Vancelnfo Technologies Inc. from 2011 to 2012 and its chief operating officer from 2008 to 2010. Prior to Vancelnfo Technologies Inc., he was the chief financial officer of two other China-based companies in technology and internet sectors between 2004 and 2006. Mr.
Prior to Vancelnfo Technologies Inc., he was the chief financial officer of two other China-based companies in technology and internet sectors between 2004 and 2006. Mr. Huang was an investment banker at Citigroup Global Markets Inc. in New York from 2002 to 2004.
Huang was an investment banker at Citigroup Global Markets Inc. in New York from 2002 to 2004. He held various positions including audit manager at KPMG LLP from 1996 to 2000 and was a Certified Public Accountant in the State of New York. Mr.
He held various positions including audit manager at KPMG LLP from 1996 to 2000 and was a Certified Public Accountant in the State of New York. Mr. Huang is currently a Foundation Fellow at St Antony’s College of Oxford University, where he was an academic visitor focusing on geoeconomics from 2021 to 2022.
The following table sets forth the number of our full-time employees as of December 31, 2023: Function Number of Employees R&D, Product Development and Production Management 208 Marketing 206 Online Operation and Sales 396 Offline Retail 235 Customer Service 136 Global Business 83 Others 241 Total 1,505 Our success depends on our ability to attract, motivate, train and retain qualified personnel.
Function Number of Employees R&D and Product Development 146 Supply Chain 43 Marketing 182 Online Operation and Sales 338 Offline Retail 266 Global Business 88 Customer Service 133 Others 154 Total 1,350 Our success depends on our ability to attract, motivate, train and retain qualified personnel.
(NYSE: TUYA and HKSE: 2391) since June 2022. Prior to JD.com, Mr. Huang was the chief financial officer of Vancelnfo Technologies Inc. (NYSE: VIT) and its successor company, Pactera Technology International Ltd., from July 2006 to September 2013.
(NYSE: VIT) and its successor company, Pactera Technology International Ltd., from July 2006 to September 2013. He also served as the co-president of Vancelnfo Technologies Inc. from 2011 to 2012 and its chief operating officer from 2008 to 2010.
Huang is currently a Foundation Fellow at St Antony’s College of Oxford University, where he was an academic visitor focusing on geoeconomics from 2021 to 2022. He obtained his master’s degree in business administration with distinction from the Kellogg School of Management at Northwestern University as an Austin Scholar. He received his bachelor’s degree in accounting from Bernard M.
He obtained his master’s degree in business administration with distinction from the Kellogg School of Management at Northwestern University as an Austin Scholar. He received his bachelor’s degree in accounting from Bernard M. Baruch College, where he graduated as class valedictorian. 136 Bonnie Yi Zhang has served as our independent director since November 2020. Ms.
Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care.
Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
The business address of both Banyan Partners Fund III, L.P. and Banyan Partners Fund III-A, L.P. is Walkers Corporate Limited, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9008, Cayman Islands. 146 To our knowledge, as of February 29, 2024, 1,484,489,250 of our Class A ordinary shares were held by three record holders in the United States, among which, one is the depositary of our ADS program that held 1,484,489,248 Class A ordinary shares.
To our knowledge, as of February 28, 2025, 1,640,869,630 of our Class A ordinary shares were held by three record holders in the United States, among which, one is the depositary of our ADS program that held 1,640,869,628 Class A ordinary shares.
Zhen International Ltd. and Success Origin Limited are wholly owned by Best Love Charming Limited. R&H Trust Co. (Singapore) Pte. Limited, trustee of the Best Love Charming Family Trust, holds 100% equity interest in Best Love Charming Limited. The business address of Zhen Fund entities is P.O. Box 10008, Willow House, Cricket Square, Grand Cayman, KY1-1001, Cayman Islands.
The general partner of Zhen Partners Fund IV, L.P. is Zhen Partners Management (MTGP) IV, L.P., whose general partner is Zhen Partners Management (TTGP) IV, Ltd. The business address of Zhen Fund entities is P.O. Box 10008, Willow House, Cricket Square, Grand Cayman, KY1-1001, Cayman Islands.
Removed
Louis and Fudan University in 2009. Zhenjie (Jack) Xu has over 20 years of experience in human resources management. Prior to joining the Company, Mr. Xu served concurrently as vice president and chief human resources officer of MINISO Group Holding Limited (NYSE: MNSO; HKSE: 9896) from July 2019 to August 2022. Before that, Mr.
Added
Huang has been a member of the board of directors of Kuaishou Technology (HKSE: 1024) since February 2021, Tuya Inc. (NYSE: TUYA and HKSE: 2391) since June 2022, and MIXUE Group (HKSE: 2097) since December 2023. Prior to JD.com, Mr. Huang was the chief financial officer of Vancelnfo Technologies Inc.
Removed
Xu was the vice president in human resources and strategies at Guangzhou Dikeni Fashion Co., Ltd. from September 2018 to June 2019. From December 2015 to June 2018, Mr. Xu worked at Natural Food International Holding Limited (HKSE: 1837) and held several positions, including general manager of human resources center and executive assistant. Earlier in his career, Mr.
Added
The following table sets forth the number of our full-time employees as of December 31, 2024.
Removed
Xu was the human resource director of Biostime International Holdings Limited, currently known as Health and Happiness (H&H) International Holdings Limited (HKSE: 1112), from December 2006 to December 2015. Mr.
Removed
Xu received Bachelor of Laws degree in public administration from Sun Yat-sen University and an EMBA degree from the University of Minnesota. 137 Sidney Xuande Huang has served as our independent director since November 2020. Mr. Huang is currently a senior advisor to JD.Com, Inc.
Removed
Baruch College, where he graduated as class valedictorian. Bonnie Zhang has served as our independent director since November 2020. Ms.
Removed
The following table summarizes, as of February 29, 2024, the number of restricted ordinary shares related to the options granted to our officers and directors under the 2018 Share Option Plan and the 2022 Share Incentive Plan.
Removed
The general partner of Zhen Partners Fund IV, L.P. is Zhen Partners Management (MTGP) IV, L.P., whose general partner is Zhen Partners Management (TTGP) IV, Ltd. Zhen Advisors Ltd. is wholly owned by Zhen International Ltd., which holds 51% equity interest in Zhen Partners Management (TTGP) IV, Ltd.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

6 edited+0 added−1 removed14 unchanged
Biggest changeOur sales of inventories to a company controlled by our chief executive officer were nil, RMB11.4 million and RMB20.1 million (US$2.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively.
Biggest changeAs of December 31, 2024, the amount due from companies over which we exercise significant control was RMB4.0 million (US$0.5 million). Our sales of inventories to a company controlled by our chief executive officer were RMB11.4 million, RMB20.1 million and RMB10.4 million (US$1.4 million) for the years ended December 31, 2022, 2023 and 2024, respectively.
Piggyback Registration Rights . If we propose to file a registration statement for a public offering of our securities other than relating to any employee benefit plan or a corporate reorganization, we must offer holders of our 149 registrable securities an opportunity to include in the registration all or any part of their registrable securities.
Piggyback Registration Rights . If we propose to file a registration statement for a public offering of our securities other than relating to any employee benefit plan or a corporate reorganization, we must offer holders of our registrable securities an opportunity to include in the registration all or any part of their registrable securities.
If the managing underwriters of any underwritten offering determine in good faith that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriters may decide to exclude shares from the registration and the underwriting and to allocate the number of securities first to us and second to each of the holders requesting the inclusion of their registrable securities on a pro rata basis based on the total number of registrable securities held by each such holder and third, to holders of other securities of our company, provided that (i) in no event may any registrable securities be excluded from such offering unless all other securities are first excluded, and (ii) in no event may the amount of the holders’ registrable securities included in such registration be reduced below 25% of the aggregate number of registrable securities requested to be included in such offering.
If the managing underwriters of any underwritten offering determine in good faith that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriters may decide to exclude shares from the registration and the underwriting and to allocate the number of securities first to us and second to each of the holders requesting the inclusion of their registrable securities on a pro rata basis based on the total number of registrable securities held by each such holder and third, to holders of other securities of our company, provided that (i) in no event may any registrable securities be excluded from such offering unless all other securities are first excluded, and (ii) in no event may the amount of the holders’ registrable securities included in such registration be reduced below 25% of the aggregate number of registrable securities requested to be included in such offering. 147 Expenses of Registration .
As of December 31, 2021, 2022 and 2023, the amount due from a company controlled by our chief executive officer was nil, RMB5.6 million and RMB2.8 million (US$0.4 million) respectively. Shareholders Agreement We entered into our seventh amended and restated shareholders agreement on September 11, 2020 with our shareholders, which included holders of ordinary shares and preferred shares.
As of December 31, 2022, 146 2023 and 2024, the amount due from a company controlled by our chief executive officer was RMB5.6 million, RMB2.8 million and RMB5.1 million (US$0.7 million), respectively. Shareholders Agreement We entered into our seventh amended and restated shareholders agreement on September 11, 2020 with our shareholders, which included holders of ordinary shares and preferred shares.
As of December 31, 2021, 2022 and 2023, the amount due to a company over which we exercise significant control was RMB14.0 million, RMB27.2 million and RMB9.4 million (US$1.3 million) respectively, which were unsecured and interest free. As of December 31, 2023, the amount due from companies over which we exercise significant control was RMB17.4 million (US$2.5 million).
As of December 31, 2022, 2023 and 2024, the amount due to a company over which we exercise significant control was RMB27.2 million, RMB9.4 million and RMB28.9 million (US$4.0 million), respectively, which were unsecured and interest free. Our sales of inventories to a company over which we exercise significant control was RMB1.8 million (US$0.2 million) in 2024.
Compensation of Directors and Executive Officers—Share Incentive Plans.” 148 Other Related Party Transactions We purchased inventories and services from companies over which we exercise significant control in the amount of RMB38.3 million, RMB137.5 million and RMB211.0 million (US$29.7 million) in 2021, 2022 and 2023, respectively.
Compensation—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” Other Related Party Transactions We purchased inventories and services from companies over which we exercise significant control in the amount of RMB137.5 million, RMB211.0 million and RMB285.5 million (US$39.1 million) in 2022, 2023 and 2024, respectively.
Removed
Compensation of Directors and Executive Officers—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B.

Other YSG 10-K year-over-year comparisons