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What changed in Vipshop Holdings Ltd's 20-F — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vipshop Holdings Ltd's 2022 and 2023 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 2023 report.

+1063 added−1105 removedSource: 20-F (2024-04-18) vs 20-F (2023-04-19)

Top changes in Vipshop Holdings Ltd's 2023 20-F

1063 paragraphs added · 1105 removed · 871 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

309 edited+103 added−106 removed392 unchanged
Biggest changeFor the Year Ended December 31, 2018 2019 2020 2021 2022 RMB RMB RMB RMB RMB US$ (in thousands, except number of shares, and per share and per ADS data) Selected Consolidated Statements of Income Data Product revenues 81,510,275 88,721,311 97,449,712 111,256,902 97,250,078 14,099,936 Other revenues 3,013,673 4,273,107 4,408,777 5,802,776 5,902,411 855,769 Total net revenues 84,523,948 92,994,418 101,858,489 117,059,678 103,152,489 14,955,705 Cost of revenues (1) (67,454,981 ) (72,314,190 ) (80,573,181 ) (93,953,121 ) (81,536,409 ) (11,821,668 ) Gross profit 17,068,967 20,680,228 21,285,308 23,106,557 21,616,080 3,134,037 Operating expenses (2) : —Fulfillment expenses (3) (7,489,393 ) (7,317,706 ) (6,878,991 ) (7,652,504 ) (7,247,210 ) (1,050,747 ) —Marketing expenses (3,240,450 ) (3,323,927 ) (4,284,274 ) (5,089,213 ) (2,831,316 ) (410,502 ) —Technology and content expenses (2,000,894 ) (1,568,107 ) (1,221,264 ) (1,517,307 ) (1,605,422 ) (232,764 ) —General and administrative expenses (2,674,179 ) (4,064,264 ) (3,748,548 ) (4,189,690 ) (4,459,518 ) (646,569 ) —Goodwill impairment loss — (278,263 ) — — — — Total operating expenses (15,404,916 ) (16,552,267 ) (16,133,077 ) (18,448,714 ) (16,143,466 ) (2,340,582 ) Other operating income 757,062 645,413 707,855 924,579 724,832 105,091 Income from operations 2,421,113 4,773,374 5,860,086 5,582,422 6,197,446 898,546 Income before income taxes and share of (loss)/income of equity method investees 2,747,075 4,942,805 7,019,357 5,873,275 8,077,204 1,171,085 Income tax expenses (566,604 ) (983,554 ) (1,130,016 ) (1,222,704 ) (1,758,810 ) (255,003 ) Share of (loss)/income of equity method investees (46,999 ) 27,182 30,015 42,303 (6,559 ) (951 ) Net income 2,133,472 3,986,433 5,919,356 4,692,874 6,311,835 915,131 Net (income)/loss attributable to non-controlling interests (4,685 ) 30,399 (12,399 ) (11,801 ) (13,019 ) (1,888 ) Net income attributable to our shareholders 2,128,787 4,016,832 5,906,957 4,681,073 6,298,816 913,243 Shares used in calculating earnings per share: Class A and Class B ordinary shares: —Basic 132,266,157 133,524,129 135,077,790 136,175,112 127,235,048 127,235,048 —Diluted 140,083,610 136,081,415 138,036,010 138,745,022 128,157,304 128,157,304 Net earnings per Class A and Class B ordinary share: —Basic 16.09 30.08 43.73 34.38 49.51 7.18 —Diluted 15.61 29.58 42.79 33.74 49.15 7.13 Net earnings per ADS (4) —Basic 3.22 6.02 8.75 6.88 9.90 1.44 —Diluted 3.12 5.92 8.56 6.75 9.83 1.43 Notes: (1) Excludes shipping and handling expenses, and includes inventory write-down that amounted to RM440.8 million, RMB347.5 million, RMB554.9 million, RMB35.3 million, and RMB130.7 million (US$18.9 million) for the years ended December 31, 2018, 2019, 2020, 2021, and 2022, respectively.
Biggest changeFor the Year Ended December 31, 2019 2020 2021 2022 2023 RMB RMB RMB RMB RMB US$ (in thousands, except number of shares, and per share and per ADS data) Selected Consolidated Statements of Income Data Product revenues 88,721,311 97,449,712 111,256,902 97,250,078 105,613,485 14,875,348 Other revenues 4,273,107 4,408,777 5,802,776 5,902,411 7,242,535 1,020,090 Total net revenues 92,994,418 101,858,489 117,059,678 103,152,489 112,856,020 15,895,438 Cost of revenues (1) (72,314,190 ) (80,573,181 ) (93,953,121 ) (81,536,409 ) (87,135,128 ) (12,272,726 ) Gross profit 20,680,228 21,285,308 23,106,557 21,616,080 25,720,892 3,622,712 Operating expenses (2) : —Fulfillment expenses (3) (7,317,706 ) (6,878,991 ) (7,652,504 ) (7,247,210 ) (8,262,004 ) (1,163,679 ) —Marketing expenses (3,323,927 ) (4,284,274 ) (5,089,213 ) (2,831,316 ) (3,242,215 ) (456,656 ) —Technology and content expenses (1,568,107 ) (1,221,264 ) (1,517,307 ) (1,605,422 ) (1,767,530 ) (248,951 ) —General and administrative expenses (4,064,264 ) (3,748,548 ) (4,189,690 ) (4,459,518 ) (4,146,568 ) (584,032 ) —Goodwill impairment loss (278,263 ) — — — — — Total operating expenses (16,552,267 ) (16,133,077 ) (18,448,714 ) (16,143,466 ) (17,418,317 ) (2,453,318 ) Other operating income 645,413 707,855 924,579 724,832 801,560 112,897 Income from operations 4,773,374 5,860,086 5,582,422 6,197,446 9,104,135 1,282,291 Income before income taxes and share of (loss)/income of equity method investees 4,942,805 7,019,357 5,873,275 8,077,204 9,987,002 1,406,640 Income tax expenses (983,554 ) (1,130,016 ) (1,222,704 ) (1,758,810 ) (1,866,004 ) (262,821 ) Share of (loss)/income of equity method investees 27,182 30,015 42,303 (6,559 ) 80,301 11,310 Net income 3,986,433 5,919,356 4,692,874 6,311,835 8,201,299 1,155,129 Net (income)/loss attributable to non-controlling interests 30,399 (12,399 ) (11,801 ) (13,019 ) (84,675 ) (11,926 ) Net income attributable to our shareholders 4,016,832 5,906,957 4,681,073 6,298,816 8,116,624 1,143,203 Shares used in calculating earnings per share: Class A and Class B ordinary shares: —Basic 133,524,129 135,077,790 136,175,112 127,235,048 110,695,778 110,695,778 —Diluted 136,081,415 138,036,010 138,745,022 128,157,304 112,552,398 112,552,398 Net earnings per Class A and Class B ordinary share: —Basic 30.08 43.73 34.38 49.51 73.32 10.33 —Diluted 29.58 42.79 33.74 49.15 72.11 10.16 Net earnings per ADS (4) —Basic 6.02 8.75 6.88 9.90 14.66 2.07 —Diluted 5.92 8.56 6.75 9.83 14.42 2.03 Notes: (1) Excludes shipping and handling expenses, and includes changes of inventory write-down that amounted to RMB347.5 million for the year ended December 31, 2019, RMB554.9 million for the year ended December 31, 2020, RMB35.3 million for the year ended December 31, 2021, RMB130.7 million for the year ended December 31, 2022, and RMB(681.2) million (US$(95.9) million) for the year ended December 31, 2023. 16 Table of Contents (2) Include share-based compensation expenses as follows: For the Year Ended December 31, 2019 2020 2021 2022 2023 RMB RMB RMB RMB RMB US$ (in thousands) Fulfillment expenses (112,683 ) (100,486 ) (88,985 ) (74,063 ) (77,926 ) (10,976 ) Marketing expenses (35,038 ) (16,534 ) (26,834 ) (14,630 ) (33,379 ) (4,701 ) Technology and content expenses (180,493 ) (152,234 ) (252,730 ) (242,714 ) (330,197 ) (46,507 ) General and administrative expenses (359,869 ) (681,794 ) (641,464 ) (876,174 ) (1,068,304 ) (150,467 ) Total (688,083 ) (951,048 ) (1,010,013 ) (1,207,581 ) (1,509,806 ) (212,651 ) (3) Include shipping and handling expenses, which amounted to RMB4.63 billion for the year ended December 31, 2019, RMB4.51 billion for the year ended December 31, 2020, RMB5.24 billion for the year ended December 31, 2021, RMB5.06 billion for the year ended December 31, 2022, and RMB5.84 billion (US$822.1 million) for the year ended December 31, 2023.
Risk Factors—Risks Relating to Doing Business in China—We may be adversely affected by the complexity, uncertainties, and changes in PRC regulation of internet-related businesses and companies, including e-commerce business,” and “Item 3. Key Information—D.
Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We may be adversely affected by the complexity, uncertainties, and changes in PRC regulation of internet-related businesses and companies, including e-commerce business,” and “Item 3. Key Information—D.
We are subject to rules and regulations by various governing bodies, including, for example, the Securities and Exchange Commission, or SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and the various regulatory authorities in China and the Cayman Islands, and to new and evolving regulatory measures under applicable law.
We are subject to rules and regulations by various governing bodies, including, for example, the Securities and Exchange Commission, or the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and the various regulatory authorities in China and the Cayman Islands, and to new and evolving regulatory measures under applicable law.
Furthermore, if future legislations prescribed by the PRC State Council, the CSRC, or other PRC regulatory authorities mandate further actions to be taken by companies with respect to existing contractual arrangement, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.
Furthermore, if future legislations prescribed by the State Council, the CSRC, or other PRC regulatory authorities mandate further actions to be taken by companies with respect to existing contractual arrangement, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.
In November 2016, China promulgated the Cybersecurity Law, which came into effect on June 1, 2017, to protect cyberspace security and order. Cybersecurity Law tightens control of cyber security and sets forth various security protection obligations for network operators.
In November 2016, China promulgated the Cybersecurity Law, which came into effect on June 1, 2017, to protect cyberspace security and order. The Cybersecurity Law tightens control of cyber security and sets forth various security protection obligations for network operators.
As of the date of this annual report, neither the SAFE nor the People’s Bank of China had promulgated and made public any legislations in this regard. There are uncertainties relating to the future regime to be adopted and any limitation to be imposed on us when providing loans to our PRC subsidiaries.
As of the date of this annual report, neither SAFE nor the People’s Bank of China had promulgated and made public any legislations in this regard. There are uncertainties relating to the future regime to be adopted and any limitation to be imposed on us when providing loans to our PRC subsidiaries.
Although SAFE launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in 2015 to allow foreign-invested enterprises to settle their foreign exchange capital at their discretion and further relaxed its rules in 2016 to allow foreign-invested enterprises (excluding financial institutions) to go through foreign exchange settlement formalities for their foreign debts at their discretion, the current SAFE rules continue to prohibit foreign-invested enterprises from using Renminbi converted from their foreign exchange capitals for expenditure beyond their business scopes as approved by the PRC government authorities.
Although SAFE launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises in 2015 to allow foreign-invested enterprises to settle their foreign exchange capital at their discretion and further relaxed its rules in 2016 to allow foreign-invested enterprises (excluding financial institutions) to go through foreign exchange settlement formalities for their foreign debts at their discretion, the current rules of SAFE continue to prohibit foreign-invested enterprises from using Renminbi converted from their foreign exchange capitals for expenditure beyond their business scopes as approved by the PRC government authorities.
Moreover, the current SAFE rules continue to prohibit foreign-invested enterprises from using Renminbi converted from their registered capitals to provide loans to persons other than affiliates unless otherwise permitted under its business scope. Any violations of such SAFE rules may result in severe monetary or other penalties.
Moreover, the current rules of SAFE continue to prohibit foreign-invested enterprises from using Renminbi converted from their registered capitals to provide loans to persons other than affiliates unless otherwise permitted under its business scope. Any violations of such rules of SAFE may result in severe monetary or other penalties.
Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly-listed company or another qualified institution selected by such PRC subsidiary, to conduct SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants.
Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly-listed company or another qualified institution selected by such PRC subsidiary, to conduct registration with SAFE and other procedures with respect to the stock incentive plan on behalf of its participants.
The STA Circular 82, as amended, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China.
STA Circular 82, as amended, provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China.
The STA Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent tax authorities. See “Item 4.Information on the Company—B.
STA Bulletin 45 clarifies matters including resident status determination, post-determination administration and competent tax authorities. See “Item 4. Information on the Company—B.
Under the PRC Enterprise Income Tax Law, as amended, and its implementation regulations issued by the PRC State Council, a 10% PRC withholding tax is applicable to dividends or interest payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in China or which have such establishment or place of business but the dividends or interest are not effectively connected with such establishment or place of business, to the extent such dividends or interest are derived from sources within China.
Under the PRC Enterprise Income Tax Law, as amended, and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends or interest payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in China or which have such establishment or place of business but the dividends or interest are not effectively connected with such establishment or place of business, to the extent such dividends or interest are derived from sources within China.
These practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards. As a non-U.S. company with ADSs listed on NYSE, we are subject to the NYSE corporate governance listing standards.
These practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards. As a non-U.S. company with ADSs listed on the NYSE, we are subject to the NYSE corporate governance listing standards.
If our ownership structure, contractual arrangements, and businesses of our company, our PRC subsidiaries, or the consolidated variable interest entities are found to be in violation of any existing or future PRC laws or regulations, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, the relevant government authorities, including the CSRC, would have broad discretion in dealing with such violation, including levying fines, confiscating our income or the income of our PRC subsidiaries or the consolidated variable interest entities, revoking the business licenses or operating licenses of our PRC subsidiaries or the consolidated variable interest entities, shutting down our servers or blocking our platform, discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring, restricting or prohibiting our use of proceeds from any securities offerings outside China to finance our business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business.
If our ownership structure, contractual arrangements, and businesses of our company, our PRC subsidiaries, or the consolidated variable interest entities are found to be in violation of any existing or future PRC laws or regulations, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, the government authorities, including the CSRC, would have broad discretion in dealing with such violation, including levying fines, confiscating our income or the income of our PRC subsidiaries or the consolidated variable interest entities, revoking the business licenses or operating licenses of our PRC subsidiaries or the consolidated variable interest entities, shutting down our servers or blocking our platform, discontinuing or placing restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring, restricting or prohibiting our use of proceeds from any securities offerings outside China to finance our business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business.
The Guideline No.2 on the Application of Regulatory Rules on Overseas Securities Offerings and Listings, or the Guideline No.2, as one of the supporting guidelines for the Overseas Offering and Listing Measures, provides that the filing documents submitted to the CSRC must specify, among other things: (i) whether the PRC laws, administrative regulations, or relevant provisions restrict or prohibit the PRC domestic companies from conducting business and/or holding licenses or qualifications for the issuers through contractual arrangements; and (ii) whether the PRC domestic operating entities that have contractual arrangements with the issuers fall into the industries in which foreign investments are restricted or prohibited.
The Guideline No. 2 on the Application of Regulatory Rules on Overseas Securities Offerings and Listings, as one of the supporting guidelines for the Overseas Offering and Listing Measures, provides that the filing documents submitted to the CSRC must specify, among other things: (i) whether the PRC laws, administrative regulations, or provisions restrict or prohibit the PRC domestic companies from conducting business and/or holding licenses or qualifications for the issuers through contractual arrangements; and (ii) whether the PRC domestic operating entities that have contractual arrangements with the issuers fall into the industries in which foreign investments are restricted or prohibited.
Organizational Structure.” 38 Table of Contents In the opinion of our PRC legal counsel, Han Kun Law Offices, based on its understanding of the relevant PRC laws, rules, and regulations, our current ownership structure, the ownership structure of our PRC subsidiaries, and the consolidated variable interest entities, each as described in this annual report, do not violate any PRC laws, rules, and regulations currently in effect, and the contractual arrangements among (a) Vipshop China, (b) Vipshop E-Commerce, and (c) shareholders of Vipshop E-Commerce as one set and the other two sets concerning the insignificant consolidated variable interest entities, each as described in this annual report, are not in violation of any PRC laws, rules, and regulations currently in effect.
Organizational Structure.” 38 Table of Contents In the opinion of our PRC legal counsel, Han Kun Law Offices, based on its understanding of the PRC laws, rules, and regulations, our current ownership structure, the ownership structure of our PRC subsidiaries, and the consolidated variable interest entities, each as described in this annual report, do not violate any PRC laws, rules, and regulations currently in effect, and the contractual arrangements among (a) Vipshop China, (b) Vipshop E-Commerce, and (c) shareholders of Vipshop E-Commerce as one set and the other two sets concerning the insignificant consolidated variable interest entities, each as described in this annual report, are not in violation of any PRC laws, rules, and regulations currently in effect.
Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to relevant individuals or entities including securities companies, securities service providers, and overseas regulators, any documents or materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to the law, and file with the secrecy administrative department at the same level.
Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to any individuals or entities including securities companies, securities service providers, and overseas regulators, any documents or materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to the law, and file with the secrecy administrative department at the same level.
The most recent negative list, issued on December 27, 2021 and effective on January 1, 2022, stipulates that any PRC domestic enterprise engaging in prohibited industries under the negative list must obtain the consent of the relevant competent PRC authorities for overseas listing, and the foreign investors cannot participate in the operation and management of such enterprise, and the shareholding percentage of the foreign investors in such enterprise must be subject to the relevant administrative provisions relating to foreign investment in the securities of PRC domestic companies.
The most recent negative list, issued on December 27, 2021 and effective on January 1, 2022, stipulates that any PRC domestic enterprise engaging in prohibited industries under the negative list must obtain the consent of the competent PRC authorities for overseas listing, and the foreign investors cannot participate in the operation and management of such enterprise, and the shareholding percentage of the foreign investors in such enterprise must be subject to the administrative provisions relating to foreign investment in the securities of PRC domestic companies.
In April 2021, the SAMR, together with certain other PRC government authorities, convened an administrative guidance meeting, focusing on unfair competition acts in community group buying, self-inspection, and rectification by major internet companies of possible violations of anti-monopoly, anti-unfair competition, tax, and other related laws and regulations, and requesting such companies to comply with relevant laws and regulations strictly and be subject to public supervision.
In April 2021, the SAMR, together with certain other PRC government authorities, convened an administrative guidance meeting, focusing on unfair competition acts in community group buying, self-inspection, and rectification by major internet companies of possible violations of anti-monopoly, anti-unfair competition, tax, and other related laws and regulations, and requesting such companies to comply with the laws and regulations strictly and be subject to public supervision.
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 permissions to continue our operations, which could result in a material adverse change in our operation and the value of our ADSs.
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 permissions to continue our operations, which could result in a material adverse change in our operation and the value of our ADSs.
We may also incur significant expenses in obtaining approvals from shareholders and relevant government authorities in China and elsewhere in the world. Our failure to consummate acquisitions could also require us to pay certain pre-negotiated fees and expenses. Acquired businesses or assets may not generate expected financial results and may have historically incurred and continue to incur losses.
We may also incur significant expenses in obtaining approvals from shareholders and the government authorities in China and elsewhere in the world. Our failure to consummate acquisitions could also require us to pay certain pre-negotiated fees and expenses. Acquired businesses or assets may not generate expected financial results and may have historically incurred and continue to incur losses.
Any failure or inability by such individuals to comply with the SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends.
Any failure or inability by such individuals to comply with the regulations of SAFE may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends.
Some of our landlords do not have proper ownership certificates or authorization of sublease for the properties we lease, or have other restrictions on their ownership of the properties. In particular, several of our offices in Guangzhou, China are located on land allocated by local government, and the landlord has not obtained the relevant government approvals for leasing the premises.
Some of our landlords do not have proper ownership certificates or authorization of sublease for the properties we lease, or have other restrictions on their ownership of the properties. In particular, several of our offices in Guangzhou, China are located on land allocated by local government, and the landlord has not obtained the government approvals for leasing the premises.
As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and the consolidated variable interest entities to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.
As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and the consolidated variable interest entities to pay off their respective debt in a currency other than Renminbi owed to entities outside mainland China, or to make other capital expenditure payments outside mainland China in a currency other than Renminbi.
The PRC Enterprise Income Tax Law requires every enterprise in China to submit annual report of enterprise income tax together with a report on transactions with its related parties to the relevant tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm’s length principles.
The PRC Enterprise Income Tax Law requires every enterprise in China to submit annual report of enterprise income tax together with a report on transactions with its related parties to the tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm’s length principles.
According to the Overseas Offering and Listing Measures, an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other securities in nature of equity) and listing by a PRC domestic company, whether directly or indirectly, are required to fulfill the filing procedures with, and to report relevant information to, the CSRC.
According to the Overseas Offering and Listing Measures, an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other securities in nature of equity) and listing by a PRC domestic company, whether directly or indirectly, are required to fulfill the filing procedures with, and to report the information to, the CSRC.
Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended, and implemented by the relevant government authorities.
Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended, and implemented by the government authorities.
On February 3, 2015, the PRC State Taxation Administration, or STA, issued a Public Notice Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-resident Enterprises, or STA Public Notice 7. In December 2017, Article 13 and Paragraph 2 of Article 8 of STA Public Notice 7 were abolished.
On February 3, 2015, the State Taxation Administration issued a Public Notice Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-resident Enterprises, or STA Public Notice 7. In December 2017, Article 13 and Paragraph 2 of Article 8 of STA Public Notice 7 were abolished.
Furthermore, a few of our leasehold interests in leased properties have not been registered with relevant PRC government authorities as required by PRC laws. According to the relevant PRC laws, rules, and regulations, failure to register a lease agreement will not affect its effectiveness between the landlord and the tenant.
Furthermore, a few of our leasehold interests in leased properties have not been registered with the PRC government authorities as required by PRC laws. According to the PRC laws, rules, and regulations, failure to register a lease agreement will not affect its effectiveness between the landlord and the tenant.
Where a non-PRC resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an offshore holding company, which is an Indirect Transfer, the non-PRC resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority.
Where a non-PRC resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an offshore holding company, which is an indirect transfer, the non-PRC resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the tax authority.
We face uncertainties as to the reporting and other implications of past and future private equity financing transactions, share exchange or other transactions involving transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC resident companies or other taxable assets by us.
We face uncertainties as to the reporting and other implications of past and future private equity financing transactions, share exchange or other transactions involving transfer of shares in our company by investors that are non-PRC resident enterprises, or our sale or purchase of shares in other non-PRC resident companies or other taxable assets.
If any of our brand partners fails to pay the required import tariffs, fails to obtain clearance from the customs or inspection and quarantine bureaus, or fails to meet the product labeling or other mandatory specification requirements, and sells such imported products to us, we may be subject to fines, suspension of business, and confiscation of unlawfully sold products and the proceeds from such sales, depending on the nature and gravity of such liabilities. 19 Table of Contents If our brand partners cease to provide us with favorable payment terms or return policies, our working capital needs may increase, resulting in negative impact on our cash flows from operating activities, and our operations may be materially and adversely affected.
If any of our brand partners fails to pay the required import tariffs, fails to obtain clearance from the customs or inspection and quarantine bureaus, or fails to meet the product labeling or other mandatory specification requirements, and sells such imported products to us, we may be subject to fines, suspension of business, and confiscation of unlawfully sold products and the proceeds from such sales, depending on the nature and gravity of such liabilities. 22 Table of Contents If our brand partners cease to provide us with favorable payment terms or return policies, our working capital needs may increase, resulting in negative impact on our cash flows from operating activities, and our operations may be materially and adversely affected.
We may need to pay substantial amount of compensation to settle similar claims for the avoidance of being involved in any legal proceedings, and could be required to pay substantial damages or to refrain from the sale of relevant products in the event that a claimant prevails in any proceedings against us.
We may need to pay substantial amount of compensation to settle similar claims for the avoidance of being involved in any legal proceedings, and could be required to pay substantial damages or to refrain from the sale of products in the event that a claimant prevails in any proceedings against us.
Any foreign loan procured by our PRC subsidiaries is required to be registered or filed with SAFE or its local branches or satisfy relevant requirements as provided in the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28.
Any foreign loan procured by our PRC subsidiaries is required to be registered or filed with SAFE or its local branches or satisfy the requirements as provided in the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment, or SAFE Circular 28.
We cannot assure you that we will be able to strictly comply with the relevant regulatory requirements, including but not limited to completing the filing procedures with the CSRC for our future issuance or offering of securities, on a timely manner, or at all.
We cannot assure you that we will be able to strictly comply with the regulatory requirements, including but not limited to completing the filing procedures with the CSRC for our future issuance or offering of securities, on a timely manner, or at all.
Similarly, any gain realized on the transfer of ADSs or ordinary shares or notes by such investors is also subject to PRC tax at a rate of 10%, subject to any reduction or exemption set forth in relevant tax treaties, if such gain is regarded as PRC-sourced income.
Similarly, any gain realized on the transfer of ADSs or ordinary shares or notes by such investors is also subject to PRC tax at a rate of 10%, subject to any reduction or exemption set forth in the tax treaties, if such gain is regarded as PRC-sourced income.
We compete with others based on a number of factors, including: • ability to identify products in demand among consumers and source these products on favorable terms from brand suppliers; • focus on and expertise in apparel-related categories; • pricing advantage due to our discount retail model; • breadth and quality of product and service offerings; • comprehensive and innovative platform features; • customer service and fulfillment capabilities; and • solid reputation among consumers and brands. 20 Table of Contents Some of our current and potential competitors may have significantly greater resources, longer operating histories, larger customer bases, and greater brand recognition.
We compete with others based on a number of factors, including: • ability to identify products in demand among consumers and source these products on favorable terms from brand suppliers; • focus on and expertise in apparel-related categories; • pricing advantage due to our discount retail model; • breadth and quality of product and service offerings; • comprehensive and innovative platform features; • customer service and fulfillment capabilities; and • solid reputation among consumers and brands. 23 Table of Contents Some of our current and potential competitors may have significantly greater resources, longer operating histories, larger customer bases, and greater brand recognition.
Many factors outside of our control, including inflation and deflation, interest rates, volatility of equity and debt securities markets, taxation rates, employment and other government policies, and global pandemics such as the COVID-19 can adversely affect consumer confidence and spending.
Many factors outside of our control, including inflation and deflation, interest rates, volatility of equity and debt securities markets, taxation rates, employment and other government policies, and global pandemics such as the COVID-19 pandemic can adversely affect consumer confidence and spending.
The PRC government, media outlets, and public advocacy groups have been increasingly focused on anti-monopoly and anti-unfair competition recently. In October 2020, the SAMR issued the Interim Provisions for Regulating Promotional Activities, which came into effect on December 1, 2020.
The PRC government, media outlets, and public advocacy groups have been increasingly focused on anti-monopoly and anti-unfair competition. In October 2020, the SAMR issued the Interim Provisions for Regulating Promotional Activities, which came into effect on December 1, 2020.
Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade- and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the SAFE, by complying with certain procedural requirements.
Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade- and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE, by complying with certain procedural requirements.
According to the relevant PRC regulations on foreign-invested enterprises, capital contributions to our PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with a local bank authorized by the SAFE.
According to the PRC regulations on foreign-invested enterprises, capital contributions to our PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with a local bank authorized by SAFE.
Any failure to obtain or delay in obtaining requisite approval(s) or completing requisite filing procedures for our overseas offerings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC government authorities.
Any failure to obtain or delay in obtaining requisite approval(s) or completing requisite filing procedures for our overseas offerings, or a rescission of any such obtained approval or filing, would subject us to sanctions by the CSRC or other PRC government authorities.
However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currencies 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 appropriate government authorities is required where Renminbi is to be converted into foreign currencies and remitted out of mainland China to pay capital expenses such as the repayment of loans denominated in foreign currencies.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the relevant national credit information system, which would then subject such investor to joint punishment as provided by relevant rules.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the national credit information system, which would then subject such investor to joint punishment as provided by the rules.
We may not be able to locate desirable sites for our stores. Operating offline stores requires considerable capital and personnel, and we may not be able to generate profits from our offline business to cover the relevant cost within a short period of time.
We may not be able to locate desirable sites for our stores. Operating offline stores requires considerable capital and personnel, and we may not be able to generate profits from our offline business to cover the cost within a short period of time.
We may incur liability for counterfeit or unauthorized products sold or information posted on our platforms. We have been and may continue to be subject to allegations that some of the items sold on our platforms are counterfeit or unauthorized from the relevant brand owners.
We may incur liability for counterfeit or unauthorized products sold or information posted on our platforms. We have been and may continue to be subject to allegations that some of the items sold on our platforms are counterfeit or unauthorized from the brand owners.
In all these online payment transactions, secured transmission of confidential information such as customers’ credit card numbers and personal information over public networks is essential to maintain consumer confidence. 24 Table of Contents We do not have control over the security measures of our third-party online payment vendors, and security breaches of the online payment services that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could, among other things, damage our reputation and the perceived security of all of the online payment services that we use.
In all these online payment transactions, secured transmission of confidential information such as customers’ credit card numbers and personal information over public networks is essential to maintain consumer confidence. 26 Table of Contents We do not have control over the security measures of our third-party online payment vendors, and security breaches of the online payment services that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could, among other things, damage our reputation and the perceived security of all of the online payment services that we use.
These assets and licenses are essential to the operation of our business and are generally subject to annual review by the relevant government authorities. Furthermore, our PRC subsidiaries and the consolidated variable interest entities may be required to obtain additional licenses.
These assets and licenses are essential to the operation of our business and are generally subject to annual review by the government authorities. Furthermore, our PRC subsidiaries and the consolidated variable interest entities may be required to obtain additional licenses.
The Cybersecurity Review Measures and the Draft Regulations on Network Data Security remain unclear on whether the relevant requirements will be applicable to companies that are already listed in the United States, such as us.
The Cybersecurity Review Measures and the draft Regulations on Network Data Security remain unclear on whether the requirements will be applicable to companies that are already listed in the United States, such as us.
In the event that such documents and materials, if leaked, will be detrimental to national security or public interest, the PRC domestic company must strictly fulfill relevant procedures stipulated by applicable national regulations.
In the event that such documents and materials, if leaked, will be detrimental to national security or public interest, the PRC domestic company must strictly fulfill the procedures stipulated by applicable national regulations.
If the Cybersecurity Review Measures, the enacted version of the Draft Regulations on Network Data Security, and the Measures for Security Assessment of Cross-border Data Transfer mandate clearance of cybersecurity review and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our app from the relevant application stores, and materially and adversely affect our business and results of operations and significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline.
If the Cybersecurity Review Measures, the enacted version of the draft Regulations on Network Data Security, and the Measures for Security Assessment of Cross-border Data Transfer mandate clearance of cybersecurity review and other specific actions to be taken by issuers like us, we face uncertainties as to whether we can complete these additional procedures timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our app from the application stores, and materially and adversely affect our business and results of operations and significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline.
For example, the law adds a catch-all clause to the definition of “foreign investment,” which includes investments made by foreign investors in China through other means defined by other laws or administrative regulations or provisions promulgated by the PRC State Council, without further elaboration on the scope of “other means.” The Implementing Regulation of the Foreign Investment Law adopted by the State Council on December 26, 2019 did not provide further clarification for such “other means” either.
The law adds a catch-all clause to the definition of “foreign investment,” which includes investments made by foreign investors in China through other means defined by other laws or administrative regulations or provisions promulgated by the State Council, without further elaboration on the scope of “other means.” The Implementing Regulation of the Foreign Investment Law adopted by the State Council on December 26, 2019 did not provide further clarification for such “other means” either.
There is no statutory limit in effect on the amount of capital contribution that we can make to our PRC subsidiaries, provided that the PRC subsidiaries complete the relevant filing and registration procedures.
There is no statutory limit in effect on the amount of capital contribution that we can make to our PRC subsidiaries, provided that the PRC subsidiaries complete the filing and registration procedures.
On July 4, 2014, SAFE has promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37.
On July 4, 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37.
The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenue in Renminbi.
The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of mainland China. We receive substantially all of our revenue in Renminbi.
Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the PRC State Administration of Foreign Exchange, or the SAFE.
Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE.
In addition, our profitability, if any, in our new product and service categories may be lower than in our long-existing categories, which may adversely affect our overall profitability and results of operations. 17 Table of Contents In addition, we seek to expand into the offline retail business that complements our online business and have for this purpose acquired control in various entities in the past years.
In addition, our profitability, if any, in our new product and service categories may be lower than in our long-existing categories, which may adversely affect our overall profitability and results of operations. 20 Table of Contents In addition, we seek to expand into the offline retail business that complements our online business and have for this purpose acquired control in various entities in the past years.
China does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.
Mainland China does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.
Pursuant to STA Public Notice 7, as amended, in the event that a non-PRC resident enterprise indirectly transfers equities and other properties of a PRC resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for reasonable commercial purpose, such indirect transfer shall be re-identified and recognized as a direct transfer of equities and other properties of the PRC resident enterprise.
Pursuant to STA Public Notice 7, as amended, in the event that a non-PRC resident enterprise indirectly transfers equities and other properties of a PRC resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for reasonable commercial purpose, such indirect transfer must be re-identified and recognized as a direct transfer of equities and other properties of the PRC resident enterprise.
Our directors and executive officers may also face litigation or proceedings unrelated to their respective capacity as a director or executive officer of our company, and such litigation or proceedings may adversely affect our public image and reputation. 30 Table of Contents The existence of litigation, claims, investigations, and proceedings may harm our reputation, limit our ability to conduct our business in the affected areas and adversely affect the trading price of our ADSs.
Our directors and executive officers may also face litigation or proceedings unrelated to their respective capacity as a director or executive officer of our company, and such litigation or proceedings may adversely affect our public image and reputation. 31 Table of Contents The existence of litigation, claims, investigations, and proceedings may harm our reputation, limit our ability to conduct our business in the affected areas, and adversely affect the trading price of our ADSs.
In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of any particular company. The securities of some China-based, U.S.-listed companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities.
In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not relating to the operating performance of any particular company. The securities of some China-based, U.S.-listed companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities.
Risk Factors—Risks Related to Doing Business in China—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” and “Item 3. Key Information—D.
Risk Factors—Risks Relating to Doing Business in China—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” and “Item 3. Key Information—D.
We cannot assure you that we will be able to compete successfully with existing offline competitors, including, among others, traditional offline malls that have accumulated considerable customer base and offline stores of other reputable online retailers. We may lack sufficient experience in or capabilities for offline operations, including offline store management.
We cannot assure you that we will be able to compete successfully with existing offline competitors, including, among other things, traditional offline malls that have accumulated considerable customer base and offline stores of other reputable online retailers. We may lack sufficient experience in or capabilities for offline operations, including offline store management.
Where a PRC domestic company, after fulfilling relevant procedures, provides to securities companies, securities service providers, and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers.
Where a PRC domestic company, after fulfilling the procedures, provides to securities companies, securities service providers, and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the PRC laws and regulations, which must specify, among other things, the obligations and liabilities on confidentiality held by such securities companies and securities service providers.
Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services and key technologies, which results in the acquisition of de facto control of the invested companies, shall be filed with the working mechanism office prior to the implementation of such investments.
Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services, and key technologies, which results in the acquisition of de facto control of the invested companies, have to be filed with the working mechanism office prior to the implementation of such investments.
A. [Reserved] Selected Consolidated Financial Data The following selected consolidated statements of income data for the years ended December 31, 2020, 2021, and 2022 and the selected consolidated balance sheets data as of December 31, 2021 and 2022 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
A. [Reserved] Selected Consolidated Financial Data The following selected consolidated statements of income data for the years ended December 31, 2021, 2022, and 2023 and the selected consolidated balance sheets data as of December 31, 2022 and 2023 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition, and results of operations could be materially and adversely affected. 34 Table of Contents Our business depends on the continuing efforts of our management.
If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition, and results of operations could be materially and adversely affected. 35 Table of Contents Our business depends on the continuing efforts of our management.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules promulgated by SEC, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 using criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules promulgated by the SEC, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the target issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Due to the disparate voting powers associated with our two classes of ordinary shares, as of March 31, 2023, Mr.
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Due to the disparate voting powers associated with our two classes of ordinary shares, as of March 31, 2024, Mr.
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 was unable to inspect or investigate completely registered public accounting firms.
If we are subject to higher than expected product return rates, our business, financial condition, and results of operations may be materially and adversely affected. Purchases of apparel, fashion accessories, and other items over the internet may be subject to higher return rates than merchandise sold at physical stores.
If we are subject to higher than expected product return rate, our business, financial condition, and results of operations may be materially and adversely affected. Purchases of apparel, fashion accessories, and other items over the internet may be subject to higher return rate than merchandise sold at physical stores.
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 was unable to inspect or investigate completely registered public accounting firms.
If we are subject to such penalties in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 56 Table of Contents Risks Relating to Our Ordinary Shares and ADSs The market price for our ADSs has fluctuated and may be volatile.
If we are subject to such penalties in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 54 Table of Contents Risks Relating to Our Ordinary Shares and ADSs The market price for our ADSs has fluctuated and may be volatile.
In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest.
In addition, according to the PRC Civil Procedures Law, the mainland China courts will not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of laws of mainland China or national sovereignty, security or public interest.
A non-United States corporation, such as our company, will be a passive foreign investment company, “PFIC,” for United States federal income tax purposes for any taxable year if either (a) 75% or more of its gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of its 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.
A non-United States corporation, such as our company, will be 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 its gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of its 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.
However, Section 303A.11 of the NYSE Listed Company Manual permits a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSE rules.
However, Section 303A.00 of the NYSE Listed Company Manual permits a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSE rules.
If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed. 32 Table of Contents Future strategic alliances or acquisitions may materially and adversely affect our business, financial condition, and results of operations.
If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed. 33 Table of Contents Future strategic alliances or acquisitions may materially and adversely affect our business, financial condition, and results of operations.
In 2022, we entered into several foreign exchange forward contracts to hedge our exposure to foreign currency exchange risk and we may continue to use foreign currency swaps, forwards, or other derivative instruments to hedge our exposure to foreign currency risk where we deem necessary, and may adopt additional measures in the future to manage such risk.
We entered into several foreign exchange forward contracts historically to hedge our exposure to foreign currency exchange risk and we may continue to use foreign currency swaps, forwards, or other derivative instruments to hedge our exposure to foreign currency risk where we deem necessary, and may adopt additional measures in the future to manage such risk.
Furthermore, although we, as an online distributor, are not directly responsible to obtain customs clearance or other relevant permits for the sale of products imported by our brand partners, we are required under the relevant PRC laws to check whether our brand partners who import such products have obtained the requisite import-related permits or filings and whether the products have passed the quality inspection before they are sold and distributed in the China market.
Furthermore, although we, as an online distributor, are not directly responsible to obtain customs clearance or other permits for the sale of products imported by our brand partners, we are required under the PRC import regulations to check whether our brand partners who import such products have obtained the requisite import-related permits or filings and whether the products have passed the quality inspection before they are sold and distributed in the China market.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

350 edited+55 added−72 removed179 unchanged
Biggest changeAccording to the Overseas Offering and Listing Measures, an overseas offering and listing of securities by a PRC domestic company under any of the following circumstances is prohibited: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the proposed securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the PRC domestic company proposing to conduct the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the past three years; (iv) the PRC domestic company proposing to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has been made thereof; or (v) there are material ownership disputes over equity held by the PRC domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
Biggest changeAccording to the Overseas Offering and Listing Measures, an overseas offering and listing of securities by a PRC domestic company under any of the following circumstances is prohibited: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations, and the state rules; (ii) the proposed securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the PRC domestic company proposing to conduct the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property, or undermining the order of the socialist market economy during the past three years; (iv) the PRC domestic company proposing to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has been made thereof; or (v) there are material ownership disputes over equity held by the PRC domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller. 90 Table of Contents Furthermore, the Overseas Offering and Listing Measures also provide that (i) where a PRC domestic company seeks to indirectly offer and list securities in overseas markets, the issuer should designate a major PRC domestic operating entity, which should, as the domestic responsible entity, fulfill the filing procedures with the CSRC; (ii) a filing relating to an initial public offering and listing must be made with the CSRC within three business days after the application is submitted overseas; (iii) a filing relating to subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities must be made with the CSRC within three business days after the offering is completed; (iv) a filing relating to subsequent securities offerings and listings of an issuer in overseas markets other than where it has offered and listed must be made pursuant to provisions as stipulated for initial public offerings and listings.
The PRC Foreign Investment Law does not comment on the concept of “ de facto control ” or contractual arrangements with variable interest entities, however, it has a catch-all provision under the definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws, administrative regulations, or other methods prescribed by the PRC State Council.
The PRC Foreign Investment Law does not comment on the concept of “ de facto control ” or contractual arrangements with variable interest entities, however, it has a catch-all provision under the definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws, administrative regulations, or other methods prescribed by the State Council.
Registration and Record-filing of E-commerce Livestream Platform Pursuant to Notice of National Radio and Television Administration on Strengthening the Administration of Livestream Shows and E-commerce Livestream promulgated by State Administration of Radio and Television on November 12, 2020, platforms providing live streaming services for online shows and e-commerce activities should effectively implement their responsibilities as subjects, strive to improve various management systems, responsibility systems, content security systems, and human resources and material allocation for webcast services, actively participate in the development of industry ethics and industry self-discipline, so as to jointly promote the standardized, orderly, and sound development of live streaming of online shows and e-commerce activities.
Registration and Record-filing of E-commerce Livestream Platform Pursuant to Notice of National Radio and Television Administration on Strengthening the Administration of Livestream Shows and E-commerce Livestream promulgated by the State Administration of Radio and Television on November 12, 2020, platforms providing live streaming services for online shows and e-commerce activities should effectively implement their responsibilities as subjects, strive to improve various management systems, responsibility systems, content security systems, and human resources and material allocation for webcast services, actively participate in the development of industry ethics and industry self-discipline, so as to jointly promote the standardized, orderly, and sound development of live streaming of online shows and e-commerce activities.
Such measures also define foreign investments as direct or indirect investments by foreign investors in China, including (i) investments in new onshore projects or establishment of wholly foreign owned onshore enterprises or joint ventures with other investors; (ii) acquiring equity or assets of onshore companies by merger and acquisition; and (iii) onshore investments by and through any other means.
Such measures also define foreign investments as direct or indirect investments by foreign investors in China, including (i) investments in new onshore projects or establishment of wholly foreign owned onshore enterprises or joint ventures with other investors; (ii) acquiring equity or assets of onshore companies by merger and acquisition; and (iii) onshore investments by and through any other means.
Under the Foreign Exchange Administration Regulations, payments of current account items, such as profit distributions and trade- and service-related foreign exchange transactions, may be made in foreign currencies without prior approval from the SAFE, by complying with certain procedural requirements.
Under the Foreign Exchange Administration Regulations, payments of current account items, such as profit distributions and trade- and service-related foreign exchange transactions, may be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts, and guarantee accounts, the reinvestment of RMB proceeds by foreign investors in China, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of the SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts, and guarantee accounts, the reinvestment of RMB proceeds by foreign investors in China, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously.
On January 26, 2017, the SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which came into effect on the same day.
On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which came into effect on the same day.
On April 10, 2020, the SAFE issued the Notice of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business.
On April 10, 2020, SAFE issued the Notice of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business.
Pursuant to the SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to the SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies.
Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies.
In addition, the PRC agents are required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agents, or the overseas entrusted institution, or other material changes.
In addition, the PRC agents are required to amend the registration with SAFE with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agents, or the overseas entrusted institution, or other material changes.
In December 2017, Article 13 and Paragraph 2 of Article 8 of STA Public Notice 7 were abolished by Decision of the State Administration of Taxation on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents effective on December 29, 2017 and the Circular on Issues concerning Withholding of Enterprise Income Tax for Non-PRC Resident Enterprises, or the STA Circular 37, effective on December 1,2017, which was amended on June 15, 2018, respectively.
In December 2017, Article 13 and Paragraph 2 of Article 8 of STA Public Notice 7 were abolished by Decision of the State Taxation Administration on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents effective on December 29, 2017 and the Circular on Issues concerning Withholding of Enterprise Income Tax for Non-PRC Resident Enterprises, or STA Circular 37, effective on December 1,2017, which was amended on June 15, 2018, respectively.
The STA Public Notice 7, as amended, provides clear criteria for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.
STA Public Notice 7, as amended, provides clear criteria for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.
In the opinion of Han Kun Law Offices, our PRC legal counsel: • as of the date of this annual report, the ownership structures of our PRC subsidiaries and the consolidated variable interest entities, as described in this annual report, are not in violation of all applicable PRC laws and regulations currently in effect; • as of the date of this annual report, the contractual arrangements among our PRC subsidiaries, the consolidated variable interest entities and their respective shareholders that are governed by PRC law are valid, binding and enforceable, and are not in any violation of applicable PRC laws or regulations currently in effect; and • as of the date of this annual report, each of our PRC subsidiaries and the consolidated variable interest entities, as described in this annual report, (i) has all necessary corporate power and authority to conduct its business as described in its business scope under its business license; (ii) has its business license in full force and effect; and (iii) is capable of suing and being sued and may be the subject of any legal proceedings in PRC courts.
In the opinion of Han Kun Law Offices, our PRC legal counsel: • as of the date of this annual report, the ownership structures of our PRC subsidiaries and the consolidated variable interest entities, as described in this annual report, are not in violation of any applicable PRC laws and regulations currently in effect; • as of the date of this annual report, the contractual arrangements among our PRC subsidiaries, the consolidated variable interest entities and their respective shareholders that are governed by PRC laws are valid, binding and enforceable, and are not in any violation of applicable PRC laws or regulations currently in effect; and • as of the date of this annual report, each of our PRC subsidiaries and the consolidated variable interest entities, as described in this annual report, (i) has all necessary corporate power and authority to conduct its business as described in its business scope under its business license; (ii) has its business license in full force and effect; and (iii) is capable of suing and being sued and may be the subject of any legal proceedings in PRC courts.
In particular, business operators are prohibited from any of the following unfair activities: (i) committing acts of confusion; (ii) seeking transaction opportunities or competitive advantages by bribing relevant entities or individuals with property or by any other means; (iii) conducting commercial promotions for the performance, function, quality, sales status, user evaluation, honor received concerning its products in a false or misleading manner; (iv) infringing trade secrets; (v) premium campaign in contravention to the Anti-unfair Competition Law; and (vi) fabricating or disseminating false or misleading information to undermine the goodwill or commodity reputation of any competitors.
In particular, business operators are prohibited from any of the following unfair activities: (i) committing acts of confusion; (ii) seeking transaction opportunities or competitive advantages by bribing entities or individuals with property or by any other means; (iii) conducting commercial promotions for the performance, function, quality, sales status, user evaluation, honor received concerning its products in a false or misleading manner; (iv) infringing trade secrets; (v) premium campaign in contravention to the Anti-unfair Competition Law; and (vi) fabricating or disseminating false or misleading information to undermine the goodwill or commodity reputation of any competitors.
Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or the SAFE Notice 7, which was promulgated by the SAFE on February 15, 2012, PRC residents or non-PRC citizens residing in China for a consecutive period of no less than one year, subject to a few exceptions, who are granted shares or stock options by companies listed on overseas stock exchanges based on the stock incentive plans are required to register with the SAFE or its local branches.
Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, which was promulgated by SAFE on February 15, 2012, PRC residents or non-PRC citizens residing in China for a consecutive period of no less than one year, subject to a few exceptions, who are granted shares or stock options by companies listed on overseas stock exchanges based on the stock incentive plans are required to register with SAFE or its local branches.
Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.
Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to any individuals or entities including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our online commerce and the distribution of internet content in China do not comply with relevant PRC government restrictions on foreign investment in value-added telecommunication, we could be subject to severe penalties, including being prohibited from continuing operations.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our online commerce and the distribution of internet content in China do not comply with the PRC government restrictions on foreign investment in value-added telecommunication, we could be subject to severe penalties, including being prohibited from continuing operations.
Under each exclusive option agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity grant the applicable WFOE an exclusive option to purchase, or designate one or more person(s) to purchase, all or part of their respective equity interests in the applicable consolidated variable interest entity at a purchase price equal to the higher of: (i) the amount of registered capital actually contributed by the shareholders or RMB10; or (ii) a minimum price permitted by applicable PRC laws.
Under each exclusive option agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity grant the applicable WFOE an exclusive option to purchase, or designate one or more person(s) to purchase, all or part of their respective equity interests in the applicable consolidated variable interest entity at a purchase price equal to the higher of: (i) the amount of registered capital actually contributed by the shareholders; or (ii) a minimum price permitted by applicable PRC laws.
The Foreign Debts Measures also provide that if an enterprise, whose principal business activities are conducted in China, issues bonds or borrows commercial loans overseas in the name of an enterprise registered overseas, based on the equity, assets, earnings or other similar rights and interests of the PRC domestic enterprise, such conduct of the enterprise would be deemed as an indirect borrowing of foreign debts overseas by domestic enterprises.
These measures also provide that if an enterprise, whose principal business activities are conducted in China, issues bonds or borrows commercial loans overseas in the name of an enterprise registered overseas, based on the equity, assets, earnings or other similar rights and interests of the PRC domestic enterprise, such conduct of the enterprise would be deemed as an indirect borrowing of foreign debts overseas by domestic enterprises.
Each of these newly promulgated regulations superseded and replaced its corresponding interim provisions, respectively, namely the Interim Review Measures of Concentration of Undertakings promulgated in October 2020 and most recently amended on March 24, 2022, the Interim Provisions on Prohibition of Monopoly Agreements promulgated in June 2019 and most recently amended on March 24, 2022, the Interim Provisions on the Prohibitions of Acts of Abuse of Dominant Market Positions promulgated in June 2019 and most recently amended on March 24, 2022, and the Interim Provisions on Curbing Abuse of Administrative Power to Exclude or Restrict Competition promulgated on June 26, 2019.
Each of these regulations superseded and replaced its corresponding interim provisions, respectively, namely the Interim Review Measures of Concentration of Undertakings promulgated in October 2020 and most recently amended on March 24, 2022, the Interim Provisions on Prohibition of Monopoly Agreements promulgated in June 2019 and most recently amended on March 24, 2022, the Interim Provisions on the Prohibitions of Acts of Abuse of Dominant Market Positions promulgated in June 2019 and most recently amended on March 24, 2022, and the Interim Provisions on Curbing Abuse of Administrative Power to Exclude or Restrict Competition promulgated on June 26, 2019.
Pursuant to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Pursuant to an Arrangement Between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the conditions and requirements, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Under the Online Transaction Measures, online transaction operators engaging in business activities should follow the principles of voluntariness, equality, fairness, and good faith, comply with laws, regulations, rules, business ethics, public order, and good morals, participate in market competition fairly, earnestly perform statutory obligations, actively assume subject responsibilities, and accept supervision from all sectors of the society.
Under these measures, online transaction operators engaging in business activities should follow the principles of voluntariness, equality, fairness, and good faith, comply with laws, regulations, rules, business ethics, public order, and good morals, participate in market competition fairly, earnestly perform statutory obligations, actively assume subject responsibilities, and accept supervision from all sectors of the society.
For the purpose of the Foreign Debts Measures, medium- and long-term foreign debts, or foreign debts, refer to debt instruments with a maturity of more than one year that are borrowed from overseas by enterprises within the territory of China and by overseas companies or branches controlled by them, denominated in Renminbi or a foreign currency, and with the principal repaid and interest accrued as agreed.
For the purpose of these measures, medium- and long-term foreign debts, or foreign debts, refer to debt instruments with a maturity of more than one year that are borrowed from overseas by enterprises within the territory of China and by overseas companies or branches controlled by them, denominated in Renminbi or a foreign currency, and with the principal repaid and interest accrued as agreed.
According to the Deep Synthesis Provisions, no organization or individual may use deep synthesis services to produce, reproduce, release, or disseminate information prohibited by laws and administrative regulations, or to engage in activities that endanger the national security and interests, damage the national image, infringe upon social public interests, disrupt the economic and social order, or undermine the legitimate rights and interests of others.
According to these provisions, no organization or individual may use deep synthesis services to produce, reproduce, release, or disseminate information prohibited by laws and administrative regulations, or to engage in activities that endanger the national security and interests, damage the national image, infringe upon social public interests, disrupt the economic and social order, or undermine the legitimate rights and interests of others.
Instead, non-PRC resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and include necessary forms and supporting documents in the tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities.
Instead, non-PRC resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and include necessary forms and supporting documents in the tax filings, which will be subject to post-tax filing examinations by the tax authorities.
If any stipulated event of default occurs, including the failure by the applicable consolidated variable interest entity or its shareholders to perform relevant contractual obligations under the exclusive business cooperation agreement, exclusive option agreement, or loan agreement, the applicable WFOE, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests.
If any stipulated event of default occurs, including the failure by the applicable consolidated variable interest entity or its shareholders to perform the contractual obligations under the exclusive business cooperation agreement, exclusive option agreement, or loan agreement, the applicable WFOE, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests.
According to the Overseas Offering and Listing Measures, an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other securities in nature of equity) and listing by a PRC domestic company, whether directly or indirectly, are required to fulfill the filing procedures with, and to report relevant information to, the CSRC.
According to the Overseas Offering and Listing Measures, an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares, and other securities in nature of equity) and listing by a PRC domestic company, whether directly or indirectly, are required to fulfill the filing procedures with, and to report the information to, the CSRC.
We held 16.0% of its equity interest from June 2018 to December 2021, and has been holding 20.4% of its equity interest since January 2022. The total capital contribution we made was RMB468.6 million as of December 31, 2022. We have significant influence on the investee since the year 2022.
We held 16.0% of its equity interest from June 2018 to December 2021, and has been holding 20.4% of its equity interest since January 2022. The total capital contribution we made was RMB468.6 million as of December 31, 2023. We have significant influence on the investee since the year 2022.
Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued on April 23, 2013, and the Personal Information Interpretations, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person, and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting, or exchanging such information in violation of applicable rules and regulations.
Pursuant to these interpretations and the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued on April 23, 2013, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of the national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person, and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting, or exchanging such information in violation of applicable rules and regulations.
In addition, the Civil Code provides that if a network service provider knows or should know that a network user is committing infringing activities through its network services and fails to take necessary measures, it shall be jointly liable with the said network user for such infringement.
In addition, the Civil Code provides that if a network service provider knows or should know that a network user is committing infringing activities through its network services and fails to take necessary measures, it should be jointly liable with the said network user for such infringement.
Where a non-PRC resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an offshore holding company, which is an Indirect Transfer, the non-PRC resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority.
Where a non-PRC resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an offshore holding company, which is an indirect transfer, the non-PRC resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the tax authority.
An operator who holds the dominant market position is prohibited from engaging in such practices which may be classified as an abuse of said position as: (a) selling commodities at unfairly high or buying commodities at unfairly low prices, (b) selling commodities at prices lower than cost without justified reasons; (c) refusing to trade with a trading counterparty without justified reasons; (d) restricting a trading counterparty to trade exclusively with it or trade exclusively with the operators designated by it without justifiable reasons; (e) conducting tie-in sales or adding other unreasonable conditions on a deal without justified reasons, (f) discriminating among trading counterparties of the same qualifications with regard to trade price, etc., without justified reasons, or (g) other practices recognized by the enforcement authorities as abuse of dominant market position.
An operator who holds the dominant market position is prohibited from engaging in such practices which may be classified as an abuse of said position as: (a) selling commodities at unfairly high or buying commodities at unfairly low prices, (b) selling commodities at prices lower than cost without justified reasons; (c) refusing to trade with a trading counterparty without justified reasons; (d) restricting a trading counterparty to trade exclusively with it or trade exclusively with the operators designated by it without justifiable reasons; (e) conducting tie-in sales or adding other unreasonable conditions on a deal without justified reasons, (f) discriminating among trading counterparties of the same qualifications with regard to trade price, among others, without justified reasons, or (g) other practices recognized by the enforcement authorities as abuse of dominant market position.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by overseas-listed China-based companies.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of the regulatory systems to deal with the risks and incidents faced by overseas-listed China-based companies.
Moreover, under the EIT Law, enterprises organized under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered PRC resident enterprises and are therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income.
Moreover, under the Enterprise Income Tax Law, enterprises organized under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered PRC resident enterprises and are therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the relevant national credit information system, which would then subject such investor to joint punishment as provided by relevant rules.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the national credit information system, which would then subject such investor to joint punishment as provided by the rules.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the relevant national credit information system, which would then subject such investor to joint punishment as provided by relevant rules.
Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the national credit information system, which would then subject such investor to joint punishment as provided by the rules.
Under each equity interest pledge agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity pledge all of their equity interests in the applicable consolidated variable interest entity to the applicable WFOE to guarantee the applicable consolidated variable interest entity’s and its shareholders’ performance of the relevant obligations under the exclusive business cooperation agreement, exclusive option agreement, and loan agreement.
Under each equity interest pledge agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity pledge all of their equity interests in the applicable consolidated variable interest entity to the applicable WFOE to guarantee the applicable consolidated variable interest entity’s and its shareholders’ performance of the obligations under the exclusive business cooperation agreement, exclusive option agreement, and loan agreement.
Food Operating Permit China has adopted a licensing system for food supply operations under the Food Safety Law, which was adopted in February 28, 2009 and most recently amended on April 29, 2021, and its implementation rules.
Food Operating Permit China has adopted a licensing system for food supply operations under the Food Safety Law, which was adopted on February 28, 2009 and most recently amended on April 29, 2021, and its implementation rules.
We believe that we compete primarily on the basis of: • ability to identify products in demand among consumers and source these products on favorable terms from brands; • focus on and expertise in apparel-related categories; • pricing advantage due to our discount retail model; • breadth and quality of product and service offerings; • comprehensive and innovative platform features; • customer service and fulfillment capabilities; and • solid reputation among consumers and brands. 77 Table of Contents We believe that our early-mover advantage and leading market position help us compete effectively against our competitors.
We believe that we compete primarily on the basis of: • ability to identify products in demand among consumers and source these products on favorable terms from brands; • focus on and expertise in apparel-related categories; • pricing advantage due to our discount retail model; • breadth and quality of product and service offerings; • comprehensive and innovative platform features; • customer service and fulfillment capabilities; and • solid reputation among consumers and brands. 72 Table of Contents We believe that our early-mover advantage and leading market position help us compete effectively against our competitors.
The Administrative Provisions of the Customs of the People’s Republic of China on the Registration of Customs Declaration Entities was replaced by the Administrative Provisions of the Customs of the People’s Republic of China on Record-filing of Customs Declaration Entities, which was promulgated by the General Administration of Customs on November 19, 2021 and came into effect on January 1, 2022.
The Administrative Provisions of the Customs of the People’s Republic of China on the Registration of Customs Declaration Entities was replaced by the Administrative Provisions of the Customs of the People’s Republic of China on Record-filing of Customs Declaration Entities, which were promulgated by the General Administration of Customs on November 19, 2021 and came into effect on January 1, 2022.
In accordance with the Internet Finance Guidance, internet finance is part of the finance sector, and internet finance business operators are still required to comply with the regulations in relation to the provision of each sub-category of specific financial services they provide.
In accordance with this guidance, internet finance is part of the finance sector, and internet finance business operators are still required to comply with the regulations in relation to the provision of each sub-category of specific financial services they provide.
In the event that such documents and materials, if leaked, will be detrimental to national security or public interest, the PRC domestic company must strictly fulfill relevant procedures stipulated by applicable national regulations.
In the event that such documents and materials, if leaked, will be detrimental to national security or public interest, the PRC domestic company must strictly fulfill the procedures stipulated by applicable national regulations.
According to the Foreign Debts Measures, before the borrowing of any foreign debts, enterprises must obtain from the NDRC the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises and complete the formalities of examination and registration. The enterprises that have not completed such examination and registration formalities cannot borrow foreign debts.
According to these measures, before the borrowing of any foreign debts, enterprises must obtain from the NDRC the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises and complete the formalities of examination and registration. The enterprises that have not completed such examination and registration formalities cannot borrow foreign debts.
Regulations Relating to Information Security The Decision Regarding the Safeguarding of Internet Security, enacted by the Standing Committee of NPC on December 28, 2000, and amended with immediate effect on August 27, 2009, specifies that certain types of acts conducted through the internet are subject to criminal liabilities if such acts constitute criminal offense, including but not limited to: (i) gaining improper entry into a computer information system relating to state affairs, national defense, or cutting-edge science and technology; (ii) disseminating harmful information, inciting secession, or sabotaging national unity; (iii) stealing or leaking state secrets, intelligence, or military secrets; (iv) undermining the commercial goodwill and product reputation of other people; or (v) infringing intellectual property rights of other people.
Regulations Relating to Information Security The Decision Regarding the Safeguarding of Internet Security, enacted by the Standing Committee of the National People’s Congress on December 28, 2000, and amended with immediate effect on August 27, 2009, specifies that certain types of acts conducted through the internet are subject to criminal liabilities if such acts constitute criminal offense, including but not limited to: (i) gaining improper entry into a computer information system relating to state affairs, national defense, or cutting-edge science and technology; (ii) disseminating harmful information, inciting secession, or sabotaging national unity; (iii) stealing or leaking state secrets, intelligence, or military secrets; (iv) undermining the commercial goodwill and product reputation of other people; or (v) infringing intellectual property rights of other people.
The revenues generated by our directly owned subsidiaries, apart from revenues earned in respect of the relevant contractual arrangements with the consolidated variable interest entities, are primarily derived from our product promotion activities for brands.
The revenues generated by our directly owned subsidiaries, apart from revenues earned in respect of the contractual arrangements with the consolidated variable interest entities, are primarily derived from our product promotion activities for brands.
On January 23, 2019, the PRC Office of the Central Cyberspace Affairs Commission and other three authorities jointly issued the Circular on the Special Campaign of Correcting Unlawful Collection and Usage of Personal Information via Apps.
On January 23, 2019, the Office of the Central Cyberspace Affairs Commission and other three authorities jointly issued the Circular on the Special Campaign of Correcting Unlawful Collection and Usage of Personal Information via Apps.
According to the PRC Trademark Law, in the event of any of the foregoing acts, the infringing party will be ordered to stop the infringement immediately and may be imposed a fine; the counterfeit goods will be confiscated.
According to the Trademark Law, in the event of any of the foregoing acts, the infringing party will be ordered to stop the infringement immediately and may be imposed a fine; the counterfeit goods will be confiscated.
The foreign exchange proceeds received by such individuals from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas-listed companies must be remitted into the bank accounts in China opened by the PRC agents before distribution to such individuals. 103 Table of Contents Under the Circular of the State Administration of Taxation on Issues Concerning Individual Income Tax in Relation to Equity Incentives promulgated and became effective on August 24, 2009 and amended on April 18, 2011 by the STA, listed companies and their domestic organizations will, according to the individual income tax calculation methods for “wage and salary income” and stock option income, lawfully withhold and pay individual income tax on such income.
The foreign exchange proceeds received by such individuals from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas-listed companies must be remitted into the bank accounts in China opened by the PRC agents before distribution to such individuals. 98 Table of Contents Under the Circular of the State Taxation Administration on Issues Concerning Individual Income Tax in Relation to Equity Incentives promulgated and became effective on August 24, 2009 and amended on April 18, 2011 by the State Taxation Administration, listed companies and their domestic organizations will, according to the individual income tax calculation methods for “wage and salary income” and stock option income, lawfully withhold and pay individual income tax on such income.
On March 15, 2021, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions (2021), or the Online Transactions Measures, which came into effect on May 1, 2021 and replaced the Administrative Measures for Online Trading (2014).
On March 15, 2021, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions (2021), which came into effect on May 1, 2021 and replaced the Administrative Measures for Online Trading (2014).
In accordance with the PRC Social Insurance Law and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance.
In accordance with the PRC Social Insurance Law and other laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance.
To further regulate cybersecurity and privacy protection, the PRC Cybersecurity Law which was promulgated by the Standing Committee of NPC on November 7, 2016 and came into effect on June 1, 2017, provides that subject to certain exceptions, (i) to collect and use personal information, network operators must follow the principles of legitimacy, rightfulness, and necessity, disclose their rules of data collection and use, clearly express the purposes, means, and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators can neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered, and must dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators cannot divulge, tamper with, or damage the personal information they have collected, and cannot provide the personal information to others without the consent of the persons whose data is collected.
To further regulate cybersecurity and privacy protection, the PRC Cybersecurity Law which was promulgated by the Standing Committee of the National People’s Congress on November 7, 2016 and came into effect on June 1, 2017, provides that subject to certain exceptions, (i) to collect and use personal information, network operators must follow the principles of legitimacy, rightfulness, and necessity, disclose their rules of data collection and use, clearly express the purposes, means, and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators can neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered, and must dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators cannot divulge, tamper with, or damage the personal information they have collected, and cannot provide the personal information to others without the consent of the persons whose data is collected.
An employer must pay the social insurance for its employees in accordance with the rates provided under relevant regulations and must withhold the social insurance that should be assumed by the employees.
An employer must pay the social insurance for its employees in accordance with the rates provided under the regulations and must withhold the social insurance that should be assumed by the employees.
Upon termination of Pinjun’s delivery service unit, in November 2019, we entered into a cooperation agreement (which was subsequently supplemented in November 2021) with SF Holding (which operates the SF Express business) to enhance our cooperation with SF Holding, and utilize its delivery services to optimize the efficiency of our logistics operations, improve operating leverage in our fulfillment expenses, and provide our customers with superior delivery services.
Upon termination of Pinjun’s delivery service unit, in November 2019, we entered into a cooperation agreement (which was subsequently supplemented in November 2021 and October 2023) with SF Holding (which operates the SF Express business) to enhance our cooperation with SF Holding, and utilize its delivery services to optimize the efficiency of our logistics operations, improve operating leverage in our fulfillment expenses, and provide our customers with superior delivery services.
The Administrative Measures for the Security Protection of International Connections to Computer Information Network, issued by the Ministry of Public Security on December 16, 1997, and amended on January 8, 2011, prohibits use of the internet to harm the national security, divulge state secrets, infringe on legal rights and interests of the state, society, or citizens, or engage in any illegal or criminal activities.
The Administrative Measures for the Security Protection of International Connections to Computer Information Network, issued by the Ministry of Public Security on December 16, 1997, and amended on January 8, 2011, prohibit use of the internet to harm the national security, divulge state secrets, infringe on legal rights and interests of the state, society, or citizens, or engage in any illegal or criminal activities.
Regulations Relating to Foreign Investments Investment activities in China by foreign investors are principally governed by the Industry Guidelines of Encouraged Foreign Investment, or the Industry Guidelines, and the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List, which were promulgated and are amended from time to time by the Ministry of Commerce, or the MOFCOM, and the NDRC, and together with the PRC Foreign Investment Law and its respective implementation rules and ancillary regulations.
Regulations Relating to Foreign Investments Investment activities in China by foreign investors are principally governed by the Industry Guidelines of Encouraged Foreign Investment and the Special Administrative Measures (Negative List) for Foreign Investment Access, which were promulgated and are amended from time to time by the Ministry of Commerce and the NDRC, and together with the PRC Foreign Investment Law and its respective implementation rules and ancillary regulations.
Pursuant to this law, business operators must guarantee that the commodities they sell satisfy the requirements for personal or property safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage, and term of validity of the commodities. The Consumer Protection Law was amended in October 2013 and became effective in March 2014.
Pursuant to this law, business operators must guarantee that the commodities they sell satisfy the requirements for personal or property safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage, and term of validity of the commodities. The Consumer Rights and Interests Protection Law was amended in October 2013 and became effective in March 2014.
Under the Regulations on the Administration of Housing Fund, which was promulgated on April 3, 1999, and was most recently amended on March 24, 2019, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.
Under the Regulations on the Administration of Housing Fund, which were promulgated on April 3, 1999, and were most recently amended on March 24, 2019, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.
Pursuant to the PRC Labor Law and Interim Provisions on Labor Dispatch, which was promulgated by the Ministry of Human Resources and Social Security on January 24, 2014 and became effective on March 1, 2014, labor dispatch employment is a supplemental form which can only be adopted for temporary, auxiliary, or alternative job positions.
Pursuant to the PRC Labor Law and Interim Provisions on Labor Dispatch, which were promulgated by the Ministry of Human Resources and Social Security on January 24, 2014 and became effective on March 1, 2014, labor dispatch employment is a supplemental form which can only be adopted for temporary, auxiliary, or alternative job positions.
As of the date of this annual report, the equity holding structures of each of the consolidated variable interest entities are as follows: • Eric Ya Shen and Arthur Xiaobo Hong hold 66.7% and 33.3% of Vipshop E-Commerce, respectively; • Eric Ya Shen and Arthur Xiaobo Hong hold 99.2% and 0.8% of Vipshop Information, respectively; and • Eric Ya Shen and Arthur Xiaobo Hong hold 65% and 35% of Pin Jun Tong, respectively.
As of the date of this annual report, the equity holding structures of each of the consolidated variable interest entities are as follows: • Eric Ya Shen and Chan Huang hold 66.7% and 33.3% of Vipshop E-Commerce, respectively; • Eric Ya Shen and Chan Huang hold 99.2% and 0.8% of Vipshop Information, respectively; and • Eric Ya Shen and Arthur Xiaobo Hong hold 65% and 35% of Pin Jun Tong, respectively.
Regulations Relating to Internet Finance On July 18, 2015, ten PRC governmental authorities jointly issued the Guidance on Promoting the Healthy Development of Internet Finance, or the Internet Finance Guidance.
Regulations Relating to Internet Finance On July 18, 2015, ten PRC governmental authorities jointly issued the Guidance on Promoting the Healthy Development of Internet Finance.
PBOC Notice No. 9 also provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies in accordance with the PBOC Notice No. 9.
PBOC Notice No. 9 also provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies in accordance with PBOC Notice No. 9.
The SAFE Circular 37 requires PRC residents to register with local branches of the SAFE in connection with their direct or indirect offshore investment activities.
SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct or indirect offshore investment activities.
Where a PRC domestic company, after fulfilling relevant procedures, provides to securities companies, securities service providers and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers.
Where a PRC domestic company, after fulfilling the procedures, provides to securities companies, securities service providers, and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the PRC laws and regulations, which must specify, among other things, the obligations and liabilities on confidentiality held by such securities companies and securities service providers.
Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services and key technologies, which results in the acquisition of de facto control of the invested companies, shall be filed with the Working Mechanism Office prior to the implementation of such investments.
Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services, and key technologies, which results in the acquisition of de facto control of the invested companies, must be filed with the working mechanism office prior to the implementation of such investments.
The Personal Information Protection Law requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
The Personal Information Protection Law requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly relating to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
In addition, according to the Decision to Amend the Anti-monopoly Law, where a concentration of business operators does not meet the filing threshold set by the State Council, but there is evidence that the concentration has or may have the effect of excluding or limiting competition, the anti-monopoly law enforcement agency may order the operators to file the concentration of business operators.
In addition, according to this decision, where a concentration of business operators does not meet the filing threshold set by the State Council, but there is evidence that the concentration has or may have the effect of excluding or limiting competition, the anti-monopoly law enforcement agency may order the operators to file the concentration of business operators.
We process orders containing products from multiple suppliers in our mega-warehouses across China. Moreover, the “third-party logistics” method launched in 2013, or 3PL, allows some of our suppliers to lease vacant space of our warehouses to manage their supplies. The 3PL model increases utilization of our warehouses while enabling certain suppliers to manage their supplies more efficiently.
We process orders containing products from multiple suppliers in our mega-warehouses across China. Moreover, the “third-party logistics” method launched in 2013 allows some of our suppliers to lease vacant space of our warehouses to manage their supplies. The “third-party logistics” model increases utilization of our warehouses while enabling certain suppliers to manage their supplies more efficiently.
The Law on Administration of Urban Real Estate further provides that where the owner of a building leases the building on state-owned land of which the land use right is granted to such owner by way of allocation for the purpose of profit- making, the gains on land included in the rental shall be turned over to the state.
The Law on Administration of Urban Real Estate further provides that where the owner of a building leases the building on state-owned land of which the land use right is granted to such owner by way of allocation for the purpose of profit- making, the gains on land included in the rental should be turned over to the state.
The Decision to Amend the Anti-monopoly Law increased the fines on business operators for illegal concentration to no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition, or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition; the anti-monopoly enforcement agency may also order the business operators to cease the implementation of the concentration, to dispose of shares, assets, and the business within a period of time, or to take other necessary measures to restore to the status before the concentration if the concentration of the business operators has or may have an effect of excluding or limiting competition.
This decision increased the fines on business operators for illegal concentration to no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition, or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition; the anti-monopoly enforcement agency may also order the business operators to cease the implementation of the concentration, to dispose of shares, assets, and the business within a period of time, or to take other necessary measures to restore to the status before the concentration if the concentration of the business operators has or may have an effect of excluding or limiting competition.
Relevant files shall be kept for no less than three years from the date of termination of the advertisement release. Internet advertising operators and publishers are required to have advertisement reviewers who are familiar with advertising laws and regulations or establish a special department responsible for the review of internet advertisements.
Relevant files should be kept for no less than three years from the date of termination of the advertisement release. Internet advertising operators and publishers are required to have advertisement reviewers who are familiar with advertising laws and regulations or establish a special department responsible for the review of internet advertisements.
If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or assets and to take any other necessary measures so as to restore to the status before the implementation of the investment and to erase the impact to national security. 79 Table of Contents Regulations Relating to Foreign Investments in Value-added Telecommunications Businesses Pursuant to the Provisions on Administration of Foreign-invested Telecommunications Enterprises which was promulgated by the State Council on December 11, 2001, and amended on September 10, 2008, February 6, 2016, and March 29, 2022, the ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50%.
If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or assets and to take any other necessary measures so as to restore to the status before the implementation of the investment and to erase the impact to national security. 74 Table of Contents Regulations Relating to Foreign Investments in Value-added Telecommunications Businesses Pursuant to the Provisions on Administration of Foreign-invested Telecommunications Enterprises which were promulgated by the State Council on December 11, 2001, and amended on September 10, 2008, February 6, 2016, and March 29, 2022, the ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50%.
A full copy of any audio-video program that has already been broadcasted shall be retained for at least 60 days. Movies, television programs, and other media content used as internet audio-video program services shall comply with applicable administrative regulations on radio, movie, and television programs.
A full copy of any audio-video program that has already been broadcasted must be retained for at least 60 days. Movies, television programs, and other media content used as internet audio-video program services must comply with applicable administrative regulations on radio, movie, and television programs.
After the SAFE Notice 13 becomes effective, application for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE.
After this notice becomes effective, application for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.
According to the PBOC Notice No. 9, the outstanding cross-border financing of an enterprise shall be calculated using a risk-weighted approach and shall not exceed the specified upper limit, and as of the date hereof, the upper limit of risk-weighted outstanding cross-border financing of a PRC enterprise is 200% of its net assets.
According to PBOC Notice No. 9, the outstanding cross-border financing of an enterprise should be calculated using a risk-weighted approach and should not exceed the specified upper limit, and as of the date hereof, the upper limit of risk-weighted outstanding cross-border financing of a PRC enterprise is 200% of its net assets.
In addition, such enterprise must, within 10 business days after each borrowing of foreign debts, report the relevant information on such borrowing of foreign debts to the NDRC. Pursuant to the Foreign Debts Measures, the requirement of the examination and registration formalities also apply to the indirect borrowing of foreign debts overseas by PRC domestic enterprises.
In addition, such enterprise must, within 10 business days after each borrowing of foreign debts, report the information on such borrowing of foreign debts to the NDRC. Pursuant to these measures, the requirement of the examination and registration formalities also apply to the indirect borrowing of foreign debts overseas by PRC domestic enterprises.
Pursuant to the Regulations, critical information infrastructure shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservancy, finance, public services, e-government affairs, and national defense science, technology and industry, and important network facilities or information systems which may seriously endanger national security, people’s livelihood, and public interest once there occur damage, malfunctioning, or data leakage to them.
Pursuant to these regulations, critical information infrastructure should mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservancy, finance, public services, e-government affairs, and national defense science, technology, and industry, and important network facilities or information systems which may seriously endanger national security, people’s livelihood, and public interest once there occur damage, malfunctioning, or data leakage to them.
Network Cultural Business License Pursuant to the Interim Administrative Provisions on Internet Culture, which was issued by the Ministry of Culture on May 10, 2003 and most recently amended on December 15, 2017, the enterprises engaged in operational internet culture activities shall obtain the Network Cultural Business License.
Network Cultural Business License Pursuant to the Interim Administrative Provisions on Internet Culture, which was issued by the Ministry of Culture on May 10, 2003 and most recently amended on December 15, 2017, the enterprises engaged in operational internet culture activities must obtain the Network Cultural Business License.
On the same day, the CSRC also published a series of guidance rules and Q&As in connection with the implementation of the Overseas Offering and Listing Measures. The Overseas Offering and Listing Measures establishes a new filing-based regime to regulate overseas offerings and listings by PRC domestic companies.
On the same day, the CSRC also published a series of guidance rules and Q&As in connection with the implementation of the Overseas Offering and Listing Measures. The Overseas Offering and Listing Measures establish a new filing-based regime to regulate overseas offerings and listings by PRC domestic companies.
For licensed use of a registered trademark, the licensor shall file record of the licensing of the said trademark with the Trademark Office, otherwise it may not defend against a bona fide third party. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration.
For licensed use of a registered trademark, the licensor must file record of the licensing of the said trademark with the Trademark Office, otherwise it may not defend against a bona fide third party. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration.
In order to facilitate foreign investment in our company, our founders incorporated Vipshop Holdings Limited, an offshore holding company in Cayman Islands, in August 2010. In October 2010, Vipshop Holdings Limited established Vipshop International Holdings Limited, or Vipshop HK, a wholly-owned subsidiary, in Hong Kong. Subsequently, Vipshop HK established a wholly-owned PRC subsidiary, Vipshop China, in January 2011.
In order to facilitate foreign investment in our company, our founders incorporated Vipshop Holdings Limited, an offshore holding company in Cayman Islands, in August 2010. In October 2010, Vipshop Holdings Limited established Vipshop International Holdings Limited, a wholly-owned subsidiary, in Hong Kong. Subsequently, Vipshop International Holdings Limited established a wholly-owned PRC subsidiary, Vipshop China, in January 2011.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

110 edited+22 added−23 removed54 unchanged
Biggest changeInvesting Activities Net cash used in investing activities amounted to RMB1.05 billion (US$152.1 million) in 2022, primarily consisting of (i) RMB11.20 billion (US$1.62 billion) used for purchase of short-term investments, offset by RMB14.95 billion (US$2.17 billion) from redemption of short term investments upon maturities, (ii) RMB3.10 billion (US$449.8 million) capital expenditure relating to our construction and expansion of warehouses, land use rights, Shan Shan Outlets, as well as purchases of office and other operating equipment and IT software, (iii) RMB621.3 million (US$90.1 million) received from loan repayments, offset by RMB269.3 million (US$39.1 million) cash paid for loan originations, (iv) RMB489.9 million (US$71.0 million) from government subsidies received for land use rights, (v) RMB387.5 million (US$56.2 million) of payment for acquisition of Zhengzhou Shan Shan, (vi) RMB283.7 million (US$41.1 million) cash paid for investment in equity method investments and other investments, primarily consisting of investment in private equity funds and other equity method investees, and (vii) RMB180.5 million (US$26.2 million) of proceeds from disposal of investment in equity method investment and other investments. 124 Table of Contents Net cash used in investing activities amounted to RMB2.33 billion in 2021, primarily consisting of (i) RMB8.55 billion used for purchase of short-term investments, offset by RMB10.45 billion from redemption of short term investments upon maturities, (ii) RMB3.58 billion capital expenditure relating to our construction and expansion of warehouses, land use rights, Shan Shan Outlets, as well as purchases of office and other operating equipment and IT software, offset by an amount of RMB395.1 million from the disposal of property and equipment and land use right and an amount of RMB600.5 million received from disposal of subsidiaries, (iii) RMB760.2 million cash paid for investment in equity method investments and other investments, primarily consisting of investment in private equity fund and other equity method investees, (iv) RMB135.7 million received from loan payments, offset by RMB262.3 million cash paid for loan originations, (v) Other investing activities mainly include RMB500.0 million deposits to Sichuan VipFubon Consumer Finance Co., Ltd as shareholder deposits, and (vi) RMB63.8 million of proceeds from disposal of other investments.
Biggest changeNet cash used in investing activities amounted to RMB2.33 billion in 2021, primarily consisting of (i) RMB8.55 billion used for purchase of short-term investments, offset by RMB10.45 billion from redemption of short-term investments upon maturities, (ii) RMB3.58 billion capital expenditure relating to our construction and expansion of warehouses, land use rights, Shan Shan Outlets, as well as purchases of office and other operating equipment and IT software, offset by an amount of RMB395.1 million from the disposal of property and equipment and land use right and an amount of RMB600.5 million received from disposal of subsidiaries, (iii) RMB760.2 million cash paid for investment in equity method investments and other investments, primarily consisting of investment in private equity fund and other equity method investees, (iv) RMB135.7 million received from loan payments, offset by RMB262.3 million cash paid for loan originations, (v) Other investing activities mainly include RMB500.0 million deposits to Sichuan VipFubon Consumer Finance Co., Ltd as shareholder deposits, and (vi) RMB63.8 million of proceeds from disposal of other investments.
Therefore, our WFOEs in China are able to pay dividends in foreign currencies to us without prior approval from the SAFE, subject to the condition that the remittance of such dividends out of China complies with certain procedures under PRC foreign exchange regulations, such as the requirement of outbound overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents.
Therefore, our WFOEs in China are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends out of China complies with certain procedures under PRC foreign exchange regulations, such as the requirement of outbound overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents.
Our other operating income in 2022 was primarily due to income derived from government grants and tax rebates. Interest Expenses . We incurred RMB24.3 million (US$3.5 million) interest expenses in 2022, as compared to RMB14.5 million in 2021, primarily due to the increase in short-term loan during the year. Interest Income .
Our other operating income in 2022 was primarily due to income derived from government grants and tax rebates. Interest Expenses . We incurred RMB24.3 million interest expenses in 2022, as compared to RMB14.5 million in 2021, primarily due to the increase in short-term loan during the year. Interest Income .
But approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currencies and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.
Approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currencies and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.
Our debt obligations primarily consist of the principal amount and cash interests in connection with banks and other loans from a related party and a third party. Our capital expenditure commitments primarily consist of contracted future purchases of property and equipment.
Our debt obligations primarily consist of the principal amount and cash interests in connection with banks and other loans from a related party and a third party. Our capital expenditure commitments primarily consist of contracted future purchases of property, plants, and equipment.
We provided a valuation allowance for the deferred tax assets relating to the future benefit of net operating loss carry forwards and other deferred tax assets of certain subsidiaries as of December 31, 2020, 2021, and 2022, respectively, as our management is not able to conclude that the future realization of some of such net operating loss carry forwards is more likely than not.
We provided a valuation allowance for the deferred tax assets relating to the future benefit of net operating loss carry forwards and other deferred tax assets of certain subsidiaries as of December 31, 2021, 2022, and 2023, respectively, as our management is not able to conclude that the future realization of some of such net operating loss carry forwards is more likely than not.
(2) Unallocated expenses include share-based compensation and amortization of intangible assets resulting from business acquisitions, which are not allocated to segments. The following table sets forth interest income and interest expenses (included in the measurement of segment profit or loss) for the years ended December 31, 2020, 2021, and 2022.
(2) Unallocated expenses include share-based compensation and amortization of intangible assets resulting from business acquisitions, which are not allocated to segments. The following table sets forth interest income and interest expenses (included in the measurement of segment profit or loss) for the years ended December 31, 2021, 2022, and 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 research and development services with us. The following table sets forth our minimum contractual obligations as of December 31, 2022.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging, or research and development services with us. The following table sets forth our minimum contractual obligations as of December 31, 2023.
Our operating lease obligations primarily consist of the commitments under the lease agreements that expire at various dates from January 2023 through July 2038 for our office spaces, outlets, offline stores, employee department and certain equipment.
Our operating lease obligations primarily consist of the commitments under the lease agreements that expire at various dates from January 2024 through July 2038 for our office spaces, outlets, offline stores, employee department, and certain equipment.
We reduce product revenues by an estimate of expected customer merchandise returns, which is calculated based on historical return patterns and recorded as a refund liability included in accrued expenses and other current liabilities. The estimated refund liability contributed 0.3%, 0.3%, and 0.3% of the net revenues for the years ended December 31, 2020, 2021, and 2022, respectively.
We reduce product revenues by an estimate of expected customer merchandise returns, which is calculated based on historical return patterns and recorded as a refund liability included in accrued expenses and other current liabilities. The estimated refund liability contributed 0.3%, 0.3%, and 0.4% of the net revenues for the years ended December 31, 2021, 2022, and 2023, respectively.
Furthermore, our business intelligence system is built with our proprietary cloud computing infrastructure, providing insights for many aspects of our business operations and site functionalities. 127 Table of Contents Safety and Scalability We have developed disaster tolerant systems for our key business modules, which include real-time data mirroring, daily data back-up, and system redundancy solutions.
Furthermore, our business intelligence system is built with our proprietary cloud computing infrastructure, providing insights for many aspects of our business operations and site functionalities. Safety and Scalability We have developed disaster tolerant systems for our key business modules, which include real-time data mirroring, daily data back-up, and system redundancy solutions.
The amount of our investment in and contribution to the private equity funds may be subject to adjustments in the event of commitment reduction or capital calls by the general partnership of these private equity funds. We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives.
The amount of our investment in and contribution to the private equity funds may be subject to adjustments in the event of commitment reduction or capital calls by the general partnership of these private equity funds. 119 Table of Contents We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives.
The seasonal trends that we have experienced in the past may not apply to, or be indicative of, our future operating results. Taxation Cayman Islands We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax in the Cayman Islands.
The seasonal trends that we have experienced in the past may not apply to, or be indicative of, our future operating results. 108 Table of Contents Taxation Cayman Islands We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax in the Cayman Islands.
Our general and administrative expenses increased from 3.6% to 4.3% as a percentage of our total net revenues during the same period. Other Operating Income . Our other operating income amounted to RMB724.8 million (US$105.1 million) in 2022, as compared to RMB924.6 million in 2021.
Our general and administrative expenses increased from 3.6% to 4.3% as a percentage of our total net revenues during the same period. Other Operating Income . Our other operating income amounted to RMB724.8 million in 2022, as compared to RMB924.6 million in 2021.
In addition, inventory write-down as a percentage of costs of goods sold was 0.04% in 2021 and 0.16% in 2022. Such write-down primarily reflected the estimated net realizable value of damaged or obsolete inventory. Gross Profit and Gross Margin .
In addition, inventory write-down as a percentage of costs of goods sold was 0.04% in 2021 and 0.16% in 2022. Such write-down primarily reflected the estimated net realizable value of damaged or obsolete inventory. 113 Table of Contents Gross Profit and Gross Margin .
As a result of the foregoing, our gross profit decreased from RMB23.11 billion in 2021 to RMB21.62 billion (US$3.13 billion) in 2022. Our gross margin increased from 19.7% in 2021 to 21.0% in 2022, primarily due to the optimization of product categories. Operating Expenses .
As a result of the foregoing, our gross profit decreased from RMB23.11 billion in 2021 to RMB21.62 billion in 2022. Our gross margin increased from 19.7% in 2021 to 21.0% in 2022, primarily due to the optimization of product categories. Operating Expenses .
Our interest income increased from RMB671.5 million in 2021 to RMB764.0 million (US$110.8 million) in 2022, primarily due to the increase in interest-bearing investments, such as the deposits and short-term investments in the banks. Share of Income/(Loss) of Equity Method Investees .
Our interest income increased from RMB671.5 million in 2021 to RMB764.0 million in 2022, primarily due to the increase in interest-bearing investments, such as the deposits and short-term investments in the banks. Share of Income/(Loss) of Equity Method Investees .
Key Components of Our Results of Operations Net Revenues We derive revenues primarily from the sale of products offered on our Vipshop Online Platform. Generally, we offer our customers a right of returning products purchased online for a period of seven days upon receipt of products.
Key Components of Our Results of Operations Net Revenues We derive revenues primarily from the sale of products offered on our Vipshop Online Platform. Generally, we offer our customers a right to return products purchased online for a period of seven days upon receipt of products.
Our technology and content expenses increased from RMB1.52 billion in 2021 to RMB1.61 billion (US$232.8 million) in 2022, and also slightly increased from 1.3% to 1.6% as a percentage of our total net revenues during the same period, primarily due to our continuing efforts to invest in human capital and advanced technologies. General and administrative expenses .
Our technology and content expenses increased from RMB1.52 billion in 2021 to RMB1.61 billion in 2022, and also slightly increased from 1.3% to 1.6% as a percentage of our total net revenues during the same period, primarily due to our continuing efforts to invest in human capital and advanced technologies. General and administrative expenses .
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. 106 Table of Contents This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
We recorded share of loss of equity method investees of RMB6.6 million (US$1.0 million), as compared to share of income of equity method investees of RMB42.3 million in 2021, which was primarily due to the increase in share of loss from Guofu Life Insurance Co., Ltd, and the decrease of share in income from Sequoia Fashion and Technology Industry Fund Investment Limited Partnership, partially offset by the decrease in share of loss from Kunshan Baowei Information Technology Limited and Sichuan VipFubon Consumer Finance Co., Ltd.
We recorded share of loss of equity method investees of RMB6.6 million in 2022, as compared to share of income of equity method investees of RMB42.3 million in 2021, which was primarily due to the increase in share of loss from Guofu Life Insurance Co., Ltd, and the decrease in share of income from HongShan Fashion and Technology Industry Fund Investment Limited Partnership, partially offset by the decrease in share of loss from Kunshan Baowei Information Technology Limited and Sichuan VipFubon Consumer Finance Co., Ltd.
We will continue to make cash commitments, including capital expenditures, to support the growth of our business. As of December 31, 2022, we have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties.
We will continue to make cash commitments, including capital expenditures, to support the growth of our business. As of December 31, 2023, we had not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties.
The number of our active customers decreased from 93.9 million in 2021 to 84.8 million in 2022, and the number of our total orders decreased from 786.6 million in 2021 to 739.5 million in 2022, primary due to the challenging macro environment with the COVID-19 resurgence in China and our stringent new customer acquisition expenditures during such time.
The number of our active customers decreased from 92.6 million in 2021 to 84.1 million in 2022, and the number of our total orders decreased from 786.6 million in 2021 to 739.5 million in 2022, primary due to the challenging macro environment with the COVID-19 resurgence in China and our stringent new customer acquisition expenditures during such time.
While the above indicates our material cash requirements as of December 31, 2022, the actual amounts we are eventually required to pay may be different in the event that any agreements are renegotiated, cancelled or terminated. 126 Table of Contents C. Research and Development, Patents and Licenses, etc.
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. C. Research and Development, Patents and Licenses, etc.
Cost of Revenues . Our cost of revenues decreased from RMB93.95 billion in 2021 to RMB81.54 billion (US$11.82 billion) in 2022, primarily due to the decrease in cost of products sold in line with the decrease in our products sales volume. We recorded RMB35.3 million and RMB130.7 million (US$18.9 million) in inventory write-down in 2021 and 2022, respectively.
Cost of Revenues . Our cost of revenues decreased from RMB93.95 billion in 2021 to RMB81.54 billion in 2022, primarily due to the decrease in cost of products sold in line with the decrease in our products sales volume. We recorded RMB35.3 million and RMB130.7 million in inventory write-down in 2021 and 2022, respectively.
Our capital expenditures were primarily for the construction of warehouses, acquisition of land use rights and expansion of Shan Shan Outlets and other infrastructure from 2020 through 2022. We expect our capital expenditures to increase for the year 2023. Holding Company Structure Vipshop Holdings Limited is a holding company with no material operations of its own.
Our capital expenditures were primarily for the expansion of Shan Shan Outlets, acquisition of land use rights, construction of office building and warehouses, and other infrastructure from 2020 through 2023. We expect our capital expenditures to decrease for the year 2024. Holding Company Structure Vipshop Holdings Limited is a holding company with no material operations of its own.
Net Income . As a result of the foregoing, we recorded a net income of RMB6.31 billion (US$915.1 million) in 2022, as compared to a net income of RMB4.69 billion in 2021. Net Income Attributable to Non-controlling Interests .
Net Income . As a result of the foregoing, we recorded a net income of RMB6.31 billion in 2022, as compared to a net income of RMB4.69 billion in 2021. Net Income Attributable to Non-controlling Interests .
Our marketing expenses decreased from RMB5.09 billion in 2021 to RMB2.83 billion (US$410.5 million) in 2022, primarily due to our decreased spending in promotion and advertising activities. Technology and content expenses .
Our marketing expenses decreased from RMB5.09 billion in 2021 to RMB2.83 billion in 2022, primarily due to our decreased spending in promotion and advertising activities. Technology and content expenses .
Our fulfillment services utilize regional logistics hubs and rely on high-quality delivery service providers with national coverage. We expect our fulfillment expenses as a percentage of our total net revenue to remain stable in the foreseeable future as we believe it has already achieved a relatively optimal level. Marketing expenses .
Our fulfillment services utilize regional logistics hubs and rely on high-quality delivery service providers with national coverage. We expect our fulfillment expenses as a percentage of our total net revenues to remain stable in the foreseeable future as we believe our fulfillment infrastructure has already achieved a suitable level. Marketing expenses .
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 year 2022 that are reasonably likely to have a material adverse effect on our total net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
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 since January 1, 2024 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Our total net revenues decreased from RMB117.06 billion in 2021 to RMB103.15 billion (US$14.96 billion) in 2022, primarily due to a decrease in product revenues from RMB111.26 billion to RMB97.25 billion (US$14.10 billion), partially offset by an increase in our other revenues from RMB5.80 billion in 2021 to RMB5.90 billion (US$855.8 million) in 2022 following our expansion into other services.
Our total net revenues decreased from RMB117.06 billion in 2021 to RMB103.15 billion in 2022, primarily due to a decrease in product revenues from RMB111.26 billion to RMB97.25 billion, partially offset by an increase in our other revenues from RMB5.80 billion in 2021 to RMB5.90 billion in 2022 following our expansion into other services.
Our inventory write-downs have not been material, and accounted for approximately 0.7%, 0.04%, and 0.16% of the cost of sales for the years ended December 31, 2020, 2021, and 2022, respectively.
Our changes of inventory write-downs have not been material, and accounted for approximately 0.04%, 0.16%, and (0.78)% of the cost of sales for the years ended December 31, 2021, 2022, and 2023, respectively.
Our operating expenses decreased from RMB18.45 billion in 2021 to RMB16.14 billion (US$2.34 billion) in 2022, primarily due to decreases in fulfillment expenses and marketing expenses, partially offset by increases in technology and content expenses, as well as general and administrative expenses. Fulfillment expenses .
Our operating expenses decreased from RMB18.45 billion in 2021 to RMB16.14 billion in 2022, primarily due to decreases in fulfillment expenses and marketing expenses, partially offset by increases in technology and content expenses as well as general and administrative expenses. Fulfillment expenses . Our fulfillment expenses decreased from RMB7.65 billion in 2021 to RMB7.25 billion in 2022.
Financing Activities Net cash used in financing activities amounted to RMB5.57 billion (US$808.1 million) in 2022, primarily consisting of (i) RMB4.59 billion (US$665.8 million) of proceeds from bank borrowings and other borrowings, offset by RMB4.05 billion (US$586.9 million) of repayment to bank and other borrowings, (ii) RMB6.26 billion (US$907.3 million) of repurchase of ordinary shares, and (iii) RMB185.2 million (US$26.9 million) of capital contributions from non-controlling interests shareholders.
Net cash used in financing activities amounted to RMB5.57 billion in 2022, primarily consisting of (i) RMB4.59 billion of proceeds from bank borrowings and other borrowings, offset by RMB4.05 billion of repayment to bank and other borrowings, (ii) RMB6.26 billion of repurchase of ordinary shares, and (iii) RMB185.2 million of capital contributions from non-controlling interests shareholders.
Unfavorable changes in any of these general factors could affect the demand for products we sell and could materially and adversely affect our results of operations. Our results of operations are also affected by the regulations and industry policies related to the online retail market.
Unfavorable changes in any of these general factors could affect the demand for products we sell and could materially and adversely affect our results of operations. Our results of operations are also affected by the regulations and industry policies relating to the online retail market. Substantially all of our revenues and workforce are concentrated in China.
We recorded net income attributable to non-controlling interests of RMB13.0 million (US$1.9 million) in 2022, as compared to net income attributable to non-controlling interests of RMB11.8 million in 2021, which was primarily due to the increase in net income attributable to non-controlling shareholders of Shan Shan Outlets. Comparison of 2021 and 2020 Net Revenues .
We recorded net income attributable to non-controlling interests of RMB84.7 million (US$11.9 million) in 2023, as compared to net income attributable to non-controlling interests of RMB13.0 million in 2022, which was primarily due to the increase in net income attributable to non-controlling shareholders of Shan Shan Outlets. Comparison of 2022 and 2021 Net Revenues .
Our technology and content expenses consist primarily of the compensation and benefits of our IT staff, telecommunications expenses, and expenses incurred in creating content for our sales events on our platform, including model fees and professional photography expenses. We incurred RMB1.22 billion, RMB1.52 billion, and RMB1.61 billion (US$232.8 million) in technology and content expenses in 2020, 2021, and 2022.
Our technology and content expenses consist primarily of the compensation and benefits of our IT staff, telecommunications expenses, and expenses incurred in creating content for our sales events on our platform, including model fees and professional photography expenses. We incurred RMB1.52 billion, RMB1.61 billion, and RMB1.77 billion (US$249.0 million) in technology and content expenses in 2021, 2022, and 2023, respectively.
A one-day change in the estimated goods in-transit period would result in an increase or decrease of approximately RMB409.8 million, RMB492.8 million, and RMB469.7 million (US$68.1 million) to our total net revenues in the years ended December 31, 2020, 2021, and 2022.
A one-day change in the estimated goods in-transit period would result in an increase or decrease of approximately RMB492.8 million, RMB469.7 million, RMB436.2 million (US$61.4 million) to our total net revenues in the years ended December 31, 2021, 2022, and 2023, respectively.
Our general and administrative expenses increased from RMB4.19 billion in 2021 to RMB4.46 billion (US$646.6 million) in 2022, primarily due to one-off donation of RMB231.8 million to the local government to support the rural revitalization as part of our environmental, social, and governance initiatives and an impairment loss of RMB127.6 million in connection with one of our warehouses in 2022.
Our general and administrative expenses increased from RMB4.19 billion in 2021 to RMB4.46 billion in 2022, primarily due to donation of RMB231.8 million in support of the rural revitalization as part of our ESG commitment and an impairment loss of RMB127.6 million in connection with one of our warehouses in 2022.
Income tax We are subject to income taxes in PRC and other jurisdictions. We exercise significant judgment and record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.
We exercise significant judgment and record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.
Fulfillment expenses primarily consist of shipping and handling expenses, packaging expenses, and logistics center rental expenses, as well as compensation and benefits of our logistics staff. Our shipping and handling expenses were RMB4.51 billion, RMB5.24 billion, and RMB5.06 billion (US$734.0 million) in 2020, 2021, and 2022, respectively.
Fulfillment expenses primarily consist of shipping and handling expenses, packaging expenses, and logistics center rental expenses, as well as compensation and benefits of our logistics staff. Our shipping and handling expenses were RMB5.24 billion, RMB5.06 billion, and RMB5.84 billion (US$822.1 million) in 2021, 2022, and 2023, respectively.
The amount of tax loss carry forwards of our certain subsidiaries was RMB1.27 billion, RMB1.69 billion, and RMB2.16 billion (US$312.8 million) as of December 31, 2020, 2021, and 2022, respectively.
The amount of tax loss carry forwards of our certain subsidiaries was RMB1.69 billion, RMB2.16 billion, and RMB2.20 billion (US$310.0 million) as of December 31, 2021, 2022, and 2023, respectively.
Comparison of 2022 and 2021 Net Revenues .
Comparison of 2023 and 2022 Net Revenues .
Our net revenues are recorded net of VAT and related surcharges. 113 Table of Contents The following table sets forth the key factors that directly affect our net revenues for the periods indicated: For the Year Ended December 31, 2020 2021 2022 Total net revenues (RMB in thousands) 101,858,489 117,059,678 103,152,489 Active customers (in millions) 83.9 93.9 84.8 Total orders (in millions) 692.4 786.6 739.5 Average orders per active customer 8.3 8.4 8.7 GMV (RMB in billions) 165.0 191.5 175.2 Cost of Revenues Our cost of revenues consists primarily of cost of merchandise sold and inventory write-down.
The following table sets forth the key factors that directly affect our net revenues for the periods indicated: For the Year Ended December 31, 2021 2022 2023 Total net revenues (RMB in thousands) 117,059,678 103,152,489 112,856,020 Active customers (in millions) 92.6 84.1 87.4 Total orders (in millions) 786.6 739.5 812.3 Average orders per active customer 8.4 8.7 9.3 GMV (RMB in billions) 191.5 175.2 208.0 107 Table of Contents Cost of Revenues Our cost of revenues consists primarily of cost of merchandise sold and inventory write-down.
Marketing expenses primarily represent advertising expenses incurred in connection with our brand promotional activities, as well as compensation and benefits of our marketing staff. In the foreseeable future, we expect to further optimize our customer acquisition costs and keep marketing expenses at a manageable level. Technology and content expenses .
Marketing expenses primarily represent advertising expenses incurred in connection with our brand promotional activities, as well as compensation and benefits of our marketing staff. In the foreseeable future, we expect our customer acquisition costs will remain at a manageable level, with relatively balanced spending in new and existing customer acquisition and retention. Technology and content expenses .
Out of the foregoing capital expenditures, we paid RMB34.6 million, RMB846.2 million, and RMB671.8 million (US$97.4 million) in the years ended December 31, 2020, 2021, and 2022, respectively, to acquire the land use rights of certain land located in China.
Out of the foregoing capital expenditures, we paid RMB846.2 million, RMB671.8 million, and RMB3.06 billion (US$431.5 million) in the years ended December 31, 2021, 2022, and 2023, respectively, to acquire the land use rights of certain land located in China.
Shipping and handling expenses, the largest component of our fulfillment expenses during these periods, increased from RMB4.51 billion in 2020 to RMB5.24 billion in 2021. The increase in our fulfillment expenses was primarily due to a significant increase in our sales volume and the number of orders.
Shipping and handling expenses, the largest component of our fulfillment expenses during these periods, decreased from RMB5.24 billion in 2021 to RMB5.06 billion in 2022. The decrease in our fulfillment expenses was primarily due to a decrease in our sales volume and the number of orders.
Guangzhou Software was classified as a “software enterprise” by the Guangzhou Software Industry Association, which remained valid for one year and needs to be renewed every year.
One of our significant PRC subsidiaries, Vipshop (Guangzhou) Software Co., Ltd., was classified as a “software enterprise” by the local software industry association, which remained valid for one year and needs to be renewed every year.
General and administrative expenses primarily consist of compensation and benefits of our headquarters and administrative staff, rental expenses, costs for professional services, payment processing fees, impairment of long-lived assets, and other administrative and overhead expenses.
General and administrative expenses primarily consist of compensation and benefits of our headquarters and administrative staff, rental expenses, costs for professional services, payment processing fees, impairment of long-lived assets, and other administrative and overhead expenses. We expect our general and administrative expenses to remain relatively stable in the foreseeable future.
Inventory write-down is estimated based on significant management estimates and assumptions used to determine the write-down percentages that are applied to different aging groups and the assessed condition of the merchandise within each category.
Write-downs are recorded in cost of revenues in the consolidated statements of income and comprehensive income. 122 Table of Contents Inventory write-down is estimated based on significant management estimates and assumptions used to determine the write-down percentages that are applied to different aging groups and the assessed condition of the merchandise within each category.
For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB (in thousands) Segment Net Revenues Vip.com 99,324,590 114,189,757 100,806,644 Shan Shan Outlets 1,151,331 1,579,032 1,858,668 Others 2,904,182 3,202,867 2,105,712 Inter-segment revenues (1) (1,521,614 ) (1,911,978 ) (1,618,535 ) Total 101,858,489 117,059,678 103,152,489 Segment Income/(Loss) from Operations Vip.com 6,656,721 6,158,560 7,341,732 Shan Shan Outlets 187,499 357,602 353,875 Others 2,291 88,065 (290,580 ) Unallocated expenses (2) (986,425 ) (1,021,805 ) (1,207,581 ) Total 5,860,086 5,582,422 6,197,446 Notes: (1) Inter-segment revenues mainly consist of payment processing, inter platform technical services, warehousing rental services and supply chain management services, promotion services provided by Vip.com to internet finance business and internal procurement between offline shops, Shanshan outlets and Vip.com.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB (in thousands) Segment Net Revenues Vip.com 114,189,757 100,806,644 109,556,481 Shan Shan Outlets 1,579,032 1,858,668 2,795,977 Others 3,202,867 2,105,712 1,234,053 Inter-segment revenues (1) (1,911,978 ) (1,618,535 ) (730,491 ) Total 117,059,678 103,152,489 112,856,020 Segment Income/(Loss) from Operations Vip.com 6,158,560 7,341,732 9,642,385 Shan Shan Outlets 357,602 353,875 802,315 Others 88,065 (290,580 ) 169,241 Unallocated expenses (2) (1,021,805 ) (1,207,581 ) (1,509,806 ) Total 5,582,422 6,197,446 9,104,135 Notes: (1) Inter-segment revenues mainly consist of payment processing, inter platform technical services, warehousing rental services and supply chain management services, promotion services provided by Vip.com to internet finance business and internal procurement between offline shops, Shanshan outlets and Vip.com.
As of December 31, 2020, 2021, and 2022, we did not have any unrecognized tax benefits. We do not anticipate any significant increase to our liability for unrecognized tax benefit within the next 12 months. We will classify interest and penalties related to income tax matters, if any, in income tax expense.
We do not anticipate any significant increase to our liability for unrecognized tax benefit within the next 12 months. We will classify interest and penalties relating to income tax matters, if any, in income tax expense.
As of December 31, 2020 2021 2022 RMB RMB RMB (in thousands) Segment Assets Vip.com 44,087,467 46,042,338 47,086,901 Shan Shan Outlets 8,766,027 10,692,051 13,489,858 Others 6,087,320 5,553,152 4,898,751 Total 58,940,814 62,287,541 65,475,510 Our Vip.com segment contributes to a significant majority of our results of operations, which are compared and analyzed on a year-on-year basis as follows.
As of December 31, 2021 2022 2023 RMB RMB RMB (in thousands) Segment Assets Vip.com 46,042,338 47,086,901 47,982,859 Shan Shan Outlets 10,692,051 13,489,858 17,062,689 Others 5,553,152 4,898,751 7,277,046 Total 62,287,541 65,475,510 72,322,594 Our Vip.com segment contributes to a significant majority of our results of operations, which are compared and analyzed on a year-on-year basis as follows.
Liquidity and Capital Resources As of December 31, 2021 and 2022, we had RMB17.17 billion and RMB23.10 billion (US$3.35 billion), respectively, in cash, cash equivalents and restricted cash. We had short-term investments with an aggregate outstanding amount of RMB1.60 billion (US$231.4 million) as of December 31, 2022.
Liquidity and Capital Resources As of December 31, 2022 and 2023, we had RMB23.10 billion and RMB26.30 billion (US$3.70 billion), respectively, in cash, cash equivalents, and restricted cash. We had short-term investments with an aggregate outstanding amount of RMB1.98 billion (US$279.3 million) as of December 31, 2023.
For example, we generally experience less user traffic and purchase orders during holidays in China, particularly during the Chinese New Year period that occurs in the first quarter of the year, when customers tend to shop less. Furthermore, sales in the retail industry are typically significantly higher in the fourth quarter of the year than in the preceding three quarters.
For example, we generally experience less user traffic and fewer purchase orders during holidays in China, particularly during the Chinese New Year period that occurs in the first quarter of the year, when customers tend to shop less.
We recorded net income attributable to non-controlling interests of RMB11.8 million in 2021, as compared to net income attributable to non-controlling interests of RMB12.4 million in 2020, which was primarily due to the increase in net loss attributable to non-controlling shareholders of city outlets. B.
We recorded net income attributable to non-controlling interests of RMB13.0 million in 2022, as compared to net income attributable to non-controlling interests of RMB11.8 million in 2021, which was primarily due to the increase in net income attributable to non-controlling shareholders of Shan Shan Outlets. 114 Table of Contents B.
Our fulfillment expenses as a percentage of our total net revenues increased from 6.5% in 2021 to 7.0% in 2022, primarily due to the increase of sales return rate. 119 Table of Contents Marketing expenses .
In 2022, we fulfilled over 739.5 million customer orders, as compared to approximately 786.6 million customer orders in 2021. Our fulfillment expenses as a percentage of our total net revenues increased from 6.5% in 2021 to 7.0% in 2022, primarily due to the increase of sales return rate. Marketing expenses .
For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB (in thousands) Segment Interest Income Vip.com 313,183 528,294 622,686 Shan Shan Outlets 63,282 57,732 53,659 Others 72,552 85,736 87,925 Inter-segment interest income — (301 ) (252 ) Total 449,017 671,461 764,018 Segment Interest Expense Vip.com (61,850 ) (13,864 ) (23,573 ) Shan Shan Outlets (5,507 ) (597 ) (685 ) Others — (301 ) (252 ) inter-segment interest expense — 301 252 Total (67,357 ) (14,461 ) (24,258 ) 118 Table of Contents The following table sets forth assets information in the reportable segments reviewed by our management.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB (in thousands) Segment Interest Income Vip.com 528,294 622,686 654,485 Shan Shan Outlets 57,732 53,659 42,807 Others 85,736 87,925 84,532 Inter-segment interest income (301 ) (252 ) (1,532 ) Total 671,461 764,018 780,292 Segment Interest Expense Vip.com (13,864 ) (23,573 ) (22,821 ) Shan Shan Outlets (597 ) (685 ) (111 ) Others (301 ) (252 ) (1,532 ) inter-segment interest expense 301 252 1,532 Total (14,461 ) (24,258 ) (22,932 ) 111 Table of Contents The following table sets forth assets information in the reportable segments reviewed by our management.
In addition, inventory write-down as a percentage of costs of goods sold, was 0.7% in 2020 and 0.04% in 2021. Such write-down primarily reflected the estimated net realizable value of damaged or obsolete inventory. The decrease in write-down from 2020 to 2021 was mainly due to our efforts in improving inventory management. Gross Profit and Gross Margin .
In addition, changes of inventory write-down as a percentage of costs of goods sold was 0.16% in 2022 and (0.78)% in 2023, primarily due to the improvement in inventory management. Such write-down primarily reflected the estimated net realizable value of damaged or obsolete inventory. Gross Profit and Gross Margin .
In 2020, 2021, and 2022, we fulfilled approximately 692.4 million, 786.6 million, and 739.5 million customer orders, respectively, and we generated total net revenues of RMB101.86 billion, RMB117.06 billion, and RMB103.15 billion (US$14.96 billion), respectively. In 2020, 2021, and 2022, we generated net income of RMB5.92 billion, RMB4.69 billion, and RMB6.31 billion (US$915.1 million), respectively.
In 2021, 2022, and 2023, we fulfilled approximately 786.6 million, 739.5 million, and 812.3 million customer orders, respectively, and we generated total net revenues of RMB117.06 billion, RMB103.15 billion, and RMB112.86 billion (US$15.90 billion), respectively. In 2021, 2022, and 2023, we generated net income of RMB4.69 billion, RMB6.31 billion, and RMB8.20 billion (US$1.16 billion), respectively.
Net cash used in financing activities amounted to RMB58.8 million in 2021, primarily consisting of (i) RMB4.07 billion of proceeds from bank borrowings and other borrowings, offset by RMB3.12 billion of repayment to bank and other borrowings, (ii) RMB1.94 billion of repurchase of ordinary shares, (iii) RMB461.1 million of capital contributions from non-controlling interests shareholders, and (iv) RMB419.8 million of proceeds from issuance of ordinary shares upon exercise of share options.
Net cash used in financing activities amounted to RMB58.8 million in 2021, primarily consisting of (i) RMB4.07 billion of proceeds from bank borrowings and other borrowings, offset by RMB3.12 billion of repayment to bank and other borrowings, (ii) RMB1.94 billion of repurchase of ordinary shares, (iii) RMB461.1 million of capital contributions from non-controlling interests shareholders, and (iv) RMB419.8 million of proceeds from issuance of ordinary shares upon exercise of share options. 118 Table of Contents Capital Expenditures Our capital expenditures paid to acquire property and equipment and land use rights amounted to RMB3.58 billion, RMB3.10 billion, and RMB5.23 billion (US$736.7 million) in the years ended December 31, 2021, 2022, and 2023, respectively.
We expect our general and administrative expenses to remain relatively stable in the foreseeable future. 114 Table of Contents Seasonality Our results of operations are subject to seasonal fluctuations, reflecting a combination of seasonal fluctuations in internet usage, traditional retail seasonality patterns, and seasonal buying patterns in certain categories such as apparel.
Seasonality Our results of operations are subject to seasonal fluctuations, reflecting a combination of seasonal fluctuations in internet usage, traditional retail seasonality patterns, and seasonal buying patterns in certain categories such as apparel.
The adjustment for changes in operating assets and liabilities primarily reflected (i) a decrease in accounts payable of RMB1.94 billion, primarily due to the acceleration in settlement with supplier along with the more prudent procurement strategy, (ii) a decrease in inventories of RMB917.4 million due to our efforts in improving our inventory management, (iii) a increase in advances from customers and accrued expenses and other current liabilities of RMB533.9 million, primarily due to the growth in our business.
The adjustment for changes in operating assets and liabilities primarily reflected (i) a decrease in inventories of RMB1.46 billion due to our efforts in improving our inventory management, (ii) an increase in accounts payable of RMB983.0 million due to our efforts in improving our procurement management, and (iii) a decrease in advances from customers and accrued expenses and other current liabilities of RMB343.2 million, primarily due to a decrease in our net revenues.
The following table sets forth the components of our operating expenses both in absolute amount and as a percentage of total net revenues for the periods indicated: For the year ended December 31 2020 2021 2022 RMB’000 % RMB’000 % RMB’000 US$’000 % Fulfillment expenses 6,878,991 6.8 7,652,504 6.5 7,247,210 1,050,747 7.0 Marketing expenses 4,284,274 4.2 5,089,213 4.3 2,831,316 410,502 2.7 Technology and content expenses 1,221,264 1.2 1,517,307 1.3 1,605,422 232,764 1.6 General and administrative expenses 3,748,548 3.7 4,189,690 3.6 4,459,518 646,569 4.3 Total operating expenses 16,133,077 15.9 18,448,714 15.7 16,143,466 2,340,582 15.6 Fulfillment expenses .
The following table sets forth the components of our operating expenses both in absolute amount and as a percentage of total net revenues for the periods indicated: For the Year Ended December 31, 2021 2022 2023 RMB’000 % RMB’000 % RMB’000 US$’000 % Fulfillment expenses 7,652,504 6.5 7,247,210 7.0 8,262,004 1,163,679 7.3 Marketing expenses 5,089,213 4.3 2,831,316 2.7 3,242,215 456,656 2.9 Technology and content expenses 1,517,307 1.3 1,605,422 1.6 1,767,530 248,951 1.6 General and administrative expenses 4,189,690 3.6 4,459,518 4.3 4,146,568 584,032 3.7 Total operating expenses 18,448,714 15.7 16,143,466 15.6 17,418,317 2,453,318 15.5 Fulfillment expenses .
As of December 31, 2022, we had been granted 204 patents and submitted 826 patent applications in China, owned 2,064 registered trademarks in China and 122 registered trademarks outside China, 228 copyrights (including copyrights to 197 software products in China developed by us relating to various aspects of our operations), and 334 registered domain names that are material to our business, including vip.com and vipshop.com .
As of December 31, 2023, we had been granted 287 patents and submitted 954 patent applications in China, owned 2,187 registered trademarks in China and 125 registered trademarks outside China, 242 copyrights (including copyrights to 210 software products in China that we develop relating to various aspects of our operations), and 30 registered domain names that are material to our business, including vip.com and vipshop.com. 121 Table of Contents D.
(2) Include share-based compensation expenses as set forth below: For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Fulfillment expenses (100,486 ) (88,985 ) (74,063 ) (10,738 ) Marketing expenses (16,534 ) (26,834 ) (14,630 ) (2,121 ) Technology and content expenses (152,234 ) (252,730 ) (242,714 ) (35,190 ) General and administrative expenses (681,794 ) (641,464 ) (876,174 ) (127,033 ) Total (951,048 ) (1,010,013 ) (1,207,581 ) (175,082 ) (3) Include shipping and handling expenses, which amounted to RMB4.51 billion, RMB5.24 billion, and RMB5.06 billion (US$734.0 million) in the years ended December 31, 2020, 2021, and 2022, respectively. 117 Table of Contents Segment Information The following table sets forth our segment operating results for the years ended December 31, 2020, 2021, and 2022.
(2) Include share-based compensation expenses as set forth below: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Fulfillment expenses (88,985 ) (74,063 ) (77,926 ) (10,976 ) Marketing expenses (26,834 ) (14,630 ) (33,379 ) (4,701 ) Technology and content expenses (252,730 ) (242,714 ) (330,197 ) (46,507 ) General and administrative expenses (641,464 ) (876,174 ) (1,068,304 ) (150,467 ) Total (1,010,013 ) (1,207,581 ) (1,509,806 ) (212,651 ) (3) Include shipping and handling expenses, which amounted to RMB5.24 billion, RMB5.06 billion, and RMB5.84 billion (US$822.1 million) in the years ended December 31, 2021, 2022, and 2023, respectively. 110 Table of Contents Segment Information The following table sets forth our segment operating results for the years ended December 31, 2021, 2022, and 2023.
Our interest income increased from RMB449.0 million in 2020 to RMB671.5 million in 2021, primarily due to the increase in interest-bearing investments, such as the deposits and short-term investments in the banks. 121 Table of Contents Share of Income of Equity Method Investees .
Our interest income increased from RMB764.0 million in 2022 to RMB780.3 million (US$109.9 million) in 2023, primarily due to the increase in interest-bearing investments, such as the deposits and short-term investments in the banks. Share of Income/(Loss) of Equity Method Investees .
Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2(ak) to the consolidated financial statements of Vipshop Holdings Limited pursuant to Item 18 of Part III of this annual report. 130 Table of Contents
As of December 31, 2022 and 2023, we did not have any significant unrecognized uncertain tax positions. 123 Table of Contents Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2(aj) to the consolidated financial statements of Vipshop Holdings Limited pursuant to Item 18 of Part III of this annual report.
The adjustment for changes in operating assets and liabilities primarily reflected (i) a decrease in inventories of RMB1.46 billion (US$211.0 million) due to our efforts in improving our inventory management, (ii) an increase in accounts payable of RMB983.0 million (US$142.5 million) due to our efforts in improving our procurement management, and (iii) a decrease in advances from customers and accrued expenses and other current liabilities of RMB343.2 million (US$49.8 million), primarily due to a decrease in our net revenues. 123 Table of Contents Net cash from operating activities amounted to RMB6.74 billion in 2021, which was primarily attributable to a net income of RMB4.69 billion, adjusted for certain non-cash expenses consisting primarily of (i) share-based compensation expenses of RMB1.01 billion, and (ii) depreciation of property and equipment of RMB1.10 billion, attributable to increases in warehouse and outlets, (iii) impairment loss of equity method investees and other investments of RMB414.8 million.
Net cash from operating activities amounted to RMB6.74 billion in 2021, which was primarily attributable to a net income of RMB4.69 billion, adjusted for certain non-cash expenses consisting primarily of (i) share-based compensation expenses of RMB1.01 billion, and (ii) depreciation of property and equipment of RMB1.10 billion, attributable to increases in warehouse and outlets, (iii) impairment loss of equity method investees and other investments of RMB414.8 million.
Our general and administrative expenses slightly decreased from 3.7% to 3.6% as a percentage of our total net revenues during the same period, primarily due to scale effect associated with the growth in total net revenue. Other Operating Income . Our other operating income amounted to RMB924.6 million in 2021, as compared to RMB707.9 million in 2020.
Our general and administrative expenses decreased from 4.3% to 3.7% as a percentage of our total net revenues during the same period. Other Operating Income . Our other operating income amounted to RMB801.6 million (US$112.9 million) in 2023, as compared to RMB724.8 million in 2022.
As of December 31, 2020, 2021, and 2022, we had VAT recoverable of approximately RMB907.7 million, RMB745.5 million, and RMB668.2 million (US$96.9 million), respectively. VAT recoverable occurs due to timing difference on operation of certain entities, as we record the revenue and VAT output when goods are delivered, but VAT input invoice from suppliers may be delayed.
Value-added tax recoverable occurs due to timing difference on operation of certain entities, as we record the revenue and value-added tax output when goods are delivered, but value-added tax input invoice from suppliers may be delayed.
As of December 31, 2021 and 2022, our cash, cash equivalents, restricted cash and short-term investments are held in the following currency denominations and jurisdictions in which our subsidiaries domiciled: As of December 31, 2021 2022 Subsidiaries in China (1) Subsidiaries in Hong Kong and Other Regions Subsidiary in the United States Total Subsidiaries in China (1) Subsidiaries in Hong Kong and Other Regions Subsidiary in the United States Total (in thousands) Currency Denomination RMB 22,133,077 241,795 — 22,374,872 14,173,647 4,662,341 — 18,835,988 US$ 47,592 59,821 54,904 162,317 39,005 4,092,179 248 4,131,432 Others 2,650 13,048 — 15,698 2 1,731,883 — 1,731,885 Total 22,183,319 314,664 54,904 22,552,887 14,212,654 10,486,403 248 24,699,305 Note: (1) Also include the consolidated variable interest entities in China.
As of December 31, 2022 and 2023, our cash, cash equivalents, restricted cash, and short-term investments were held in the following currency denominations and jurisdictions in which our subsidiaries domiciled: As of December 31, 2022 2023 Subsidiaries in China (1) Subsidiaries in Hong Kong and Other Regions Subsidiary in the United States Total Subsidiaries in China (1) Subsidiaries in Hong Kong and Other Regions Subsidiary in the United States Total (in thousands) Currency Denomination RMB 14,173,647 4,662,341 — 18,835,988 23,404,854 2,346,519 — 25,751,373 US$ 39,005 4,092,179 248 4,131,432 37,049 1,903,106 331 1,940,486 Others 2 1,731,883 — 1,731,885 2 588,705 — 588,708 Total 14,212,654 10,486,403 248 24,699,305 23,441,905 4,838,330 331 28,280,567 Note: (1) Also include the consolidated variable interest entities in China.
We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances.
We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.
Our technology and content expenses increased from RMB1.22 billion in 2020 to RMB1.52 billion in 2021, and also slightly increased from 1.2% to 1.3% as a percentage of our total net revenues during the same period, primarily due to our continuing efforts to invest in human capital and advanced technologies. General and administrative expenses .
Our technology and content expenses increased from RMB1.61 billion in 2022 to RMB1.77 billion (US$249.0 million) in 2023, primarily due to our continuing efforts to invest in human capital and advanced technologies. As a percentage of our total net revenues, our technology and content expenses remained stable at 1.6% in 2022 and 2023. General and administrative expenses .
Pursuant to the Announcement on Enterprise Income Tax Policies for Promoting High Quality Development of Integrated Circuit Industry and Software Industry on December 11, 2020, Guangzhou Software enjoys a preferential enterprise income tax policy of “exemption for the first two years and 50% deduction of income tax (i.e., entitled to a favourable tax rate at 12.5%) for the subsequent three years” from the profit making year.
This subsidiary is entitled to enjoy a preferential enterprise income tax policy of “exemption for the first two years and 50% deduction of income tax (i.e., entitled to a favorable tax rate at 12.5%) for the subsequent three years” from the first profit making year. The first profit making year for this subsidiary was 2021.
Net cash used in investing activities amounted to RMB6.70 billion in 2020, primarily consisting of (i) RMB14.35 billion used for purchase of short-term investments, offset by RMB9.63 billion from redemption of short term investments upon maturities, (ii) RMB2.27 billion capital expenditure relating to our construction of warehouses and leasehold improvements, as well as purchases of office and other operating equipment, motor vehicles, IT software, and land use rights, (iii) RMB1.60 billion cash paid for investment in equity method investments and other investments, primarily consisting of investment in private equity fund and other equity method investees, (iv) RMB1.12 billion received from loan payments, offset by RMB819.8 million cash paid for loan originations, and (v) RMB1.05 billion of proceeds from disposal of other investments.
Net cash from investing activities amounted to RMB1.05 billion in 2022, primarily consisting of (i) RMB11.20 billion used for purchase of short-term investments, offset by RMB14.95 billion from redemption of short-term investments upon maturities, (ii) RMB3.10 billion capital expenditure relating to our construction and expansion of Shan Shan Outlets, land use rights, warehouses, as well as purchases of office and other operating equipment and IT software, (iii) RMB621.3 million received from loan repayments, offset by RMB269.3 million cash paid for loan originations, (iv) RMB489.9 million from government subsidies received for land use rights, (v) RMB387.5 million of payment for acquisition of Zhengzhou Shan Shan Outlets Shopping Plaza Co., Ltd., (vi) RMB283.7 million cash paid for investment in equity method investments and other investments, primarily consisting of investment in private equity funds and other equity method investees, and (vii) RMB180.5 million of proceeds from disposal of investment in equity method investment and other investments.
Our net income in 2020, 2021, and 2022 reflected non-cash share-based compensation expenses in an aggregate amount of RMB951.0 million, RMB1,010.0 million, and RMB1,207.6 million (US$175.1 million), respectively. 112 Table of Contents Our business and operating results are affected by general factors affecting the online retail market in China, including China’s overall economic growth, the increase in per capita disposable income, the growth in consumer spending and retail industry and the expansion of internet penetration.
Our business and operating results are affected by general factors affecting the online retail market in China, including China’s overall economic growth, the increase in per capita disposable income, the growth in consumer spending and retail industry and the expansion of internet penetration.
Our cost of revenues increased from RMB80.57 billion in 2020 to RMB93.95 billion in 2021, primarily due to the significant increase in cost of products sold in line with the increase in our products sales volume. We recorded RMB554.9 million and RMB35.3 million in inventory write-down in 2020 and 2021, respectively.
Our cost of revenues increased from RMB81.54 billion in 2022 to RMB87.14 billion (US$12.27 billion) in 2023, primarily due to the increase in cost of products sold in line with the increase in our products sales volume. We recorded RMB130.7 million and RMB(681.2) million (US$(95.9) million) in changes of inventory write-down in 2022 and 2023, respectively.
Net Income . As a result of the foregoing, we recorded a net income of RMB4.69 billion in 2021, as compared to a net income of RMB5.92 billion in 2020. Net Income Attributable to Non-controlling Interests .
Net Income . As a result of the foregoing, we recorded a net income of RMB8.20 billion (US$1.16 billion) in 2023, as compared to a net income of RMB6.31 billion in 2022. Net Income Attributable to Non-controlling Interests.
For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Product revenues 97,449,712 111,256,902 97,250,078 14,099,936 Other revenues 4,408,777 5,802,776 5,902,411 855,769 Total net revenues 101,858,489 117,059,678 103,152,489 14,955,705 Cost of revenues (1) (80,573,181 ) (93,953,121 ) (81,536,409 ) (11,821,668 ) Gross profit 21,285,308 23,106,557 21,616,080 3,134,037 Operating Expenses (2) —Fulfillment expenses (3) (6,878,991 ) (7,652,504 ) (7,247,210 ) (1,050,747 ) —Marketing expenses (4,284,274 ) (5,089,213 ) (2,831,316 ) (410,502 ) —Technology and content expenses (1,221,264 ) (1,517,307 ) (1,605,422 ) (232,764 ) —General and administrative expenses (3,748,548 ) (4,189,690 ) (4,459,518 ) (646,569 ) Total operating expenses (16,133,077 ) (18,448,714 ) (16,143,466 ) (2,340,582 ) Other operating income 707,855 924,579 724,832 105,091 Income from operations 5,860,086 5,582,422 6,197,446 898,546 Impairment loss of investments (43,160 ) (414,780 ) (93,904 ) (13,615 ) Interest expense (67,357 ) (14,461 ) (24,258 ) (3,517 ) Interest income 449,017 671,461 764,018 110,772 Exchange (loss)/gain (160,097 ) (37,052 ) 687,871 99,732 Investment gain and revaluation of investments 980,868 85,685 546,031 79,167 Income before income taxes and share of income/(loss) of equity method investees 7,019,357 5,873,275 8,077,204 1,171,085 Income tax expenses (1,130,016 ) (1,222,704 ) (1,758,810 ) (255,003 ) Share of income/(loss) of equity method investees 30,015 42,303 (6,559 ) (951 ) Net income 5,919,356 4,692,874 6,311,835 915,131 Net income attributable to non-controlling interests (12,399 ) (11,801 ) (13,019 ) (1,888 ) Net income attributable to our shareholders 5,906,957 4,681,073 6,298,816 913,243 Notes: (1) Excludes shipping and handling expenses, and includes inventory write-down which amounted to RMB554.9 million, RMB35.3 million, and RMB130.7 million (US$18.9 million) in the years ended December 31, 2020, 2021, and 2022, respectively.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Product revenues 111,256,902 97,250,078 105,613,485 14,875,348 Other revenues 5,802,776 5,902,411 7,242,535 1,020,090 Total net revenues 117,059,678 103,152,489 112,856,020 15,895,438 Cost of revenues (1) (93,953,121 ) (81,536,409 ) (87,135,128 ) (12,272,726 ) Gross profit 23,106,557 21,616,080 25,720,892 3,622,712 Operating Expenses (2) —Fulfillment expenses (3) (7,652,504 ) (7,247,210 ) (8,262,004 ) (1,163,679 ) —Marketing expenses (5,089,213 ) (2,831,316 ) (3,242,215 ) (456,656 ) —Technology and content expenses (1,517,307 ) (1,605,422 ) (1,767,530 ) (248,951 ) —General and administrative expenses (4,189,690 ) (4,459,518 ) (4,146,568 ) (584,032 ) Total operating expenses (18,448,714 ) (16,143,466 ) (17,418,317 ) (2,453,318 ) Other operating income 924,579 724,832 801,560 112,897 Income from operations 5,582,422 6,197,446 9,104,135 1,282,291 Impairment loss of investments (414,780 ) (93,904 ) (19,105 ) (2,691 ) Interest expense (14,461 ) (24,258 ) (22,932 ) (3,230 ) Interest income 671,461 764,018 780,292 109,902 Exchange (loss)/gain (37,052 ) 687,871 162,666 22,911 Investment gain and revaluation of investments 85,685 546,031 (18,054 ) (2,543 ) Income before income taxes and share of income/(loss) of equity method investees 5,873,275 8,077,204 9,987,002 1,406,640 Income tax expenses (1,222,704 ) (1,758,810 ) (1,866,004 ) (262,821 ) Share of income/(loss) of equity method investees 42,303 (6,559 ) 80,301 11,310 Net income 4,692,874 6,311,835 8,201,299 1,155,129 Net income attributable to non-controlling interests (11,801 ) (13,019 ) (84,675 ) (11,926 ) Net income attributable to our shareholders 4,681,073 6,298,816 8,116,624 1,143,203 Notes: (1) Excludes shipping and handling expenses, and includes changes of inventory write-down which amounted to RMB35.3 million, RMB130.7 million, and RMB(681.2) million (US$(95.9) million) in the years ended December 31, 2021, 2022, and 2023, respectively.

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

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Biggest changeShare Incentive Grants The following table summarizes, as of December 31, 2022, the outstanding options we granted to our directors and executive officers under the 2011 Plan, the 2012 Plan, and the 2014 Plan. 137 Table of Contents Name Number of Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Eric Ya Shen 2,601,894 66.85 January 1, 2020 December 31, 2029 51,669 68.35 January 1, 2017 December 31, 2026 Arthur Xiaobo Hong 2,681,894 66.85 January 1, 2020 December 31, 2029 Donghao Yang * 0.50 August 30, 2011 August 29, 2023 Nanyan Zheng * 2.50 April 16, 2012 April 15, 2024 Kathleen Chien * 2.50 April 16, 2012 April 15, 2024 Chun Liu * 2.50 January 1, 2013 December 31, 2024 Note: * Aggregate number of shares beneficially owned by the person account for less than 1% of our total outstanding ordinary shares.
Biggest changeName Number of Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Eric Ya Shen 2,601,894 66.85 January 1, 2020 December 31, 2029 * 68.35 January 1, 2017 December 31, 2026 Arthur Xiaobo Hong 2,681,894 66.85 January 1, 2020 December 31, 2029 Donghao Yang * 0.50 August 30, 2011 January 1, 2026 Nanyan Zheng * 2.50 April 16, 2012 December 31, 2024 Kathleen Chien * 2.50 April 16, 2012 December 31, 2024 Chun Liu * 2.50 January 1, 2013 January 1,2026 Note: * Aggregate number of shares beneficially owned by the person account for less than 1% of our total outstanding ordinary shares. 129 Table of Contents The following table summarizes, as of December 31, 2023, the outstanding restricted shares we granted to our directors and executive officers under the 2012 Share Incentive Plan and the 2014 Share Incentive Plan.
Compensation Committee . Our compensation committee consists of Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Frank Lin. Mr. Nanyan Zheng, Mr. Frank Lin, and Ms. Kathleen Chien satisfy the “independence” requirements under Section 303A of the Corporate Governance Rules of NYSE. Mr. Nanyan Zheng is the chairperson of our compensation committee.
Compensation Committee . Our compensation committee consists of Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Frank Lin. Mr. Nanyan Zheng, Mr. Frank Lin, and Ms. Kathleen Chien satisfy the “independence” requirements under Section 303A of the Corporate Governance Rules of the NYSE. Mr. Nanyan Zheng is the chairperson of our compensation committee.
The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; • reviewing and recommending to the board for determination with respect to the compensation of our directors; and reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements.
The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; and • reviewing and recommending to the board for determination with respect to the compensation of our directors; and reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Xing Liu. Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Xing Liu satisfy the “independence” requirements under Section 303A of the Corporate Governance Rules of NYSE. Mr.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Xing Liu. Mr. Nanyan Zheng, Ms. Kathleen Chien, and Mr. Xing Liu satisfy the “independence” requirements under Section 303A of the Corporate Governance Rules of the NYSE. Mr.
The maximum aggregate number of shares that may be issued pursuant to our 2014 Plan is (i) 5,366,998 Class A ordinary shares, and (ii) an automatic increase on January 1 of each year after the effective date of the 2014 Plan by that number of shares representing 1.5% of our then total issued and outstanding share capital as of December 31 of the preceding year, or such less number as determined by the board of directors.
The maximum aggregate number of shares that may be issued pursuant to our 2014 Share Incentive Plan is (i) 5,366,998 Class A ordinary shares, and (ii) an automatic increase on January 1 of each year after the effective date of the 2014 Share Incentive Plan by that number of shares representing 1.5% of our then total issued and outstanding share capital as of December 31 of the preceding year, or such less number as determined by the board of directors.
Our PRC legal counsel has advised us that there is uncertainty as to whether the courts of China would: • recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or • entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
Our PRC legal counsel has advised us that there is uncertainty as to whether the courts in mainland China would: • recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or • entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
Martin Chi Ping Lau has served as our director since December 2017. Mr. Lau is president and executive director of Tencent Holdings Limited (SEHK: 0700), or Tencent. He joined Tencent in 2005 as the chief strategy and investment officer, and was responsible for corporate strategies, investments, merger and acquisitions, and investor relations. In 2006, Mr.
Martin Chi Ping Lau has served as our director since December 2017. Mr. Lau is the president of Tencent Holdings Limited (SEHK: 0700), or Tencent. He joined Tencent in 2005 as the chief strategy and investment officer, and was responsible for corporate strategies, investments, merger and acquisitions, and investor relations. In 2006, Mr.
Subject to our amended and restated memorandum and articles of association, the directors may exercise all the powers of our company to borrow money, mortgage their undertaking, property and uncalled capital and issue debentures or other securities whether outright or as security for any debt, liability or obligation of our company or of any third party.
Subject to our second amended and restated memorandum and articles of association, the directors may exercise all the powers of our company to borrow money, mortgage their undertaking, property, and uncalled capital, and issue debentures or other securities whether outright or as security for any debt, liability, or obligation of our company or of any third party.
With the approval of our board of directors, at any time and from time to time, the plan administrator may terminate, amend or modify the 2014 Plan; provided, however, that to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, unless we decide to follow home country practice, shareholder approval is required for any plan amendment, including any amendment to the plan that (i) increases the number of shares available under the 2014 Plan, (ii) permits the plan administrator to extend the exercise period for an option beyond ten years from the date of grant, or (iii) results in a change in eligibility requirements.
With the approval of our board of directors, at any time and from time to time, the plan administrator may terminate, amend or modify the 2014 Share Incentive Plan; provided, however, that to the extent necessary and desirable to comply with any applicable law, regulation, or stock exchange rule, unless we decide to follow home country practice, shareholder approval is required for any plan amendment, including any amendment to the plan that (i) increases the number of shares available under the 2014 Share Incentive Plan, (ii) permits the plan administrator to extend the exercise period for an option beyond ten years from the date of grant, or (iii) results in a change in eligibility requirements.
PRC courts 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 China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
Courts in 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.
As required by the relevant PRC laws and regulations, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance, and housing insurance.
As required by the PRC laws and regulations, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance, and housing insurance.
The decrease in the number of full-time employees as of December 31, 2022, as compared to that of December 31, 2021, was primarily due to the strategic personnel optimization of our other offline stores and the personnel outsourcing of Shan Shan Outlets.
The decrease in the number of full-time employees as of December 31, 2022, as compared to that of December 31, 2021, was primarily due to the personnel optimization of our other offline stores and the personnel outsourcing of Shan Shan Outlets.
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.
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.
The audit committee will be 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.
The audit committee will be 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; 130 Table of Contents • 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; and • 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 nominating and corporate governance committee is responsible for, among other things: 139 Table of Contents • 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 regard 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 • and advising the board periodically with regard 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 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 regard 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 • and advising the board periodically with regard 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.
(2) For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of the stock options or vesting of restricted shares within 60 days after March 31, 2023.
(2) For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of the stock options or vesting of restricted shares within 60 days after March 31, 2024.
Liu received an MBA degree from The Wharton School of the University of Pennsylvania in May 2004, a master’s degree in computer engineering from Syracuse University in December 1995, and a bachelor’s degree in management information systems from Fudan University. Ms. Kathleen Chien has served as our independent director since March 2012. Ms.
Liu received an MBA degree from The Wharton School of the University of Pennsylvania in May 2004, a master’s degree in computer engineering from Syracuse University in December 1995, and a bachelor’s degree in management information systems from Fudan University in July 1992. Ms. Kathleen Chien has served as our independent director since March 2012. Ms.
Except as otherwise provided in an individual award agreement or any other written agreement entered into between a participant and us, our plan administrator may provide for one or more of the following in the event of a change of control or other similar corporate transaction: (i) the termination of each award outstanding under the plan at a specific time in the future, with each participant having the right to exercise such awards during a period of time as determined by the plan administrator; (ii) either the purchase of any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award or realization of the participant’s rights had such award been currently exercisable or payable or fully vested; (iii) the replacement of an award with other rights or property selected by the plan administrator in its sole discretion the assumption of or substitution of such award by the successor or surviving corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, or (iv) provide for payment of awards in cash based on the value of shares on the date of the change of control plus reasonable interest on the award through the date such award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with the Code.
Except as otherwise provided in an individual award agreement or any other written agreement entered into between a participant and us, our plan administrator may provide for one or more of the following in the event of a change of control or other similar corporate transaction: (i) the termination of each award outstanding under the plan at a specific time in the future, with each participant having the right to exercise such awards during a period of time as determined by the plan administrator; (ii) either the purchase of any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award or realization of the participant’s rights had such award been currently exercisable or payable or fully vested; (iii) the replacement of an award with other rights or property selected by the plan administrator in its sole discretion the assumption of or substitution of such award by the successor or surviving corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices, or (iv) provide for payment of awards in cash based on the value of shares on the date of the change of control plus reasonable interest on the award through the date such award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with the United States Internal Revenue Code of 1986, as amended.
Yang has held senior executive and managerial positions in various public and private companies, including serving as the chief finance officer of Synutra International Inc. (Nasdaq: SYUT) from May 2010 to August 2011, as the chief financial officer of Greater China of Tyson Foods, Inc.
Yang has held senior executive and managerial positions in various public and private companies, including serving as the chief finance officer of Synutra International Inc. from May 2010 to August 2011, as the chief financial officer of Greater China of Tyson Foods, Inc.
Lin currently serves on the board of directors of various DCM portfolio companies, including 51Talk Online Education Group (NYSE: COE), GigaCloud Technology Inc. (Nasdaq: GCT), Kuaishou Technology (SEHK: 1024), QuantaSing Group Limited (Nasdaq: QSG), and Tuniu Corporation (Nasdaq: TOUR). Mr.
Lin currently serves on the board of directors of various DCM portfolio companies, including 51Talk Online Education Group (NYSE: COE), GigaCloud Technology Inc. (Nasdaq: GCT), Kuaishou Technology (SEHK: 1024), YSB Inc. (SEHK: 9885), QuantaSing Group Limited (Nasdaq: QSG), and Tuniu Corporation (Nasdaq: TOUR). Mr.
Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements.
Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC laws against a company in mainland China for disputes if they can establish sufficient nexus to mainland China for a court in mainland China to have jurisdiction, and meet other procedural requirements.
Each of our directors will hold office until the expiration of his or her term and until his or her successor shall have been elected and qualified. There are no family relationships among any of the directors or executive officers of our company. Biographical Information Mr.
Each of our directors will hold office until the expiration of his or her term and until his or her successor should have been elected and qualified. There are no family relationships among any of the directors or executive officers of our company. Biographical Information Mr.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2023 by: • each of our directors and executive officers; and • each person known to us to beneficially own 5% or more of our ordinary shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2024 by: • each of our directors and executive officers; and • each person known to us to beneficially own 5% or more of our ordinary shares.
We have developed a corporate culture that encourages teamwork, effectiveness, self-development, and commitment to providing our customers with superior services. We regularly provide our employees with training tailored to each job function to enhance performance and service quality.
We have developed a corporate culture that encourages teamwork, effectiveness, personal development, and commitment to providing our customers with superior services. We regularly provide our employees with training tailored to each job function to enhance performance and service quality.
The registered address of Elegant Motion Holdings Limited is Trident Chambers, Wickhams Cay, PO Box 146, Road Town, Tortola, British Virgin Islands. 142 Table of Contents (14) Represents 12,852,698 Class A ordinary shares held by Tencent Mobility Limited as reported on the Schedule 13D/A filed with the SEC on December 16, 2019.
The registered address of Elegant Motion Holdings Limited is Trident Chambers, Wickhams Cay, PO Box 146, Road Town, Tortola, British Virgin Islands. (14) Represents 12,852,698 Class A ordinary shares held by Tencent Mobility Limited as reported on the Schedule 13D/A filed with the SEC on December 16, 2019.
Donghao Yang has served as our director since November 2020. Mr. Yang is currently the chief financial officer of Yatsen Holding Limited (NYSE: YSG). Prior to that, he has served as Vipshop’s chief financial officer from August 2011 to November 2020. Mr.
Donghao Yang has served as our director since November 2020. Mr. Yang is currently the director and chief financial officer of Yatsen Holding Limited (NYSE: YSG). Prior to that, he has served as our chief financial officer from August 2011 to November 2020. Mr.
Martin Chi Ping Lau, the business address of our directors and executive officers is c/o 128 Dingxin Road, Haizhu District, Guangzhou 510220, People’s Republic of China. 141 Table of Contents *** Certain of our directors and executive officers have been granted options and restricted shares pursuant to our stock incentive plans. See “Item 6. Directors, Senior Management and Employees—B.
Martin Chi Ping Lau, the business address of our directors and executive officers is c/o 128 Dingxin Road, Haizhu District, Guangzhou 510220, People’s Republic of China. *** Certain of our directors and executive officers have been granted options and restricted shares pursuant to our stock incentive plans. See “Item 6. Directors, Senior Management and Employees—B.
Jacky Xu, also known as Jacky Yu Xu is an angel investor of our company and has served as our director since January 2011. Mr. Xu is the director of several privately held companies in China. He is co-founder, chairman and chief executive officer of Trendy International Group Co., Ltd., an international fashion conglomerate. 131 Table of Contents Mr.
Jacky Xu, also known as Jacky Yu Xu is an angel investor of our company and has served as our director since January 2011. Mr. Xu is the director of several privately held companies in China. He is co-founder, chairman and chief executive officer of Trendy International Group Co., Ltd., an international fashion conglomerate. Mr.
Chien received her bachelor’s degree in economics from the Massachusetts Institute of Technology in June 1992 and an MBA degree from the Walter A. Haas School of Business at University of California, Berkeley in May 1996. Mr. Nanyan Zheng has served as our independent director since March 2012. Mr.
Chien received her bachelor’s degree in economics from the Massachusetts Institute of Technology in June 1992 and an MBA degree from the Walter A. Haas School of Business at University of California, Berkeley in May 1996. 125 Table of Contents Mr. Nanyan Zheng has served as our independent director since March 2012. Mr.
To the extent not prohibited by applicable laws or any exchange rule, a downward adjustment of the exercise prices of options shall be effective without the approval of the shareholders or the approval of the affected participants. Eligibility .
To the extent not prohibited by applicable laws or any exchange rule, a downward adjustment of the exercise prices of options could be effective without the approval of the shareholders or the approval of the affected participants. Eligibility .
Subject to certain limits set forth in the plan, the exercise price may be amended or adjusted in the absolute discretion of the plan administrator, whose determination shall be final, binding and conclusive.
Subject to certain limits set forth in the plan, the exercise price may be amended or adjusted in the absolute discretion of the plan administrator, whose determination should be final, binding, and conclusive.
The plan administrator may permit an award other than an incentive share option to be transferred to or exercised by certain persons related to the participant by express provision in the award or by an amendment to the award. Corporate Transactions .
The plan administrator may permit an award other than an incentive share option to be transferred to or exercised by certain persons related to the participant by express provision in the award or by an amendment to the award.
Mr. Arthur Xiaobo Hong is our co-founder and has served as the vice chairman of our board of directors since January 2011. Mr. Hong has served as our chief operating officer since August 2012. Mr. Hong has over 10 years of experience in the distribution of consumer goods and e-commerce industry. Mr.
Mr. Arthur Xiaobo Hong is our co-founder and has served as the vice chairman of our board of directors since January 2011. Mr. Hong has served as our chief operating officer since August 2012. Mr. Hong has over 10 years of experience in the distribution of consumer goods and e-commerce industry. 124 Table of Contents Mr.
In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest.
In addition, according to the PRC Civil Procedures Law, courts in mainland China will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of laws of mainland China or national sovereignty, security or public interest.
Chien is currently the chief operating officer and acting chief financial officer of 51job, Inc. (Nasdaq: JOBS), a Nasdaq-listed provider of integrated human resource services in China. Ms. Chien joined 51job, Inc. in 1999 and served as its chief financial officer from 2004 to March 2009. Ms.
Chien is currently the chief operating officer and acting chief financial officer of 51job, Inc., a provider of integrated human resource services in China. Ms. Chien joined 51job, Inc. in 1999 and served as its chief financial officer from 2004 to March 2009. Ms.
None of our directors has a service contract with us that provides for benefits upon termination of service. 138 Table of Contents Committees of the Board of Directors We have four committees under the board of directors, namely the audit committee, the compensation committee, the nominating and corporate governance committee, and the ESG committee.
None of our directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have four committees under the board of directors, namely the audit committee, the compensation committee, the nominating and corporate governance committee, and the ESG committee.
Lin received an MBA degree from Stanford University in June 1993 and a bachelor’s degree in engineering from Dartmouth College in June 1988. Mr. Xing Liu has served as our independent director since January 2011. Mr. Liu is currently a partner of Sequoia Capital China, which he joined in May 2007. Mr.
Lin received an MBA degree from Stanford University in June 1993 and a bachelor’s degree in engineering from Dartmouth College in June 1988. Mr. Xing Liu has served as our independent director since January 2011. Mr. Liu is currently a partner of HongShan, which he joined in May 2007. Mr.
Xiaochun Zhang have the power to jointly direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares, as reported by Elegant Motion, Eric Ya Shen, and Xiaochun Zhang on the Schedule 13G/A filed with the SEC on February 13, 2023.
Xiaochun Zhang have the power to jointly direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares, as reported by Elegant Motion, Eric Ya Shen, and Xiaochun Zhang on the Schedule 13G/A filed with the SEC on February 8, 2024.
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients or the confidential or proprietary information of any third party that we receive and for which we have confidential obligations.
Prior to joining us, Mr. Feng worked at Tencent where he led monetization initiatives of news and sports businesses, core technology upgrade and product planning of news business. From July 2014 to April 2020, Mr.
Feng worked at Tencent where he led monetization initiatives of news and sports businesses, core technology upgrade and product planning of news business. From July 2014 to April 2020, Mr.
The exercise price of an option shall be determined by the plan administrator and set forth in the award agreement. It may be a fixed price or a variable price related to the fair market value of our Class A ordinary shares, to the extent not prohibited by applicable laws.
Option Exercise Price . The exercise price of an option should be determined by the plan administrator and set forth in the award agreement. It may be a fixed price or a variable price relating to the fair market value of our Class A ordinary shares, to the extent not prohibited by applicable laws.
Hong has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares, as reported by High Vivacity and Arthur Xiaobo Hong on the Schedule 13G/A filed with the SEC on February 13, 2023.
Hong has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares, as reported by High Vivacity and Arthur Xiaobo Hong on the Schedule 13G/A filed with the SEC on February 8, 2024.
ESG Committee . Our ESG committee consists of Mr. Eric Ya Shen, Mr. Authur Xiaobo Hong, and Mr. Frank Lin. Mr. Eric Ya Shen is the chare of our ESG committee.
ESG Committee . Our ESG committee consists of Mr. Eric Ya Shen, Mr. Authur Xiaobo Hong, and Mr. Frank Lin. Mr. Eric Ya Shen is the chairperson of our ESG committee.
Mr. Zheng co-founded 7 Days Groups Holdings Ltd. (NYSE: SVN, delisted), and served as chief executive officer since October 2004 and as a director since its listing in 2009. Mr.
Mr. Zheng co-founded 7 Days Groups Holdings Ltd., and served as chief executive officer since October 2004 and as a director since its listing in 2009. Mr.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands.
As a result, it is uncertain whether and on what basis a court in mainland China would enforce a judgment rendered by a court in the United States or in the Cayman Islands.
Specifically, each executive officer has agreed not to (a) approach our clients, customers, contacts or other persons or entities introduced to the executive officer for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (b) assume employment with or provide services to any of our competitors, or engage with, whether as principal, partner, licensor or otherwise, any of our competitors; or (c) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination. 133 Table of Contents B.
Specifically, each executive officer has agreed not to (a) approach our clients, customers, contacts or other persons or entities introduced to the executive officer for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (b) assume employment with or provide services to any of our competitors, or engage with, whether as principal, partner, licensor or otherwise, any of our competitors; or (c) seek directly or indirectly, to solicit the services of any of our employees on or after the date of the executive officer’s termination, or in the year preceding such termination.
The ordinary shares directly held by Elegrant Motion as of December 30, 2022 were also reported by UBS Group AG directly and on behalf of certain subsidiaries, including UBS TC (Jersey) Ltd., the entity serving as the trustee of the SYZXC Trust, on the Schedule 13G/A filed with the SEC on February 8, 2023.
The ordinary shares directly held by Elegrant Motion as of December 31, 2023 were also reported by UBS Group AG directly and on behalf of certain subsidiaries, including UBS TC (Jersey) Ltd., the entity serving as the trustee of the SYZXC Trust, on the Schedule 13G/A filed with the SEC on February 5, 2024.
Except as otherwise provided in an individual award agreement or any other written agreement entered into between a participant and us, our plan administrator may provide for one or more of the following in the event of a change of control or other similar corporate transaction: (i) the termination of each award outstanding under the plan at a specific time in the future, with each participant having the right to exercise the vested portion of the awards during a period of time as determined by the plan administrator; (ii) the termination of any award in exchange for an amount of cash equal to the amount that could have been obtained upon the exercise of the award; (iii) the replacement of an award with other rights or property selected by the plan administrator; (iv) the assumption of the award by our successor, parent or subsidiary, or the substitution of an award granted by our successor, parent or subsidiary, with appropriate adjustments; or (v) payment of an award in cash based on the value of our ordinary shares on the date of the corporate transaction plus reasonable interest on the award.
Except as otherwise provided in an individual award agreement or any other written agreement entered into between a participant and us, our plan administrator may provide for one or more of the following in the event of a change of control or other similar corporate transaction: (i) the termination of each award outstanding under the plan at a specific time in the future, with each participant having the right to exercise the vested portion of the awards during a period of time as determined by the plan administrator; (ii) the termination of any award in exchange for an amount of cash equal to the amount that could have been obtained upon the exercise of the award; (iii) the replacement of an award with other rights or property selected by the plan administrator; (iv) the assumption of the award by our successor, parent or subsidiary, or the substitution of an award granted by our successor, parent or subsidiary, with appropriate adjustments; or (v) payment of an award in cash based on the value of our ordinary shares on the date of the corporate transaction plus reasonable interest on the award. 2014 Share Incentive Plan In July 2014, we adopted our 2014 Share Incentive Plan, which permits the grant of options to purchase our ordinary shares, restricted shares, share appreciation rights, and other types of awards as deemed appropriate by the administrator.
Other awards are transferable by will and by the laws of descent and distribution, and during the lifetime of the grantee, may be transferred to the extent and in the manner authorized by the plan administrator. Termination of Employment or Service .
Other awards are transferable by will and by the laws of descent and distribution, and during the lifetime of the grantee, may be transferred to the extent and in the manner authorized by the plan administrator.
Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of fees, salaries and benefits (excluding equity-based grants) of approximately RMB15.7 million (US$2.3 million) to our executive officers, and we paid an aggregate of approximately RMB4.0 million (US$0.6 million) to our directors.
B. Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of fees, salaries, and benefits (excluding equity-based grants) of approximately RMB8.3 million (US$1.2 million) to our executive officers, and we paid an aggregate of approximately RMB4.2 million (US$0.6 million) to our directors.
To our knowledge and based on our review of our register of shareholders as of March 31, 2023, 108,106,493 Class A ordinary shares were held of record by one holder that resides in the United States, Deutsche Bank Trust Company Americas, the depositary of our ADS program.
To our knowledge and based on our review of our register of shareholders as of March 31, 2024, 82,489,720 Class A ordinary shares were held of record by one holder that resides in the United States, Deutsche Bank Trust Company Americas, the depositary of our ADS program.
Xiaochun Zhang have the power to jointly direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares. As of March 31, 2023, Mr. Eric Ya Shen beneficially owned (i) 1,389,646 Class A ordinary shares, (ii) 74,497 Class A ordinary shares issuable to Mr.
Xiaochun Zhang have the power to jointly direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to these shares. As of March 31, 2024, Mr. Eric Ya Shen beneficially owned (i) 2,533 Class A ordinary shares, (ii) 1,908,592 Class A ordinary shares issuable to Mr.
Directors and Executive Officers Age Position/Title Eric Ya Shen 51 Chairman of the Board of Directors, Chief Executive Officer Arthur Xiaobo Hong 50 Vice Chairman of the Board of Directors, Chief Operating Officer Martin Chi Ping Lau 50 Director Jacky Yu Xu 51 Director Donghao Yang 51 Director Chun Liu (1) 55 Independent Director Frank Lin (2) 58 Independent Director Xing Liu (3) 52 Independent Director Kathleen Chien (1)(2)(3) 53 Independent Director Nanyan Zheng (1)(2)(3) 54 Independent Director David Cui 54 Chief Financial Officer Tao Feng 39 Chief Technology Officer Yizhi Tang 49 Senior Vice President of Logistics Notes: (1) Member of our audit committee.
Directors and Executive Officers Age Position/Title Eric Ya Shen 52 Chairman of the Board of Directors, Chief Executive Officer Arthur Xiaobo Hong 51 Vice Chairman of the Board of Directors, Chief Operating Officer Martin Chi Ping Lau 51 Director Jacky Yu Xu 52 Director Donghao Yang 52 Director Chun Liu (1) 56 Independent Director Frank Lin (2) 59 Independent Director Xing Liu (3) 53 Independent Director Kathleen Chien (1)(2)(3) 54 Independent Director Nanyan Zheng (1)(2)(3) 55 Independent Director Mark Wang 40 Chief Financial Officer Tao Feng 39 Chief Technology Officer Notes: (1) Member of our audit committee.
Name Number of Restricted Shares Date of Grant Donghao Yang * January 1, 2017 * December 1, 2020 Yizhi Tang * January 1, 2017 * May 1, 2019 Frank Lin * January 1, 2013 * April 1, 2016 * April 1, 2020 Xing Liu * April 1, 2016 * April 1, 2020 Nanyan Zheng * April 1, 2020 Kathleen Chien * January 1, 2013 * April 1, 2016 * April 1, 2020 Chun Liu * January 1, 2013 * April 1, 2016 * April 1, 2020 David Cui * November 1, 2020 * April 15, 2022 Feng Tao * August 1, 2022 Note: * Aggregate number of shares beneficially owned by the person account for less than 1% of our total outstanding ordinary shares.
Name Number of Restricted Shares Date of Grant Donghao Yang * January 1, 2017 * December 1, 2020 Frank Lin * January 1, 2013 * April 1, 2016 * April 1, 2020 Xing Liu * April 1, 2016 * April 1, 2020 Nanyan Zheng * April 1, 2020 Kathleen Chien * January 1, 2013 * April 1, 2016 * April 1, 2020 Chun Liu * January 1, 2013 * April 1, 2016 * April 1, 2020 Tao Feng * August 1, 2022 Mark Wang * June 1, 2023 Note: * Aggregate number of shares beneficially owned by the person account for less than 1% of our total outstanding ordinary shares.
We have also been advised by our Cayman Islands legal counsel that a judgment obtained in any federal or state court in the United States will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final and conclusive, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. 143 Table of Contents However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the United States courts under the civil liability provisions of the securities laws if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature.
We have also been advised by our Cayman Islands legal counsel that a judgment obtained in any federal or state court in the United States will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final and conclusive, (iv) is not in respect of taxes, a fine, or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
Lau was promoted as president of Tencent to manage the day-to-day operation of Tencent. In 2007, he was appointed as an executive director of Tencent. Prior to joining Tencent, Mr. Lau was an executive director at Goldman Sachs (Asia) L.L.C.’s investment banking division and the chief operating officer of its telecom, media, and technology group.
Lau was promoted as president of Tencent to manage the day-to-day operation of Tencent. Prior to joining Tencent, Mr. Lau was an executive director at Goldman Sachs (Asia) L.L.C.’s investment banking division and the chief operating officer of its telecom, media, and technology group. Prior to that, he worked at Mckinsey & Company, Inc. as a management consultant. Mr.
Number of Ordinary Shares Beneficially Owned (1) % (2) Directors and Executive Officers **: Eric Ya Shen (3) 17,405,226 15.4 Arthur Xiaobo Hong (4) 10,442,751 9.3 Martin Chi Ping Lau (5) * * Jacky Xu (6) * * Chun Liu (7) * * Frank Lin (8) * * Xing Liu (9) * * Kathleen Chien (10) * * Nanyan Zheng (11) * * Donghao Yang (12) * * David Cui * * Tao Feng * * Yizhi Tang * * All directors and executive officers as a group 28,557,456 25.3 Principal Shareholders : Directors and Executive Officers **: Elegant Motion Holdings Limited (13) 15,941,084 14.2 Tencent Mobility Limited (14) 12,852,698 11.4 High Vivacity Holdings Limited (15) 8,952,810 8.0 Notes: * Less than 1% of our total outstanding ordinary shares. ** Except for Mr.
Number of Ordinary Shares Beneficially Owned (1) % (2) Directors and Executive Officers **: Eric Ya Shen (3) 17,852,209 16.2 Arthur Xiaobo Hong (4) 10,644,065 9.6 Martin Chi Ping Lau (5) * * Jacky Xu (6) * * Chun Liu (7) * * Frank Lin (8) * * Xing Liu (9) * * Kathleen Chien (10) * * Nanyan Zheng (11) * * Donghao Yang (12) * * Tao Feng * * Mark Wang — — All directors and executive officers as a group 29,204,436 25.9 Principal Shareholders: Directors and Executive Officers **: Elegant Motion Holdings Limited (13) 15,941,084 14.7 Tencent Mobility Limited (14) 12,852,698 11.8 High Vivacity Holdings Limited (15) 8,707,142 8.0 Notes: * Less than 1% of our total outstanding ordinary shares. ** Except for Mr.
In addition, we also provide our employees fringe benefits such as free lunches and periodic appreciation payments to employees’ family members. For the year ended December 31, 2022, we have not experienced any significant labor disputes. E.
In addition, we also provide our employees fringe benefits such as free lunches and periodic appreciation payments to employees’ family members. For the year ended December 31, 2023, we did not experience any significant labor disputes. 132 Table of Contents E.
Employees As of December 31, 2022, we had 6,815 full-time employees, compared with 7,567 and 8,013 employees as of December 31, 2020 and 2021, respectively.
Employees As of December 31, 2023, we had 14,638 full-time employees, compared with 8,013 and 6,815 employees as of December 31, 2021 and 2022, respectively.
In December 2017 and August 2020, we registered additional securities consisting of 5,237,297 and 5,973,419 Class A ordinary shares that were automatically added to our 2014 Plan, effective January 1, 2015, January 1, 2016, January 1, 2017, January 2018, and January 2019, pursuant to the evergreen provisions.
In December 2017, August 2020, and May 2023, we registered additional securities consisting of 5,237,297, 5,973,419, and 5,830,632 Class A ordinary shares that were automatically added to our 2014 Share Incentive Plan, effective January 1 of each years from 2015 to 2023, pursuant to the evergreen provisions.
Zheng founded Plateno Group Ltd. in 2013, which wholly owned 7 Days Groups Holdings Ltd. after its privatization and launched a series of new mid-level and upscale hotel brands, and served as the chairman of Plateno Group Ltd. from 2013 to 2019. 132 Table of Contents Mr. David Cui has served as our chief financial officer since October 2020.
Zheng founded Plateno Group Ltd. in 2013, which wholly owned 7 Days Groups Holdings Ltd. after its privatization and launched a series of new mid-level and upscale hotel brands, and served as the chairman of Plateno Group Ltd. from 2013 to 2019. Mr. Mark Wang has served as our chief financial officer since May 2023. Prior to joining us, Mr.
Awards granted under the 2011 Plan are evidenced by an award agreement and, in the case of stock options, a notice of stock option award that sets forth the terms, conditions, and limitations for each grant. Exercise Price . The exercise price of an award shall be determined by the administrator in accordance with the 2011 Plan. Eligibility .
Awards granted under the 2011 Stock Incentive Plan are evidenced by an award agreement and, in the case of stock options, a notice of stock option award that sets forth the terms, conditions, and limitations for each grant.
The calculations in the shareholder table below are based on 112,612,139 ordinary shares issued and outstanding as of March 31, 2023, comprising of (i) 97,051,781 Class A ordinary shares, excluding the 29,236,960 Class A ordinary shares issued to Deutsche Bank Trust Company Americas, the depositary of our ADS program, for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our stock incentive plans and our treasury ADSs, and (ii) 15,560,358 Class B ordinary shares.
The calculations in the shareholder table below are based on 108,474,571 ordinary shares issued and outstanding as of March 31, 2024, comprising of (i) 92,914,213 Class A ordinary shares, excluding the 7,157,755 Class A ordinary shares issued to Deutsche Bank Trust Company Americas, the depositary of our ADS program, for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our stock incentive plans and our treasury ADSs, and (ii) 15,560,358 Class B ordinary shares.
We may grant options, restricted shares or restricted share units to our directors, employees or consultants under the plan. Awards granted under the plan will be evidenced by award agreements that set forth the terms, conditions and limitations for each award.
The termination did not adversely affect any rights under awards previously granted. We were authorized to grant options, restricted shares or restricted share units to our directors, employees or consultants under the plan. Awards granted under the plan are evidenced by award agreements that set forth the terms, conditions and limitations for each award.
Except as otherwise provided by the plan administrator, an award may not be transferred or otherwise disposed of by a participant other than by will or the laws of descent and distribution.
We have the right to repurchase the restricted shares until they have vested. Transfer Restrictions . Except as otherwise provided by the plan administrator, an award may not be transferred or otherwise disposed of by a participant other than by will or the laws of descent and distribution.
Liu has served a non-executive director of ZTO Express (Cayman) Inc. (NYSE: ZTO, SEHK: 2057) since May 2013 and as a non-executive director of China Renaissance Holdings Limited (SEHK: 1911) since June 2020. Mr.
Liu has served a non-executive director of ZTO Express (Cayman) Inc. (NYSE: ZTO, SEHK: 2057) since May 2013. Mr.
The following table summarizes, as of December 31, 2022, the outstanding restricted shares we granted to our directors and executive officers under the 2012 Plan and the 2014 Plan.
Share Incentive Grants The following table summarizes, as of December 31, 2023, the outstanding options we granted to our directors and executive officers under the 2011 Stock Incentive Plan, the 2012 Share Incentive Plan, and the 2014 Share Incentive Plan.
It will be, however, difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding the ADSs or ordinary shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.
It will be, however, difficult for U.S. shareholders to originate actions against us in mainland China in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding the ADSs or ordinary shares, to establish a connection to mainland China for a court in mainland China to have jurisdiction as required under the PRC Civil Procedures Law. 135 Table of Contents Furthermore, the United States and Hong Kong do not have a bilateral treaty or multilateral convention in force on reciprocal recognition and enforcement of judgments either.
In the event that an award recipient ceases employment with us or ceases to provide services to us, an award may be exercised following the termination of employment or service to the extent provided in the award agreement. Termination and Amendment of the Plan . The 2011 Plan was terminated automatically in 2021.
In the event that an award recipient ceases employment with us or ceases to provide services to us, an award may be exercised following the termination of employment or service to the extent provided in the award agreement. 2012 Share Incentive Plan Our 2012 Share Incentive Plan was adopted in March 2012 and terminated automatically after its ten-year term in March 2022.
We may grant options, restricted shares, share appreciation rights, or other types of awards to our directors, employees or consultants under the plan. Awards granted under the plan will be evidenced by award agreements that set forth the terms, conditions and limitations for each award.
The committee will determine the provisions and terms and conditions of each award grant. Awards and Award Agreement . We may grant options, restricted shares, share appreciation rights, or other types of awards to our directors, employees or consultants under the plan.
For the options granted to our directors, officers and employees, please refer to “Item 6. Directors, Senior Management and Employees—B. Compensation.” F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
For the options granted to our directors, officers and employees, please refer to “Item 6. Directors, Senior Management and Employees—B. Compensation.” F.
These may include the term of an award, the provisions applicable in the event the participant’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an award. Option Exercise Price . The exercise price of an option shall be determined by the plan administrator and set forth in the award agreement.
Awards granted under the plan will be evidenced by award agreements that set forth the terms, conditions, and limitations for each award. These may include the term of an award, the provisions applicable in the event the participant’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an award.
The plan will be administered by the Compensation Committee, or a committee of two or more directors to whom the Compensation Committee shall delegate the authority to grant or amend awards to participants other than independent directors and executive officers. The committee will determine the provisions and terms and conditions of each award grant. Awards and Award Agreement .
The following paragraphs describe the principal terms of our 2014 Share Incentive Plan: Plan Administration . The plan will be administered by the Compensation Committee, or a committee of two or more directors to whom the Compensation Committee may delegate the authority to grant or amend awards to participants other than independent directors and executive officers.
The ESG committee is responsible for systematically evaluating, monitoring, and carrying out a variety of ESG initiatives with an aim to strengthen the ESG awareness and efforts at full scale, ranging from energy conservation and emission reduction, responsibility management, customer services, and sustainable supply chain, among others.
The ESG committee is responsible for systematically evaluating, monitoring, and carrying out a variety of ESG initiatives with an aim to strengthen the ESG awareness and efforts at full scale, ranging from energy conservation and emission reduction, responsibility management, customer services, and sustainable supply chain, among other things. 131 Table of Contents Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests.
The following table sets forth the number of our full time employees categorized by areas of operations as of December 31, 2022: Operations Number of Employee Merchandising 1,162 Products and technology support 1,786 Business development, sales and marketing 164 Internet finance 58 Customer services 489 Warehouse management 1,018 Offline stores 407 Administration and management 795 Shan Shan Outlets 936 Total 6,815 140 Table of Contents Our success depends on our ability to attract, retain, and motivate qualified personnel.
The following table sets forth the number of our full time employees categorized by areas of operations as of December 31, 2023: Operations Number of Employees Merchandising 1,131 Products and technology support 1,822 Business development, sales and marketing 161 Internet finance 55 Customer service 896 Warehouse management 8,337 Offline stores 268 Administration and management 803 Shan Shan Outlets 1,165 Total 14,638 Our success depends on our ability to attract, retain, and motivate qualified personnel.
Our initial public offering in March 2012 is a qualified initial public offering under the 2011 Plan. 134 Table of Contents Transfer Restrictions . Incentive stock options may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the grantee, only by the grantee.
Incentive stock options may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the grantee, only by the grantee.
Eric Ya Shen upon the exercise of options within 60 days after March 31, 2023, and (iii) 380,726 Class A ordinary shares and 15,560,358 Class B ordinary shares held by Elegant Motion Holdings Limited, representing 62.3% of the aggregate voting power of our company.
Eric Ya Shen upon the exercise of options within 60 days after March 31, 2024, and (iii) 380,726 Class A ordinary shares and 15,560,358 Class B ordinary shares held by Elegant Motion Holdings Limited, representing 63.1% of the aggregate voting power of our company. 133 Table of Contents (4) Beneficially owned through High Vivacity Holdings Limited, a British Virgin Islands company, which is ultimately wholly owned by the Nasa Stand Trust, and options of Mr.
Under the 2011 Plan, the maximum number of shares might be granted was 7,350,000 ordinary shares. The 2011 Plan has expired while options to acquire 461,236 Class A ordinary shares remained outstanding thereunder as of the date of this annual report. The following paragraphs summarize the terms of the 2011 Plan. Plan Administration .
The maximum number of shares authorized under the 2011 Stock Incentive Plan was 7,350,000 ordinary shares. The 2011 Stock Incentive Plan expired already while options to acquire 461,234 Class A ordinary shares remained outstanding thereunder as of the date of this annual report. The termination did not adversely affect any rights under awards previously granted.
Incentive share options may be granted only to employees of our company or a parent or a subsidiary of our company. Term of the Awards . The term of each award grant shall be determined by our plan administrator, provided that the term for an option shall not exceed 10 years from the date of the grant. Vesting Schedule .
The term of each award grant should be determined by our plan administrator, provided that the term for an option should not exceed 10 years from the date of the grant. Vesting Schedule . In general, the plan administrator determines, or the award agreement specifies, the vesting schedule.
These may include the term of an award, the provisions applicable in the event the participant’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an award. 136 Table of Contents Option Exercise Price .
These may include the term of an award, the provisions applicable in the event the participant’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an award. 127 Table of Contents Except as otherwise provided by the plan administrator, an award may not be transferred or otherwise disposed of by a participant other than by will or the laws of descent and distribution.

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Item 7. Management's Discussion & Analysis

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

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Biggest changeTo our best knowledge, JD.com no longer holds any of our shares or ADSs as of the date of this annual report. 144 Table of Contents Other than transactions with Tencent and JD.com, we purchased products and goods from companies controlled by our directors or major shareholders, in the amount of RMB275.7 million (US$40.0 million) for the year ended December 31, 2022.
Biggest changeOrganizational Structure—Contractual Arrangements Relating to the Consolidated Variable Interest Entities.” Transactions with Our Directors and Shareholders We purchased products and goods from companies controlled by our directors or major shareholders in the amount of RMB267.8 million (US$37.7 million) and received service from companies controlled by our directors or major shareholders in the amount of RMB833.0 million (US$117.3 million), for the year ended December 31, 2023.
Related Party Transactions Contractual Arrangements Our wholly-owned subsidiary, Vipshop China, has entered into a series of contractual arrangements with the consolidated variable interest entity, Vipshop E-Commerce, and its shareholders, which enable us to direct the business operations of Vipshop E-Commerce, receive substantially all of the economic benefits of Vipshop E-Commerce through service fees in consideration for the technical and consulting services provided by Vipshop China, and have an exclusive option to purchase, or designate one or more person(s) to purchase, all of the equity interests in Vipshop E-Commerce to the extent permitted under PRC laws, regulations, and legal procedures.
Related Party Transactions Contractual Arrangements Our wholly-owned subsidiary, Vipshop China, has entered into a series of contractual arrangements with the consolidated variable interest entity, Vipshop E-Commerce, and its shareholders, which enable us to make management decisions of Vipshop E-Commerce, receive substantially all of the economic benefits of Vipshop E-Commerce through service fees in consideration for the technical and consulting services provided by Vipshop China, and have an exclusive option to purchase, or designate one or more person(s) to purchase, all of the equity interests in Vipshop E-Commerce to the extent permitted under PRC laws, regulations, and legal procedures.
As of December 31, 2022, the amounts due to companies controlled by our directors or major shareholders were RMB125.5 million (US$18.2 million), which was unsecured and interest free. We also provided service to companies controlled or significantly influenced by our directors or major shareholders in the amount of RMB1.5million (US$0.2 million) for the year ended December 31, 2022.
As of December 31, 2023, the amounts due to companies controlled by our directors or major shareholders were RMB79.2 million (US$11.2 million), which was unsecured and interest free. We also provided service to companies controlled or significantly influenced by our directors or major shareholders in the amount of RMB1.0 million (US$0.1 million) for the year ended December 31, 2023.
As of December 31, 2022, the amounts due from companies significantly influenced by us were RMB651.3million (US$94.4 million), of which RMB604.9 million (US$87.7 million) were short-term loan originated to our company’s joint ventures and affiliates carried an interest rate of 3.85% and deposits to Sichuan VipFubon Consumer Finance Co., Ltd as shareholder deposits at interest rate of 4.95%.
As of December 31, 2023, the amounts due from companies significantly influenced by us were RMB506.7 million (US$71.4 million), of which RMB483.0 million (US$68.0 million) were short-term loan originated to our company’s joint ventures and affiliates carried an interest rate of 3.45% and deposits to Sichuan VipFubon Consumer Finance Co., Ltd as shareholder deposits at interest rate of 4.9%.
As of December 31, 2022, the amounts due from our directors or major shareholders and companies controlled or significantly influenced by our directors or major shareholders were RMB18.9 million (US$2.7 million), which were unsecured and interest free.
As of December 31, 2023, the amounts due from our directors or major shareholders and companies controlled or significantly influenced by our directors or major shareholders were RMB46.8 million (US$6.6 million), which were unsecured and interest free.
Our sales of products to companies significantly influenced by us was RMB90.2 million (US$13.1 million) for the year ended December 31, 2022.
Our sales of products to companies significantly influenced by us was RMB73.2 million (US$10.3 million) for the year ended December 31, 2023.
The interest income from the loan and deposit amounted to RMB31.8 million (US$4.6million) for the year ended December 31, 2022. Employment Agreements See “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Employment Agreements.” Share Options See “Item 6. Directors, Senior Management and Employees—B. Compensation—Stock Incentive Plans.” C. Interests of Experts and Counsel Not applicable.
The interest income from the loan and deposit amounted to RMB24.0 million (US$3.4 million) for the year ended December 31, 2023. 136 Table of Contents Employment Agreements See “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Employment Agreements.” Share Options See “Item 6. Directors, Senior Management and Employees—B. Compensation—Stock Incentive Plans.” C.
Transactions with Other Related Parties We purchased products and goods from companies significantly influenced by us in the amount of RMB91.4 million (US$13.3million) and received service from our affiliates in the amount of RMB7.5 million (US$1.1million), for the year ended December 31, 2022.
Transactions with Other Related Parties We purchased products and goods from companies significantly influenced by us in the amount of RMB106.1 million (US$14.9 million) and received service from our affiliates in the amount of RMB5.6 million (US$0.8 million), for the year ended December 31, 2023.
As of December 31, 2022, the amount due to companies significantly influenced by us were RMB26.3 million (US$3.8 million), which were unsecured and interest free. We also provided service to companies significantly influenced by us in the amount of RMB20.0million (US$2.9 million) for the year ended December 31, 2022.
As of December 31, 2023, the amount due to companies significantly influenced by us were RMB71.1 million (US$10.0 million), which were unsecured and interest free. We also provided service to companies significantly influenced by us in the amount of RMB16.7 million (US$2.4 million) for the year ended December 31, 2023.
Removed
For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements Relating to the Consolidated Variable Interest Entities.” Transactions with Our Directors and Shareholders In December 2017, a Tencent subsidiary and JD.com entered into strategic cooperation framework agreement and business cooperation framework agreement with us, respectively.
Added
For a description of these contractual arrangements, see “Item 4. Information on the Company—C.
Removed
Under these agreements, Tencent granted us an entry on the interface of Weixin Wallet, and JD.com granted us entries on the main page of JD.com’s mobile application, and the main page of JD.com’s Weixin Discovery shopping entry, to utilize the traffic from such platforms.

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