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Zepp Health Corp

Zepp Health CorpZEPP決算レポート

NYSE · 産業 · 電子コンピュータ

Zepp Health Corp is a global digital health and smart wearable technology company. It develops and sells fitness trackers, smartwatches, and AI-powered health monitoring tools, serving individual consumers, sports teams, and healthcare providers across Asia, North America, and Europe, with core focus on wellness tracking and remote health management solutions.

What changed in Zepp Health Corp's 20-F — 2022 vs 2023

Top changes in Zepp Health Corp's 2023 20-F

861 paragraphs added · 871 removed · 710 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
We expect that it will become more difficult to forecast demand as we introduce and develop a more diverse product portfolio and as market competition for similar products intensifies.
As we introduce and develop a more diverse product portfolio and as market competition for similar products intensifies, we expect that it will become more difficult to forecast demand.
On September 6, 2022, we received a notice from Beijing Communication Administration, requiring us to conduct self-review on the problems they found on our app in respect of infringement of users’ rights, threats to data security and potential hidden hazards.
On September 6, 2022, we received a notice from the Beijing Communication Administration, requiring us to conduct self-review on the problems they found on our app in respect of infringement of users’ rights, threats to data security and potential hidden hazards.
In July 2021, the National Intellectual Property Administration issued an order which invalidated this registered trademark. The invalidation decision was further confirmed by Beijing Intellectual Property Court and Beijing High People’s Court in June 2022 and December 2022, respectively. Furthermore, the “ 华米 ” trademark in one trademark category—which is contractually owned by Xiaomi only.
In July 2021, the National Intellectual Property Administration issued an order which invalidated this registered trademark. The invalidation decision was further confirmed by Beijing Intellectual Property Court and Beijing High People’s Court in June 2022 and December 2022, respectively. Furthermore, the “ 华米 ” trademark in one trademark category is contractually owned by Xiaomi only.
Any failure to detect, prevent, or fix defects, or an increase in defects could result in a variety of consequences, including a greater number of returns and replacement of products than expected from Xiaomi for Xiaomi Wearable Products, or from end users for our Amazfit and Zepp products.
Any failure to detect, prevent, or fix defects, or an increase in defects could result in a variety of consequences, including a greater number of replacement and returns of products than expected from end users for our Amazfit and Zepp products, or from Xiaomi for Xiaomi Wearable Products.
This will lead to increases in warranty costs, regulatory proceedings and product recalls, which could harm not only our revenue and operating results, but also our brand name. We currently offer a standard product warranty that the product will operate under normal use. We offer product warranty to Xiaomi and distributors of our self-branded products.
This will lead to increases in warranty costs, regulatory proceedings and product recalls, which could harm not only our revenue and operating results, but also our brand name. We currently offer a standard product warranty that the product will operate under normal use. We offer product warranty to distributors of our self-branded products and Xiaomi.
It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC, and no organization or individual may provide documents or materials relating to securities business activities to overseas parties arbitrarily without the consent of the competent securities regulatory authority in China.
Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC, and no organization or individual may provide documents or materials relating to securities business activities to overseas parties arbitrarily without the consent of the competent securities regulatory authority in China.
Business Overview—Regulation—Regulations on Tax—PRC Enterprise Income Tax.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that Zepp Health Corporation is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs.
Business Overview—Regulation—Regulation on Tax—PRC Enterprise Income Tax.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that Zepp Health Corporation is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs.
For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be required to expend valuable resources to comply with SAT Public Notice 37 and SAT Public Notice 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have an adverse effect on our financial condition and results of operations.
For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be required to expend valuable resources to comply with SAT Public Notice 37 and SAT Public Notice 7 or to request the transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have an adverse effect on our financial condition and results of operations.
According to the Trial Measures and the Notice on Administrative Arrangement of Overseas Securities Offering and Listing of Domestic Companies issued by the CSRC on February 17, 2023, we are required to conduct filing with the CSRC in connection with our future issuances of our equity securities, such as shares, depository receipts, convertible bonds and exchangeable bonds, etc. to foreign investors and listings, and to submit reports to the CSRC for some material events such as change of control, and voluntary or mandatory delisting, etc.
According to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and the Notice on Administrative Arrangement of Overseas Securities Offering and Listing of Domestic Companies issued by the CSRC on February 17, 2023, we are required to conduct filing with the CSRC in connection with our future issuances of our equity securities, such as shares, depository receipts, convertible bonds and exchangeable bonds to foreign investors and listings, and to submit reports to the CSRC for some material events such as change of control, and voluntary or mandatory delisting.
Our revenues have been higher in the fourth quarter each year primarily as a result of (i) holiday sales for Black Friday and Cyber Monday and during the lead-up to Christmas and (ii) promotional events organized by Amazon and other e-commerce platforms. Accordingly, any shortfall in expected fourth quarter revenue would adversely affect our annual operating results.
Historically, our revenues have been higher in the fourth quarter each year primarily as a result of (i) holiday sales for Black Friday and Cyber Monday and during the lead-up to Christmas and (ii) promotional events organized by Amazon and other e-commerce platforms. Accordingly, any shortfall in expected fourth quarter revenue would adversely affect our annual operating results.
Further, as we associate ourselves with these strategic partners in providing services, any negative publicity on them may also have adverse impact on our own reputation. Our future success depends on the continuing efforts of our key employees, including our founder Mr. Wang Huang, and on our ability to attract and retain highly skilled personnel and senior management.
Further, as we associate ourselves with these strategic partners in providing services, any negative publicity on them may also have adverse impact on our own reputation. Our future success depends on the continuing efforts of our key employees, including our founder Mr. Wang Wayne Huang, and on our ability to attract and retain highly skilled personnel and senior management.
The PRC Anti-monopoly Law and the relevant implementing rules (i) require that where concentration of undertakings reaches the filing threshold stipulated by the State Council, a filing must be made with the anti-monopoly authority before the parties implement the concentration, (ii) prohibit a business operator with a dominant market position from abusing such position, such as by selling commodities at unfairly high prices or buying commodities at unfairly low prices, selling products at prices below cost without any justifiable cause, or refusing to trade with a trading party without any justifiable cause, and (iii) prohibit business operators from entering into monopoly agreements, which refer to agreements that eliminate or restrict competition with competing business operators or transaction counterparties, such as by boycotting transactions, fixing or changing the price of commodities, limiting the output of commodities or fixing the price of commodities for resale to third parties, unless the agreements satisfy certain exemptions under the PRC Anti-monopoly Law.
The PRC Anti-monopoly Law and its implementing rules (i) require that where concentration of undertakings reaches the filing threshold stipulated by the State Council, a filing must be made with the anti-monopoly authority before the parties implement the concentration, (ii) prohibit a business operator with a dominant market position from abusing such position, such as by selling commodities at unfairly high prices or buying commodities at unfairly low prices, selling products at prices below cost without any justifiable cause, or refusing to trade with a trading party without any justifiable cause, and (iii) prohibit business operators from entering into monopoly agreements, which refer to agreements that eliminate or restrict competition with competing business operators or transaction counterparties, such as by boycotting transactions, fixing or changing the price of commodities, limiting the output of commodities or fixing the price of commodities for resale to third parties, unless the agreements satisfy certain exemptions under the PRC Anti-monopoly Law.
During the meeting, it was pointed out that illegal activities including, among others, forcing the implementation of “choose one” among the enterprise and its competitors, abusing dominant market position, “cash burning” to seize the “community group buying” market, making use of big data analysis to the disadvantage of existing customers, etc., shall be prohibited and rectified.
During the meeting, it was pointed out that illegal activities including, among others, forcing the implementation of “choose one” among the enterprise and its competitors, abusing dominant market position, “cash burning” to seize the “community group buying” market, and making use of big data analysis to the disadvantage of existing customers, shall be prohibited and rectified.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar, Euro and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal and administrative obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, could cause our users to lose trust in us and could expose us to legal claims.
Any of our failure or perceived failure to prevent information security breaches or to comply with privacy policies or privacy-related legal and administrative obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, could cause our users to lose trust in us and could expose us to legal claims.
Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims.
Any of our failure or perceived failure to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims.
We refer to the shareholders of each of the VIEs as its nominee shareholders because although they remain the holders of equity interests on record in each of the VIEs, pursuant to the terms of the relevant power of attorney, each such shareholder has irrevocably authorized our WFOE to exercise his, her or its rights as a shareholder of the relevant VIE.
We refer to the shareholders of each of the VIEs as its nominee shareholders because although they remain the holders of equity interests on record in each of the VIEs, pursuant to the terms of the power of attorney, each such shareholder has irrevocably authorized our WFOE to exercise his, her or its rights as a shareholder of the VIE.
Any failure or perceived failure by us to comply with the anti-monopoly and anti-unfair competition laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
Any of our failure or perceived failure to comply with the anti-monopoly and anti-unfair competition laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
If the platforms are found to conduct illegal activities including forcing the implementation of “choose one” among them and their competitors, abusing dominant market position, infringing consumers rights and interests, etc., they will be imposed with more severe penalties in accordance with the laws.
If the platforms are found to conduct illegal activities including forcing the implementation of “choose one” among them and their competitors, abusing dominant market position, and infringing consumers rights and interests, they will be imposed with more severe penalties in accordance with the laws.
Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-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-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-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.
If and when such other technical services are provided, the amount to be charged is to be mutually agreed between the VIEs and the WFOEs based on the nature and workload of the services. Historically, the WFOE has not charged such service fees, and as such, there is currently no fees to be settled under the contractual arrangements.
If and when such other technical services are provided, the amount to be charged is to be mutually agreed between the VIEs and the WFOE based on the nature and workload of the services. Historically, the WFOE has not charged such service fees, and as such, there is currently no fees to be settled under the contractual arrangements.
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 China-based overseas-listed 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 regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.
If we or any of the VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.
If we or any of the VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.
The centralized cash management function in these entities lead to daily cash transferred and dispatched to the remaining consolidated subsidiaries and consolidated VIEs. We have complied with the applicable laws and regulations for the operation of such cash centralized management accounts and completed necessary registration and approval procedures with relevant governmental authorities.
The centralized cash management function in these entities lead to daily cash transferred and dispatched to the remaining consolidated subsidiaries and consolidated VIEs. We have complied with the applicable laws and regulations for the operation of such cash centralized management accounts and completed necessary registration and approval procedures with governmental authorities.
In the United States, the Health Insurance Portability and Accountability Act, or HIPAA, governs the privacy and security of health information and require that covered entities, including most health care providers, implement administrative, physical, and technical safeguards to protect the security of individually identifiable health information that is maintained or transmitted electronically.
In the United States, the Health Insurance Portability and Accountability Act governs the privacy and security of health information and require that covered entities, including most health care providers, implement administrative, physical, and technical safeguards to protect the security of individually identifiable health information that is maintained or transmitted electronically.
In particular, our acquisitions and investments may be subject to relevant laws, regulations and governmental approvals, potentially strict scrutiny by foreign governments, both retrospectively and prospectively. For example, in June 2020, we acquired PAI Health, a heart health software company incorporated in Canada.
In particular, our acquisitions and investments may be subject to laws, regulations and governmental approvals, potentially strict scrutiny by foreign governments, both retrospectively and prospectively. For example, in June 2020, we acquired PAI Health, a heart health software company incorporated in Canada.
The PRC government and public advocacy groups have been increasingly focused on environment, social and governance (“ESG”) issues in recent years, making our business more sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and other ESG-related matters.
The PRC government and public advocacy groups have been increasingly focused on environment, social and governance (ESG) issues in recent years, making our business more sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and other ESG-related matters.
If our PRC subsidiaries realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay dividends or distribute earnings to our Hong Kong Subsidiary. Our Hong Kong subsidiary, in turn, may transfer cash to the Parent through dividends or other distributions.
If our PRC subsidiaries realize accumulated after-tax profits, they may, upon satisfaction of statutory conditions and procedures, pay dividends or distribute earnings to our Hong Kong Subsidiary. Our Hong Kong subsidiary, in turn, may transfer cash to the Parent through dividends or other distributions.
In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China.
In 2009, the State Administration of Taxation issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China.
Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. In particular, we are highly dependent on the contributions of our founder Mr. Wang Huang, as well as other members of our senior management team.
Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. In particular, we are highly dependent on the contributions of our founder Mr. Wang Wayne Huang, as well as other members of our senior management team.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future.
Given the uncertainties of interpretation and implementation of laws and regulations and the enforcement practice by government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future.
We currently follow our home country practice in lieu of these requirements. In January 2023, our board of directors approved the 2023 Share Incentive Plan. We followed our home country practice and our Memorandum and Articles, and did not convene a shareholder meeting to approve the 2023 Share Incentive Plan.
We currently follow our home country practice in lieu of these requirements. In addition, in January 2023, our board of directors approved the 2023 Share Incentive Plan. We followed our home country practice and our Memorandum and Articles, and did not convene a shareholder meeting to approve the 2023 Share Incentive Plan.
The FIL does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises, but it has a catch-all provision under the definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or rules of the State Council, so there is still a possibility for future laws, administrative regulations or provisions of the State Council to stipulate contractual arrangements as a form of foreign investment.
The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises, but it has a catch-all provision under the definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or rules of the State Council, so there is still a possibility for future laws, administrative regulations or provisions of the State Council to stipulate contractual arrangements as a form of foreign investment.
This integration process involves inherent uncertainties, and we cannot assure you that the anticipated benefits of these acquisitions will be fully realized without incurring unanticipated costs or diverting management’s attention from our core operations. 35 Table of Contents Acquisitions and investments may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, and adversely impact our business, financial condition, operating results, and cash flows.
This integration process involves inherent uncertainties, and we cannot assure you that the anticipated benefits of these acquisitions will be fully realized without incurring unanticipated costs or diverting management’s attention from our core operations. 34 Table of Contents Acquisitions and investments may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, and adversely impact our business, financial condition, operating results, and cash flows.
Wang Huang, the chairman of our board of directors and our chief executive officer, also serves as the chairman of the board of directors of Jiangsu Yitong High-tech Co., Ltd., or Jiangsu Yitong, an affiliate of our company. Our director, Ms. Yunfen Lu, also serves as a director of Jiangsu Yitong.
Wang Wayne Huang, the chairman of our board of directors and our chief executive officer, also serves as the chairman of the board of directors of Jiangsu Yitong High-tech Co., Ltd., or Jiangsu Yitong, an affiliate of our company. Our director, Ms. Yunfen Lu, also serves as a director of Jiangsu Yitong.
If we fail to obtain the relevant approval or complete other filing procedures, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to obtain the requisite approval or complete other filing procedures, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
In the event that any possible implementing regulations of the FIL, any other future laws, administrative regulations or provisions deem contractual arrangements as a way of foreign investment, or if any of our operations through contractual arrangements is classified in the “restricted” or “prohibited” industry in the future “negative list” under the FIL, our contractual arrangements may be deemed as invalid and illegal, and we may be required to unwind the variable interest entity contractual arrangements and/or dispose of any affected business, any of which may have a material adverse effect on our business operation.
In the event that any possible implementing regulations of the Foreign Investment Law, any other future laws, administrative regulations or provisions deem contractual arrangements as a way of foreign investment, or if any of our operations through contractual arrangements is classified in the “restricted” or “prohibited” industry in the future “negative list” under the Foreign Investment Law, our contractual arrangements may be deemed as invalid and illegal, and we may be required to unwind the variable interest entity contractual arrangements and/or dispose of any affected business, any of which may have a material adverse effect on our business operation.
Moreover, the Anti-Monopoly Law requires, among other things, that the anti-trust governmental authority shall be notified in advance of any concentration of undertakings if certain thresholds are triggered.
Moreover, the PRC Anti-Monopoly Law requires, among other things, that the anti-trust governmental authority shall be notified in advance of any concentration of undertakings if certain thresholds are triggered.
Any underperformance or negative publicity of our strategic partners may also adversely affect our operating results. It requires resources and contributions from a variety of market players to capitalize on the data and user base that we have accumulated so far. We have been actively seeking strategic cooperation opportunities on this front to create diverse application scenarios of our products.
Any underperformance or negative publicity of our strategic partners may also adversely affect our operating results. It takes resources and contributions from a variety of market players to capitalize on the data and user base that we have accumulated so far. We have been actively seeking strategic cooperation opportunities on this front to create diverse application scenarios of our products.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions between our WFOE and the VIEs; ● imposing fines, confiscating the income from our WFOE or the VIEs, or imposing other requirements with which we or the VIEs may not be able to comply; 39 Table of Contents ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIEs; or ● restricting or prohibiting our use of the proceeds of our initial public offering and our ADS offering in April 2019 to finance our business and operations in China.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions between our WFOE and the VIEs; ● imposing fines, confiscating the income from our WFOE or the VIEs, or imposing other requirements with which we or the VIEs may not be able to comply; ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIEs; or ● restricting or prohibiting our use of the proceeds of our initial public offering and our ADS offering in April 2019 to finance our business and operations in China.
Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations. 43 Table of Contents On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations. 42 Table of Contents On July 6, 2021, the PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
The Anti-Monopoly Guidelines prohibit certain monopolistic acts of internet platforms so as to protect market competition and safeguard the interests of users and undertakings participating in the internet platform economy, including, without limitation, prohibiting platforms with a dominant position from abusing their market dominance (such as discriminating against customers in terms of pricing and other transactional conditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology to block competitors’ interfaces, favorable positioning in search results of goods displays, using bundle services to sell services or products, compulsory collection of unnecessary user data).
These guidelines prohibit certain monopolistic acts of internet platforms so as to protect market competition and safeguard the interests of users and undertakings participating in the internet platform economy, including, without limitation, prohibiting platforms with a dominant position from abusing their market dominance (such as discriminating against customers in terms of pricing and other transactional conditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology to block competitors’ interfaces, favorable positioning in search results of goods displays, using bundle services to sell services or products, compulsory collection of unnecessary user data).
Any of these incidents may adversely affect our brand and reputation, consume our managerial resources, result in potential liability of us or administrative measures being enforced on us, or otherwise harm our business. 26 Table of Contents In addition, regulatory authorities around the world have adopted or are considering a number of legislative and regulatory proposals concerning data protection.
Any of these incidents may adversely affect our brand and reputation, consume our managerial resources, result in potential liability of us or administrative measures being enforced on us, or otherwise harm our business. 25 Table of Contents In addition, regulatory authorities around the world have adopted or are considering a number of legislative and regulatory proposals concerning data protection.
Under the Enterprise Income Tax Law of the PRC, or the EIT Law, and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
Under the Enterprise Income Tax Law of the PRC and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
Our capability to roll out new or enhanced products and services in turn depend on a number of factors, including timely and successful research and development efforts by us as well as our suppliers to bring cutting-edge technologies to the market, quality control of service provision and product manufacturing and the effectiveness of our distribution channels.
Our capability to roll out new or enhanced products and services in turn depend on a number of factors, including our timely and successful research and development efforts as well as our suppliers to bring cutting-edge technologies to the market, quality control of service provision and product manufacturing and the effectiveness of our distribution channels.
In accordance with the Draft Regulations, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data processors that process the personal information of more than one million users and (ii) any data processing activity that affects or may affect national security.
In accordance with these regulations, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data processors that process the personal information of more than one million users and (ii) any data processing activity that affects or may affect national security.
We have registered and applied to register trademarks and service marks, including, but not limited to, “Amazfit,” “ZEPP,” “ 华米 ” and “ 跃我 ” in China and foreign jurisdictions.
We have registered and applied to register trademarks and service marks, including, but not limited to, “Amazfit,” “ZEPP,” “huami,” “ 华米 ” and “ 跃我 ” in China and foreign jurisdictions.
Labor costs in China have risen in recent years as a result of the enactment of new labor laws and social development. Given our contract manufacturers are currently all located in China, rising labor costs in China will increase their costs, which in turn may be reflected in the manufacturing fees charged by these contract manufacturers to us.
Labor costs in China have risen in recent years as a result of the enactment of new labor laws and social development. Given most of our contract manufacturers are currently located in China, rising labor costs in China will increase their costs, which in turn may be reflected in the manufacturing fees charged by these contract manufacturers to us.
On February 17, 2023, the CSRC promulgated a set of new regulations consists of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines which took effect on March 31, 2023 to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form.
On February 17, 2023, the CSRC promulgated a set of new regulations consists of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines which took effect on March 31, 2023 to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form.
If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
Additionally, we may receive from time-to-time letters alleging infringement of patents, trademarks or other intellectual property rights by us. If we continue to grow, we may not be able to effectively manage our growth and the increased complexity of our business, which could negatively impact our brand and financial performance.
Additionally, we may receive from time-to-time letters alleging our infringement of patents, trademarks or other intellectual property rights. If we continue to grow, we may not be able to effectively manage our growth and the increased complexity of our business, which could negatively impact our brand and financial performance.
In addition, the FIL provides that foreign-invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within a five-year transition period, which means that we may be required to adjust the structure and corporate governance of certain of our PRC subsidiaries in such transition period.
In addition, the Foreign Investment Law provides that foreign-invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within a five-year transition period, which means that we may be required to adjust the structure and corporate governance of certain of our PRC subsidiaries in such transition period.
Business Overview—Regulation—Regulation on Employee Share Options.” 51 Table of Contents If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
Business Overview—Regulation—Regulation on Employee Share Options.” 50 Table of Contents If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied. 7 Table of Contents The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our WFOE under tax neutral contractual arrangements.
For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied. The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our WFOE under tax neutral contractual arrangements.
In the future, we plan to retain our sole discretion to determine the specific amount of the service fees payable by the VIEs pursuant to the contractual arrangements, and to obtain the earnings of the VIEs through charging service fees and collect the payments from the VIEs, taking into consideration of the business growth and working capital needs of the WFOEs and the VIEs.
In the future, we plan to retain our sole discretion to determine the specific amount of the service fees payable by the VIEs pursuant to the contractual arrangements, and to obtain the earnings of the VIEs through charging service fees and collect the payments from the VIEs, taking into consideration of the business growth and working capital needs of the WFOE and the VIEs.
Furthermore, in February 2021, the Anti-monopoly Commission of the State Council officially promulgated the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, or the Anti-Monopoly Guidelines.
Furthermore, in February 2021, the Anti-monopoly Commission of the State Council officially promulgated the Anti-Monopoly Guidelines for the Internet Platform Economy Sector.
We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2022, which could subject U.S. investors in our ADSs or Class A ordinary shares to significant adverse U.S. income tax consequences.
We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2023, which could subject U.S. investors in our ADSs or Class A ordinary shares to significant adverse U.S. income tax consequences.
Since our founding in December 2013, our company has experienced rapid growth. Continued growth of our business requires us to expand our product development, sales and marketing, and distribution functions, to upgrade our management information systems and other processes and technology, and to secure more space for our expanding workforce.
Since our founding in December 2013, our company has experienced continual growth. Continued growth of our business requires us to expand our product development, sales and marketing, and distribution functions, to upgrade our management information systems and other processes and technology, and to secure more space for our expanding workforce.
The selected consolidated statements of operating data for the years ended December 31, 2018 and 2019, the selected consolidated balance sheet data as of December 31, 2018, 2019 and 2020 and selected consolidated cash flow data for the years ended December 31, 2018 and 2019 have been derived from our audited consolidated financial statements that are not included in this annual report.
The selected consolidated statements of operating data for the years ended December 31, 2019 and 2020, the selected consolidated balance sheet data as of December 31, 2019, 2020 and 2021 and selected consolidated cash flow data for the years ended December 31, 2019 and 2020 have been derived from our audited consolidated financial statements that are not included in this annual report.
In April 2022, our Cayman Islands holding company declared and distributed cash dividends with the amount of approximately US$6.30 million to its shareholders and ADS holders, which was funded by surplus cash on our balance sheet.
In April 2022, our Cayman Islands holding company declared and distributed cash dividends with the amount of approximately US$6.3 million to its shareholders and ADS holders, which was funded by surplus cash on our balance sheet.
Selected Financial Data Our Selected Consolidated Financial Data The following selected consolidated statements of operating data for the years ended December 31, 2020, 2021 and 2022, selected consolidated balance sheet data as of December 31, 2021 and 2022 and selected consolidated cash flow data for the years ended December 31, 2020, 2021 and 2022 have been derived from our audited consolidated financial statements included elsewhere in this annual report.
Selected Financial Data Our Selected Consolidated Financial Data The following selected consolidated statements of operating data for the years ended December 31, 2021, 2022 and 2023, selected consolidated balance sheet data as of December 31, 2022 and 2023 and selected consolidated cash flow data for the years ended December 31, 2021, 2022 and 2023 have been derived from our audited consolidated financial statements included elsewhere in this annual report.
However, they may transfer cash to the VIEs by loans or by making payment to the VIEs for intra-group transactions. The VIEs may transfer cash to our WFOEs by paying service fees according to the exclusive business cooperation agreements entered into by and among our WFOEs, the VIEs and their respective shareholders.
However, they may transfer cash to the VIEs by loans or by making payment to the VIEs for intra-group transactions. The VIEs may transfer cash to our WFOE by paying service fees according to the exclusive business cooperation agreements entered into by and among our WFOE, the VIEs and their respective shareholders.
The ability to accurately forecast demand for our products and services could be affected by many factors, including changes in customer demand for our products and services or our competitors’, sales promotions by us or our competitors, sales channel inventory levels, and unanticipated changes in general market and economic conditions.
The ability to accurately forecast demand for our products and services could be affected by many factors, including changes in customer demand for our products and services or our competitors’, our sales promotions or our competitors’, sales channel inventory levels, and unanticipated changes in general market and economic conditions.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of our business in general, which may reduce the number of orders we receive. Our patents, know-how, trade secrets and other intellectual property rights and proprietary rights are critical to our success.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of our business in general, which may reduce the number of orders we receive. 27 Table of Contents Our patents, know-how, trade secrets and other intellectual property rights and proprietary rights are critical to our success.
Furthermore, negative publicity related to Xiaomi, including products offered by Xiaomi, the celebrities Xiaomi is associated with, or even the labor policies of any of Xiaomi’s suppliers or manufacturers may have a material adverse effect on the sales of our products. 22 Table of Contents In addition, Xiaomi sells a broad spectrum of electronic products through its online and offline channels.
Furthermore, negative publicity related to Xiaomi, including products offered by Xiaomi, the celebrities Xiaomi is associated with, or even the labor policies of any of Xiaomi’s suppliers or manufacturers may have a material adverse effect on the sales of our products. In addition, Xiaomi sells a broad spectrum of electronic products through its online and offline channels.
The Draft Regulations provide that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing.
These regulations provide that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing.
Pursuant to the SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. 52 Table of Contents On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
Pursuant to the SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. 51 Table of Contents On February 3, 2015, the State Administration of Taxation issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
Risk Factors—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Therefore, our contractual arrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.
See “—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Therefore, our contractual arrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.
In addition, the Anti-Monopoly Guidelines also reinforce antitrust merger review for internet platform related transactions to safeguard market competition. As the Anti-Monopoly Guidelines were newly promulgated, it is still uncertain how they will impact on our business, financial condition, results of operations and prospects.
In addition, the Anti-Monopoly Guidelines for the Internet Platform Economy Sector also reinforce antitrust merger review for internet platform related transactions to safeguard market competition. As these guidelines were newly promulgated, it is still uncertain how they will impact on our business, financial condition, results of operations and prospects.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in 2007.
In February 2012, the State Administration of Foreign Exchange promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in 2007.
These entities settle payments of the smart wearable products in accordance with the specific transaction value and payment terms under the relevant contracts. Because the Parent and its subsidiaries consolidate the financial results of the VIEs through contractual arrangements, they are not able to make direct capital contribution to the VIEs and its subsidiaries.
These entities settle payments of the smart wearable products in accordance with the specific transaction value and payment terms under the relevant contracts. 5 Table of Contents Because the Parent and its subsidiaries consolidate the financial results of the VIEs through contractual arrangements, they are not able to make direct capital contribution to the VIEs and its subsidiaries.
There are also uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice. Moreover, regulatory authorities in China have recently increased their supervision on the collection and use of personal information, as well as cybersecurity and data compliance, over mobile applications.
There are also uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice. Moreover, in recent years, regulatory authorities in China have increased their supervision on the collection and use of personal information, as well as cybersecurity and data compliance, over mobile applications.
The loss of any key personnel could be disruptive to our operations and research and development activities, reduce our employee retention and revenue, and impair our ability to compete. 33 Table of Contents Certain director may have conflicts of interest. Our director, Mr. De Liu, is also a co-founder and a senior vice president of Xiaomi. Mr.
The loss of any key personnel could be disruptive to our operations and research and development activities, reduce our employee retention and revenue, and impair our ability to compete. Certain director may have conflicts of interest. Our director, Mr. De Liu, is also a co-founder and a senior vice president of Xiaomi. Mr.
International expansion represents a large opportunity to further grow our business and enhance our competitive position, and is one of our core strategies. We may enter into new geographic markets where we have limited or no experience in marketing, selling, and localizing and deploying our products.
International expansion represents a large opportunity to further grow our business and enhance our competitive position, and is one of our core strategies. 29 Table of Contents We may enter into new geographic markets where we have limited or no experience in marketing, selling, and localizing and deploying our products.
Our future success depends on our ability to promote our own brands and protect our reputation. The failure to establish and promote our brands, including Amazfit and Zepp, and any damage to our reputation will hinder our growth. Since September 2015, we have begun to use the brand “Amazfit” to sell our products to address the middle to high-end market.
Our future success depends on our ability to promote our own brands and protect our reputation. The failure to establish and promote our brands, including Amazfit and Zepp, and any damage to our reputation will hinder our growth. Since September 2015, we began to use the brand “Amazfit” to sell our products to address the middle to high-end market.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Based on five years of technical research and employing our proprietary Huangshan AI chip and biosensor array, the PumpBeats TM algorithm is able to measure blood pressure through the watch’s optical sensors in only 30 seconds. This feature provides users with easy, convenient, accurate readings anytime and anywhere throughout their busy day.
Based on five years of technical research and employing our proprietary biosensor array and Huangshan AI chip, the PumpBeats TM algorithm is able to measure blood pressure through the watch’s optical sensors in only 30 seconds. This feature provides users with easy, convenient, accurate readings anytime and anywhere throughout their busy day.
Representatives of Xiaomi and our distribution channels, especially those that manage our e-commerce channels, also provide customer services to users who purchased our products through their channels during normal working hours. These representatives are required to complete mandatory training on product knowledge, complaint handling and communication skills.
Representatives of our distribution channels and Xiaomi, especially those that manage our e-commerce channels, also provide customer services to users who purchased our products through their channels during normal working hours. These representatives are required to complete mandatory training on product knowledge, complaint handling and communication skills.
The PRC Trademark Office of National Intellectual Property Administration is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration.
The PRC Trademark Office of National Intellectual Property Administration is responsible for the registration and administration of trademarks throughout the PRC. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration.
These circumstances include: (i) where the data to be transferred to an overseas recipient contain important data collected and generated by data processors; (ii) where the data to be transferred to an overseas recipient are personal information collected and generated by operators of critical information infrastructure or data processors processing over one million users’ individual information; (iii) where the personal information of more than 100,000 people or sensitive personal information of more than 10,000 people are transferred overseas accumulatively since January 1 of the previous year; or (iv) other circumstances under which security assessment of data cross-border transfer is required as prescribed by the national cyberspace administration.
These circumstances include: (i) where the data to be transferred to an overseas recipient contain important data collected and generated by data processors; (ii) where the data to be transferred to an overseas recipient are personal information collected and generated by operators of critical information infrastructure or data processors processing over one million users’ individual information; (iii) where the personal information of more than 100,000 people or sensitive personal information of more than 10,000 people are transferred overseas accumulatively since January 1 of the previous year; or (iv) other circumstances under which security assessment of cross-border data transfer is required as prescribed by the national cyberspace administration.
PRC Value Added Tax On January 1, 2012, the State Council officially launched a pilot value-added tax reform program, or the Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay value added tax, or VAT, instead of business tax.
PRC Value Added Tax On January 1, 2012, the State Council officially launched a pilot value-added tax reform program, applicable to businesses in selected industries. Businesses in the pilot value-added tax reform program would pay value added tax, or VAT, instead of business tax.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue Renminbi entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises.
The State Administration of Foreign Exchange promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue Renminbi entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises.
Effective February 25, 2021, we changed our corporate name from “Huami Corporation” to “Zepp Health Corporation,” and our trading symbol at the New York Stock Exchange from “HMI” to “ZEPP.” Our principal executive offices are located at Huami Global Innovation Center, Building B2, Zhong’an Chuanggu Technology Park, No. 900 Wangjiang West Road Road, Hefei, 230088, People’s Republic of China.
Effective on February 25, 2021, we changed our corporate name from “Huami Corporation” to “Zepp Health Corporation,” and our trading symbol at the New York Stock Exchange from “HMI” to “ZEPP.” Our principal executive offices are located at Huami Global Innovation Center, Building B2, Zhong’an Chuanggu Technology Park, No. 900 Wangjiang West Road, Hefei, 230088, People’s Republic of China.
Any organization or individual that needs to obtain personal information of others shall obtain such information legally and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others. 80 Table of Contents On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the PRC Personal Information Protection Law, or the PIPL, which became effective on November 1, 2021.
Any organization or individual that needs to obtain personal information of others shall obtain such information legally and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others. 80 Table of Contents On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the PRC Personal Information Protection Law, which became effective on November 1, 2021.
Wang Huang and Yunfen Lu are beneficial owners of the shares of our company and hold 99.4% and 0.6% equity interests in Anhui Huami, respectively. They are also directors of our company. The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shunyuan Kaihua (our WFOE), the VIEs and their respective shareholders.
Wang Wayne Huang and Yunfen Lu are beneficial owners of the shares of our company and hold 99.4% and 0.6% equity interests in Anhui Huami, respectively. They are also directors of our company. The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shunyuan Kaihua (our WFOE), the VIEs and their respective shareholders.
Regulation on Advertising Business The State Administration for Market Regulation, or the SAMR, is the government agency responsible for regulating advertising activities in the PRC. 76 Table of Contents According to the PRC laws and regulations, companies that engage in advertising activities must obtain from SAMR or its local branches a business license which specifically includes operating an advertising business within its business scope.
Regulation on Advertising Business The State Administration for Market Regulation is the government agency responsible for regulating advertising activities in the PRC. 76 Table of Contents According to the PRC laws and regulations, companies that engage in advertising activities must obtain from the State Administration for Market Regulation or its local branches a business license which specifically includes operating an advertising business within its business scope.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D.
Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results. Patents in China are filed with the State Intellectual Property Office, or SIPO.
Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results. Patents in China are filed with the State Intellectual Property Office.
In some cases, users may opt-in to have their personal data seen by the population manager. Each use of data under data analytics services is specifically codified in contract language, with the default always to be protection of individuals’ personal identity and data, and only shared upon users’ specific instruction (opt-in).
In some cases, users may opt-in to have their personal data seen by the population manager. Each use of data under data analytics services is specifically codified in contract language, with the default always to be protection of individuals’ personal identity and data, and only shared upon users’ specific instruction for opt-in.
Each shareholder has also executed a power of attorney to irrevocably authorize Wang Huang as his, her or its attorney-in-fact to sign any legal documents that are required or useful in exercising our WFOE’s rights under the Equity Pledge Agreement.
Each shareholder has also executed a power of attorney to irrevocably authorize Wang Wayne Huang as his, her or its attorney-in-fact to sign any legal documents that are required or useful in exercising our WFOE’s rights under the Equity Pledge Agreement.
In 2021, we introduced a new smart hearable product, Amazfit PowerBuds Pro, an upgraded version of Amazfit PowerBud featuring true wireless stereo with powerful multi-scenario, active noise cancellation and advanced health monitoring functions, including cervical vertebrae and hearing protection.
In 2021, we introduced a new smart hearable product, Amazfit PowerBuds Pro, an upgraded version of Amazfit PowerBuds featuring true wireless stereo with powerful multi-scenario, active noise cancellation and advanced health monitoring functions, including cervical vertebrae and hearing protection.
Wang Huang, Yunfen Lu, Meihui Fan, Bin Fan, Yi Zhang and Xiaojun Zhang are beneficial owners of the shares of our company and hold 90.1%, 2.1285%, 2.1285%, 2.1285%, 2.1285% and 1.386% equity interests in Beijing Huami, respectively. They are either directors or employees of our company. (2) Messrs.
Wang Wayne Huang, Yunfen Lu, Meihui Fan, Bin Fan, Yi Zhang and Xiaojun Zhang are beneficial owners of the shares of our company and hold 90.1%, 2.1285%, 2.1285%, 2.1285%, 2.1285% and 1.386% equity interests in Beijing Huami, respectively. They are either directors or employees of our company. (2) Messrs.
According to the Draft Data Security Regulations, data processors shall, in accordance with relevant state provisions, apply for cyber security review when carrying out the following activities: (i) the merger, reorganization or separation of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests, which affects or may affect national security; (ii) data processors that handle the personal information of more than one million people intends to be listed abroad; (iii) the data processor intends to be listed in Hong Kong, which affects or may affect national security; (iv) other data processing activities that affect or may affect national security.
According to these regulations, data processors shall, in accordance with relevant state provisions, apply for cyber security review when carrying out the following activities: (i) the merger, reorganization or separation of internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests, which affects or may affect national security; (ii) data processors that handle the personal information of more than one million people intends to be listed abroad; (iii) the data processor intends to be listed in Hong Kong, which affects or may affect national security; (iv) other data processing activities that affect or may affect national security.
Abiding by the data security regulations, we currently utilize our big data technology in the following areas: ● optimize the algorithms that count the number of steps taken by eliminating the effect of certain patterns of the hand movements that are not associated with walking; ● fine-tune our algorithms for tracking sleep duration and quality and then make personalized adjustment based on users’ sleep patterns; ● enhance the performance of our built-in GPS, enabling our products to draw users’ running tracks more accurately and more quickly; ● develop insights into massive market and consumer data, empowering a more streamlined and efficient product design and optimization process; ● perform statistical analysis to identify certain characteristics that are associated with heart diseases and sleep patterns and make related practice recommendations to our users; ● perform statistical analysis to identify certain characteristics that are associated with users’ health and make related recommendations of training courses to our users; and ● develop the capability to perform more granular analysis on the data we collect from our users and to allow our products to recognize types of activities and sports.
Abiding by the data security regulations, we currently utilize our big data technology in the following areas: ● optimize the algorithms that count the number of steps taken by eliminating the effect of certain patterns of the hand movements that are not associated with walking; ● fine-tune our algorithms for tracking sleep duration and quality and then make personalized adjustment based on users’ sleep patterns; ● enhance the performance of our built-in GPS, enabling our products to draw users’ running tracks more accurately and more quickly; ● develop insights into massive market and consumer data, empowering a more streamlined and efficient product design and optimization process; ● perform statistical analysis to identify certain characteristics that are associated with heart diseases and sleep patterns and make related practice recommendations to our users; ● perform statistical analysis to identify certain characteristics that are associated with users’ health and make related recommendations of training courses to our users; and 65 Table of Contents ● develop the capability to perform more granular analysis on the data we collect from our users and to allow our products to recognize types of activities and sports.
However, if the dispute cannot be settled through mutual consultation, the patent owner, or an interested party who believes the patent is being infringed, may either file a civil legal suit or file an administrative complaint with the relevant patent administration authority.
However, if the dispute cannot be settled through mutual consultation, the patent owner, or an interested party who believes the patent is being infringed, may either file a civil legal suit or file an administrative complaint with the patent administration authority.
Our PRC subsidiaries have obligations to file documents related to employee share awards with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options or hold the vested restricted shares.
Our PRC subsidiaries have obligations to file documents related to employee share awards with the tax authorities and to withhold individual income taxes of those employees who exercise their share options or hold the vested restricted shares.
If defective products are identified after they have been put into circulation, the producers or the sellers shall take remedial measures such as ceasing the sale, warning and recall of products, etc. in a timely manner.
If defective products are identified after they have been put into circulation, the producers or the sellers shall take remedial measures such as ceasing the sale, warning and recall of products, in a timely manner.
Whoever manufactures or imports radio transmission equipment that has not obtained model verification and approval for sales or use on the domestic market shall be ordered by the relevant radio administration to make correction and subject to fines.
Whoever manufactures or imports radio transmission equipment that has not obtained model verification and approval for sales or use on the domestic market shall be ordered by the radio administration to make correction and subject to fines.
Wang Huang, one of shareholders of Anhui Huami, dated November 3, 2017, our WFOE made interest-free loans in an aggregate amount of RMB15 million to Mr. Wang Huang for the exclusive purpose of acquiring equity interests in Anhui Huami.
Wang Wayne Huang, one of shareholders of Anhui Huami, dated November 3, 2017, our WFOE made interest-free loans in an aggregate amount of RMB15 million to Mr. Wang Wayne Huang for the exclusive purpose of acquiring equity interests in Anhui Huami.
To comply with these laws and regulations, we have required our users to consent to our collecting and using their personal information, and established information security systems to protect users’ privacy. 81 Table of Contents Regulation on Employment The Labor Law of the PRC, effective on January 1, 1995 and subsequently amended on August 27, 2009 and December 29, 2018, the PRC Labor Contract Law, effective on January 1, 2008 and subsequently amended on December 28, 2012 and the Implementing Regulations of the Employment Contract Law, effective on September 18, 2008, provide requirements concerning employment contracts between an employer and its employees.
To comply with these laws and regulations, we have required our users to consent to our collecting and using their personal information, and established information security systems to protect users’ privacy. 82 Table of Contents Regulation on Employment The Labor Law of the PRC, effective on January 1, 1995 and subsequently amended on August 27, 2009 and December 29, 2018, the PRC Labor Contract Law, effective on January 1, 2008 and subsequently amended on December 28, 2012 and the Implementing Regulations of the Employment Contract Law, effective on September 18, 2008, provide requirements concerning employment contracts between an employer and its employees.
The PIPL explicitly sets forth the circumstances where it is allowed to process personal information, including (i) the consent from the individual has been obtained; (ii) it is necessary for the conclusion and performance of a contract under which an individual is a party, or it is necessary for human resource management in accordance with the labor related rules and regulations and the collective contracts formulated or concluded in accordance with laws; (iii) it is necessary to perform statutory duties or statutory obligations; (iv) it is necessary to respond to public health emergencies, or to protect the life, health and property safety of individuals in emergencies; (v) carrying out news reports, public opinion supervision and other acts for the public interest, and processing personal information within a reasonable scope; (vi) processing personal information disclosed by individuals or other legally disclosed personal information within a reasonable scope in accordance with this law; or (vii) other circumstances stipulated by laws and administrative regulations.
The PRC Personal Information Protection Law explicitly sets forth the circumstances where it is allowed to process personal information, including (i) the consent from the individual has been obtained; (ii) it is necessary for the conclusion and performance of a contract under which an individual is a party, or it is necessary for human resource management in accordance with the labor related rules and regulations and the collective contracts formulated or concluded in accordance with laws; (iii) it is necessary to perform statutory duties or statutory obligations; (iv) it is necessary to respond to public health emergencies, or to protect the life, health and property safety of individuals in emergencies; (v) carrying out news reports, public opinion supervision and other acts for the public interest, and processing personal information within a reasonable scope; (vi) processing personal information disclosed by individuals or other legally disclosed personal information within a reasonable scope in accordance with this law; or (vii) other circumstances stipulated by laws and administrative regulations.
Pursuant to the Circular 36, all the companies operating in construction, real estate, finance, modern service or other sectors which were required to pay business tax are required to pay VAT, in lieu of business tax.
Pursuant to the circular, all the companies operating in construction, real estate, finance, modern service or other sectors which were required to pay business tax are required to pay VAT, in lieu of business tax.
Regulation on Information Security The Standing Committee of the National People’s Congress promulgated the Cyber Security Law of the PRC, or the Cyber Security Law, which became effective on June 1, 2017, to protect cyberspace security and order.
Regulation on Information Security The Standing Committee of the National People’s Congress promulgated the Cyber Security Law of the PRC, which became effective on June 1, 2017, to protect cyberspace security and order.
The Exclusive Consultation and Service Agreement will remain effective for an indefinite term, unless otherwise terminated pursuant to mutual agreement in writing or applicable PRC laws. 90 Table of Contents On March 20, 2020, our WFOE, Beijing Huami and each of the shareholders of Beijing Huami entered into the second amended and restated Exclusive Consultation and Service Agreement, which contains terms substantially similar to the Exclusive Consultation and Service Agreement described above.
The Exclusive Consultation and Service Agreement will remain effective for an indefinite term, unless otherwise terminated pursuant to mutual agreement in writing or applicable PRC laws. 91 Table of Contents On March 20, 2020, our WFOE, Beijing Huami and each of the shareholders of Beijing Huami entered into the second amended and restated Exclusive Consultation and Service Agreement, which contains terms substantially similar to the Exclusive Consultation and Service Agreement described above.
In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the supporting documents in May 2013 (amended in December 2019), which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in China based on the registration information provided by SAFE and its branches.
In addition, the State Administration of Foreign Exchange promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the supporting documents in May 2013 (amended in December 2019), which specifies that the administration by the State Administration of Foreign Exchange or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in China based on the registration information provided by the State Administration of Foreign Exchange and its branches.
Risk Factors—Risks Related to Our Business—We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.” Our Environmental, Social and Governance Initiatives We are committed to promoting various aspects of our environmental, social and governance (“ESG”) initiatives.
Risk Factors—Risks Related to Our Business—We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.” Our Environmental, Social and Governance Initiatives We are committed to promoting various aspects of our environmental, social and governance (ESG) initiatives.
The business license of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any relevant law or regulation.
The business license of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any law or regulation.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g., pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts), the reinvestment of lawful incomes derived by foreign investors in China (e.g., profit, proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment), and purchase and remittance of foreign exchange as a result of capital reduction, liquidation, early repatriation or share transfer in a foreign-invested enterprise no longer require SAFE approval, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g., pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts), the reinvestment of lawful incomes derived by foreign investors in China (e.g., profit, proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment), and purchase and remittance of foreign exchange as a result of capital reduction, liquidation, early repatriation or share transfer in a foreign-invested enterprise no longer require approval of the State Administration of Foreign Exchange, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before.
The State establishes a working mechanism, or the Working Mechanism, for the security review of foreign investments to be responsible for organizing, coordinating and guiding the security review of foreign investments.
The State establishes a working mechanism for the security review of foreign investments to be responsible for organizing, coordinating and guiding the security review of foreign investments.
If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer.
If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller.
Because of these contractual arrangements, we are the primary beneficiary of the VIEs in China and hence consolidate their financial results as the consolidated affiliated entities. 89 Table of Contents Agreements that provide us with effective control over the VIEs Shareholder Voting Proxy Agreements and Powers of Attorney.
Because of these contractual arrangements, we are the primary beneficiary of the VIEs in China and hence consolidate their financial results as the consolidated affiliated entities. 90 Table of Contents Agreements that provide us with effective control over the VIEs Shareholder Voting Proxy Agreements and Powers of Attorney.
For foreign investments related to important cultural products and services, important information technology and internet products and services, and others, the foreign investors who obtains the actual controlling stake in the investee enterprise or relevant parties in the PRC shall declare to the office of the Working Mechanism prior to proceeding with the investments.
For foreign investments related to important cultural products and services, important information technology and internet products and services, and others, the foreign investors who obtain the actual controlling stake in the investee enterprise or relevant parties in the PRC shall declare to the office of the working mechanism prior to proceeding with the investments.
The SAT issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, or SAT Circular No. 35, on October 14, 2019, which became effective on January 1, 2020. The SAT Circular No. 35 further simplified the procedures for enjoying treaty benefits and replaced the SAT Circular No. 60.
The State Administration of Taxation issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits on October 14, 2019, which became effective on January 1, 2020. The announcement further simplified the procedures for enjoying treaty benefits and replaced the SAT Circular No. 60.
Under the Foreign Exchange Administration Regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions can be made in foreign currencies without prior approval from State Administration of Foreign Exchange, or 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 can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange by complying with certain procedural requirements.
In addition, relevant administration departments of each critical industry and sector, or Protection Departments, shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or field. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators.
In addition, administration departments of each critical industry and sector shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or field. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators.
Hardware Engineering Our hardware engineering team supports the system-level product design, ultralow power system design and the design of key system components, including antenna, bio-sensors, battery, integrated circuits (“IC”) for battery protection, Bluetooth Low Energy system on chip IC, energy-efficient microprocessor and product testing apparatus.
Hardware Engineering Our hardware engineering team supports the system-level product design, ultralow power system design and the design of key system components, including antenna, bio-sensors, battery, integrated circuits for battery protection, Bluetooth Low Energy system on chip integrated circuits, energy-efficient microprocessor and product testing apparatus.
In addition, the FIL 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 definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods prescribed by the State Council.
In addition, the 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 definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods prescribed by the State Council.
However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans. 84 Table of Contents On August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular No. 142, regulating the conversion by a foreign-invested enterprise of foreign currency-registered capital into Renminbi by restricting how the converted Renminbi may be used.
However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans. 85 Table of Contents On August 29, 2008, the State Administration of Foreign Exchange issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular No. 142, regulating the conversion by a foreign-invested enterprise of foreign currency-registered capital into Renminbi by restricting how the converted Renminbi may be used.
We are also opening the Mini Program framework for developers to create new apps that leverage the high-quality data and intelligence from our company’s proprietary biosensor array and AI chip, creating a global open IoT ecosystem for smart wearable users. Our inclusive and innovative Zepp OS ecosystem has now launched over 180 mini programs now.
We are also opening the Mini Program framework for developers to create new apps that leverage the high-quality data and intelligence from our company’s proprietary biosensor array and AI chip, creating a global open IoT ecosystem for smart wearable users. Our inclusive and innovative Zepp OS ecosystem has now launched over 280 mini apps.
The Measures further provide that personal information processors may agree on other terms with overseas recipients which shall not conflict with the Standard Contract, and the personal information processor shall, within ten working days from the effective date of the standard contract, file with the local provincial cyberspace administration and submit the standard contract and personal information protection impact assessment report for record.
The Measures for Standard Contract for Outbound Data Transfer of Personal Information further provide that personal information processors may agree on other terms with overseas recipients which shall not conflict with the Standard Contract, and the personal information processor shall, within ten working days from the effective date of the standard contract, file with the local provincial cyberspace administration and submit the standard contract and personal information protection impact assessment report for record.
Pursuant to the EIT Law and the Implementation Rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
Pursuant to the Enterprise Income Tax Law of the PRC and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
On November 19, 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment (amended in May 2015) which substantially amends and simplifies the current foreign exchange procedure.
On November 19, 2012, the State Administration of Foreign Exchange promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment (amended in May 2015) which substantially amends and simplifies the current foreign exchange procedure.
In the opinion of Zhong Lun Law Firm, our PRC legal counsel: ● the ownership structures of the VIEs in China and our WFOE comply with all existing PRC laws and regulations; and ● the contractual arrangements between our WFOE, the VIEs and their respective shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect.
In the opinion of Zhong Lun Law Firm, our PRC legal counsel: ● the ownership structures of the VIEs in China and our WFOE comply with all existing PRC laws and regulations; and ● the contractual arrangements between our WFOE, the VIEs and their respective shareholders governed by PRC law are legal, valid and binding, and do not result in any violation of PRC laws or regulations currently in effect.
The Security Assessment Measures provides four circumstances, under any of which data processors shall, through the local cyberspace administration at the provincial level, apply to the national cyberspace administration for security assessment of data cross-border transfer.
The Measures for the Security Assessment of Cross-border Data Transfer provide four circumstances, under any of which data processors shall, through the local cyberspace administration at the provincial level, apply to the national cyberspace administration for security assessment of cross-border data transfer.
On July 22, 2020, MIIT issued the Notice on Carrying out Special Rectification Actions in Depth against the Infringement upon Users’ Rights and Interests by Apps to rectify the following problems (i) illegal processing of personal information of users by the APP and the SDK; (ii) the conduct of setting up obstacles and frequently harassing users; (iii) cheating and misleading users; and (iv) inadequate implementation of application distribution platforms’ responsibilities.
On July 22, 2020, the Ministry of Industry and Information Technology issued the Notice on Carrying out Special Rectification Actions in Depth against the Infringement upon Users’ Rights and Interests by Apps to rectify the following problems (i) illegal processing of personal information of users by the APP and the SDK; (ii) the conduct of setting up obstacles and frequently harassing users; (iii) cheating and misleading users; and (iv) inadequate implementation of application distribution platforms’ responsibilities.
The regulations further require critical information infrastructures operators, among others, (i) to report to the competent Protection Departments in a timely manner when the identification result may be affected due to material changes in the critical information infrastructures; (ii) to plan, construct or put into use the security protection measures and the critical information infrastructures simultaneously; and (iii) to report to the competent Protection Departments in a timely manner in the event of merger division or dissolution, and deal with critical information infrastructures as required by the competent Protection Departments.
The regulations further require critical information infrastructures operators, among others, (i) to report to the competent administration departments of each critical industry and sector in a timely manner when the identification result may be affected due to material changes in the critical information infrastructures; (ii) to plan, construct or put into use the security protection measures and the critical information infrastructures simultaneously; and (iii) to report to the competent administration departments of each critical industry and sector in a timely manner in the event of merger division or dissolution, and deal with critical information infrastructures as required by the competent administration departments of each critical industry and sector.
On February 15, 2012, SAFE issued the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or the Stock Option Rules, which replaced the Application Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas Publicly-Listed Companies issued by SAFE on March 28, 2007.
On February 15, 2012, the State Administration of Foreign Exchange issued the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, which replaced the Application Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas Publicly-Listed Companies issued by the State Administration of Foreign Exchange on March 28, 2007.
In addition, pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee of the National People’s Congress on December 28, 2012 and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the MIIT on July 16, 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes.
In addition, pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee of the National People’s Congress on December 28, 2012 and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the Ministry of Industry and Information Technology on July 16, 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes.
The provisions apply to both domestic issuer applying to or having completed direct overseas offering or listing and domestic operating entity of the issuer applying to or having completed indirect overseas offering or listing. 88 Table of Contents C.
The provisions apply to both domestic issuer applying to or having completed direct overseas offering or listing and domestic operating entity of the issuer applying to or having completed indirect overseas offering or listing. 89 Table of Contents C.
In addition, we use the same biosensor array in each of our products, regardless of price or type, which provides us with a consistency as to the quality and format of the data collected that many of our competitors do not possess.
In addition, we use the same algorithm in each of our products, regardless of price or type, which provides us with a consistency as to the quality and format of the data collected that many of our competitors do not possess.
When a dispute arises out of infringement of the patent owner’s patent right, Chinese law requires that the parties first attempt to settle the dispute through mutual consultation.
When a dispute arises out of infringement of the patent owner’s patent right, PRC law requires that the parties first attempt to settle the dispute through mutual consultation.
The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk.
The cybersecurity review will evaluate, among other things, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk.
To comply with these laws and regulations, we have adopted security policies and measures to protect our cyber system and user information. 78 Table of Contents In addition, on July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Data Cross-border Transfer, or the Security Assessment Measures, which took effect on September 1, 2022 and requires that any data processor providing important data collected and generated during operations within the territory of the PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security assessment.
To comply with these laws and regulations, we have adopted security policies and measures to protect our cyber system and user information. 78 Table of Contents In addition, on July 7, 2022, the Cyberspace Administration of China promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which took effect on September 1, 2022 and require that any data processor providing important data collected and generated during operations within the territory of the PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security assessment.
In addition, our products have international versions that are manufactured for sales and distribution in overseas markets. In 2022, we expanded domestic and international sales and marketing channels for our Amazfit products and Zepp products on our own, and we plan to keep doing so in the foreseeable future.
In addition, our products have international versions that are manufactured for sales and distribution in overseas markets. In 2023, we expanded international sales and marketing channels for our Amazfit products and Zepp products on our own, and we plan to keep doing so in the foreseeable future.
A Chinese court may issue a preliminary injunction upon the patent owner’s or an interested party’s request before instituting any legal proceedings or during the proceedings.
A PRC court may issue a preliminary injunction upon the patent owner’s or an interested party’s request before instituting any legal proceedings or during the proceedings.
On October 31, 2019, the MIIT issued the Notice on the Special Rectification of Apps Infringing Users’ Rights and Interests, pursuant to which app providers were required to promptly rectify issues the MIIT designated as infringing app users’ rights such as collecting personal information in violation of PRC regulations and setting obstacles for user account deactivation.
On October 31, 2019, the Ministry of Industry and Information Technology issued the Notice on the Special Rectification of Apps Infringing Users’ Rights and Interests, pursuant to which app providers were required to promptly rectify issues the Ministry of Industry and Information Technology designated as infringing app users’ rights such as collecting personal information in violation of PRC regulations and setting obstacles for user account deactivation.
In February 2018, the State Administration of Taxation issued the “Announcement on Issues concerning Beneficial Owners in Tax Treaties,” or Circular No. 9, effective on April 1, 2018, to replace the Circular of the State Administration of Taxation on the Interpretation and the Determination of the Beneficial Owners in the Tax Treaties, effective from October 2009.
In February 2018, the State Administration of Taxation issued the Announcement on Issues concerning Beneficial Owners in Tax Treaties, or Circular No. 9, effective on April 1, 2018, to replace the Circular of the State Administration of Taxation on the Interpretation and the Determination of the Beneficial Owners in the Tax Treaties, effective from October 2009.
On February 13, 2015, SAFE promulgated the Circular on Further Simplifying and Improving the Policies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular No. 13, which took effect on June 1, 2015 and was amended in December 2019.
On February 13, 2015, the State Administration of Foreign Exchange promulgated the Circular on Further Simplifying and Improving the Policies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular No. 13, which took effect on June 1, 2015 and was amended in December 2019.
Furthermore, under the “Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties,” or SAT Circular No. 60, nonresident taxpayers who satisfy the criteria for entitlement to tax treaty benefits may, at the time of tax declaration or withholding declaration through a withholding agent, enjoy the tax treaty benefits, and be subject to follow-up administration by the tax authorities.
Furthermore, under the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or SAT Circular No. 60, non-resident taxpayers who satisfy the criteria for entitlement to tax treaty benefits may, at the time of tax declaration or withholding declaration through a withholding agent, enjoy the tax treaty benefits, and be subject to follow-up administration by the tax authorities.
In addition to the aforementioned general rules, the PIPL also introduces the rules for processing sensitive personal information, which refers to the personal information that, once leaked or illegally used, can easily lead to the infringement of the personal dignity of natural persons or harm personal and property safety, including biometrics, religious beliefs, specific identities, medical health, financial accounts, whereabouts and other information, as well as personal information of minors under the age of fourteen.
In addition to the aforementioned general rules, the PRC Personal Information Protection Law also introduces the rules for processing sensitive personal information, which refers to the personal information that, once leaked or illegally used, can easily lead to the infringement of the personal dignity of natural persons or harm personal and property safety, including biometrics, religious beliefs, specific identities, medical health, financial accounts, and whereabouts, as well as personal information of minors under the age of fourteen.
The controlling shareholders and actual controllers of such domestic companies that organize or instruct the aforementioned violations would be fined up to RMB10 million and directly liable persons-in-charge and other directly liable persons would be each fined up to RMB 5 million.
The controlling shareholders and actual controllers of such domestic companies that organize or instruct the aforementioned violations would be fined up to RMB10 million and directly liable persons-in-charge and other directly liable persons would be each fined up to RMB5 million.
In addition, the PRC Patent Law (2020 version) provides a criterial for compensation amount for intentional patent infringement of one to five times of actual loss suffered by the rights holder due to the infringement or the gains obtained by the infringer from the infringement, and the extension of the limitation of action for patent infringement of up to three years.
In addition, the further amended PRC Patent Law provides a criterial for compensation amount for intentional patent infringement of one to five times of actual loss suffered by the rights holder due to the infringement or the gains obtained by the infringer from the infringement, and the extension of the limitation of action for patent infringement of up to three years.
We offer products in different styles, such as round versus rectangular, and specific functions targeting various audiences, such as ruggedized versus everyday, or sports versus fashion, to address the different needs of our consumers.
We offer products in different styles, such as round versus rectangular, and specific functions targeting various audiences, such as ruggedized versus every day, or sports versus fashion, to address the different needs of our consumers.
All of our products utilize the same AI chipset and sensor array with important differentiating benefits for our data analytics service offerings, which provides consistent biometric data and allows users to connect with different terminals to improve the IoT application scenarios. In 2022, we sold our own branded products under the Amazfit and Zepp brand names.
All of our products utilize the then-latest AI chipset and sensor array with important differentiating benefits for our data analytics service offerings, which provides consistent biometric data and allows users to connect with different terminals to improve the IoT application scenarios. In 2023, we sold our own branded products under the Amazfit and Zepp brand names.
Regulations Relating to Overseas Issuance and Listing of Securities by Domestic Enterprises On February 17, 2023, the CSRC promulgated a new set of regulations consists of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines (collectively, the “Filing Measures”), which came into effect on March 31, 2023, to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form.
Regulations Relating to Overseas Issuance and Listing of Securities by Domestic Enterprises On February 17, 2023, the CSRC promulgated a new set of regulations consisting of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which came into effect on March 31, 2023, to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form.
On January 29, 2016, the State Administration for Taxation, or SAT, the Ministry of Science and Technology and the Ministry of Finance, or MOF, jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises specifying the criteria and procedures for the certification of High and New Technology Enterprises.
On January 29, 2016, the State Administration of Taxation, the Ministry of Science and Technology and the Ministry of Finance jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises specifying the criteria and procedures for the certification of High and New Technology Enterprises.
Our research and development team has responded effectively to technological changes, and is driving continued innovation to unleash the potential of the wearable devices industry. As of December 31, 2022, our total research and development staff consisted of 564 employees. Our global research and development team supports the design and development of our new products.
Our research and development team has responded effectively to technological changes, and is driving continued innovation to unleash the potential of the wearable devices industry. As of December 31, 2023, our total research and development staff consisted of 493 employees. Our global research and development team supports the design and development of our new products.
According to the Filing Measures, any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and; (ii) the main parts of the issuer’s business activities are conducted in the Chinese Mainland, or its main places of business are located in the Chinese Mainland, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in the Chinese Mainland.
According to these regulations and guidelines, any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and; (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly PRC citizens or domiciled in mainland China.
According to the SAT Circular No. 35, no approvals from the tax authorities are required for a non-resident taxpayer to enjoy treaty benefits, where a non-resident taxpayer self-assesses and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, but it shall gather and retain the relevant materials as required for future inspection, and accept follow-up administration by the tax authorities.
According to the announcement, no approvals from the tax authorities are required for a non-resident taxpayer to enjoy treaty benefits, where a non-resident taxpayer assesses itself and concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time of tax declaration or at the time of withholding through the withholding agent, but it shall gather and retain the relevant materials as required for future inspection, and accept follow-up administration by the tax authorities.
Pursuant to the PIPL, personal information refers to the information related to an identified or identifiable individual recorded electronically or by other means, excluding the anonymized information, and processing of personal information includes among others, the collection, storage, use, handling, transmission, provision, disclosure, deletion of personal information.
Pursuant to the PRC Personal Information Protection Law, personal information refers to the information related to an identified or identifiable individual recorded electronically or by other means, excluding the anonymized information, and processing of personal information includes among others, the collection, storage, use, handling, transmission, provision, disclosure, deletion of personal information.
Hearables and Others Smart ear buds, ear phones and other personal listening devices have become a fast-growing segment of the smart wearables industry in the last three years. We introduced our first two smart hearable products, Amazfit PowerBuds and Amazfit ZenBuds, which incorporate true health monitoring and health benefits, in 2020.
Hearables and Others Smart ear buds, ear phones and other personal listening devices have become a fast-growing segment of the smart wearables industry in the last several years. 61 Table of Contents We introduced our first two smart hearable products, Amazfit PowerBuds and Amazfit ZenBuds, which incorporate true health monitoring and health benefits, in 2020.
We believe this give us an edge in product design for current and future products, as well as cost advantages. Huangshan AI-Powered Smart Chipset In September 2018, we introduced the world’s first AI-powered wearable chipset, Huangshan-1.
We believe this give us an edge in product design for current and future products, as well as cost advantages. 62 Table of Contents Huangshan AI-Powered Smart Chipset In September 2018, we introduced the world’s first AI-powered wearable chipset, Huangshan-1.
Article 20 of the PRC Patent Law (2008 version) provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the SIPO for a confidential examination.
Article 20 of the PRC Patent Law (2008 version) provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the State Intellectual Property Office for a confidential examination.
In addition, according to a tax circular issued by SAT in February 2009, if the main purpose of an offshore arrangement is to obtain a preferential tax treatment, the PRC tax authorities have the discretion to adjust the preferential tax rate enjoyed by the relevant offshore entity.
In addition, according to a tax circular issued by the State Administration of Taxation in February 2009, if the main purpose of an offshore arrangement is to obtain a preferential tax treatment, the PRC tax authorities have the discretion to adjust the preferential tax rate enjoyed by the relevant offshore entity.
The PRC agents shall, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options.
The PRC agents shall, on behalf of the PRC residents who have the right to exercise the employee share options, apply to the State Administration of Foreign Exchange or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options.
In February 2015, Hong Kong Zepp Holding Limited established a wholly-owned subsidiary in China, Beijing Shunyuan Kaihua Technology Co., Ltd., which we refer to as Shunyuan Kaihua or our WFOE in this annual report.
In February 2015, Hong Kong Zepp Holding Limited established a wholly-owned subsidiary in China, Beijing Shunyuan Kaihua Technology Co., Ltd., which we refer to as Shunyuan Kaihua or for the purpose of this annual report, our WFOE.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

88 edited+16 added−32 removed53 unchanged
Dividends paid by our wholly foreign-owned subsidiaries in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and other related regulations, including Circular No. 9, and receives approval from the relevant tax authority.
Dividends paid by our wholly foreign-owned subsidiaries in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and other related regulations, including Circular No. 9, and receives approval from the tax authority.
Effective from November 1, 2015, the above mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority.
Effective from November 1, 2015, the above-mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file application package with the tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the tax authority.
PRC Generally, our PRC subsidiaries, VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by relevant governmental authorities every three years.
PRC Generally, our PRC subsidiaries, VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by governmental authorities every three years.
If Hong Kong Zepp Holding Limited satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
If Hong Kong Zepp Holding Limited satisfies all the requirements under the tax arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. 100 Table of Contents We are subject to value added tax, or VAT, at a rate of 17% (before May 1, 2018), 16% (on and after May 1, 2018 and before April 1, 2019), and 13% (on and after April 1, 2019) on sales and/or import goods and at a rate of 6% on the services (research and development services, technology services, information technology services and/or culture and creativity services), in each case less any deductible VAT we have already paid or borne.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. 100 Table of Contents We are subject to VAT at a rate of 17% (before May 1, 2018), 16% (on and after May 1, 2018 and before April 1, 2019), and 13% (on and after April 1, 2019) on sales and/or import goods and at a rate of 6% on the services (research and development services, technology services, information technology services and/or culture and creativity services), in each case less any deductible VAT we have already paid or borne.
United States Our subsidiaries, ZEPP Inc. and Zepp North America Inc., are located in the United States and are subject to an income tax rate of 21% for taxable income earned as determined in accordance with relevant tax rules and regulations in the United States.
United States Our subsidiaries, ZEPP Inc. and Zepp North America Inc., are located in the United States and are subject to an income tax rate of 21% for taxable income earned as determined in accordance with tax rules and regulations in the United States.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2022 that are reasonably likely to have a material adverse effect on our 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 since January 1, 2024 that are reasonably likely to have a material adverse effect on our 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.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2022. Holding Company Structure Zepp Health Corporation is a holding company with no material operations of its own. We conduct our operations in China primarily through our PRC subsidiaries, the VIEs and their subsidiaries in China.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023. Holding Company Structure Zepp Health Corporation is a holding company with no material operations of its own. We conduct our operations in China primarily through our PRC subsidiaries, the VIEs and their subsidiaries in China.
Research and Development, Patents and Licenses, Etc. See “Item 4. Information On the Company—B. Business Overview—Research and Development” and “—Intellectual Property.” D.
C. Research and Development, Patents and Licenses, Etc. See “Item 4. Information On the Company—B. Business Overview—Research and Development” and “—Intellectual Property.” D.
Our Xiaomi Wearable Products segment revenues decreased by 49.2% from RMB3,340.9 million for the year ended December 31, 2021 to RMB1,697.1 million (US$246.1 million) for the year ended December 31, 2022. The decrease was primarily attributable to a decrease in shipment volume of our Xiaomi Wearable Products from approximately 28.5 million in 2021 to approximately 14.0 million in 2022.
Our Xiaomi Wearable Products segment revenues decreased by 49.2% from RMB3,340.9 million for the year ended December 31, 2021 to RMB1,697.1 million for the year ended December 31, 2022. The decrease was primarily attributable to a decrease in shipment volume of our Xiaomi Wearable Products from approximately 28.5 million in 2021 to approximately 14.0 million in 2022.
The difference between our net loss of RMB289.0 million (US$41.9 million) and the net cash used in operating activities was primarily due to additional used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses and provision, write off for excess and obsolete inventories.
The difference between our net loss of RMB289.0 million and the net cash used in operating activities was primarily due to additional used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary 105 Table of Contents differences, projected future taxable income, tax-planning strategies, and results of recent operations.
We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
The decrease was in line with a decrease in the sales of our Xiaomi Wearable Products, and was partially driven by the increasing demand for our newly introduced self-branded products. Gross profit Our gross profit decreased by 38.5% from RMB1,305.6 million for the year ended December 31, 2021 to RMB803.1 million (US$116.4 million) for the year ended December 31, 2022.
The decrease was in line with a decrease in the sales of our Xiaomi Wearable Products, and was partially driven by the increasing demand for our newly introduced self-branded products. Gross profit Our gross profit decreased by 38.5% from RMB1,305.6 million for the year ended December 31, 2021 to RMB803.1 million for the year ended December 31, 2022.
General and administrative expenses General and administrative expenses decreased by 8.7% from RMB258.3 million for the year ended December 31, 2021 to RMB235.9 million (US$34.2 million) for the year ended December 31, 2022, primarily due to a decrease of RMB23.4 million (US$3.4 million) in external service fees as we implemented strict expense control measures in 2022.
General and administrative expenses General and administrative expenses decreased by 8.7% from RMB258.3 million for the year ended December 31, 2021 to RMB235.9 million for the year ended December 31, 2022, primarily due to a decrease of RMB23.4 million in external service fees as we implemented strict expense control measures in 2022.
Selling and marketing expenses Selling and marketing expenses increased by 5.0% from RMB438.3 million for the year ended December 31, 2021 to RMB460.3 million (US$66.7 million) for the year ended December 31, 2022, primarily due to an increase of RMB22.9 million (US$3.3 million) in advertisement promotion expenses related to our investments in establishing online and offline sales channels.
Selling and marketing expenses Selling and marketing expenses increased by 5.0% from RMB438.3 million for the year ended December 31, 2021 to RMB460.3 million for the year ended December 31, 2022, primarily due to an increase of RMB22.9 million in advertisement promotion expenses related to our investments in establishing online and offline sales channels.
Cost is determined using the weighted average method. We assess the valuation of inventory and periodically write down and write off the value for estimated excess and obsolete inventory based upon the product life cycle. Inventories are written down if the estimated net realizable value is less than the recorded value.
Cost is determined using the weighted average method. We assess the valuation of inventory and periodically write down and write off the value for estimated excess and obsolete inventory based upon the product life cycle. 105 Table of Contents Inventories are written down if the estimated net realizable value is less than the recorded value.
All of the amount due from Xiaomi as of December 31, 2020, 2021 and 2022 was collected in the first quarter of 2021, 2022 and 2023, respectively.
All of the amount due from Xiaomi as of December 31, 2021, 2022 and 2023 was collected in the first quarter of 2022, 2023 and 2024, respectively.
Cost of revenues Our cost of revenues decreased by 32.5% from RMB4,944.5 million for the year ended December 31, 2021 to RMB3,339.7 million (US$484.2 million) for the year ended December 31, 2022. Self-branded products and others.
Cost of revenues Our cost of revenues decreased by 32.5% from RMB4,944.5 million for the year ended December 31, 2021 to RMB3,339.7 million for the year ended December 31, 2022. Self-branded products and others.
Our self-branded products are our Amazfit-branded smart wearable products, which currently include smart bands, watches, modules and associated accessories, and our Zepp-branded smart wearable products, which currently include smart watches. We also generate revenues from the sale of Xiaomi Wearable Products, which include Xiaomi-branded smart bands, scales and associated accessories.
Our self-branded products include our Amazfit- and Zepp-branded smart wearable products, which currently include smart bands, watches, modules and associated accessories for sale. We also generate revenues from the sales of Xiaomi Wearable Products, which include Xiaomi-branded smart bands, scales and associated accessories.
Furthermore, capital account transactions, which include foreign direct investment and loans, must be registered with SAFE and its local branches. The total amount of loans we can make to our PRC subsidiaries cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
Furthermore, capital account transactions, which include foreign direct investment and loans, must be registered with the State Administration of Foreign Exchange and its local branches. The total amount of loans we can make to our PRC subsidiaries cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange.
Changes in working capital for the year ended December 31, 2022 primarily consisted of RMB904.9 million (US$131.2 million) accounts payable payment settlement cash outflow, partially offset and optimize by RMB187.9 million (US$27.2 million) better inventory management cash inflow and RMB210.8 million (US$30.6 million) cash saving in prepaid expenses and other current assets due to better expense control.
Changes in working capital for the year ended December 31, 2022 primarily consisted of RMB904.9 million accounts payable payment settlement cash outflow, partially offset and optimize by RMB187.9 million better inventory management cash inflow and RMB210.8 million cash saving in prepaid expenses and other current assets due to better expense control.
See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulation on Foreign Exchange.” A substantial portion of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, Renminbi may be converted into foreign exchange for current account items, including profit distributions, interest payments and trade-and service-related foreign exchange transactions.
Business Overview—Regulation—Regulation on Foreign Exchange.” A substantial portion of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, Renminbi may be converted into foreign exchange for current account items, including profit distributions, interest payments and trade-and service-related foreign exchange transactions.
Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ​ 106 Table of Contents
Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ​
Costs of revenues for our Xiaomi Wearable Products segment decreased by 49.2% from RMB2,754.1 million for the year ended December 31, 2021 to RMB1,394.5 million (US$202.2 million) for the year ended December 31, 2022.
Costs of revenues for our Xiaomi Wearable Products segment decreased by 49.4% from RMB2,754.1 million for the year ended December 31, 2021 to RMB1,394.5 million for the year ended December 31, 2022.
The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE.
The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the State Administration of Foreign Exchange.
Cost of revenues for our self-branded products and others segment decreased by 11.2% from RMB2,190.4 million for the year ended December 31, 2021 to RMB1,945.3 million (US$282.0 million) for the year ended December 31, 2022. The decrease was in line with a decrease in shipment volume of our self-branded products. Xiaomi Wearable Products.
Cost of revenues for our self-branded products and others segment decreased by 11.2% from RMB2,190.4 million for the year ended December 31, 2021 to RMB1,945.3 million for the year ended December 31, 2022. The decrease was in line with a decrease in shipment volume of our self-branded products. 98 Table of Contents Xiaomi Wearable Products.
Research and development expenses Research and development expenses increased by 0.4% from RMB515.1 million for the year ended December 31, 2021 to RMB517.1 million (US$75.0 million) for the year ended December 31, 2022, primarily due to a decrease of RMB40.5 million (US$5.9 million) in government subsidies that we received in 2022, partially offset by (i) a decrease of RMB 19.4 million (US$2.8 million) in expenses as we implemented strict expense control measures in 2022, and (ii) a decrease of RMB 19.1 million (US$2.8 million) in share-based compensation expenses.
Research and development expenses Research and development expenses increased by 0.4% from RMB515.1 million for the year ended December 31, 2021 to RMB517.1 million for the year ended December 31, 2022, primarily due to a decrease of RMB40.5 million in government subsidies that we received in 2022, partially offset by (i) a decrease of RMB19.4 million in expenses as we implemented strict expense control measures in 2022, and (ii) a decrease of RMB19.1 million in share-based compensation expenses.
Investing activities Net cash used in investing activities was RMB42.3 million (US$6.1 million) for the year ended December 31, 2022, primarily due to purchase of short-term investments of RMB16.3 million (US$2.4 million), loans provided to related parties of RMB15.5 million (US$2.2 million), and purchase of long-term investments of RMB12.7 million (US$1.8 million).
Net cash used in investing activities was RMB42.3 million for the year ended December 31, 2022, primarily due to purchase of short-term investments of RMB16.3 million, loans provided to related parties of RMB15.5 million, and purchase of long-term investments of RMB12.7 million.
Changes in working capital for the year ended December 31, 2021 primarily consisted of a decrease by RMB673.2 million in accounts payable, which was due to the lower material purchase volume in fourth quarter 2021 compared with it was in fourth quarter 2020, partially offset and optimize by a net decrease of RMB304.7 million in amount due from related parties and accounts receivable. 102 Table of Contents Net cash provided by operating activities for the year ended December 31, 2020 was RMB157.3 million.
Changes in working capital for the year ended December 31, 2021 primarily consisted of a decrease by RMB673.2 million in accounts payable, which was due to the lower material purchase volume in fourth quarter 2021 compared with it was in fourth quarter 2020, partially offset and optimize by a net decrease of RMB304.7 million in amount due from related parties and accounts receivable.
Financing activities Net cash provided by financing activities for the year ended December 31, 2022 was RMB289.2 million (US$41.9 million), primarily due to proceeds from letter of credit factoring of RMB310.3 million (US$45.0 million), bank borrowings of RMB838.9 million (US$121.6 million), partially offset by the repayment of bank borrowings of RMB727.5 million (US$105.5 million).
Net cash provided by financing activities for the year ended December 31, 2022 was RMB289.2 million, primarily due to proceeds from letter of credit factoring of RMB310.3 million, bank borrowings of RMB838.9 million, partially offset by the repayment of bank borrowings of RMB727.5 million.
Operating lease. We have operating lease arrangements for administrative office spaces in various cities in the PRC and overseas, and financial lease that is immaterial. As of December 31, 2022, we had RMB43.7 million of payables within the next 12 months.
Operating lease. We have operating lease arrangements for administrative office spaces in various cities in the PRC and overseas, and financial lease that is immaterial. As of December 31, 2023, we had RMB28.3 million of payables within the next 12 months.
See “Item 4. Information on the Company—C. Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “Item 5. Operating and Financial Review and Prospects—B.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “Item 5. Operating and Financial Review and Prospects—B.
Our capital expenditures were RMB84.8 million, RMB53.1 million and RMB9.9 million (US$1.4 million) in the years ended December 31, 2020, 2021 and 2022, respectively. We will continue to make capital expenditures to meet the expected growth of our business.
Our capital expenditures were RMB53.1 million, RMB9.9 million and RMB11.9 million (US$1.7 million) in the years ended December 31, 2021, 2022 and 2023, respectively. We will continue to make capital expenditures to meet the expected growth of our business.
For the years ended December 31, 2020, 2021 and 2022, research and development expenses accounted for 46.4%, 42.5% and 42.6% of our total operating expenses and 8.4%, 8.2% and 12.5% of our revenues, respectively.
For the years ended December 31, 2021, 2022 and 2023, research and development expenses accounted for 42.5%, 42.6% and 41.8% of our total operating expenses and 8.2%, 12.5% and 14.5% of our revenues, respectively.
Material cash requirements Our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include bank borrowings and operating lease obligations. 103 Table of Contents Bank borrowings .
Material cash requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include bank borrowings and operating lease obligations. Bank borrowings.
Operating income As a result of the factors set out above, we recorded an operating income of RMB93.9 million for the year ended December 31, 2021, as compared to an operating income of RMB174.2 million for the year ended December 31, 2020. Interest income Interest income represents interest earned on bank deposits.
Operating income/(loss) As a result of the factors set out above, we recorded an operating income of RMB93.9 million for the year ended December 31, 2021, and an operating loss of RMB410.2 million for the year ended December 31, 2022. Interest income Interest income represents interest earned on bank deposits.
In 2022, we recorded RMB35.2 million (US$5.1 million) valuation allowance for deferred tax asset which is a non-cash in nature and does not materially affect our operation.
In 2023, we recorded RMB29.1 million (US$4.1 million) in valuation allowance for deferred tax asset which is a non-cash in nature and does not materially affect our operation.
Net cash provided by financing activities for the year ended December 31, 2021 was RMB551.1 million, primarily due to bank borrowings of RMB1,473.6 million, including an RMB540.0 million loan with a term of seven years used in acquiring equity interests in Jiangsu Yitong, partially offset by the repayment of bank borrowings of RMB953.4 million.
Net cash provided by financing activities for the year ended December 31, 2021 was RMB551.1 million, primarily due to bank borrowings of RMB1,473.6 million, including an RMB540.0 million loan with a term of seven years used in acquiring equity interests in Jiangsu Yitong, partially offset by the repayment of bank borrowings of RMB953.4 million. 103 Table of Contents Capital expenditures Our capital expenditures primarily consist of purchases of property, plant and equipment and intangible assets.
Significant judgements included in revenue recognition include: ● the allocation of the transaction price to all the performance obligations based on the relative standalone selling prices; and ● variable consideration We allocate the transaction price to all performance obligations based on their relative standalone selling prices.
Significant judgements related to revenue recognition mainly include the allocation of the transaction price to all the performance obligations based on the relative standalone selling prices. We allocate the transaction price to all performance obligations based on their relative standalone selling prices.
We had interest income of RMB12.3 million (US$1.8 million) in 2022 and RMB16.7 million in 2021. Interest expense Interest expense represents interest charges for bank borrowings. We had interest expense of RMB57.0 million (US$8.3 million) in 2022 and RMB44.9 million in 2021.
We had interest income of RMB16.7 million in 2021 and RMB12.3 million in 2022. Interest expenses Interest expense represents interest charges for bank borrowings. We had interest expense of RMB44.9 million in 2021 and RMB57.0 million in 2022. Other income, net We had other income of RMB27.4 million in 2021 and other income of RMB43.8 million in 2022.
As of December 31, 2022, the balance of the notes payable and others is RMB456 million, which includes RMB146 million payables for short-term bank acceptance notes and RMB310 million payable for the letter of credits factored in the bank. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively.
As of December 31, 2023, the balance of the notes payable and others is RMB475.6 million, which includes RMB212.2 million payables for short-term bank acceptance notes and RMB263.4 million payable for the letter of credits factored in the bank. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively.
Revenues from our self-branded products and others segment, substantially all of which was from the sales of our self-branded products, contributed 31.0%, 46.5% and 59.0% of our total revenues in 2020, 2021 and 2022, respectively. For the year ended December 31, 2022, revenues from our self-branded products and others segment were RMB2,445.8 million (US$354.6 million).
Revenues from our self-branded products and others segment, substantially all of which was from the sales of our self-branded products, contributed 46.5%, 59.0% and 74.2% of our total revenues in 2021, 2022 and 2023, respectively. For the year ended December 31, 2023, revenues from our self-branded products and others segment were RMB1,850.4 million (US$260.6 million).
As of December 31, 2020, 2021 and 2022, we had amount due from related parties of RMB860.2 million, RMB295.6 million and RMB144.9 million (US$21.0 million), respectively, among which RMB833.2 million, RMB287.2 million and RMB118.3 million (US$17.2 million) were from Xiaomi and its affiliates, respectively.
As of December 31, 2021, 2022 and 2023, we had amount due from related parties of RMB295.6 million, RMB144.9 million and RMB82.1 million (US$11.6 million), respectively, among which RMB287.2 million, RMB118.3 million and RMB38.3 million (US$5.4 million) were from Xiaomi and its affiliates, respectively.
The slight decrease was mainly driven by the decrease in the gross profit for sales of Xiaomi wearable products and change in the product mix of our self-branded wearable products.
The decrease was mainly driven by the decrease in the gross profit for sales of Xiaomi Wearable Products, partially offset by the increase in the gross profit for sales of our self-branded wearable products.
As of December 31, 2022, we had outstanding bank loans with terms of one to seven years for an aggregate balance of RMB1.2 billion, including RMB512.0 million short-term bank loans and RMB280.0 million long-term bank loans used for our daily operations and RMB404.2 million long-term bank loans for the Jiangsu Yitong acquisition. Notes payable and others.
As of December 31, 2023, we had outstanding bank loans with terms of one to seven years for an aggregate balance of RMB864.1 million, including RMB12.0 million short-term bank loans and RMB537.1 million long-term bank loans used for our daily operations and RMB315.0 million long-term bank loans for the Jiangsu Yitong acquisition with the shares we hold in Jiangsu Yitong as collateral, compared to our outstanding bank loans for an aggregate balance of RMB1.2 billion as of December 31, 2022.
Anhui Huami began to qualify as a high and new technology enterprise, or HNTE, since 2015 and renewed the HNTE certificate in July 2018 and in September 2021. Anhui Huami Health Technology Co., Ltd. began to qualify as a HNTE since August 2020. Shunyuan Kaihua began to qualify as a HNTE since December 2021.
Anhui Huami began to qualify as a high and new technology enterprise since 2015 and renewed the high and new technology enterprise certificate in July 2018 and in September 2021.
The table below sets forth the respective revenues contribution and assets of Zepp and our wholly-owned subsidiaries and the VIEs as of the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues (1) ​ Total assets (1) ​ ​ For the Year Ended December 31, ​ As of December 31, ​ 2020 2021 2022 2021 2022 Zepp and its wholly-owned subsidiaries 2.1 % 16.5 % 38.8 % 39.4 % 46.2 % VIEs 97.9 % 83.5 % 61.2 % 60.6 % 53.8 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Note: (1) The percentages exclude the inter-company transactions and balances between our subsidiaries and the VIEs. 104 Table of Contents C.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. 104 Table of Contents The table below sets forth the respective revenues contribution and assets of Zepp and our wholly-owned subsidiaries and the VIEs as of the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues (1) ​ Total assets (1) ​ ​ For the Year Ended December 31, ​ As of December 31, ​ 2021 2022 2023 2022 2023 Zepp and its wholly-owned subsidiaries 16.5 % 38.8 % 60.2 % 46.2 % 53.1 % VIEs 83.5 % 61.2 % 39.8 % 53.8 % 46.9 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Note: (1) The percentages exclude the inter-company transactions and balances between our subsidiaries and the VIEs.
Increase of brand recognition and sales of our self-branded products One of our important growth strategies is to attract new users and increase sales of our self-branded products through enhancing the brand recognition for our self-branded products. We plan to make the sale of self-branded products account for significant portion of our revenue in the future.
Increase of brand recognition and sales of our self-branded products One of our key growth strategies is to attract new users and increase sales of our self-branded products through enhancing the brand recognition for our self-branded products. We expect our self-branded products to contribute increasingly to in the future.
The decrease was primarily attributable to a decrease in shipment volume of our self-branded products from approximately 7.6 million in 2021 to approximately 6.3 million in 2022. Xiaomi Wearable Products.
Our self-branded products and others segment revenues decreased by 15.9% from RMB2,909.3 million in 2021 to RMB2,445.8 million in 2022. The decrease was primarily attributable to a decrease in shipment volume of our self-branded products from approximately 7.6 million in 2021 to approximately 6.3 million in 2022. Xiaomi Wearable Products.
Net income/(loss) attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net loss of RMB288.3 million (US$41.8 million) for the year ended December 31, 2022, as compared to a net income of RMB137.8 million for the year ended December 31, 2021.
Net loss attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net loss of RMB288.3 million for the year ended December 31, 2022, and a net loss of RMB212.1 million (US$29.9 million) for the year ended December 31, 2023.
Shipping costs for raw materials and components from domestic locations are borne by our suppliers and contract manufacturers. For raw materials and components procured overseas, our suppliers cover the shipping costs from place of origin to China, and we are responsible for the additional logistics costs if we consign these raw materials and components to our contract manufacturers.
For raw materials and components procured overseas, our suppliers cover the shipping costs from place of origin to China, and we are responsible for the additional logistics costs if we consign these raw materials and components to our contract manufacturers. 94 Table of Contents We offer a warranty ranging from one to three years.
Other (expenses)/income, net We had other expenses of RMB27.4 million in 2021 and other income of RMB43.8 million (US$6.4 million) in 2022. Income taxes (provision)/benefit We recorded provision for income taxes in the amount of RMB10.7 million in 2021. In 2022, we recorded income taxes benefit in the amount of RMB65.9 million (US$9.6 million) in 2022.
Income taxes (provision)/benefit We recorded provision for income taxes in the amount of RMB10.7 million in 2021 and income taxes benefit in the amount of RMB65.9 million in 2022.
Accordingly, Anhui Huami was subject to a tax rate of 15% during the years ended December 31, 2020, 2021 and 2022.
Accordingly, Anhui Huami, Anhui Huami Health Technology Co., Ltd. and Shunyuan Kaihua were subject to a tax rate of 15% during the years ended December 31, 2021, 2022 and 2023.
The following table sets forth our revenues by segment and as a percentage of total revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 4,438,081 ​ 69.0 ​ 3,340,857 ​ 53.5 ​ 1,697,053 ​ 246,050 ​ 41.0 Self-branded products and others 1,995,282 31.0 2,909,252 46.5 2,445,809 354,609 59.0 Total revenues 6,433,363 100.0 6,250,109 100.0 4,142,862 600,659 100.0 ​ We generate more than half of our revenues from sales of our self-branded products.
The following table sets forth our revenues by segment and as a percentage of total revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 3,340,857 ​ 53.5 ​ 1,697,053 ​ 41.0 ​ 644,879 ​ 90,829 ​ 25.8 Self-branded products and others 2,909,252 46.5 2,445,809 59.0 1,850,443 260,630 74.2 Total revenues 6,250,109 100.0 4,142,862 100.0 2,495,322 351,459 100.0 ​ We generate the majority of our revenues from the sales of our self-branded products.
Liquidity and Capital Resources The following table sets forth the movements of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB RMB RMB US$ ​ ​ (in thousands) Selected Consolidated Cash Flow Data: ​ ​ ​ ​ Net cash provided by (used in) operating activities ​ 157,302 (232,435) (787,643) (114,199) Net cash used in investing activities ​ (206,880) (1,069,289) (42,258) (6,127) Net cash provided by financing activities ​ 564,671 551,077 289,198 41,928 Net increase/(decrease) in cash and cash equivalents and restricted cash ​ 515,093 (750,647) (540,703) (7,898) Exchange rate effect on cash and cash equivalents ​ (43,334) (15,564) 4,504 656 Cash, cash equivalents and restricted cash at the beginning of year ​ 1,803,991 2,275,750 1,509,539 218,863 Cash, cash equivalents and restricted cash at end of year ​ 2,275,750 1,509,539 973,340 141,121 ​ As of December 31, 2020, 2021 and 2022, our cash, cash equivalents and restricted cash were RMB2,275.8 million, RMB1,509.5 million and RMB973.3 million (US$141.1 million), respectively, out of which RMB609.7 million, RMB435.2 million and RMB263.4 million (US$38.2 million) were held in U.S. dollars, and RMB1,618.7 million, RMB1,030.7 million and RMB651.8 million (US$94.5 million) were held in Renminbi, as of December 31, 2020, 2021 and 2022, respectively.
Liquidity and Capital Resources The following table sets forth the movements of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Selected Consolidated Cash Flow Data: ​ ​ ​ ​ Net cash (used in)/provided by operating activities ​ (232,435) (787,643) 298,674 42,067 Net cash (used in)/provided by investing activities ​ (1,069,289) (42,258) 54,718 7,706 Net cash provided by/(used in) financing activities ​ 551,077 289,198 (295,038) (41,555) Net (decrease)/increase in cash and cash equivalents and restricted cash ​ (750,647) (540,703) 58,354 8,218 Exchange rate effect on cash and cash equivalents ​ (15,564) 4,504 (34,376) (4,841) Cash, cash equivalents and restricted cash at the beginning of year ​ 2,275,750 1,509,539 973,340 137,092 Cash, cash equivalents and restricted cash at end of year ​ 1,509,539 973,340 997,318 140,469 ​ As of December 31, 2021, 2022 and 2023, our cash, cash equivalents and restricted cash were RMB1,509.5 million, RMB973.3 million and RMB997.3 million (US$140.5 million), respectively, out of which RMB435.2 million, RMB263.4 million and RMB412.1 million (US$58.0 million) were held in U.S. dollars, and RMB1,030.7 million, RMB651.8 million and RMB546.0 million (US$76.9 million) were held in Renminbi, as of December 31, 2021, 2022 and 2023, respectively.
However, given our efficient supply chain management and industry leading market share, we believe we have the ability to control the overall level of material and manufacturing costs as percentage of revenues. 92 Table of Contents Relationship with Xiaomi Our strategic cooperation agreement with Xiaomi grants us the most-preferred-partner status globally to develop future Xiaomi Wearable Products.
However, given our efficient supply chain management and industry leading market share, we believe we have the ability to control the overall level of material and manufacturing costs as percentage of revenues. 93 Table of Contents Relationship with Xiaomi Xiaomi is our exclusive distribution channel for all Xiaomi Wearable Products.
The decrease was primarily resulted from a 49.2% decline in the sales of Mi Band. 96 Table of Contents Self-branded products and others. Our self-branded products and others segment revenues decreased by 15.9% from RMB2,909.3 million in 2021 to RMB2,445.8 million (US$354.6 million) in 2022.
The decrease was primarily resulted from a 62.0% decline in the sales of Xiaomi Wearable Products. 96 Table of Contents Self-branded products and others. Our self-branded products and others segment revenues decreased by 24.3% from RMB2,445.8 million in 2022 to RMB1,850.4 million (US$260.6 million) in 2023.
According to the SAT Circular No. 35, effective from January 1, 2020, a Hong Kong entity shall adopt the method of “self-discrimination, declaration of enjoyment, and retention of relevant materials for future reference,” and the above mentioned requirement of filing application package with the relevant tax authority has been abolished. See “Item 3. Key Information—D.
According to the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, effective from January 1, 2020, a Hong Kong entity shall adopt the method of “self-discrimination, declaration of enjoyment, and retention of relevant materials for future reference,” and the above-mentioned requirement of filing application package with the tax authority has been abolished.
Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2 to the consolidated financial statements of Zepp Health Corporation and its subsidiaries pursuant to Item 17 of Part III of this annual report.
Any significant changes in those estimates would result in changes in the in allocation of revenue which could have an impact on revenue. ​ 106 Table of Contents Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2 to the consolidated financial statements of Zepp Health Corporation and its subsidiaries pursuant to Item 17 of Part III of this annual report.
Xiaomi is our exclusive distribution channel for all Xiaomi Wearable Products. Historically, we derived a substantial majority of our revenues from the sales of Xiaomi Wearable Products. For the years ended December 31, 2020, 2021 and 2022, revenues from our Xiaomi Wearable Products segment represented 69.0%, 53.5% and 41.0% of our total revenues, respectively.
Historically, we derived a substantial majority of our revenues from the sales of Xiaomi Wearable Products. However, over the recent years, we have observed a continuous decline in revenues from this segment. Specifically, for the years ended December 31, 2021, 2022 and 2023, revenues from our Xiaomi Wearable Products segment represented 53.5%, 41.0% and 25.8% of our total revenues, respectively.
Xiaomi Wearable Products. Our Xiaomi Wearable Products segment revenues decreased by 24.7% from RMB4,438.1 million for the year ended December 31, 2020 to RMB3,340.9 million for the year ended December 31, 2021. The decrease was primarily attributable to a decrease in shipment volume of our Xiaomi Wearable Products from approximately 41.0 million in 2020 to approximately 28.5 million in 2021.
Our Xiaomi Wearable Products segment revenues decreased by 62.0% from RMB1,697.1 million for the year ended December 31, 2022 to RMB644.9 million (US$90.8 million) for the year ended December 31, 2023. The decrease was primarily attributable to a decrease in shipment volume of our Xiaomi Wearable Products from approximately 14.0 million in 2022 to approximately 7.9 million in 2023.
However, most of these uses are subject to PRC regulations and approvals. For example: ● capital contributions to our PRC subsidiaries must be approved by the Ministry of Commerce or its local counterparts; and ● loans by us to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with SAFE or its local branches.
For example: ● capital contributions to our PRC subsidiaries must be approved by the Ministry of Commerce or its local counterparts; and ● our loans to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange or its local branches. See “Item 4. Information on the Company—B.
The first HK$2.0 million of profits earned by Galaxy Trading Platform Limited and Hong Kong Zepp Holding Limited will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate.
The first HK$2 million of profits earned by a HK entity will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate.
At the time revenue is recognized, an estimate of warranty costs in relation to the products sold is recorded as a component of cost of revenues. 94 Table of Contents The following table sets forth our cost of revenues by segment and as a percentage of total cost of revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 3,706,495 ​ 72.7 ​ 2,754,086 ​ 55.7 ​ 1,394,460 ​ 202,178 ​ 41.8 Self-branded products and others 1,394,203 27.3 2,190,381 44.3 1,945,286 282,040 58.2 Total cost of revenues 5,100,698 100.0 4,944,467 100.0 3,339,746 484,218 ​ 100.0 ​ The following table sets forth the gross profit and gross margin by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB RMB RMB US$ ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 731,586 ​ 586,771 ​ 302,593 ​ 43,872 Self-branded products and others 601,079 718,871 500,523 72,569 Total gross profit 1,332,665 1,305,642 803,116 116,441 Xiaomi Wearable Products 16.5 % 17.6 % 17.8 % Self-branded products and others 30.1 % 24.7 % 20.5 % Overall gross margin 20.7 % 20.9 % 19.4 % ​ Operating expenses We classify our operating expenses into three categories: research and development, general and administrative, and selling and marketing.
The following table sets forth our cost of revenues by segment and as a percentage of total cost of revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 2,754,086 ​ 55.7 ​ 1,394,460 ​ 41.8 ​ 576,130 ​ 81,146 ​ 31.4 Self-branded products and others 2,190,381 44.3 1,945,286 58.2 1,261,413 177,667 68.6 Total cost of revenues 4,944,467 100.0 3,339,746 100.0 1,837,543 258,813 ​ 100.0 ​ The following table sets forth the gross profit and gross margin by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands, except for percentages) Xiaomi Wearable Products ​ 586,771 ​ 302,593 ​ 68,749 ​ 9,683 Self-branded products and others 718,871 500,523 589,030 82,963 Total gross profit 1,305,642 803,116 657,779 92,646 Xiaomi Wearable Products 17.6 % 17.8 % 10.7 % Self-branded products and others 24.7 % 20.5 % 31.8 % Overall gross margin 20.9 % 19.4 % 26.4 % ​ Operating Expenses We classify our operating expenses into three categories: research and development, general and administrative, and selling and marketing.
Under the Hong Kong tax laws, we are exempted from the Hong Kong income tax on our foreign-derived income. In addition, to avoid abuse of the two-tiered income tax rate regime, each group of connected entities can nominate only one entity to benefit from the two-tiered income tax rate.
In addition, to avoid abuse of the two-tiered income tax rate regime, each group of connected entities can nominate only one entity to benefit from the two-tiered income tax rate. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.
To achieve the goal, we have engaged in a variety of marketing and brand promotion campaigns both in China and globally, which may cause our selling and marketing expenses to increase in the near future. International expansion also represents a significant opportunity to further grow our business.
To achieve the goal, we have engaged in a variety of marketing and brand promotion campaigns both in China and globally, including collaboration with several renowned marathon runners for the launch of our new products, which may cause our selling and marketing expenses to increase in the near future.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Summary of Consolidated Statements of Operating Data: ​ ​ ​ ​ ​ ​ ​ Revenues (1) 6,433,363 100.0 6,250,109 100.0 4,142,862 600,659 100.0 Cost of revenues (2) 5,100,698 79.3 4,944,467 79.1 3,339,746 484,218 80.6 Gross profit 1,332,665 20.7 1,305,642 20.9 803,116 116,441 19.4 Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development (3) 538,009 8.4 515,081 8.2 517,122 74,976 12.5 General and administrative (3) 261,805 4.1 258,346 4.1 235,932 34,207 5.7 Selling and marketing (3) 358,655 5.6 438,273 7.0 460,304 66,738 11.1 Total operating expenses 1,158,469 18.0 1,211,700 19.4 1,213,358 175,921 29.3 Operating income/(loss) 174,196 2.7 93,942 1.5 (410,242) (59,480) (9.9) Realized gain from investments — — 13,507 0.2 597 87 0.0 Gain from deconsolidation of a subsidiary ​ 56,522 ​ 0.9 ​ — ​ — ​ — ​ — ​ 0.0 Interest income 46,118 0.7 16,686 0.3 12,334 1,788 0.3 Interest expenses ​ (22,623) ​ (0.4) ​ (44,884) ​ (0.7) ​ (57,001) ​ (8,264) ​ (1.4) Gain from fair value change of long-term investments 12,325 0.2 — — 51,817 7,513 1.3 Impairment loss from long-term investments — — — — (13,858) (2,009) (0.3) Other income/(expenses), net (929) (0.0) 27,418 0.4 43,820 6,353 1.1 Income/(Loss) before income tax and income from equity method investments 265,609 4.1 106,669 1.7 (372,533) (54,012) (9.0) Income taxes (provision)/benefit (31,154) (0.5) (10,745) (0.2) 65,875 9,551 1.6 Income/(Loss) before income from equity method investments 234,455 3.6 95,924 1.5 (306,658) (44,461) (7.4) (Loss)/Income from equity method investments (4,749) (0.1) 41,028 0.7 17,657 2,560 0.4 Net income/(loss) 229,706 3.6 136,952 2.2 (289,001) (41,901) (7.0) Notes: (1) Includes RMB4,449.8 million, RMB3,350.0 million and RMB1,704.0 million (US$247.1 million) with related parties for the years ended December 31, 2020, 2021 and 2022, respectively. ​ (2) Includes RMB3,713.5 million, RMB2,760.0 million and RMB1,399.5 million (US$202.9 million) resulting from related parties sales for the years ended December 31, 2020, 2021 and 2022, respectively. ​ (3) Share-based compensation expenses were included in operating expenses.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Summary of Consolidated Statements of Operating Data: ​ ​ ​ ​ ​ ​ ​ Revenues (1) 6,250,109 100.0 4,142,862 100.0 2,495,322 351,459 100.0 Cost of revenues (2) 4,944,467 79.1 3,339,746 80.6 1,837,543 258,813 73.6 Gross profit 1,305,642 20.9 803,116 19.4 657,779 92,646 26.4 Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development (3) 515,081 8.2 517,122 12.5 361,812 50,960 14.5 General and administrative (3) 258,346 4.1 235,932 5.7 188,508 26,551 7.6 Selling and marketing (3) 438,273 7.1 460,304 11.1 314,563 44,305 12.6 Total operating expenses 1,211,700 19.4 1,213,358 29.3 864,883 121,816 34.7 Operating income/(loss) 93,942 1.5 (410,242) (9.9) (207,104) (29,170) (8.3) Realized gain from investments 13,507 0.2 597 — 777 109 — Interest income 16,686 0.3 12,334 0.3 21,917 3,087 0.9 Interest expenses ​ (44,884) ​ (0.7) ​ (57,001) ​ (1.4) ​ (47,704) ​ (6,719) ​ (1.9) Gain from fair value change of long-term investments — — 51,817 1.3 1,249 176 0.1 Impairment loss from long-term investments — — (13,858) (0.3) (2,263) (319) (0.1) Other income/(expenses), net 27,418 0.4 43,820 1.0 (3,658) (515) (0.1) Income/(Loss) before income tax and income/(loss) from equity method investments 106,669 1.7 (372,533) (9.0) (236,786) (33,351) (9.4) Income taxes (provision)/benefit (10,745) (0.2) 65,875 1.6 15,822 2,228 0.6 Income/(Loss) before income/(loss) from equity method investments 95,924 1.5 (306,658) (7.4) (220,964) (31,123) (8.8) Income/ (loss) from equity method investments 41,028 0.7 17,657 0.4 8,382 1,181 0.3 Net income/(loss) 136,952 2.2 (289,001) (7.0) (212,582) (29,942) (8.5) Notes: (1) Includes RMB3,350.0 million, RMB1,704.0 million and RMB644.9 million (US$90.8 million) with related parties for the years ended December 31, 2021, 2022 and 2023, respectively.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues Our revenues decreased by 33.7% from RMB6,250.1 million for the year ended December 31, 2021 to RMB4,142.9 million (US$600.7 million) for the year ended December 31, 2022.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues Our revenues decreased by 39.8% from RMB4,142.9 million for the year ended December 31, 2022 to RMB2,495.3 million (US$351.5 million) for the year ended December 31, 2023.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. 101 Table of Contents Although we consolidate the results of the VIEs and their subsidiaries, we only have access to the assets or earnings of the VIEs and their subsidiaries through our contractual arrangements with the consolidated variable interest entities and their shareholders.
Although we consolidate the results of the VIEs and their subsidiaries, we only have access to the assets or earnings of the VIEs and their subsidiaries through our contractual arrangements with the consolidated variable interest entities and their shareholders. See “Item 4. Information on the Company—C.
The difference between our net income of RMB229.7 million and the net cash provided by operating activities was primarily due to additional RMB210.0 million used in working capital, partially offset by the adjustment of RMB137.6 million in non-cash items, which primarily consisted of inventory provision and write-off and share-based compensation.
The difference between our net loss of RMB212.6 million (US$29.9 million) and the net cash provided by operating activities was primarily due to additional cash provided by working capital, as well as the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
Net cash used in investing activities was RMB206.9 million for the year ended December 31, 2020, primarily due to purchase of term deposits of RMB212.1 million, purchase of property, plant and equipment of RMB83.6 million, purchase of long-term investments of RMB82.2 million and acquisition of businesses and assets of RMB26.7 million, partially offset by proceeds from the maturity of term deposits of RMB207.1 million.
Investing activities Net cash provided by investing activities was RMB54.7 million (US$7.7 million) for the year ended December 31, 2023, primarily due to disposal of intangible assets of RMB22.2 million (US$3.1 million), disposal of long-term investments of RMB33.0 million (US$4.7 million), disposal of property, plant and equipment of RMB11.3 million (US$1.6 million), partially offset by purchase of property, plant and equipment of RMB11.3 million (US$1.6 million) and loans provided to related parties of RMB9.9 million (US$1.4 million).
Costs of revenues for our Xiaomi Wearable Products segment decreased by 25.7% from RMB3,706.5 million for the year ended December 31, 2020 to RMB2,754.1 million for the year ended December 31, 2021.
Xiaomi Wearable Products. Costs of revenues for our Xiaomi Wearable Products segment decreased by 58.7% from RMB1,394.5 million for the year ended December 31, 2022 to RMB576.1 million (US$81.1 million) for the year ended December 31, 2023. The decrease was in line with the decrease in the sales of our Xiaomi Wearable Products.
We offer a 12-month warranty.We have the obligation to either repair or replace the defect product for the customers if the product is still under warranty.
We have the obligation to either repair or replace the defect product for the customers if the product is still under warranty. At the time revenue is recognized, an estimate of warranty costs in relation to the products sold is recorded as a component of cost of revenues.
We had interest income of RMB16.7 million in 2021 and RMB46.1 million in 2020. Interest expense Interest expense represents interest charges for bank borrowings. We had interest expense of RMB44.9 million in 2021 and RMB22.6 million in 2020.
Interest income Interest income represents interest earned on bank deposits. We had interest income of RMB12.3 million in 2022 and RMB21.9 million (US$3.1 million) in 2023. Interest expenses Interest expense represents interest charges for bank borrowings. We had interest expense of RMB57.0 million in 2022 and RMB47.7 million (US$6.7 million) in 2023.
Operating activities Net cash used in operating activities for the year ended December 31, 2022 was RMB787.6 million (US$114.2 million).
Operating activities Net cash provided by operating activities for the year ended December 31, 2023 was RMB298.7 million (US$42.1 million).
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Revenues Our revenues decreased by 2.8% from RMB6,433.4 million for the year ended December 31, 2020 to RMB6,250.1 million for the year ended December 31, 2021, primarily due to the decline in the sales of Xiaomi Wearable Products, which contributed to 53.5% of our total revenues.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues Our revenues decreased by 33.7% from RMB6,250.1 million for the year ended December 31, 2021 to RMB4,142.9 million for the year ended December 31, 2022. The decrease was primarily resulted from a 49.2% decline in the sales of Mi Band. Self-branded products and others.
We will pay close attention to the development of the COVID-19 pandemic, perform further assessment of its impact and take relevant measures to minimize the impact. 93 Table of Contents Key Line Items and Specific Factors Affecting Our Results of Operations Revenues We derive our revenues from two operating segments, (i) our self-branded products and others, and (ii) Xiaomi Wearable Products.
For future product collaborations with Xiaomi, we will continue to adopt a disciplined approach, focusing on the profitability and return on investment. Key Line Items and Specific Factors Affecting Our Results of Operations Revenues We derive our revenues from two operating segments, (i) our self-branded products and others, and (ii) Xiaomi Wearable Products.
Cost of revenues for our self-branded products and others segment increased by 57.1% from RMB1,394.2 million for the year ended December 31, 2020 to RMB2,190.4 million for the year ended December 31, 2021.
Cost of revenues Our cost of revenues decreased by 45.0% from RMB3,339.7 million for the year ended December 31, 2022 to RMB1,837.5 million (US$258.8 million) for the year ended December 31, 2023. Self-branded products and others.
The estimated selling price for the smart and wearable devices comprised the majority of the transaction. Any significant changes in those estimates would result in changes in the in allocation of revenue which could have an impact on revenue.
The estimated selling price for the smart and wearable devices comprised the majority of the transaction.
We are building our own distribution network and promoting our own brand with a focus on North America, the European Union, Japan, Korea, India and Southeast Asia, which requires us to dedicate additional time and resources.
International expansion also represents a significant opportunity to further grow our business. We are building our own distribution network and promoting our own brand in various markets across the world, which requires us to dedicate additional time and resources.

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Item 6. [Reserved]

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

66 edited+5 added−9 removed106 unchanged
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant. Award Agreement.
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant. Award Agreement.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. * Less than 1% of our total outstanding ordinary shares and aggregate voting power. 117 Table of Contents ** Each of Mr.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. 117 Table of Contents * Less than 1% of our total outstanding ordinary shares and aggregate voting power. ** Each of Mr.
HHtech Holdings Limited is wholly owned by Wayne Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Wang Huang and his family members. Mr. Huang is the sole director of HHtech Holdings Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr.
HHtech Holdings Limited is wholly owned by Wayne Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Wang Wayne Huang and his family members. Mr. Huang is the sole director of HHtech Holdings Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr.
Wang Huang, Yunfen Lu, Xiaojun Zhang, Leon Cheng Deng, Mike Yan Yeung, Meihui Fan and Hui Wang’s business address is Huami Global Innovation Center, Building B2, Zhong’an Chuanggu Technology Park, No. 900 Wangjiang West Road Road, Hefei, 230088, People’s Republic of China. Pengtao Yu’s business address is 10050 North Wolfe Road, Cupertino, California 95104. Mr.
Wang Wayne Huang, Yunfen Lu, Xiaojun Zhang, Leon Cheng Deng, Mike Yan Yeung, Meihui Fan and Hui Wang’s business address is Huami Global Innovation Center, Building B2, Zhong’an Chuanggu Technology Park, No. 900 Wangjiang West Road, Hefei, 230088, People’s Republic of China. Pengtao Yu’s business address is 10050 North Wolfe Road, Cupertino, California 95104. Mr.
Wang Huang is our founder and has served as the chairman of our board of directors and our chief executive officer since our inception. Mr. Huang is a serial entrepreneur with significant experience and expertise in the technology and Internet sectors in China. Mr. Huang founded Anhui Huami in December 2013 to develop, manufacture and sell smart wearable devices.
Wang Wayne Huang is our founder and has served as the chairman of our board of directors and our chief executive officer since our inception. Mr. Huang is a serial entrepreneur with significant experience and expertise in the technology and internet sectors in China. Mr. Huang founded Anhui Huami in December 2013 to develop, manufacture and sell smart wearable devices.
Prior to being appointed as our chief technology officer, he served as the President of Global Innovation Center and worked in other roles in our company from January 2014 to July 2021. He was in charge of all software related technical architecture and management of the entire research and development team. Prior to joining our company, Mr.
Prior to being appointed as our chief technology officer, he served as the rotating president of Global Innovation Center and worked in other roles in our company from January 2014 to July 2021. He was in charge of all software related technical architecture and management of the entire research and development team. Prior to joining our company, Mr.
Wang Huang; (ii) 3,800,000 Class A ordinary shares in the form of ADSs and 65,836,680 Class B ordinary shares held by HHtech Holdings Limited, a British Virgin Islands company; and (iii) 3,000,000 Class A ordinary shares (including 400,000 Class A ordinary shares in the form of ADSs) and 15,510,447 Class B ordinary shares beneficially owned by HHtech Holdings Limited as a result of the voting agreement dated January 12, 2018 by and among HHtech Holdings Limited, Fandler Holding Limited, Forest Mountain Holding Limited, Haiyu Holding Limited, Shu Hill Holding Limited and Wenshui Holding Limited.
Wang Wayne Huang; (ii) 3,800,000 Class A ordinary shares in the form of ADSs and 65,836,680 Class B ordinary shares held by HHtech Holdings Limited, a British Virgin Islands company; and (iii) 3,520,000 Class A ordinary shares (including 400,000 Class A ordinary shares in the form of ADSs) and 15,510,447 Class B ordinary shares beneficially owned by HHtech Holdings Limited as a result of the voting agreement dated January 12, 2018 by and among HHtech Holdings Limited, Fandler Holding Limited, Forest Mountain Holding Limited, Haiyu Holding Limited, Shu Hill Holding Limited and Wenshui Holding Limited.
We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.
We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In such case of our termination, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.
Our PRC subsidiaries and VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. 2015 Share Incentive Plan In October 2015, our shareholders and board of directors approved the 2015 Share Incentive Plan, which we refer to as the 2015 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
Our PRC subsidiaries and VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. 110 Table of Contents 2015 Share Incentive Plan In October 2015, our shareholders and board of directors approved the 2015 Share Incentive Plan, which we refer to as the 2015 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Wang Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Huang is the chairperson of our nominating and corporate governance committee. Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Huang is the chairperson of our nominating and corporate governance committee. Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Zhang is appointed as a director to our board by the Co-Founder Entities. Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr.
Lu is appointed as a director to our board by the Co-Founder Entities. Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr.
(10) Based on the statement on Schedule 13G filed on February 1, 2019 jointly by (i) People Better Limited, a British Virgin Islands company, (ii) Fast Pace Limited, a British Virgin Island company and (iii) Xiaomi, pursuant to which 35,861,112 Class B ordinary shares are held by People Better Limited.
(11) Based on the statement on Schedule 13G filed on February 1, 2019 jointly by (i) People Better Limited, a British Virgin Islands company, (ii) Fast Pace Limited, a British Virgin Island company and (iii) Xiaomi, pursuant to which 35,861,112 Class B ordinary shares are held by People Better Limited.
Lu served as the financial controller of Hefei Huaheng Electronic Technology Co., Ltd. From November 2002 to March 2009, Ms. Lu worked at Hefei Huakai Yuanheng Information Technology Co., Ltd, where she was responsible for overseeing financial accounting, procurement, administrative affairs and manufacturing management. Ms.
Lu served as the financial controller of Hefei Huaheng Electronic Technology Co., Ltd. From November 2002 to March 2009, Ms. Lu worked at Hefei Huakai Yuanheng Information Technology Co., Ltd, where she was responsible for overseeing financial accounting, procurement, administrative affairs and manufacturing management. Prior to that, Ms.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 114 Table of Contents Compensation Committee.
(12) Based on the statement on Schedule 13G/A filed on February 9, 2021 jointly by (i) Shunwei High Tech Limited, (ii) Shunwei China Internet Fund II, L.P., (iii) Shunwei Capital Partners II GP, L.P., (iv) Shunwei Capital Partners II GP Limited and (v) Mr.
(13) Based on the statement on Schedule 13G/A filed on February 9, 2021 jointly by (i) Shunwei High Tech Limited, (ii) Shunwei China Internet Fund II, L.P., (iii) Shunwei Capital Partners II GP, L.P., (iv) Shunwei Capital Partners II GP Limited and (v) Mr.
Awards granted under the 2018 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. 111 Table of Contents Eligibility.
Awards granted under the 2018 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award. Eligibility.
The non-compete restricted period typically expires two years after the termination of employment, and we agree to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. E.
The non-compete restricted period typically expires two years after the termination of employment, and we agree to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. 116 Table of Contents E.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; 115 Table of Contents ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A3 under the Exchange Act. We have determined that Mr. Lai qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act. We have determined that Mr. Lai qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr. De Liu has served as our director since April 2015. Mr.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. 107 Table of Contents Mr. De Liu has served as our director since April 2015. Mr.
Wang received his bachelor’s degree in electronic and information engineering and Ph.D. in communication and information system from the University of Science and Technology of China in 2000 and 2005, respectively. Mr. Pengtao Yu has served as our chief industrial designer since October 2014. Prior to joining us, Mr.
Wang received his bachelor’s degree in electronic and information engineering and Ph.D. in communication and information system from the University of Science and Technology of China in 2000 and 2005, respectively. 109 Table of Contents Mr. Pengtao Yu has served as our chief industrial designer since October 2014. Prior to joining us, Mr.
Lai received his bachelor’s degree in statistics from the National Cheng Kung University in Taiwan and his MBA from the University of Texas in Dallas. Mr. Lai is a certified public accountant licensed in the State of Texas. Dr. Hongjiang Zhang has served as our director since February 2018. Currently, Dr.
Lai received his bachelor’s degree in statistics from the National Cheng Kung University in Taiwan and his MBA from the University of Texas in Dallas. Mr. Lai is a certified public accountant licensed in the State of Texas. 108 Table of Contents Dr. Hongjiang Zhang has served as our director since February 2018. Currently, Dr.
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 or pursuant to applicable law, 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 or pursuant to applicable law, 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 we receive and for which we have confidential obligations.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; or (ii) 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, without our express consent.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; or (ii) seek directly or indirectly, to solicit the services of any of our employees who we employ on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.
Zhang received his bachelor’s degree in electrical engineering from Zhengzhou University in 1982 and Ph.D. in electrical engineering from the Technical University of Denmark in 1991. 108 Table of Contents Mr. Bing Xie has served as our director since November 2020. Prior to that, Mr.
Zhang received his bachelor’s degree in electrical engineering from Zhengzhou University in 1982 and Ph.D. in electrical engineering from the Technical University of Denmark in 1991. Mr. Bing Xie has served as our director since November 2020. Prior to that, Mr.
Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance 114 Table of Contents committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
We may grant awards to our employees, directors and consultants of our company. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement.
We may grant awards to our employees, directors and consultants of our company. 112 Table of Contents Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 28, 2023 by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our total outstanding shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 29, 2024 by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our total outstanding shares.
However, without the prior written 112 Table of Contents consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the 2023 Plan.
However, without the prior written consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the 2023 Plan.
To our knowledge, as of February 28, 2023, 137,357,820 of our Class A ordinary shares were held by one record holder in the United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program.
To our knowledge, as of February 29, 2024, 137,357,820 of our Class A ordinary shares were held by one record holder in the United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr. Xiaojun Zhang has served as our director since April 2015. In addition to this role, Mr.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr. Jimmy Lai has served as our director since February 2018. In addition to this role, Mr.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 113 Table of Contents Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of approximately RMB17.9 million (US$2.6 million) in cash to our executive officers and RMB2.0 million (US$0.3 million) to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB15.5 million (US$2.2 million) in cash to our executive officers and RMB2.1 million (US$0.3 million) to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
As of March 31, 2023, awards to purchase 13,536,737 Class A ordinary shares have been granted and are outstanding under the 2015 Plan, excluding awards that were forfeited or cancelled after the relevant grant dates.
As of March 31, 2024, awards to purchase 13,564,827 Class A ordinary shares have been granted and are outstanding under the 2015 Plan, excluding awards that were forfeited or cancelled after the relevant grant dates.
He was the head of finance in Philips’ business group of domestic appliances from July 2019 to October 2020 and the head of finance in the business group of personal care from September 2018 to July 2019. Prior to that, Mr. Deng was the head of corporate finance and financial risks in Philips’ treasury group. Mr.
He was the head of finance in Philips’ business group of domestic appliances from July 2019 to October 2020 and the head of finance in the business group of personal care from September 2018 to July 2019. Prior to that, Mr.
Grantees of our share incentive awards under the 2015 Plan resident in China were not permitted to exercise their options prior to the completion of our initial public offering. The following paragraphs describe the principal terms of the 2015 Plan. Types of Awards.
Grantees of our share incentive awards under the 2015 Plan resident in China were not permitted to exercise their options prior to the completion of our initial public offering. The following paragraphs describe the principal terms of the 2015 Plan. Types of Awards. The 2015 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration.
As of March 31, 2023, awards to purchase 4,255,544 Class A ordinary shares under the 2023 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2023 Plan. Types of Awards.
As of March 31, 2024, awards to purchase 7,591,456 Class A ordinary shares under the 2023 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2023 Plan. Types of Awards.
We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Lai is the chairman of our audit committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Lai is the chairman of our audit committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. ​
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. ​ 120 Table of Contents
Lai has served as the chief financial officer of China Online Education Group, an NYSE-listed company and an online English language education services provider in China, from June 2015 to December 2018. In addition to his role at China Online Education, Mr.
Lai also serves as chief financial officer of a biotechnology company, Acepodia, Inc., since March 2021. Mr. Lai has served as the chief financial officer of China Online Education Group, an NYSE-listed company and an online English language education services provider in China, from June 2015 to December 2018. In addition to his role at China Online Education, Mr.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ of ​ ​ Class A ​ Class B ​ Total ​ of total ​ aggregate ​ ​ ordinary ​ ordinary ​ ordinary ​ ordinary ​ voting ​ ​ shares ​ shares ​ shares ​ shares ​ power† Directors and Executive Officers:** ​ Wang Huang (1) 6,860,076 81,347,127 88,207,203 36.0 % 63.1 % De Liu — — — — — ​ Yunfen Lu (2) * 3,450,746 3,770,746 1.5 % 2.7 % Xiaojun Zhang (3) * 2,107,463 2,467,463 1.0 % 1.6 % Jimmy Lai (4) * — * * * ​ Hongjiang Zhang — — — — — ​ Bing Xie ​ — ​ — ​ — ​ — ​ — ​ Leon Cheng Deng (5) * — * * * ​ Mike Yan Yeung (6) * — * * * ​ Meihui Fan (7) ​ * ​ 3,450,746 ​ 4,130,746 ​ 1.7 % 2.7 % Hui Wang (8) * — * * * ​ Pengtao Yu (9) * — * * * ​ All Directors and Executive Officers as a Group 13,340,476 81,347,127 94,687,603 38.6 % 63.6 % Principal Shareholders: ​ ​ ​ ​ ​ ​ HHtech Holdings Limited (1) 6,800,000 81,347,127 88,147,127 36.1 % 63.1 % People Better Limited (10) — 35,861,112 35,861,112 14.7 % 27.6 % Allspring Entities (11) 20,536,840 — 20,536,840 8.4 % 1.6 % Shunwei High Tech Limited (12) ​ 16,598,560 — 16,598,560 6.8 % 1.3 % FIL Limited (13) 13,084,692 — 13,084,692 5.4 % 1.0 % Notes: † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ of ​ ​ Class A ​ Class B ​ Total ​ of total ​ aggregate ​ ​ ordinary ​ ordinary ​ ordinary ​ ordinary ​ voting ​ ​ shares ​ shares ​ shares ​ shares ​ power † Directors and Executive Officers:** ​ Wang Wayne Huang (1) 7,380,076 81,347,127 88,727,203 37.0 % 63.4 % De Liu — — — — — ​ Yunfen Lu (2) * 3,450,746 3,970,746 1.7 % 2.7 % Xiaojun Zhang (3) * 2,107,463 2,707,463 1.1 % 1.7 % Jimmy Lai (4) * — * * * ​ Hongjiang Zhang — — — — — ​ Bing Xie ​ — ​ — ​ — ​ — ​ — ​ Leon Cheng Deng (5) * — * * * ​ Mike Yan Yeung (6) 2,609,116 — 2,609,116 1.1 % 0.2 % Meihui Fan (7) ​ * ​ 3,450,746 ​ 4,410,746 ​ 1.8 % 2.7 % Hui Wang (8) * — * * * ​ Pengtao Yu (9) * — * * * ​ All Directors and Executive Officers as a Group 15,014,476 81,347,127 96,361,603 39.9 % 63.8 % Principal Shareholders: ​ ​ ​ ​ ​ ​ HHtech Holdings Limited (10) 7,320,000 81,347,127 88,667,127 37.0 % 63.4 % People Better Limited (11) — 35,861,112 35,861,112 14.9 % 27.7 % Allspring Entities (12) 20,018,936 — 20,018,936 8.3 % 1.5 % Shunwei High Tech Limited (13) ​ 16,598,560 — 16,598,560 6.9 % 1.3 % Notes: † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
As of March 31, 2023, awards to purchase 20,966,518 Class A ordinary shares under the 2018 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2018 Plan. Types of Awards.
As of March 31, 2024, awards to purchase 23,312,826 Class A ordinary shares under the 2018 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. 111 Table of Contents The following paragraphs describe the principal terms of the 2018 Plan. Types of Awards.
The following table summarizes, as of March 31, 2023, the awards granted under our 2015 Plan, 2018 Plan and 2023 Plan to several of our executive officers, excluding awards that were forfeited or cancelled after the relevant grant dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Underlying ​ ​ ​ ​ ​ Options and ​ ​ ​ ​ ​ ​ ​ ​ Restricted Shares ​ Exercise Price ​ ​ ​ ​ Name ​ Units ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Mike Yan Yeung * (1) — March 3, 2015 — ​ * 0.79 March 3, 2015 February 28, 2019 ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — Leon Cheng Deng ​ * (1) ​ — ​ August 31, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — Hui Wang ​ * ​ — ​ August 20, 2014 ​ August 20, 2024 ​ ​ * ​ — ​ August 18, 2020 ​ August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 Pengtao Yu ​ * (1) ​ — ​ March 3, 2015 ​ — ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — Yunfen Lu * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 Xiaojun Zhang * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 Meihui Fan ​ * ​ — ​ May 13, 2021 ​ May 6, 2031 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 Total 11,434,700 ​ Notes: * Less than one percent of our total outstanding shares.
The following table summarizes, as of March 31, 2024, the awards granted under our 2015 Plan, 2018 Plan and 2023 Plan to several of our executive officers, excluding awards that were forfeited or cancelled after the relevant grant dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Underlying ​ ​ ​ ​ ​ Options and ​ ​ ​ ​ ​ ​ ​ ​ Restricted Shares ​ Exercise Price ​ ​ ​ ​ Name ​ Units ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Mike Yan Yeung * (1) — March 3, 2015 — ​ * 0.79 March 3, 2015 February 28, 2019 ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Leon Cheng Deng ​ * (1) ​ — ​ August 31, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Hui Wang ​ * ​ — ​ August 20, 2014 ​ August 20, 2024 ​ ​ * ​ — ​ August 18, 2020 ​ August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Pengtao Yu ​ * (1) ​ — ​ March 3, 2015 ​ — ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Yunfen Lu * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Xiaojun Zhang * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Meihui Fan ​ * ​ — ​ May 13, 2021 ​ May 6, 2031 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Total 11,994,700 ​ Notes: * Less than one percent of our total outstanding shares. 113 Table of Contents (1) Restricted share units As of March 31, 2024, other employees as a group held outstanding options to purchase 16,495,525 Class A ordinary shares of our company, at a weighted average exercise price of US$0.03 per share, 2,076,217 restricted shares, and 4,149,014 restricted share units.
Directors and Executive Officers Age Position/Title Wang Huang ​ 47 ​ Chairman of the Board of Directors and Chief Executive Officer ​ De Liu ​ 49 ​ Director ​ Yunfen Lu ​ 57 ​ Director ​ Xiaojun Zhang ​ 51 ​ Director ​ Jimmy Lai ​ 66 ​ Independent Director ​ Hongjiang Zhang ​ 62 ​ Independent Director ​ Bing Xie ​ 55 ​ Independent Director ​ Leon Cheng Deng ​ 40 ​ Chief Financial Officer ​ Mike Yan Yeung ​ 52 ​ Chief Operating Officer ​ Meihui Fan ​ 44 ​ Chief Technology Officer ​ Hui Wang ​ 45 ​ Vice President of Corporate Strategy and General Manager of Beijing Operations ​ Pengtao Yu ​ 41 ​ Chief Industrial Designer ​ ​ Mr.
Directors and Executive Officers Age Position/Title Wang Wayne Huang ​ 48 ​ Chairman of the Board of Directors and Chief Executive Officer ​ De Liu ​ 50 ​ Director ​ Yunfen Lu ​ 58 ​ Director ​ Xiaojun Zhang ​ 52 ​ Director ​ Jimmy Lai ​ 67 ​ Independent Director ​ Hongjiang Zhang ​ 63 ​ Independent Director ​ Bing Xie ​ 56 ​ Independent Director ​ Leon Cheng Deng ​ 41 ​ Chief Financial Officer ​ Mike Yan Yeung ​ 53 ​ Chief Operating Officer ​ Meihui Fan ​ 45 ​ Chief Technology Officer ​ Hui Wang ​ 46 ​ Vice President of Corporate Strategy and General Manager of Beijing Operations ​ Pengtao Yu ​ 42 ​ Chief Industrial Designer ​ ​ Mr.
Lu also serves as the director of Beijing Huami, Huami (Shenzhen) Information Technology Co., Ltd., Beijing Huami Intelligent Technology Co., Ltd., Hong Kong Zepp Holding Limited, 107 Table of Contents Shenzhen Yunding Information Technology Co., Ltd., Jiangsu Yitong High-tech Co., Ltd. (Shenzhen: 300211) and Hefei Zhongan Huami Investment Management Co., Ltd. Ms.
Lu also serves as the director of Huami (Shenzhen) Information Technology Co., Ltd., Beijing Huami Intelligent Technology Co., Ltd., Hong Kong Zepp Holding Limited, Shenzhen Yunding Information Technology Co., Ltd., Jiangsu Yitong High-tech Co., Ltd. (Shenzhen: 300211), Hefei Zhongan Huami Investment Management Co., Ltd. and Shanghai Shengyin Technology Co., Ltd. From April 2009 to December 2013, Ms.
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant. Award Agreement.
Our board of directors or a committee of one or more members of the board of directors will administer the 2015 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant.
The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the 2018 Share Incentive Plan was 21,509,115 as of January 1, 2023.
The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the 2018 Share Incentive Plan was 23,899,017 as of January 1, 2024.
He earned a Bachelor of Finance degree from Shanghai International Studies University, and a Master of International Finance degree from the University of Amsterdam. Mr. Mike Yan Yeung has served as our chief operating officer since January 2015. Prior to joining us, Mr.
Deng holds a CPA certificate in Australia, and a Chartered Global Management Accountant certification from CIMA. He earned a Bachelor of Finance degree from Shanghai International Studies University, and a Master of International Finance degree from the University of Amsterdam. Mr. Mike Yan Yeung has served as our chief operating officer since January 2015. Prior to joining us, Mr.
A director is not required to hold any shares in our company to qualify to serve as a director.
C. Board Practices Our board of directors consists of seven directors. A director is not required to hold any shares in our company to qualify to serve as a director.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be or becomes of unsound mind. 115 Table of Contents D.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be or becomes of unsound mind. D. Employees We had 1,227, 987 and 839 employees as of December 31, 2021, 2022 and 2023, respectively.
To name a few, he was awarded “Zhongguancun Top Talent” in 2015 and “Beijing Top Innovative and Entrepreneurial Leading Talent” in 2016. Mr.
Liu has received many honors in the business world as well. To name a few, he was awarded “Zhongguancun Top Talent” in 2015 and “Beijing Top Innovative and Entrepreneurial Leading Talent” in 2016. Mr.
Under these agreements, each of our executive officers is employed for a specified time period.
Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Compensation Committee. Our compensation committee consists of Mr. Wang Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Dr. Zhang is the chairman of our compensation committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Our compensation committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Dr. Zhang is the chairman of our compensation committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr. Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
The calculations in the table below are based on 126,944,152 Class A ordinary shares (excluding the 5,548,888 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the 2015 Share Incentive Plan, the 2018 Share Incentive Plan and the 2023 Share Incentive Plan and the 14,130,092 treasury shares in the form of ADSs that we repurchased under our share repurchase program) and 117,208,247 Class B ordinary shares outstanding as of February 28, 2023. 116 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 122,712,060 Class A ordinary shares (excluding the 4,355,880 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the 2015 Share Incentive Plan, the 2018 Share Incentive Plan and the 2023 Share Incentive Plan, and the 21,275,192 treasury shares in the form of ADSs that we repurchased under our share repurchase program) and 117,208,247 Class B ordinary shares outstanding as of February 29, 2024.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2022: ​ ​ ​ ​ As of ​ ​ December 31, ​ ​ 2022 Function: Research and development 564 Selling and marketing 220 Administrative 143 Supply chain management 60 Total 987 ​ As of December 31, 2022, we had 369 employees in Shenzhen, 275 employees in Hefei, 142 employees in Beijing, 83 employees in Nanjing, 25 employees in other cities in mainland China, 47 employees in North America, 39 employees in Europe, 7 employees in other countries in Asia.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2023: ​ ​ ​ ​ As of ​ ​ December 31, ​ ​ 2023 Function: Research and development 493 Selling and marketing 170 Administrative 122 Supply chain management 54 Total 839 ​ As of December 31, 2023, we had 300 employees in Shenzhen, 234 employees in Hefei, 116 employees in Beijing, 74 employees in Nanjing, 25 employees in other cities in mainland China, 43 employees in North America, 41 employees in Europe, 6 employees in other countries in Asia.
(11) Based on the statement on Schedule 13G/A filed on January 12, 2023 jointly by Allspring Global Investments Holdings, LLC, Allspring Global Investments, LLC and Allspring Funds Management, LLC, each of which is a Delaware limited liability company with the address of 525 Market St, 10th Fl, San Francisco, CA 94105, 20,536,840 Class A ordinary shares in the form of ADSs are held by Allspring Global Investments Holdings LLC.
(12) Based on the statement on Schedule 13G/A filed on January 12, 2024 jointly by Allspring Global Investments Holdings, LLC, Allspring Global Investments, LLC and Allspring Funds Management, LLC, each of which is a Delaware limited liability company with the address of 1415 Vantage Park Drive, 3 rd Floor, Charlotte, NC, 28203, 20,018,936 Class A ordinary shares in the form of ADSs are held by Allspring Global Investments Holdings LLC.
Liu also holds various positions, including the vice-chairman of China Industrial Design Association and a member of National Manufacturing Strategy Advisory Committee. He also serves as a director of Viomi Technology Co., Ltd., a Nasdaq-listed company. Mr. Liu has received many honors in the business world as well.
Liu also holds various positions, including the vice-chairman of China Industrial Design Association and a member of National Manufacturing Strategy Advisory Committee. He also serves as the director at several other technology companies, such as Viomi Technology Co., Ltd. (Nasdaq: VIOT), Shanghai Longcheer Technology Co., Ltd. (Shanghai: 603341) and Ninebot Limited (Shanghai: 689009). Mr.
De Liu’s business address is Keliyuan Building, No.72 Anningzhuang East Road, Haidian District, Beijing, 100085, People’s Republic of China. Mr. Jimmy Lai’s business address is 4521 Turnberry Ct, Plano, Texas, 75024, USA. Dr. Hongjiang Zhang’s business address is 627 Jurong West St 65, #14-380, Singapore 640627. Bing Xie’s business address is 10005 Meadowbrook Drive, Dallas, Texas, U.S. 75229.
De Liu’s business address is Keliyuan Building, No.72 Anningzhuang East Road, Haidian District, Beijing, 100085, People’s Republic of China. Mr. Jimmy Lai’s business address is 9th Floor, No. 8 Zhongyuan Street, Zhonghe District, New Taipei City, Taiwan. Dr. Hongjiang Zhang’s business address is 627 Jurong West St 65, #14-380, Singapore 640627.
(1) Represents (i) 60,076 Class A ordinary shares in the form of ADSs held by Mr.
Bing Xie’s business address is 10005 Meadowbrook Drive, Dallas, Texas, U.S. 75229. (1) Represents (i) 60,076 Class A ordinary shares in the form of ADSs held by Mr.
Zhang worked at the Immigration Office of Anhui Provincial Public Security Department, where he held multiple positions including clerk, deputy chief officer and chief officer, from July 1994 to July 2009. Mr. Zhang received his bachelor’s degree in Chinese language and literature from Anhui University in 1994. Mr.
Zhang served as head of the human resources and administrative affairs department at the Anhui branch of Sunshine Insurance Group Corporation Limited. Prior to that, Mr. Zhang worked at the Immigration Office of Anhui Provincial Public Security Department, where he held multiple positions including clerk, deputy chief officer and chief officer, from July 1994 to July 2009. Mr.
Zhang has also served as vice president of Anhui Huami since January 2014, where he is responsible for overseeing human resources. Prior to joining us, Mr. Zhang served as the vice president of Hefei Huaheng Electronic Technology Co., Ltd from October 2011 to December 2013. From September 2010 to October 2011, Mr.
Xiaojun Zhang has served as our director since April 2015. In addition to this role, Mr. Zhang has also served as vice president of Anhui Huami since January 2014, where he is responsible for overseeing human resources. Prior to joining us, Mr.
Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
Yu received his bachelor’s degree in engineering from Beijing Institute of Technology in 2003, and his bachelor’s degree in product design and master’s degree in industrial design from the Art Center College of Design in 2008 and 2011, respectively. 109 Table of Contents Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
He also received the Red Dot Design Award (Germany) in 2011 and 2016. Mr. Yu received his bachelor’s degree in engineering from Beijing Institute of Technology in 2003, and his bachelor’s degree in product design and master’s degree in industrial design from the Art Center College of Design in 2008 and 2011, respectively.
Deng also played a critical leadership role in the divestiture of Philips’ TV and Audio divisions, the Philips Lighting separation, and a series of acquisitions in the past. Mr. Deng holds a CPA certificate in Australia, and a Chartered Global Management Accountant certification from CIMA.
Deng was the head of corporate finance and financial risks in Philips’ treasury group from October 2016 to September 2018. Mr. Deng also played a critical leadership role in the divestiture of Philips’ TV and Audio divisions, the Philips Lighting separation, and a series of acquisitions in the past. Mr.
Lu received her secondary vocational degree in accounting from Shanghai Lixin Vocational School of Accounting (now Shanghai Lixin University of Accounting and Finance) in 1986. Ms. Lu is appointed as a director to our board by the Co-Founder Entities.
Zhang received his bachelor’s degree in Chinese language and literature from Anhui University in 1994. Mr. Zhang is appointed as a director to our board by the Co-Founder Entities.
Zhang served as deputy general manager of Anhui Mei Bang Investment Management Co., Ltd. From July 2009 to September 2010, Mr. Zhang served as head of the human resources and administrative affairs department at the Anhui branch of Sunshine Insurance Group Corporation Limited. Prior to that, Mr.
Zhang served as the vice president of Hefei Huaheng Electronic Technology Co., Ltd from October 2011 to December 2013. From September 2010 to October 2011, Mr. Zhang served as deputy general manager of Anhui Mei Bang Investment Management Co., Ltd. From July 2009 to September 2010, Mr.
Removed
Jimmy Lai has served as our director since February 2018. In addition to this role, Mr. Lai also serves as chief financial officer of a biotechnology company, Acepodia, Inc., since March 2021. Mr.
Added
Lu worked at the Logistics Group of the University of Science and Technology of China, where she was in charge of financial accounting and manufacturing management, from 1999 to 2002. Ms. Lu received her secondary vocational degree in accounting from Shanghai Lixin Vocational School of Accounting (now Shanghai Lixin University of Accounting and Finance) in 1986. Ms.
Removed
He also received the Red Dot Design Award (Germany) in 2011 and 2016. Mr.
Added
Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Removed
The 2015 Plan permits the awards of options, restricted shares and restricted share units. 110 Table of Contents Plan Administration. Our board of directors or a committee of one or more members of the board of directors will administer the 2015 Plan.
Added
(10) Represents (i) 3,800,000 Class A ordinary shares in the form of ADSs and 65,836,680 Class B ordinary shares held by HHtech Holdings Limited, a British Virgin Islands company; and (ii) 3,520,000 Class A ordinary shares (including 400,000 Class A ordinary shares in the form of ADSs) and 15,510,447 Class B ordinary shares beneficially owned by HHtech Holdings Limited as a result of the voting agreement dated January 12, 2018 by and among HHtech Holdings Limited, Fandler Holding Limited, Forest Mountain Holding Limited, Haiyu Holding Limited, Shu Hill Holding Limited and Wenshui Holding Limited.
Removed
(1) Restricted share units As of March 31, 2023, other employees as a group held outstanding options to purchase 14,495,279 Class A ordinary shares of our company, at a weighted average exercise price of US$0.04 per share, 4,225,417 restricted shares, and 7,334,938 restricted share units. C. Board Practices Our board of directors consists of seven directors.
Added
HHtech Holdings Limited is wholly owned by Wayne Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Wang Wayne Huang and his family members. Mr. Huang is the sole director of HHtech Holdings Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr.
Removed
Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Added
Huang is entitled to exercise voting and dispositive power over the shares held by HHtech Holdings Limited. The registered address of HHtech Holdings Limited is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
Removed
Employees We had 1,507, 1,227 and 987 employees as of December 31, 2020, 2021 and 2022, respectively.
Removed
(13) Based on the statement on Schedule 13G/A filed on February 9, 2023 jointly by FIL Limited, Pandanus Partners, L.P. and Pandanus Associates, Inc., pursuant to which 13,084,692 Class A ordinary shares are held by FIL Limited. Pandanus Partners owns more than 25% and less than 48.5% of the total voting stock of FIL Limited voting stock.
Removed
Pandanus Partners is owned by trusts for the benefit of members of the Johnson family, including Abigail P. Johnson, the chairman of FIL Limited. Pandanus Associates, Inc. is the general partner of Pandanus Partners. The registered address of FIL Limited is Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, HM19.
Removed
As of the date of this annual report, none of our ordinary shares are held by governmental entities of our place of incorporation, and no government entity in the place where our registered public accounting firm is located and organized has a controlling financial interest in our company.

Item 7. Management's Discussion & Analysis

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

10 edited+1 added−3 removed6 unchanged
Strategic Cooperation Agreement Under our strategic cooperation agreement with a subsidiary of Xiaomi, (i) we are Xiaomi’s most preferred partner for Xiaomi-branded smart bands, smart watches (excluding children watches and quartz watches) and smart scales products, and (ii) if any other smart band, smart watch or smart scale is sold on any sales platform or channel operated by Xiaomi (including its official website, Mi.com , offline retail stores and online mobile apps), Xiaomi is required to provide better or equally prominent displays for our products.
Strategic Cooperation Agreement Under our strategic cooperation agreement with a subsidiary of Xiaomi, (i) we were Xiaomi’s most preferred partner for Xiaomi-branded smart bands, smart watches (excluding children watches and quartz watches) and smart scales products, and (ii) if any other smart band, smart watch or smart scale is sold on any sales platform or channel operated by Xiaomi (including its official website, Mi.com, offline retail stores and online mobile apps), Xiaomi was required to provide better or equally prominent displays for our products.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 120 Table of Contents B. Related Party Transactions Contractual Arrangements with the Variable Interest Entity and its Shareholders See “Item 4. Information on the Company—C. Organizational Structure.” Employment Agreements and Indemnification Agreements See “Item 6.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Contractual Arrangements with the Variable Interest Entity and its Shareholders See “Item 4. Information on the Company—C. Organizational Structure.” Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—A.
Business Cooperation Agreement In February 2023, we entered into a business cooperation agreement with a subsidiary of Xiaomi for the sale of Xiaomi Wearable Products, including Mi Band series and Mi Smart Scale series. The business cooperation agreement is set to have a term of two years.
This strategic cooperation agreement expired in October 2023. Business Cooperation Agreement In February 2023, we entered into a business cooperation agreement with a subsidiary of Xiaomi for the sale of Xiaomi Wearable Products, including Mi Band series and Mi Smart Scale series. The business cooperation agreement is set to have a term of two years.
Other Transactions with Related Parties We have invested in a number of companies as a strategy to expand our business partner network. In 2020, we sold 26.7% equity interest in Shenzhen Yunding Information Technology Co., Ltd. for a cash consideration of RMB22.5 million to Gongqingcheng Yunding Ruiheng Investment L.P.
Other Transactions with Related Parties We have invested in a number of companies as a strategy to expand our business partner network. In 2021, we sold 5% equity interest in Shenzhen Yunding Information Technology Co., Ltd. for a cash consideration of RMB20.0 million to Gongqingcheng Yunding Ruiheng Investment L.P.
Transactions with Xiaomi In the year ended December 31, 2022, we recorded RMB1,704.0 million (US$247.1 million) in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2022, the amount due from Xiaomi and its affiliates was RMB118.3 million (US$17.2 million).
In the year ended December 31, 2022, we recorded RMB1,704.0 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2022, the amount due from Xiaomi and its affiliates was RMB118.3 million.
We have entered into a business cooperation agreement and a strategic cooperation agreement with Xiaomi, which grant us the most-preferred-partner status globally to develop future Xiaomi Wearable Products. In October 2020, we entered into the strategic cooperation agreement with Xiaomi for three years, which will end in October 2023.
In October 2017, we entered into a strategic cooperation agreement with Xiaomi, which granted us the most-preferred-partner status globally to develop subsequent Xiaomi Wearable Products. In October 2020, we extended the strategic cooperation agreement with Xiaomi for three years, which ended in October 2023.
Compensation—2015 Share Incentive Plan,” “2018 Share Incentive Plan” and “2023 Share Incentive Plan.” Our Relationship with Xiaomi As of February 28, 2023, Xiaomi held 14.7% of our total outstanding shares, and has appointed one director to our board.
Directors and Senior Management— Employment Agreements and Indemnification Agreements.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—2015 Share Incentive Plan,” “2018 Share Incentive Plan” and “2023 Share Incentive Plan.” Our Relationship with Xiaomi As of February 29, 2024, Xiaomi held 14.9% of our total outstanding shares, and has appointed one director to our board.
In 2021 and 2022, we purchased raw materials from Hefei Jingyu Micro-electronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, with total transaction amount of RMB146.8 million and RMB240.7 million, respectively. C. Interests of Experts and Counsel Not applicable. ​
In 2021, 2022 and 2023, we purchased raw materials from Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, with total transaction amount of RMB146.8 million, RMB222.2 million and RMB86.8 million, respectively.
In the year ended December 31, 2020, we recorded RMB4,449.8 million in revenues from Xiaomi and its affiliates primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2020, the amount due from Xiaomi and its affiliates was RMB833.2 million.
Transactions with Xiaomi In the year ended December 31, 2023, we recorded RMB644.9 million (US$90.8 million) in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products. As of December 31, 2023, the amount due from Xiaomi and its affiliates was RMB38.3 million (US$5.4 million).
During the year ended December 31, 2022, we also sold one specific generation of Xiaomi Wearable Product, accounting for 26.1% of consolidated revenue, which we and Xiao has a standard selling price and does not include installment payments.
During the year ended December 31, 2023, we sold several Xiaomi Wearable Products, which we and Xiaomi have standard selling prices and do not include installment payments.
Removed
Directors, Senior Management and Employees—A. Directors and Senior Management— Employment Agreements and Indemnification Agreements.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B.
Added
In 2023, we transferred the technologies related to Huangshan-2/2S smart wearable chips to Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, for a total consideration of RMB21.9 million. C. Interests of Experts and Counsel Not applicable. ​
Removed
This extended strategic cooperation agreement will expire in October 2023, and can be terminated earlier by Xiaomi if (i) we fail to deliver products to the market within the period mutually agreed by Xiaomi and us, or if the products do not meet Xiaomi’s requirements and (ii) return rates of our products are above certain thresholds or more than three consecutive months, or a material quality issue causes a massive product recall.
Removed
In 2021, we further sold 5% equity interest in Shenzhen Yunding Information Technology Co., Ltd. for a cash consideration of RMB20.0 million. In 2020, we made a prepayment of RMB12.0 million to purchase a building of Hefei Yizhi Electronic Technology Co., Ltd., a company controlled by Mr. Wang Huang.

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