{"url_path":"/sec/bq/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-13","source_url":"https://www.sec.gov/Archives/edgar/data/1815021/0001213900-26-077593-index.html","accession_number":"0001213900-26-077593","cik":"0001815021","ticker":"BQ","issuer_name":"Boqii Holding Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1815021/0001213900-26-077593-index.html","primary_entity_key":"0001815021","primary_entity_name":"Boqii Holding Ltd"},"word_count":24506,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION\nON THE COMPANY**\n\n** **\n\n**4.A. History and Development of the Company**\n\n** **\n\n**Corporate History**\n\n \n\nWe commenced operations in\n2008 with the establishment of Shanghai Guangcheng Information Technology Co., Ltd. (“Guangcheng Information”) in December\n2007. In November 2012, Shanghai Guangcheng was established in the PRC. In November 2012 and March 2013, Guangcheng Information and Shanghai\nGuangcheng entered into an asset transfer agreement and a supplemental agreement thereto, respectively, pursuant to which Guangcheng Information\ntransferred all of its business operations and assets to Shanghai Guangcheng.\n\n \n\nWe incorporated Boqii, an\nexempted company with limited liability, in the Cayman Islands, as our offshore holding company in June 2012 to facilitate offshore financing\nand our initial public offering. In July 2012 and August 2016, Boqii Corporation Limited and Boqii International Limited, two of our wholly\nowned subsidiaries, were incorporated in Hong Kong. In October 2019, Yoken International Limited (“Yoken International”),\nour wholly owned subsidiary, was incorporated in Hong Kong. In November 2019, we incorporated Yoken Holding Limited (“Yoken Holding”)\nas a wholly owned subsidiary under the laws of the Cayman Islands, and in December 2019, we transferred all of our shares in Yoken International\nto Yoken Holding.\n\n \n\nIn November 2012, Shanghai\nXincheng, our wholly owned subsidiary, was established in the PRC. In the same year, due to the restrictions imposed by PRC laws and regulations\non foreign ownership of companies engaged in value-added telecommunication services, Shanghai Xincheng entered into a series of contractual\narrangements, as supplemented and amended, with Shanghai Guangcheng and then shareholders of Shanghai Guangcheng, by which Shanghai Xincheng\nmay exert control over Shanghai Guangcheng and consolidate Shanghai Guangcheng’s financial statements under U.S. GAAP. In August\n2020, Shanghai Xincheng re-entered into another series of similar contractual arrangements, as supplemented and amended, with Shanghai\nGuangcheng and then shareholders of Shanghai Guangcheng, which substitute for or supplement the above contractual arrangements entered\ninto in 2019. For details, please refer to “*Item 3. Key Information-Contractual Arrangements with the VIEs and Their Respective\nShareholders*.” As of the date of this annual report, share pledge registration of the shareholders of Shanghai Guangcheng have\nbeen completed.\n\n \n\n65\n\n \n\n \n\nIn June 2021, Suzhou Taicheng\nwas established in the PRC. In the same month, Shanghai Xincheng entered into a series of contractual arrangements, as supplemented and\namended, with Suzhou Taicheng and then shareholders of Suzhou Taicheng, by which Shanghai Xincheng may exert control over Suzhou Taicheng\nand consolidate Suzhou Taicheng’s financial statements under U.S. GAAP. For details, please refer to “*Item 3. Key Information-Contractual\nArrangements with the VIEs and Their Respective Shareholders*.”\n\n \n\nIn February 2026, the VIE\narrangement with respect to Xingmu was terminated. See “*Recent Development – February 2026 Repurchase Agreement.*”\n\n \n\nIn February 2013, Shanghai\nYiqin Pet Products Co., Ltd. (“Shanghai Yiqin”) was established in the PRC. In February 2020, Yoken International established\nYoken WFOE in the PRC as its wholly owned subsidiary. Following Shanghai Yiqin’s restructuring, Boqii holds 1,862,142 ordinary shares\nand 2,887,858 series A ordinary shares, representing approximately 92.78% of equity interest in Yoken Holding on a fully diluted and converted\nbasis as of the date of this annual report.\n\n \n\nIn October 2020, we completed\nan initial public offering in which we offered and sold an aggregate of 32,813 Class A ordinary shares  in the form of ADSs. On September\n30, 2020, the ADSs were listed on the New York Stock Exchange (“NYSE”) under the symbol “BQ.”\n\n \n\nIn September 2023, our shareholders\napproved our thirteenth memorandum and articles of association, under which our share capital was increased, from US$200,000 divided into\n200,000,000 shares of par value of US$0.001 each; comprising (a) 129,500,000 Class A ordinary shares of par value of US$0.001 each; (b)\n15,000,000 Class B ordinary shares of par value of US$0.001 each; and (c) 55,500,000 shares of US$0.001 each of such class or classes\n(however designated) as our Board may determine in accordance with our effective memorandum and articles of association, to US$20,000,000\ndivided into 20,000,000,000 shares of par value of US$0.001 each, comprising (a) 15,000,000,000 Class A ordinary shares of par value of\nUS$0.001 each; (b) 2,000,000,000 Class B ordinary shares of par value of US$0.001 each; and (c) 3,000,000,000 shares of US$0.001 each\nof such class or classes (however designated) as our Board may determine in accordance with our thirteenth memorandum and articles of\nassociation.\n\n \n\nIn October 2023, we transferred\nthe listing of our ADSs from NYSE to NYSE American, under the same ticker symbol of “BQ.”\n\n \n\nIn June 2025, our shareholders\napproved our MAA, under which (1) our issued and unissued shares were consolidated at a ratio of 160-for-1 (the “2025 Reverse Split”)\nresulting in an authorized share capital of US$20,000,000, divided into 125,000,000 shares of par value of $0.16 each, comprising (a)\n93,750,000 Class A ordinary shares of par value of $0.16 each; (b) 12,500,000 Class B ordinary shares of par value of $0.16 each; and\n(c) 18,750,000 shares of par value of $0.16 each of such class or classes (however designated) as may be determined by our Board in accordance\nwith the MAA; and (2) the deemed service period for notice served by post was reduced from five calendar days to three calendar days counting\nfrom the date service is deemed to occur as provided in the MAA. The shareholders also approved the following actions relating to our\nADSs upon the effectiveness of the 2025 Reverse Split (collectively referred to as the “ADS Termination”): (1) suspension\nof trading of ADSs on the NYSE American; (2) termination of the deposit agreement dated September 29, 2020, in connection with our ADS\nprogram, (3) mandatory exchange of outstanding ADSs for the corresponding Class A ordinary shares; and (4) commencement of trading of\nClass A ordinary shares on the NYSE American.\n\n \n\n66\n\n \n\n \n\nOn July 11, 2025, the ADS\nTermination took effect and our Class A ordinary shares commenced trading on a post-2025 Reverse Split basis, of par value of $0.16 per\nshare, on the NYSE American under the same ticker symbol of “BQ.”\n\n \n\nOn May 7, 2026, the Company\nfiled its Fifteenth Amended and Restated Memorandum and Articles of Association with the Registrar of Companies of the Cayman Islands,\nresulting in that, among others, (i) the par value of each issued and unissued share in the capital of the Company reduced from US$0.16\nper share to US$0.0000001 per share; and (ii) the authorized share capital of the Company changed to US$2,000 divided into 20,000,000,000 shares\ncomprising (A) 15,000,000,000 Class A ordinary shares of par value of US$0.0000001 each; (B) 1,000,000,000 Class B\nordinary shares of par value of US$0.0000001 each; (C) 1,000,000,000 Class C ordinary shares of par value of US$0.0000001 each;\nand (D) 3,000,000,000 shares of US$0.0000001 each of such Class or Classes (however designated) as the Board may determine in\naccordance with the fifteenth amended and restated memorandum and articles of association of the Company.\n\n \n\nBoqii is a holding company\nand does not directly own any substantive business operations in the PRC. We currently focus our business operations within the PRC primarily\nthrough the VIEs, Suzhou Taicheng, Shanghai Guangcheng and Shanghai Yiqin. See “*Item 3. Key Information-3.D. Risk Factors-Risks\nRelated to Our Corporate Structure and Contractual Arrangements-We may lose the ability to use, or otherwise benefit from, the licenses,\napprovals and assets held by the VIEs, which could severely disrupt our business, render us unable to conduct some or all of our business\noperations and constrain our growth*.”\n\n** **\n\n**Corporate Information**\n\n \n\nOur principal executive offices\nare located at Room 1203, 12th Floor, Building T1, Smart Cloud, No. 1, Lane 235, Yubei Road Pudong New District, Shanghai 201204, People’s\nRepublic of China. Our telephone number at this address is +86-21-6882 6799. Our registered office in the Cayman Islands is located at\nthe offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman\nIslands. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor New\nYork, NY 10168. Investors should contact us for any inquiries through the address and telephone number of our principal executive office.\nOur principal website is www.boqii.com. The information contained on our website is not a part of this annual report.\n\n \n\nThe SEC maintains an internet\nsite at www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with\nthe SEC.\n\n** **\n\n**Recent Development**\n\n** **\n\n**May 2026 Private Placement**\n\n \n\nOn May 11, 2026, the Company\nentered into a securities purchase agreement (the “2026 Purchase Agreement”) with certain non-U.S. investors, pursuant to\nwhich the Company agreed to issue and sell, in a private placement conducted in reliance upon Regulation S under the Securities Act, up\nto 3,000,000 units at a purchase price of $0.6667 per unit for aggregate gross proceeds of up to approximately $2,000,100 (the “May\n2026 Private Placement”).\n\n \n\nEach unit consists of (i)\none Class A ordinary share, par value $0.0000001 per share, and (ii) one pre-funded warrant exercisable for 2.33 Class A ordinary shares\nat an exercise price of $0.0001 per share. In connection with the closing of the May 2026 Private Placement, 3,000,000 Class A ordinary\nshares were issued to the investors, and the pre-funded warrants to purchase up to 6,900,000 Class A ordinary shares were issued to the\ninvestors at the closing and are exercisable and will expire on the second anniversary of the initial exercise date.\n\n** **\n\n**December 2025 Repurchase Agreement**\n\n** **\n\nOn December 4, 2025, Guangcheng\n(Shanghai) Information Technology Co., Ltd. (“Shanghai Guangcheng”), a variable interest entity of the Company, entered into\nan equity interest repurchase agreement (the “Repurchase Agreement”) with Nanjing Xingmu Biotechnology Co., Ltd. (“Nanjing\nXingmu”), a prior variable interest entity of the Company, two founders of Nanjing Xingmu, Chao Guo and Zhongshu Zhai (together,\nthe “Xingmu Founders”), and certain other parties listed thereto. Under the Repurchase Agreement, the Xingmu Founders agreed\nto repurchase the 14.5% equity interest in Nanjing Xingmu currently held by Shanghai Guangcheng for an aggregate cash consideration of\nRMB 12.5 million, to be paid in installments upon satisfaction of certain considerations (the “Repurchase”). Each Xingmu Founder\nwill acquire 7.25% of such equity interest from Shanghai Guangcheng. The Repurchase Agreement contains certain representations, warranties\nand covenants by the Parties, as well as provisions on indemnification or damages, among other things.\n\n \n\n67\n\n \n\n** **\n\nIn connection with the Repurchase,\nin February 2026, the contractual arrangements (the “VIE Arrangements”) were terminated by Nanjing Xinmu Information Technology\nCo., Ltd. (“Xingmu WFOE”), Nanjing Xingmu and the shareholders of Nanjing Xingmu, pursuant to which Xingmu WFOE was considered\nthe primary beneficiary of Nanjing Xingmu for accounting purposes.\n\n** **\n\n**November 2025 Registered Offering**\n\n \n\nOn November 3, 2025, the\nCompany entered into a securities purchase agreement (the “November 2025 Securities Purchase Agreement”) with certain institutional\ninvestors named thereto, pursuant to which the Company issued and sold, in a registered direct offering: (i) 698,000 Class A ordinary\nshares of the Company, at a purchase price of $2.80 per share; and (ii) pre-funded warrants to purchase up to 802,000 Class A ordinary\nshares at a purchase price of $2.80 per pre-funded warrant. The offering closed on November 4, 2025. The Company received approximately\n$4.2 million in gross proceeds from the offering, before deducting placement agent fees and estimated offering expenses.\n\n \n\nThe pre-funded warrants were sold to the investors, whose purchase\nof the shares in the offering would otherwise have resulted in the investors, together with its affiliates and certain related parties,\nbeneficially owning more than 9.99% of the outstanding Class A ordinary shares of the Company following the consummation of the offering.\nEach pre-funded warrants represents the right to purchase one Class A ordinary share at an exercise price of $0.16 per share. The pre-funded\nwarrants are exercisable immediately and may be exercised at any time until the pre-funded warrants are exercised in full (subject to\nthe beneficial ownership limitation described above).\n\n \n\nOn November 3, 2025, the\nCompany entered into a placement agency agreement with Univest Securities, LLC (“Univest”), pursuant to which the\nCompany engaged Univest as the placement agent in connection with the Offering. The placement agent received a placement agent\nfee in cash equal to seven percent (7%) of the aggregate gross proceeds raised from the offering. The Company also agreed to reimburse\nthe placement agent at closing for legal and other expenses incurred by them in connection with the offering in an amount not to exceed\n$100,000.\n\n** **\n\n**Issuance of Class C Ordinary Shares**\n\n \n\nOn August 19, 2025, the Company\nentered into a securities subscription agreement with Green Mountain Management Limited (“Green Mountain”), a British Virgin\nIslands business company. Yingzhi (Lisa) Tang, a director, co-Chief Executive Officer, and Chief Financial Officer of the Company, and\nHao (Louis) Liang, Chairman of the Board and Chief Executive Officer of the Company, each owns 50% of Green Mountain. Pursuant to the\nagreement, the Company issued and sold to Green Mountain 500,000 Class C Ordinary Shares for a total consideration of $80,000. The issuance\nwas intended to (i) enhance the Company’s ability to execute long-term business strategies and (ii) enable the Company to raise\nnew equity capital while maintaining a stable corporate structure and senior management team.\n\n** **\n\n**2025 Reverse Split and ADS Termination in\nJuly 2025**\n\n** **\n\nOn June 26, 2025, our shareholders\napproved the 2025 Reverse Split and the ADS Termination.\n\n \n\nOn July 11, 2025, the 2025\nReverse Split was effective in the market and the ADS Termination became effective. As a result of the 2025 Reverse Split, the par value\nof our ordinary shares was increased from $0.001 per share to $0.16 per share. In connection with the ADS Termination, our outstanding\nADSs were automatically cancelled and exchanged for the corresponding number of Class A ordinary shares at a rate 15/16, or 0.9375 of\na Class A ordinary share for each ADS cancelled. All resulting fractional shares were rounded up to the nearest whole number of shares\non the participant level. On July 11, 2025, trading of our ADSs was suspended, and our Class A ordinary shares commenced trading on a\npost-2025 Reverse Split basis, each with a par value of $0.16, on the NYSE American under the same ticker symbol “BQ.”\n\n \n\n68\n\n \n\n \n\n**4. B. Business Overview**\n\n** **\n\n**Our Vision**\n\n \n\nOur vision is to connect\npeople and pets.\n\n** **\n\n**Our Mission**\n\n \n\nBoqii was founded for the\nlove of pets. With this belief, we are inspired to empower the pet ecosystem and instill love and trust into pet parenting.\n\n** **\n\n**Boqii at a Glance**\n\n \n\nBoqii is a leading pet-focused\nplatform in China. We offer a truly one-stop destination that pet parents in China may go to get everything they need for their pets and\nshare their passion for pet parenting. They come to Boqii to discover the best pet products for their pets, share their most memorable\npet raising stories, and find ways to make their pets healthier and happier. With our purpose-built platforms, we are reshaping how pet\nparents in China engage with their pets-by educating and inspiring them to become better pet parents, helping them find what their pets\nneed, and bringing them a unique shopping experience. We believe you will love Boqii if you love pets. With online sales platforms at\nits core, we extend our reach offline to connect and empower other participants in the pet value chain, including brand partners, manufacturers\nof pet products, physical pet stores and pet hospitals, and pet-related content providers.\n\n \n\nWe operate a leading pet-focused\nonline retail business in China’s pet market in terms of GMV. During the three years ended March 31, 2024, 2025 and 2026, we connected\na total of approximately 578 brand partners with pet parents in China. We are redefining e-commerce for pet parents by providing an accessible,\npersonalized and enjoyable shopping experience based on a deep understanding of our users and customers and their pets by leveraging extensive\nuser interactions and transactional behaviors we have observed over the years. We create and continue to develop our private brands, including\nYoken, Mocare and two “D-cat” labels, with compelling quality and prices. Users and customers come to shop on Boqii because\nwe offer them a high-quality, high-touch experience with access to approximately 22,915 SKUs as of March 31, 2026. During the three years\nended March 31, 2024, 2025 and 2026, we delivered an aggregate of approximately 17.5 million orders to our users and customers.\n\n \n\nWe have a large pet-focused\nonline community in China’s pet market*.* We had approximately 3.7 million active buyers for the year ended March 31,\n2025. We deeply understand and care about our users and customers and their pets. We engage with our users and customers through shopping,\ncontent, social media, and offline events, spurring interactions in a way that traditional retailers do not. On top of extensive interactions\nand transactional behaviors we have observed, we have developed a profound understanding of who our users and customers are, what they\nare keen to buy for their pets, how they communicate with other pet parents, and what content they resonate with. Our rich content not\nonly guides users and customers along their shopping journey, but also becomes a trusted source for discovery and inspiration for all\npet lovers.\n\n \n\nWe generate revenues primarily from transactions completed on our online\nsales platforms and by supplying products to physical pet stores we cooperate with. Our total net revenues were approximately RMB709.4\nmillion, RMB468.9 million and RMB 420.5 (US$61.0 million) in the years ended March 31, 2024, 2025, and 2026 respectively. Net revenues\ngenerated from the sale of products were approximately RMB680.1 million, RMB431.3 million , and RMB381.2 (US$55.3 million) accounting\nfor approximately 95.9%, 92.0%, 90.7% of our total net revenues in the years ended March 31, 2024, 2025, and 2026 respectively. We recorded\nnet loss of approximately RMB68.9 million, RMB58.6, and RMB 1.9 (US$0.3 million) in the years ended March 31, 2024, 2025, and 2026 respectively.\n\n** **\n\n69\n\n \n\n** **\n\n**Our Business Model**\n\n \n\nFocusing on the needs of\npet parents and their pets, we have established a large pet ecosystem in China in terms of revenue and the number of customers*.*\nThrough Boqii, we offer a truly one-stop destination that pet parents in China may go to for everything they need for their pets, from\npet products and services to pet knowledge and parenting advice. Our online sales platforms, comprised of Boqii Mall and our flagship\nstores on third-party e-commerce platforms, provides customers with convenient access to a wide selection of high-quality pet products\nand an engaging and personalized shopping experience. Our informative and interactive content platform, Boqii Community, allows users\nto share their pet parenting experience and discover new products and ways to make their pets healthier and happier. We had cooperated\nwith over 15,000 physical pet stores and pet hospitals as of March 31, 2026 to further extend our product and service offerings to connect\nwith users and customers in their neighborhoods.\n\n \n\nWe have a large pet-focused\nonline community in China’s pet market. We had approximately 4.4 million active buyers for the year ended March 31, 2026. We\ntake pride in building a vibrant online community where we lead our users through a content and product discovery journey, developing\na user-centric content-driven “discover and buy” model.\n\n** **\n\n**Our Users**\n\n \n\nOur dynamic and growing user\nbase consists of pet lovers, pet parents, and KOLs. Our users come from towns and cities all over China, but are primarily concentrated\nin economically developed provinces and cities. Based on information voluntarily provided by our users, we believe that a majority of\nour users own pets, mostly cats and dogs. We have acquired our users mainly through third-party e-commerce platforms, social media marketing,\nword-of-mouth referral and physical pet stores. Our users primarily access our pet-focused platform through our online sales platforms.\n\n** **\n\n**Mobile App**\n\n \n\nWhen users and customers\nopen our mobile app, they will immediately see the homepage of our vibrant user community with featured pet-related content, and may switch\nto our self-operated online sales platform, Boqii Mall, and offline pet services homepage with the navigation bar on the bottom. Users\nand customers can directly browse and search for contents by topics, products by brand and category, and services by location on the respective\nhomepages.\n\n** **\n\n**Weixin/WeChat Mini-programs**\n\n \n\nMini-program is an innovative\nplatform built into Weixin/WeChat, facilitating discovery and consumption of services and products. Our mini-programs on Weixin/WeChat\ninclude Boqii Flagship Store, Mini Boqii Mall, Boqii Group Buy and Mengchong Haowuguan, and they feature similar interfaces and functions\nas our mobile app. Users and customers can also access our mini-programs through Weixin/WeChat. These mini-programs serve as additional\naccess points to our pet-focused platform and complement our full-function native mobile app.\n\n** **\n\n**Monetization Channels**\n\n \n\nThrough diverse product selections,\ninformative content offerings and fun social interactive features, we have engaged a dynamic and growing user base and developed various\nmodels of monetization.\n\n \n\n●Self-operated\nonline sales platform. Our self-operated online sales platform can be accessed by users through Boqii Mall, our mobile app and Weixin/WeChat\nmini-programs. We sell both branded products and private label products through our online sales platforms. We acquire branded products\nfrom our branded partners and private label products from our manufacturing partners before we sell them to our customers. We typically\nrecognize the sales income as our revenue and product procurement costs as our cost of revenue.\n\n \n\n●Flagship\nstores on third-party e-commerce platforms. We also sell branded products and private label products on our flagship stores on third-party\ne-commerce platforms, including Tmall, JD.com and Pinduoduo. We typically pay marketing and promotion service fees and annual service\nfees to these third-party platforms and account for such fees as sales and marketing expenses.\n\n \n\n70\n\n \n\n \n\n \n\n●Offline\ndistribution network. We supply branded products and private label products, mostly in bulk, to physical pet stores and pet hospitals\nat discounted prices.\n\n \n\n●Membership\nprograms. To cultivate customer stickiness, we offer prepaid membership to users of Boqii Mall. Our prepaid membership card, Magic Black\nCard, requires a deposit of at least RMB500, which can be used for future purchases on Boqii Mall. We do not recognize the deposit payment\nas revenue, and instead we recognize revenue only upon successful sales to our customers.\n\n \n\n●Online\nmarketing and information services. We provide online marketing and information services to pet product brand owners, including helping\nthem place advertisements on our online platforms and third-party platforms and organize marketing campaigns to promote their products\nand brands. We recognize revenue for provision of online marketing and information services over the service period pursuant to our service\ncontracts with the brand owners. For the years ended March 31, 2024, 2025 and 2026, we generated net revenues of approximately RMB 29.2\nmillion, RMB 37.6 million and RMB 39.3(US$5.7 million) from provision of online marketing and information services.\n\n \n\n●Content\nofferings. We provide users with informative, fun and interactive content. While our content offerings are free of charge, they provide\nus with a multitude of monetization opportunities. We engage KOLs to recommend products to our users, and integrate our curated content\nwith relevant products to guide users along their shopping journey. Specifically, we place links to products on Boqii Mall within content\nto capture purchase impulse and meet user demands, delivering a seamless user experience.\n\n \n\n●SaaS\nsolution. We have introduced our proprietary SaaS solution, which provides inventory management, membership management, price information\nand other services, to offline stores. We currently provide the SaaS solution to pet stores for free. Our free SaaS solution serves as\nour initial contact with physical pet stores and we expect that it will open up more business opportunities with these stores.\n\n** **\n\n**Our Online Sales Platforms**\n\n \n\nWe operate a leading pet-focused\nonline retail business in China in terms of GMV. During the three years ended March 31, 2024, 2025, and 2026 we connected a total of approximately\n578 brand partners with pet parents in China. We offer branded products and private label products primarily through our self-operated\nonline sales platform, Boqii Mall, as well as major third-party e-commerce platforms, such as Tmall, JD.com and Pinduoduo.\n\n \n\nThe following tables set\nforth a breakdown of our GMV by product type and by sales channel during the specified periods.\n\n \n\n  \nFor the Fiscal Year Ended March 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \n%  \nRMB  \n%  \nRMB  \nUS$  \n% \n\n  \n(in millions, except for percentages) \n\nGMV generated from sales of branded products \n 1,195.3  \n 75.1  \n 761.6  \n 76.0  \n 600.5  \n 87.0  \n 77.9 \n\nGMV generated from sales of our private label products \n 396.5  \n 24.9  \n 240.9  \n 24.0  \n 169.8  \n 24.7  \n 22.1 \n\nTotal \n 1,591.8  \n 100.0  \n 1,002.5  \n 100.0  \n 770.3  \n 111.7  \n 100.0 \n\n \n\n  \nFor the Fiscal Year Ended March 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \n%  \nRMB  \n%  \nRMB  \nUS$  \n% \n\n  \n(in millions, except for percentages) \n\nGMV generated from sales on Boqii Mall \n 785.6  \n 49.3  \n 584.2  \n 58.3  \n 481.5  \n 69.8  \n 62.5 \n\nGMV generated from our sales on third-party e-commerce platforms \n 806.2  \n 50.7  \n 418.3  \n 41.7  \n 288.8  \n 41.9  \n 37.5 \n\nTotal \n 1,591.8  \n 100.0  \n 1,002.5  \n 100.0  \n 770.3  \n 111.7  \n 100.0 \n\n \n\n71\n\n \n\n \n\nThe following tables set\nforth a breakdown of our net revenues by product type and by sales channel during the specified periods.\n\n \n\n  \nFor the Fiscal Year Ended March 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \n%  \nRMB  \n%  \nRMB  \nUS$  \n% \n\n  \n(in thousands, except for percentages) \n\nNet revenues generated from sales of branded products \n 483,635  \n 71.1  \n 299,598  \n 69.5  \n 270,335  \n 39,190  \n 70.9 \n\nNet revenues generated from sales of our private label products \n 196,508  \n 28.9  \n 131,696  \n 30.5  \n 110,873  \n 16,074  \n 29.1 \n\nTotal \n 680,143  \n 100.0  \n 431,294  \n 100.0  \n 381,208  \n 55,264  \n 100.0 \n\n \n\n  \nFor the Fiscal Year Ended March 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \n%  \nRMB  \n%  \nRMB  \nUS$  \n% \n\n  \n(in thousands, except for percentages) \n\nNet revenues generated from sales on Boqii Mall \n 276,992  \n 40.7  \n 218,083  \n 50.6  \n 213,030  \n 30,883  \n 55.9 \n\nNet revenues generated from our sales on third-party e-commerce platforms \n 403,151  \n 59.3  \n 213,211  \n 49.4  \n 168,178  \n 24,381  \n 44.1 \n\nTotal \n 680,143  \n 100.0  \n 431,294  \n 100.0  \n 381,208  \n 55,264  \n 100.0 \n\n** **\n\n**Our Pet Product Offerings**\n\n \n\nWe offer our customers, which\ninclude both pet parents and small and medium pet businesses, a diverse selection of high-quality pet products at competitive prices,\nincluding food, treats, shampoos, cages, toys, apparel, OTC veterinary drugs and many more. As of March 31, 2026, we offered approximately\n22,915 SKUs from approximately 589 brands, including approximately 63 international brands.** **We are committed to offering\na comprehensive and relevant selection of product inventory so that pet parents can get everything they need for their pets at one destination.\n\n \n\n**Branded products**\n\n \n\nDuring the three years ended\nMarch 31, 2024, 2025, and 2026 we connected approximately 578 brand partners with pet parents in China, such as Royal Canin and Pedigree.\nOur brand partners together contributed approximately 18,431 SKUs to our online sales platforms, accounting for approximately 80.4% of\nour total SKUs as of March 31, 2026.** **In addition to branded pet food and other daily supplies, we cooperate with certain\nbrand partners to offer OTC veterinary drugs, such as dermatology drugs and worm medications. We have designated a team with backgrounds\nin veterinary pharmacy to oversee the procurement of OTC veterinary drugs on our online sales platforms.\n\n \n\n72\n\n \n\n \n\nWe select our brand partners\nbased on their brand reputation, product quality, manufacturing capability and prices. Before engaging a brand partner, we inspect its\nbusiness licenses, permits and trademarks, perform background checks, sample products, and in certain cases conduct on-site visits.\n\n \n\nWe normally enter into one-year\nnonexclusive framework agreements with our brand partners or, in most cases of foreign brand partners, their agents and renew them annually\nif we are satisfied with their performance. The key terms of our supply contracts are as follows.\n\n \n\n●Delivery\nand acceptance. Our brand partners are responsible for delivering products to our warehouses, and the products delivered shall conform,\nin form and substance, to the samples we have accepted.\n\n \n\n●Quality.\nThe products shall satisfy all applicable quality requirements under relevant laws and regulations, industry standards and our quality\nstandards specified in the agreements. We may reject or return any substandard products.\n\n \n\n●Purchase\ncommitment. A few brand partners specify minimum purchase requirements in our supply agreements.\n\n** **\n\n**Private label products**\n\n** **\n\nComplementary to our extensive\nselection of branded products, we also offer high-quality private label products at compelling prices. Leveraging our wealth of expertise\nin the pet industry and deep understanding of customer needs, we developed our private label brands, Yoken and Mocare in 2015 and 2018,\nrespectively. We launched two “D-cat” label brands in 2022. We achieved significant growth in the sales of private label products\nduring the three fiscal years ended March 31, 2023. On March 31, 2026, approximately 4,484 SKUs of our private label products were offered,\naccounting for approximately 19.6% of our total SKUs. Moreover, as we introduce our high-quality competitively priced private label products\nto physical pet stores and pet hospitals, we are able to develop close relationships with them that provide for additional business opportunities.\n\n \n\nWe had approximately 1,954\nSKUs under our Yoken brand for the year ended March 31, 2026. We operate two business lines under our Yoken brand, Yiqin and Youbeizi.\nWe mainly offer competitively priced cat litter, liners, bath products, dog food, cat food, canned food, pet clothes and pet toys under\nYiqin, and value-for-money pet food under Youbeizi. Yoken was awarded 2020 and 2021 Annual Horse Brand, 2020 Consumers’ Favorite\nCat Litter Brand and 2021 Annual Cat Litter at the Tmall Golden Cosmetics Festival.\n\n \n\nWe had approximately 56 SKUs\nunder our Mocare brand for the year ended March 31, 2026 Mocare focuses on premium freeze-dry cat and dog food, which is made from cooked\nfresh foods with nearly all of the water content removed through a special process. Freeze-dried cat and dog food is known to preserve\nmore nutritional content compared to conventional dry food, has longer shelf life than wet food, and allows for more convenient transportation\nand storage than frozen food. Mocare was awarded Annual Top 10 Dark Horse Brand by Shenzhen International Pet Product Fair in 2019.\n\n \n\nIn 2022, we launched two\n“D-cat” label brands, under which we offer (i) pet snacks and pet supplies and (ii) pet pharmaceuticals and medical care products,\nrespectively.\n\n \n\nWe adopt a “customer-to-manufacturer”\nmodel in developing our private label products. We identify customer needs by analyzing the massive trove of customer and transactional\nbehaviors we have observed, evaluating the feasibility and profitability of developing the products that satisfy such needs and engaging\nmanufacturing partners to bring the products to market. For example, since 2020, we identified rapidly growing demands for pet supplies\nand expand our offerings of pet suppliers catering to customer needs, such as cat litter and cat litter boxes, pet beddings, cat scratchers,\nairline-compliant crates, interactive pet toys and functional pet snacks. These have achieved significant popularity in the pet supplies\nmarket.\n\n \n\n73\n\n \n\n \n\nWe have implemented strict\nquality control procedures on our private label products. Manufacturing factories for our private labels conduct pre-delivery inspection\nfor each batch of products. In the case of newly developed products, our own personnel will conduct on-site inspections at manufacturing\nfactories to ensure compliance with our stringent quality standards. Meanwhile, we will conduct spot checks when each batch of products\nis delivered to our own warehouses. Irregular inspections will also be made on site to our cooperated manufacturing factories and products,\nand we have the right to demand manufacturers to rectify, impose a fine thereon or request a refund or exchange of products if they fail\nany of such inspections.\n\n \n\nWe carefully select manufacturers\nbased on their ability to ensure timely delivery of quality products at competitive prices. Before engaging a manufacturer, we examine\nits business licenses, permits and operating history, sample products and evaluate its quality control effectiveness, assess its production\ncapacity and conduct on-site visits. Our manufacturing agreement generally sets out a price cap for each product category. We normally\nmake a lump-sum payment within an agreed timeframe following our acceptance of the products. To strengthen our relationship with Qingdao\nShuangan Biotechnology Co., Ltd. (“Shuangan”), a leading pet food manufacturer in China, we made an equity investment in it\nin 2017. We outsource the manufacturing of the rest of our private label products to various other high-quality manufacturers in China.\n\n** **\n\n**Boqii Mall**\n\n \n\nBoqii Mall, our self-operated\nonline sales platform, has transformed shopping for pet products from a traditional search-based experience to a personalized discovery\njourney. Users and customers can easily navigate Boqii Mall through our mobile app, website or Weixin/WeChat mini-programs.\n\n \n\nOur users and customers may\nbrowse through our extensive catalog of pet products by pet species and age, and product type, flavor and brand. For example, users and\ncustomers may choose specialty dog food for 15 dog breeds, such as golden retrievers, Labradors, poodles and huskies, and specialty cat\nfood for cat breeds of all ages. Such detailed search categories allow users and customers to quickly identify the most suitable product\nfor their pets.\n\n \n\nWhen registering on our mobile\napp, pet parents may create their pet profiles, entering the names, species, age and sex of their pets. Pet profiles help us better understand\nthe needs of pet parents and connect them with the right product at the right time throughout their pets’ lives. As we personalize\npet parents’ shopping experience, we are able to further enhance customer loyalty.\n\n \n\nThrough our automated recommendation\nalgorithm, we study and analyze customers’ browsing and purchase history and their pet profiles to identify their needs and preferences\nand recommend products of interest to them. Furthermore, we integrate our content offerings on our online community with the most relevant\nproducts and make customized recommendation, which create a unique and engaging experience for our users and customers. See *“Item\n4. Information on the Company-4. B. Business Overview-Our Content Platform.*” We have been constantly improving our algorithms\nto more precisely target customers with smart recommendations.\n\n \n\nWe engage various third parties\nto provide payment and delivery services for our customers on Boqii Mall. We require our customers to make full payment before we ship\nout their orders. We collaborate with YeePay, WeChat Pay, Alipay and Union Pay to offer convenient and secure payment options. We have\nengaged STO Express, Yuantong and Yunda to provide fast and reliable delivery services to our customers. See *“Item 4. Information\non the Company-4. B. Business Overview-Supply Chain Management*.”\n\n** **\n\n**Flagship Stores on Third-party E-commerce\nPlatforms**\n\n \n\nWe operate flagship stores\non major third-party e-commerce platforms, including Tmall, JD.com, Pinduoduo and Douyin. These third-party e-commerce platforms expand\nour customer reach and serve as our initial contact with customers, especially first-time pet parents who have yet to develop brand loyalty.\nFor the years ended March 31, 2024, 2025 and 2026, we generated revenue of approximately RMB403.2 million, RMB213.2 million and RMB168.2\n(US$24.4 million), respectively, from sales on our flagship stores on third-party e-commerce platforms.\n\n \n\nAccording to our arrangement\nwith third-party e-commerce platforms, we are responsible for product selection and display, product delivery, warehousing and customer\nsupport services, while e-commerce platforms provide online marketing and information services, payment processing services and customer\nrelationship management system. We typically pay annual fees for basic store operations on third-party e-commerce platforms, and we also\nneed to pay for additional services, such as technical service surcharges, online marketing and information services, and payment processing\nservices.\n\n** **\n\n74\n\n \n\n** **\n\n**Offline Distribution Network**\n\n \n\nWe have developed a proprietary\nSaaS solution which provides inventory management, membership management, price information and other services to offline pet stores.\nWe first introduced this SaaS solution to pet stores for free in December 2015. Our free SaaS solution serves as our initial contact with\nphysical pet stores.\n\n \n\nWith our SaaS system, pet\nstore owners may access their inventory status, view real-time analysis of sales status, keep tabs on upcoming re-order needs, and track\nshipping status anytime and anywhere. They may also easily replenish their stock with our products at competitive prices and manage their\nbusiness more efficiently. Our SaaS system reminds pet store owners to re-order when their stock level is low and offers them an easy\nordering process. Additionally, pet store owners may integrate their membership program with our SaaS system for easy management of their\nmember profiles and interactions.\n\n \n\nWe supply a variety of branded\nproducts and private label products to physical pet stores and pet hospitals in bulk at discounted prices, which diversify their store\nproduct portfolio. With our valuable data insights, we identify unique needs of local pet stores, and recommend high-quality and value-for-money\nproducts to them accordingly. In certain cases, we coordinate with our brand partners to offer free samples to pet stores before they\ndecide to make bulk purchases. We enter into customary supply agreements with physical pet stores and pet hospitals, pursuant to which\nthe physical pet stores or pet hospitals may not sell our products at a price lower than specified in the agreements unless otherwise\nagreed. For the years ended March 31, 2024, 2025 and 2026, we generated revenue of approximately RMB 178.0 million, RMB65.2 million, and\nRMB5.0 (US$0.7 million) from sales through our offline distribution network, accounting for approximately 25.1%, 13.9% and 1.2% of our\ntotal net revenues during the same periods, respectively.\n\n \n\nOur offline distribution\nnetwork also extends our brand partners’ customer reach to pet parents who frequently visit physical pet stores and pet hospitals.\nWe help our brand partners design tailored offline marketing strategies. For example, we promote their branded products to and display\ntheir marketing campaigns at physical pet stores we cooperate with and during trade fairs.\n\n** **\n\n**Customer Services**\n\n \n\nOur professional customer\nservices distinguish us from generic retailers and add a personal touch to the customer shopping experience. Unlike shopping for personal\ngoods, shopping for pet products can be more challenging and requires professional guidance. We maintain a dedicated team of customer\nservices staff, including our four employees and 19 outsourced workers.** **Pet parents can reach our knowledgeable customer\nservices staff and our intelligent customer service system every day. Our responsive and experienced customer services team achieved an\naverage satisfaction rate of approximately 4.98 out of five points for service attitude on our Taobao online shop for the year ended March\n31, 2026.\n\n \n\nMost of the products offered\non our platform can be exchanged or returned with a full refund within seven days of receipt of shipment, and we provide a full refund\nto our customers if there is a product quality issue. We normally pay for shipping expenses to facilitate successful return or exchange\nof defective products. Meanwhile, we cooperate with third-party insurance companies which provide our customers with shipping return and\nexchange insurance that cover their return or exchange shipping expenses incurred by the orders with our stores at Tmall and JD.com.\n\n** **\n\n**Supply Chain Management**\n\n \n\nWe have an integrated supply\nchain management system covering everything from inventory management to order fulfillment. Our integrated system aims to ensure that\nwe maintain appropriate inventory levels at our warehouses and that we can optimize order routing, which helps us reduce inventory risks,\nshipping time and transportation costs.\n\n \n\n75\n\n \n\n \n\nWe have adopted three inventory\nmodels-distribution model, consignment model and drop shipping model-and had an average inventory turnover days of approximately 39 days\nfor the year ended March 31, 2026. Average annual inventory turnover days are calculated by dividing the ending inventory balance by cost\nof product sales and multiplying by 365.\n\n \n\n \n●\nDistribution model. Distribution model is the most common inventory model in our operations. Under this model, we purchase products from our brand partners before selling them to customers and take inventory.\n\n \n\n \n●\nConsignment model. We initially partnered with some emerging brand partners, using a consignment model where ownership of the products remained with such brand partners until the products were sold. We believed this model allowed us to minimize inventory and working capital risks. Since early 2019, we have started to substantially reduce product sales through the consignment model as we strategically reduced the sales volume of certain long-tail, less popular products offered by emerging brand partners.\n\n \n\n \n●\nDrop shipping model. Only a few of our manufacturers have chosen the drop shipping model. Under this model, we take inventory although our manufacturers ship the products directly to the customers under this model.\n\n \n\nAs of March 31, 2026, we\noperated two warehouse and utilized eight fulfillment centers across China, and maintained a fulfilment team of three employees and 12\noutsourced workers. We store our inventories, and sort, package and ship products to customers from our warehouses. We also utilize fulfillment\ncenters at free trade-zones where certain brand partners we cooperate with ship their products to us or our customers directly. As of\nMarch 31, 2026, we also partnered with four delivery service providers to ensure fast and reliable delivery to our customers. Our expansive\nfulfillment network enables us to reach certain parts of China in 24 hours or less, providing customers with a convenient click-to-door\nshopping experience.\n\n \n\n**Membership Programs**\n\n \n\nWe have established prepaid\nand free membership programs to enhance customer loyalty. As of March 31, 2026, we had approximately 44,474 prepaid members. Our prepaid\nmembers on average deposited approximately RMB2,142 each year in their membership cards during the three years ended March 31, 2024, 2025\nand 2026.\n\n \n\n \n●\nPrepaid membership. Prepaid membership is only available to users of Boqii Mall. Our prepaid membership card, Magic Black Card, requires a deposit of at least RMB500, which can be used for purchases on Boqii Mall. Our Magic Black Card holders receive discounts on all purchases made on Boqii Mall, access to limited-time offers, birthday coupons, free shipping twice a month, VIP customer service and other value-added services.\n\n \n\n \n●\nFree membership. Free membership is only available to users of our flagship stores on Tmall, JD.com and Pinduoduo. Users earn points for visiting, making purchases or drawing lotteries on our flagship stores, and points can be then used for deducting the order amounts in future purchases on these stores. Free members enjoy discount offers at our flagship stores from time to time and one-to-one customer service.\n\n** **\n\n**Our Content Platform**\n\n \n\nBoqii Community provides\nan interactive content platform for users to share their knowledge and love for pets. We strive to provide our users with a variety of\nhigh-quality and engaging original content.\n\n \n\nWhen users open the “Community”\nfeature on our mobile app, they will immediately see our recommended content based on their initial indication of interests upon registration\nand their reading, social and purchase behavior. They may browse posts from other community members they follow, latest updates, videos\nand news by sliding through the top navigation bar. By clicking on the navigation buttons in the middle of the page, users can explore\nhot topics, KOLs, Q&As and product reviews. Users may also post questions and share their informative pet parenting experience, memorable\npet raising stories, favorite pet photos and short videos on our mobile app.\n\n** **\n\n76\n\n \n\n** **\n\n**Content Creation**\n\n \n\nOur users and customers constantly\ncontribute to our diverse, high-quality and engaging content. Among them, some have attracted a significant number of followers and grown\nto become KOLs. We have also engaged a number of KOLs, who are particularly active in creating and sharing content on pet parenting and\npet products. They encourage social interactions among our users and customers and help shape their purchasing decisions. As of March\n31, 2026, we had a few hundred KOLs on our platform and a few thousand KOL accounts on social media platforms. We continuously monitor user activities\nand original content creation on our platform to discover potential KOLs and encourage them to partner with us.\n\n \n\nWe offer KOLs access to broad\nuser base, and help them monetize their content offerings. KOLs earn commissions from us for actively promoting branded products and our\nprivate label products. At the same time, we depend on KOLs’ content creation capabilities to invigorate Boqii Community, and capitalize\non their marketing skills which lead to enhanced product sales on our online sales platforms. We typically pay KOLs a fee for each piece\nof their advertising post or video on a per case basis.\n\n \n\nOur diverse, engaging and\noriginal content is available in various formats, including articles, photographs, and short videos.\n\n** **\n\n**Content Monitoring**\n\n \n\nWe place strong emphasis\non content screening and monitoring content posted on our platform to ensure that they do not infringe copyright and other intellectual\nproperty rights, and that they fully comply with applicable laws and regulations. Our online content screening and monitoring procedures\nconsist of automated screening performed by an automated filtering system as well as a set of manual review procedures conducted by our\neditors. We maintain a dedicated team of content editors and hold regular internal trainings on latest compliance requirements and development.\n\n** **\n\n**Monetization through Content Offerings**\n\n \n\nOur rich and informative\ncontent provides us with a multitude of monetization opportunities. We recommend relevant content to users and customers based on their\npet profiles, initial indication of interests upon registration and their reading, social and purchase behavior. In addition to facilitating\nusers and customers in content discovery, we also leverage our automated recommendation algorithm to integrate our curated content with\nrelevant products and make customized product recommendations. We place links to products on Boqii Mall within content to capture purchase\nimpulse and meet user demands, delivering a seamless user experience. From time to time, our customer service staff mail free samples\nand make phone calls to our users and customers to provide offer updates and promote our products.\n\n \n\n**Social Media**\n\n \n\nThrough interactive social\nnetwork platforms, we bring our dynamic community and their diverse and engaging content offerings to life. We distribute content through\nsubstantially all major social communications and social media platforms in China, including Weixin/WeChat, Weibo, Red and Douyin. Our\ncontent offerings on these platforms have attracted a large number of loyal fans. As of March 31, 2026, we managed over 750 Weixin/WeChat\ngroups, most of which are under our direct management.\n\n \n\nWe leverage these major social\nmedia platforms for viral and interactive marketing. Such platforms enable our users and customers to make purchases as part of their\nsocial networking and entertainment, boosting the frequency and value of their purchases.\n\n** **\n\n**Our Offline Network**\n\n \n\nDespite the convenience of\nonline sales platforms, we believe physical pet stores and pet hospitals are still an integral part of the pet industry. Certain services,\nsuch as pet care, training and grooming, are only available offline. Offline store settings provide us with an opportunity to interact\nwith pet parents face-to-face and offer more value-added products and services.\n\n \n\n77\n\n \n\n \n\nWe began cooperating with\nphysical pet stores and pet hospitals in 2013. As of March 31, 2026, we had cooperated with over 15,000 physical pet stores and pet hospitals,\nspanning over 250 cities in China. Our offline network increases our brand awareness and presents a complementary source of user traffic.\nBy making pet products and services more accessible and appealing to pet parents, we are able to drive customer acquisition and customer\nloyalty in a more cost-effective manner. Through our brand influence and proprietary technology, we have also begun to digitally connect\nand empower an extensive, growing network of physical pet stores and pet hospitals through our SaaS solutions.\n\n \n\nOur mobile app allows users\nand customers to quickly and accurately locate nearby pet stores and pet hospitals we cooperate with. We host a homepage for each store\nwe cooperate with on our mobile app, where users and customers may view store photos, browse the type of services provided, review staff\nbackgrounds and access and provide store reviews.\n\n** **\n\n**Partnership with PetDog**\n\n \n\nIn an effort to expand our\noffline presence and enhance pet service offerings, we made an approximately 23.6% equity investment in Beijing PetDog Technology Development\nCo., Ltd. (“PetDog”) in 2019. PetDog offers a variety of courses on pet beauty, pet training, pet store management and pet\nnutrition management to train and prepare students to become licensed pet professionals, expanding the talent pool in the pet industry.\nAccording to Frost & Sullivan, PetDog is the largest pet store franchise in terms of number of pet stores and the largest training\ncenter for pet service professionals in terms of training service revenue in China as of 2019. We equip PetDog stores with smart inventory\nmanagement through our SaaS solution, and diversify its product portfolio with our wide selection of high-quality and value-for-money\npet products.\n\n \n\nThrough our investment in\nPetDog, we have also successfully expanded the outreach of professional trainings to more offline pet stores to improve the quality of\ntheir services. With more licensed pet professionals available, pet stores are able to offer more varieties of high-quality services to\npet parents.\n\n** **\n\n**Our Marketing Services**\n\n \n\nWe offer our brand partners\nas well as other brand owners tailored marketing and information services and distribution support to promote their brands and increase\nproduct sales. We charge our marketing service clients a service fee for our online marketing and information services, which was settled\naccording to the overall service price in the contracts. Our vibrant online community and extensive offline network give our brand partners\nand brand owners wide access to targeted and high-quality user traffic.\n\n \n\nWith valuable data insights\non user behavior, we also help our brand partners and brand owners design and implement effective marketing strategies, and guide them\nin offering more relevant products and optimizing pricing strategies. In 2013, we started to provide online marketing and information\nservices to Chuncui Pet Products (Shanghai) Co., Ltd, a new Chinese pet product brand and have since expanded our service client base\nto include additional clients.\n\n \n\n**Sales and Marketing**\n\n \n\nOur diverse and high-quality\nproduct offerings, rich and engaging content, and personalized user experience have contributed to our expanding user base and increasing\nuser engagement, leading to a strong word-of-mouth effect that strengthens our brand awareness.\n\n \n\n78\n\n \n\n \n\nAdditionally, we promote\nour platform and enhance our brand awareness through a variety of online and offline marketing activities. We cooperate with third-party\ne-commerce platforms, social media platforms, and popular search engines for online and mobile marketing. We also conduct offline marketing\nby attending leading trade fairs and exhibits in the industry, such as Chengdu International Pet Fair and China Pet Fair.\n\n** **\n\n**Competition**\n\n \n\nThe pet industry is highly\ncompetitive in China. We mainly compete with online and physical pet product retail stores, pet product sections in supermarkets, general\ne-commerce platforms and other pet-focused online retail platforms.\n\n \n\nWe have a large pet ecosystem\nin China in terms of revenue and the number of customers*.* We believe we differentiate ourselves from our competitors by our significant\nbrand awareness, transformative retail model, content-driven marketing approach, diverse and high-quality product offerings, rich and\nengaging content offerings, smart recommendations, personalized customer service and reliable fulfillment services.\n\n** **\n\n**Licenses and Approvals**\n\n \n\nThe following table sets\nforth a list of material licenses and approvals, subject to further renewal, that our PRC subsidiaries and the VIEs are required to obtain\nto carry out our operations in China, in addition to business licenses that are required for each company operating in the PRC.\n\n \n\n**License**\n \n**Entity Holding the License**\n \n**Type of the Entity**\n \n**Regulatory Authority**\n\nICP License\n \nShanghai Guangcheng\n \nVIE\n \nShanghai Communication Administration\n\n \n \n \n \n\nVeterinary Drug Operation Permit\n \nShanghai Guangcheng\n \nVIE\n \nShanghai Pudong Agriculture and Countryside Committee\n\n \n \n \n \n\nVeterinary Drug Operation Permit\n \nShanghai Xincheng\n \nWFOE\n \nShanghai Pudong Agriculture and Countryside Committee\n\n \n \n \n \n\nVeterinary Drug Operation Permit\n \nShanghai Guangcheng Wuhu Branch\n \nBranch of VIE\n \nWuhu Economic Technology Development District Nongshui Management Center\n\n \n \n \n \n\nVeterinary Drug Operation Permit\n \nSuzhou Taicheng\n \nVIE\n \nSuzhou Agriculture and Country Bureau\n\n** **\n\n**Our Technology**\n\n \n\nOur strong technology and\ndata capabilities enable us to deliver superior user experience and increase our operational efficiency. As of March 31, 2026, we had\na three-member research and development team dedicated to the design and development of algorithm and the upgrades and maintenance of\nour technology infrastructure.\n\n** **\n\n**Data Analytics**\n\n \n\nWith access to a massive\ntrove of customer and transaction data, we have built our big data analytics capabilities upon detailed user tagging and third-party computing\ninfrastructure that can efficiently process complex analytical computing tasks. We have created approximately 16 different user purchase\nbehavior tags by studying user interactions and purchase behaviors. With such user and transactional behaviors we have observed, we leverage\nbig data analytics and artificial intelligence technology to enhance the accuracy of user behavior predictions and user profiling, and\nhence customize our content and product recommendation to optimize user experience.\n\n \n\n79\n\n \n\n \n\n**Data Privacy and Security**\n\n \n\nWe believe data security\nis critical to our business operation. Users must acknowledge the terms and conditions of the user agreement before registering an account\nwith us, pursuant to which they consent to our collection, use and disclosure of their data in compliance with applicable laws and regulations.\nTo protect users’ information, we have internal rules and policies governing how we may use and share personal information, and\nprotocols, technologies and systems guarding against improper access or disclosure of personal information. We collect personal information\nand data only with users’ prior consent. We have also adopted a strict data protection policy to ensure the security of our proprietary\ndata, and back up the important information we gather from our platform. The use of data within our various departments is under our strict\nsupervision and management. We have outsourced some of our data security work, including cloud storage and anti-hacking, to certain third-party\ntechnological service providers.\n\n \n\nTo ensure data security and\navoid data leakage, we limit access to our servers that store our user information and internal data on a “need-to-know” basis\nby establishing stringent internal protocols under which we grant classified access to confidential personal data only to limited employees\nwith strictly defined and layered access authority. We have also adopted a data encryption system intended to ensure secure storage and\ntransmission of data, and to prevent any unauthorized access to use of our data. Furthermore, we implement comprehensive data masking\nto fend off potential hacking and security attacks.\n\n \n\nIn addition, we back up our\ndata on a daily basis in various separate secured data back-up systems to minimize the risk of data loss. We also conduct frequent reviews\nof our back-up systems to ensure that they are well maintained and function properly.\n\n** **\n\n**Inventory Management**\n\n \n\nWe have adopted a smart ERP\ninventory management system that enables real-time inventory tracking and sales analysis, which helps us monitor and administer warehouse\noperations and forecast demand. In addition, our drop shipping system is able to connect our manufacturers to the third-party delivery\nservice providers to ensure efficient order shipment.\n\n \n\nMoreover, we provide our\ninventory management system to physical pet stores and pet hospitals as a SaaS solution and help them manage their business more efficiently.\nSee “*Item 4. Information on the Company-4. B. Business Overview-Our Business Model -Offline Distribution Network.*”\n\n** **\n\n**Intellectual Property**\n\n \n\nOur trademarks, copyrights,\ndomain names, trade names, trade secrets, patents and other proprietary rights are critical to our success. As of March 31, 2026, we had\ntwo registered patents, 257 registered trademarks, 49 registered copyrights and 23 registered domain names in China. We rely on patent,\ntrademark, copyright and trade secret protection laws in China and enter into standard confidentiality agreements with all of our employees\nto protect our intellectual properties.\n\n** **\n\n**Seasonality**\n\n \n\nWe experience seasonality\nin our business, primarily as a result of seasonal fluctuations in personal consumption needs and patterns. We typically record higher\nnet revenues in the fourth calendar quarters, primarily because consumers tend to increase their purchases during e-commerce festivals\nin China, such as the periods around Double Eleven Shopping Festival (which is an online sales promotion event that falls on November\n11 of each year) and Double Twelve (which is another online sales promotion event that falls on December 12 of each year). In addition,\nwe typically experience a lower level of sales activity in the first calendar quarters due to the Chinese New Year holiday, during which\nthe volumes of online purchases and logistical operations may drop significantly due to vacations and business closures. As a result,\nwe generally generate higher net revenues in quarters ended December 31. Similar to the trends in our net revenues, our cost of revenues\nand to a lesser extent, fulfillment expenses, sales and marketing expenses, and general and administrative expenses generally also experience\nseasonal fluctuations. Due to our limited operating history, the seasonal trends that we have experienced in the past may not apply to,\nor be indicative of, our future operating results. See “*Item 3. Key Information-Item 3.D. Risk Factors-Risks Related to Our Business\nand Industry-Our results of operations are subject to fluctuations due to the seasonality of our business and other events*.”\n\n** **\n\n80\n\n \n\n** **\n\n**Regulations**\n\n \n\nThis section sets forth a\nsummary of the most significant rules and regulations that affect our business activities in China.\n\n \n\n**Regulations on Foreign Investment**\n\n \n\nThe *Foreign Investment\nLaw of the PRC*, or the Foreign Investment Law, was formally adopted by the National People’s Congress on March 15, 2019 and\nbecame effective on January 1, 2020. The Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign\ninvestment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments\nare entitled to pre-entry national treatment and are subject to negative list management system. The pre-entry national treatment means\nthat the treatment given to foreign investors and their investments at the stage of investment access is not lower than that of domestic\ninvestors and their investments. The negative list management system means that the state implements special administrative procedures\nfor access of foreign investment in specific fields. Foreign investors shall not invest in any forbidden fields stipulated in the negative\nlist and shall meet the conditions stipulated in the negative list before investing in any restricted fields.\n\n \n\nForeign investors’\ninvestment, earnings and other legitimate rights and interests within the territory of China shall be protected in accordance with the\nlaw, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises. The state\nguarantees that foreign-invested enterprises participate in the formulation of standards in an equal manner. The state guarantees that\nforeign-invested enterprises participate in government procurement activities through fair competition in accordance with the law. The\nState shall not expropriate any foreign investment except under special circumstances. In special circumstances, the state may levy or\nexpropriate the investment of foreign investors in accordance with the law for the needs of the public interest. The expropriation and\nrequisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be given. In carrying\nout business activities, foreign-invested enterprises shall comply with relevant provisions on labor protection, social insurance, tax,\naccounting, foreign exchange and other matters stipulated in laws and regulations.\n\n \n\nOn December 19, 2020, the\nNDRC and the MOFCOM jointly promulgated the *Measures on the Security Review of Foreign Investment*, effective on January 18, 2021,\nwhich sets forth provisions concerning the security review mechanism on foreign investment, including the types of investments subject\nto review, review scopes and procedures, among others. The Office of the Working Mechanism of the Security Review of Foreign Investment,\nor the Office of the Working Mechanism, will be established under the NDRC, who will carry out routine work of security review on foreign\ninvestment. Foreign investor or relevant parties in China must declare the security review to the Office of the Working Mechanism prior\nto (i) the investments in the military industry, military industrial supporting industry and other fields relating to the security of\nnational defense, and investments in areas surrounding military facilities and military industry facilities; and (ii) investments in important\nagricultural products, important energy and resources, important equipment manufacturing, important infrastructure, important transport\nservices, important cultural products and services, important information technology and internet products and services, important financial\nservices, key technologies and other important fields relating to national security, and obtain control in the target enterprise. Control\nexists when the foreign investor (i) holds over 50% equity interests in the target, (ii) has voting rights that can materially impact\non the resolutions of the board of directors or shareholders meeting of the target even when it holds less than 50% equity interests in\nthe target, or (iii) has material impact on the target’s business decisions, human resources, accounting and technology, etc.\n\n \n\nFrom January 1, 2020, the\n*Wholly Foreign-Owned Enterprises Law of the PRC*, together with the *Law of the People’s Republic of China on Sino-Foreign\nEquity Joint Ventures*and the *Law of the People’s Republic of China on Sino-Foreign Cooperative Joint Ventures*shall\nbe abolished. The organization form, organization and activities of foreign-invested enterprises shall be governed by the laws of the\n*Company Law of the People’s Republic of China*and the *Partnership Enterprise Law of the People’s Republic of China*.\nForeign-invested enterprises established before the implementation of the Foreign Investment Law were required to retain or adjust the\noriginal business organization and so on within five years after the implementation of the Foreign Investment Law.\n\n \n\n81\n\n \n\n \n\nOn December 26, 2019, the\nState Council promulgated the *Implementation Regulations on the Foreign Investment Law*, which came into effect on January 1, 2020,\nand it further requires that foreign-invested enterprises and domestic enterprises shall be treated equally with respect to policy making\nand implementation. Pursuant to the *Implementation Regulations on the Foreign Investment Law*, if the existing foreign-invested\nenterprises failed to change their original forms as of January 1, 2025, the relevant market regulation departments shall not process\nother registration matters for the enterprises, and may disclose their relevant information to the public.\n\n \n\nOn December 30, 2019, the\nMOFCOM and the State Administration for Market Regulation jointly issued the *Measures for Reporting of Foreign Investment Information*,\nor the Foreign Investment Information Measures, which came into effect on January 1, 2020 and replaced the *Interim Administrative Measures\nfor the Record-filing of the Establishment and Modification of Foreign-invested Enterprises*. Since January 1, 2020, for foreign investors\ncarrying out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall submit investment\ninformation through the Enterprise Registration System and the National Enterprise Credit Information Publicity System operated by the\nState Administration for Market Regulation. Foreign investors or foreign-invested enterprises shall disclose their investment information\nby submitting reports for their establishments, modifications and cancelations and their annual reports in accordance with the Foreign\nInvestment Information Measures. If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment,\nmodifications and cancelation and its annual reports, the relevant information will be shared by the competent market regulation department\nto the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.\n\n \n\n*Foreign Investment Industrial Policy*\n\n \n\nInvestment in the PRC conducted\nby foreign investors and foreign-owned enterprises shall comply with the *Catalog for the Guidance of Foreign Investment Industries*,\nor the Catalog, which was first issued in 1995 and amended from time to time. The most updated Catalog was promulgated by the MOFCOM and\nthe NDRC, on June 28, 2017 and became effective on July 28, 2017, and contains specific provisions guiding market access of foreign capital\nand stipulates in detail the areas of entry pertaining to the categories of encouraged foreign investment industries, restricted foreign\ninvestment industries and prohibited foreign investment industries. On October 26, 2022, the MOFCOM and the NDRC promulgated the *Catalog\nof Industries for Encouraged Foreign Investment (2025 Edition),*or the Encouraging Catalog*,*which became effective on January\n1, 2023, to replace* *the previous Encouraging Catalog. On September 6,2024, the MOFCOM and the NDRC released the *Special\nAdministrative Measures for Access of Foreign Investments (2024 Edition),* or the Negative List 2024, which became effective on November\n1, 2024, to replace the previous Negative List. According to the current regulation, any industry not listed in the Negative List 2024\nis a permitted industry and generally open to foreign investment unless specifically prohibited or restricted by PRC laws and regulations.\nAccording to the Negative List 2024, the foreign investment in value-added telecommunications services shall not exceed 50% (excluding\ne-commerce, domestic multi-party telecommunication, storage and forwarding business, and call center).\n\n** **\n\n**Regulations on Value-added Telecommunications\nServices**\n\n* *\n\n*Foreign Investment in Value-Added Telecommunications*\n\n \n\nForeign direct investment\nin telecommunications companies in China is regulated by the *Administrative Provisions of Foreign-Invested Telecommunications Enterprises*,\nor the FITE Regulation, which was issued by the State Council on December 11, 2001 and recently amended on March 29, 2022 and effective\nfrom May 1, 2022, respectively. The FITE Regulation stipulates that a foreign-invested telecommunications enterprise in the PRC, or the\nFITE, must be established as a sino-foreign equity joint venture for operations in the PRC. Under the FITE Regulation and in accordance\nwith WTO-related agreements, the foreign party investing in a FITE engaging in value-added telecommunications services may hold up to\n50% of the ultimate equity interests of the FITE. The FITE must obtain approvals from the MIIT and the MOFCOM or their authorized local\ncounterparts, which retain considerable discretion in granting approvals. Furthermore, the foreign party investing in e-commerce business,\nas a type of value-added telecommunications services, has been allowed to hold up to 100% of the equity interests of the FITE based on\nthe *Circular of the Ministry of Industry and Information Technology on Removing the Restrictions on Shareholding Ratio Held by Foreign\nInvestors in Online Data Processing and Transaction Processing (Operating E-commerce) Business*issued on June 19, 2015 and the current\neffective *Catalog of Telecommunications Services*, or the Telecom Catalog.\n\n \n\n82\n\n \n\n \n\nOn July 13, 2006, the Ministry\nof Information Industry of the PRC, or the MII (which is the predecessor of the MIIT) promulgated the *Notice of the Ministry of Information\nIndustry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services*, or the MII Notice,\nwhich reiterates certain requirements of the FITE Regulations and strengthens the administration by the MII. Under the MII Notice, if\na foreign investor intends to invest in PRC value-added telecommunications business, the FITE must be established to apply for the relevant\ntelecommunications business licenses. In addition, a domestic company that holds a license for the provision of value-added telecommunications\nservices is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance,\nincluding providing resources, sites or facilities, to foreign investors to conduct value-added telecommunications businesses illegally\nin China. Trademarks and domain names that are used in the provision of value-added telecommunications services must be owned by the license\nholder or its shareholders. The MII Notice also requires that each value-added telecommunications services license holder have appropriate\nfacilities for its approved business operations and to maintain such facilities in the business regions covered by its license. The value-added\ntelecommunications services license holder shall perfect relevant measures for safeguarding the network and information, establish relevant\nadministrative system for information safety, set up the procedures for handling emergencies of network and information safety and implement\nthe liabilities of information safety.\n\n \n\n*Telecommunications Regulations*\n\n \n\nThe *Telecommunications\nRegulations of the People’s Republic of China*, or the Telecom Regulations, promulgated on September 25, 2000 and amended on\nJuly 29, 2014 and February 6, 2016 respectively, are the primary PRC laws governing telecommunications services, and set out the general\nframework for the provision of telecommunications services by domestic PRC companies. The Telecom Regulations require that telecommunications\nservice providers shall obtain operating licenses prior to commencing operations. The Telecom Regulations draw a distinction between basic\ntelecommunications services and value-added telecommunications services. The *Telecom Catalog*,* *promulgated by MII on\nFebruary 21, 2003 and issued as an attachment to the Telecom Regulations and amended by the MIIT on December 28, 2015 and June 6, 2019,\nidentifies Internet information services and online data processing and transaction processing as value-added telecommunications services.\n\n \n\nOn July 3, 2017, the MIIT\nissued the revised *Administrative Measures for the Licensing of Telecommunications Business*, or the Telecom License Measures, which\nbecame effective on September 1, 2017, to supplement the Telecom Regulations. The Telecom License Measures require that an operator of\nvalue-added telecommunications services obtain a value-added telecommunications business operating license from the MIIT or its provincial\nlevel counterparts. The term of a value-added telecommunications business license is five years and subject to annual inspection.\n\n* *\n\n*Internet Information Services*\n\n \n\n*The Administrative Measures\nfor Internet Information Services*, or the Measures for Internet, was promulgated by State Council on September 25, 2000, most recently\namended on December 6, 2024 and became effective on January 20, 2025. Pursuant to the Measures for Internet, the Internet information\nservices providers, also referred to as Internet content providers, or ICPs, that provide commercial services are required to obtain the\nICP License from the MIIT or its provincial counterpart before engaging in any commercial Internet information service operations in the\nPRC.\n\n \n\nInternet information service\nproviders are required to monitor their websites. They may not post or disseminate any content that falls within prohibited categories\nprovided by laws or administrative regulations and must stop providing any such content on their websites. The PRC government may order\nICP License holders that violate the content restrictions to correct those violations and revoke their ICP Licenses under serious conditions.\n\n \n\nThe MIIT released the *Circular\non Regulating the Use of Domain Names in Internet Information Services*on November 27, 2017, effective from January 1, 2018, which\nprovides that the domain names used by the Internet information service provider in providing Internet information services shall be registered\nand owned by such Internet information service provider, and if the Internet information service provider is a legal entity, the domain\nname registrant shall be the legal entity (or any of its shareholders), or its principal or senior manager.\n\n* *\n\n83\n\n \n\n* *\n\n*Mobile Internet Applications Information Services*\n\n \n\nOn June 28, 2016, the CAC,\npromulgated the *Administrative Provisions on Mobile Internet Applications Information Services*, or the APP Provisions, which was\namended on June 14, 2022 and took effect on August 1, 2022. Under the APP Provisions, mobile application providers are prohibited from\nengaging in any activity that may endanger national security, disturb the social order, or infringe the legal rights of third parties,\nand may not produce or disseminate through internet mobile applications any content prohibited by laws and regulations. The APP Provisions\nalso require application providers to procure relevant qualifications required by laws and regulations to provide services through such\napplications and require application distribution platforms to file a record with local branches of the CAC within 30 days after their\nonline operation.\n\n \n\nFurthermore, on December\n16, 2016, the MIIT promulgated the *Interim Measures on the Administration of Pre-Installation and Distribution of Applications for\nMobile Smart Terminals*, which took effect on July 1, 2017 and requires, among others, that internet information service providers\nshould ensure that a mobile application, as well as its ancillary resource files, configuration files and user data can be uninstalled\nby a user on a convenient basis, unless it is a basic function software, which refers to a software that supports the normal functioning\nof hardware and operating system of a mobile smart device.\n\n \n\n**Regulations on Online Transmission of Audio-Visual\nProgram**\n\n \n\nOn December 20, 2007, the\nState Administration of Radio, Film and Television, or the SARFT (which is the predecessor of State Administration of Press, Publication,\nRadio, Film and Television, or the SAPPRFT) and the MII, jointly promulgated the *Administrative Provisions on Internet Audio-visual\nProgram Service*, or the Audio-visual Program Provisions, effective January 31, 2008 and amended on August 28, 2015. The Audio-visual\nProgram Provisions apply to the provision of audio-visual program services to the public via internet (including mobile network) within\nChina. Providers of internet audio-visual program services are required to obtain a License for Online Transmission of Audio-visual Programs\nissued by the SARFT or complete certain registration procedures with the SARFT. Providers of internet audiovisual program services are\ngenerally required to be either state-owned or state-controlled by the PRC government, and the business to be carried out by such providers\nmust satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the SARFT. In a press conference\njointly held by the SARFT and MII in 2008, the SARFT and MII clarified that providers of internet audio-visual program services who had\nengaged in such services prior to the promulgation of the Audio-visual Program Provisions shall be eligible to register their businesses\nand continue their operations of internet audio-visual program services so long as those providers have not been in violation of the laws\nand regulations.\n\n \n\nOn April 8, 2008, the SARFT\nissued the *Notice on Relevant Issues Concerning Application and Approval of License for Online Transmission of Audio-visual Programs*,\nas amended on August 28, 2015, which further sets forth detailed provisions concerning the application and approval process regarding\nthe License for Online Transmission of Audio-visual Programs. The notice also provides that providers of internet audio-visual program\nservices who engaged in such services prior to the promulgation of the Audio-visual Program Provisions shall also be eligible to apply\nfor the license so long as their violation of the laws and regulations is minor and can be rectified timely and they have no records of\nviolation during the latest three months prior to the promulgation of the Audio-visual Program Provisions. The SARFT further issued the\n*Notice on Strengthening the Administration of Television Drama and Films Transmitted via Internet*on December 28, 2007 and the\n*Notice on Further Implementing the Administration of Overseas Television Drama and Films Transmitted via Internet*on September\n2, 2014. According to these notices, the audio-visual programs of film and drama category published to the public through information\nnetwork shall be television drama under the Permit for Issuance of Television Drama, films under the Permit for Public Projection of Films,\ncartoons under the Permit for Issuance of Cartoons or academic literature movies and television plays under the Permit for Public Projection\nof Academic Literature Movies and Television Plays. Providers of such services shall obtain the prior consents from copyright owners of\nall such audio-visual programs.\n\n \n\n84\n\n \n\n \n\nThe *Classified Categories\nof the Internet Audio-Video Program Services (for Trial Implementation)*, or the Audio-video Program Categories, promulgated by the\nSAPPRFT on March 10, 2017, classifies internet audio/video program services into detailed categories.\n\n \n\nOn October 31, 2018, the\nNational Radio and Television Administration issued the *Notice on Further Strengthening the Management of Radio and Television and\nNetwork Audiovisual Programs*, or the Notice 60. According to Notice 60, all radio and television broadcasting institutes, network\naudiovisual program service institutes and program production institutes shall stick to the right political direction and strengthen value\nguidance; pursue people-centered creative orientation to curb bad tendencies such as pursuing celebrities, pan-entertainment and so on;\npersist in providing high-quality content, constantly innovate programs, and strictly control the remuneration of guests.\n\n** **\n\n**Regulations on Feeds and Feed Additives**\n\n \n\nThe State Council promulgated\nthe *Administrative Regulations on Feed and Feed Additives*on May 29, 1999, as amended on November 29, 2001, November 3, 2011, December\n7, 2013, February 6, 2016 and March 1, 2017. Pursuant to the *Administrative Regulations on Feed and Feed Additives*, the operators\nof feed and feed additives shall inspect product labels, product quality inspection certificates and the corresponding licensing documents\nwhen purchasing such products and no operator of feed or feed additives may unpack or repack any feed or feed additives or reprocess or\nadd any other substance into any feed or feed additives.\n\n \n\nOn April 27, 2018, the Ministry\nof Agriculture and Rural Affairs promulgated a series of announcements, including the *Administrative Measures for Pet Feed*,* *the\n*Permit Conditions for Pet Feed Manufacturers*,* *the *Pet Feed Labeling Regulations,*the *Pet Feed Hygienic Regulations*,* *the\n*Requirements for Pet Compound Feed Production Licensing Application Materials*and* *the *Requirements for Pet Additive\nPremix Feed Production License Application Materials*, which further set forth detailed provisions concerning the production, operation\nand usage of animal feed and feed additives.\n\n** **\n\n**Regulations on Veterinary Drugs**\n\n \n\nOn April 9, 2004, State Council\npromulgated the *Regulation on Veterinary Drug Administration*, which was amended on July 29, 2014, February 6, 2016 and March 27,\n2020. Pursuant to the *Regulation on Veterinary Drug Administration*, the distribution of veterinary drug requires a Veterinary Drug\nDistribution License. The Veterinary Drug Distribution License shall indicate such details as the scope of business, place of business,\nvalidity period, name of the legal representative, and domicile. The validity period of a Veterinary Drug Distribution License is five\nyears.\n\n \n\nThe veterinary drug distributors\nin the PRC shall also comply with the *Norms for the Business Operation and Quality Management of Veterinary Drugs*, or the GSP,\nwhich was promulgated by the Ministry of Agriculture on January 15, 2010 and amended on November 30, 2017. GSP is a set of standards relating\nto the quality management in the distribution of veterinary drugs in the PRC. It sets standards regulating veterinary drug distributors\nwith respect to distribution sites, equipment, personnel, bylaws, purchases, warehousing, distribution and freight.\n\n \n\nOn July 31, 2007, the Ministry\nof Agriculture and the General Administration of Customs promulgated the *Administrative Measures for the Import of Veterinary Drugs*,\nor the Veterinary Drugs Import Measures, which was amended on April 25, 2019 and January 7, 2022. Pursuant to the Veterinary Drugs Import\nMeasures, the Customs Clearance Document for Imported Veterinary Drugs shall be obtained for the import of veterinary drugs. The Customs\nClearance Document for Imported Veterinary Drugs shall be applied for by a Chinese domestic agent to the veterinary administrative department\nunder the provincial people’s government at the locality of the veterinary drug import port. The Veterinary Drugs Import Measures\nalso stipulates that no overseas enterprise may directly sell veterinary drugs within the territory of China. The imported veterinary\nbiological products shall be sold by a veterinary drug enterprise within the territory of China as an agent; but no wholly foreign-invested\nenterprise, sino-foreign equity joint venture or sino-foreign contractual joint venture may sell the imported veterinary biological products.\n\n** **\n\n85\n\n \n\n** **\n\n**Regulations on E-Commerce**\n\n \n\nOn January 26, 2014, the\nSAIC (which is the predecessor of the State administration for Market Regulation) promulgated the *Administrative Measures for Online\nTrading*, or the Online Trading Measures, which became effective on March 15, 2014, to regulate all operating activities for product\nsales and services provision via the internet (including mobile internet). It stipulates the obligations of online products operators\nand services providers and certain special requirements applicable to third-party platform operators. On March 15, 2021, the State Administration\nfor Market Regulation promulgated the *Measures for the Supervision and Administration of Online Trading*, which was latest promulgated\non March 18, 2025, became effective on May 1, 2025, and totally replaced the Online Trading Measures. Furthermore, the MOFCOM promulgated\nthe *Provisions on the Procedures for Formulating Transaction Rules of Third-Party Online Retail Platforms (Trial)* on December 24,\n2014, which became effective on April 1, 2015, to guide and regulate the formulation, revision and enforcement of transaction rules by\nonline retail third-party platforms operators. These measures impose more stringent requirements and obligations on third-party platform\noperators. For example, third-party platform operators are obligated to make public and file their transaction rules with MOFCOM or their\nrespective provincial counterparts, examine and register the legal status of each third-party merchant selling products or services on\ntheir platforms and display on a prominent location on a merchant’s webpage the information stated in the merchant’s business\nlicense or a link to its business license. Where third-party platform operators also conduct self-operation of products or services on\nthe platform, these third-party platform operators must make a clear distinction between their online direct sales and sales of third-party\nmerchant products on their third-party platforms to avoid misleading the consumers.\n\n \n\nOn August 31, 2018, the SCNPC\npromulgated the *E-Commerce Law of the People’s Republic of China*, or the E-Commerce Law, which became effective on January\n1, 2019. The promulgation of the E-Commerce Law established the basic legal framework for the development of China’s E-Commerce\nbusiness and clarified the obligations of the operators of E-Commerce platforms and the possible legal consequences if operators of E-commerce\nplatforms are found to be in violation of legally prescribed obligations. For example, pursuant to the E-Commerce Law, all e-commerce\noperators shall (i) register themselves as market subjects according to the law, except for individuals selling self-produced agricultural\nand sideline products or family handicrafts, applying their own skills in labor activities that are exempted from registration, or engaged\nin odd small-amount transaction activities that do not require any license under the law; (ii) fulfill their tax obligations and enjoy\ntax incentives in accordance with the law; (iii) always have information about its own business license, the administrative license issued\nfor its business, and its status as a party that is not required to register itself as a market subject, or the link to a webpage with\nsuch information published in a prominent position on its homepage; (iv) bear the likely risks and responsibilities when commodities are\nin transit, except when consumers select separate express logistics service providers; and (v) provide clear notice to consumers for tie-in\nsales and shall not set tie-in commodities or services as the default option. Further, e-commerce operators that possess dominant market\npositions shall not abuse their market dominance to eliminate or restrict competition.\n\n \n\nIn addition, the E-commerce\nLaw provides that platform operators shall (i) verify and register the identity, address, contact and administrative license of e-commerce\noperators applying to sell commodities or provide services on its platform, establish registration archives and have them verified and\nupdated regularly; (ii) record and save information released on its platform about commodities and services and deals concluded for a\nperiod of three years (unless otherwise stipulated), and ensure the completeness, confidentiality and availability of such information;\n(iii) use noticeable labels to clearly identify any business that it conducts on its own platform. A platform operator shall not impose\nunreasonable restrictions over or add unjustified conditions to transactions concluded on its platform by e-commerce operators, nor shall\na platform operator charge e-commerce operators on its platform any unreasonable fees.\n\n \n\nViolation of the provisions\nof the E-Commerce Law may entail being ordered to make corrections within a prescribed period of time, confiscation of gains illegally\nobtained, fines, suspension of business, inclusion of such violations in the credit records and possible civil liabilities. If a platform\noperator knows, or should have known, that an e-commerce operator has conducted acts infringing on the legitimate rights and interests\nof consumers, but the platform operator fails to take any necessary measure, the platform operator shall be held jointly and severally\nliable with the e-commerce operator. Where a platform operator fails to examine the qualifications of the e-commerce operators on its\nplatform or fails to protect the safety of its consumers in respect of goods or services that may affect the consumer’s health,\nthe platform operator shall bear corresponding liability to the consumers. Where a platform operator fails to take necessary measures\nagainst violations of intellectual property rights by e-commerce operators on its platform, the relevant administrative departments of\nintellectual property may order the platform operator to make corrections within the required time limit; where it fails to make corrections\nwithin the required time limit, the platform operator may face administrative fines of up to RMB2,000,000.\n\n** **\n\n86\n\n \n\n** **\n\n**Regulations on Product Quality**\n\n \n\nAccording to the *Product\nQuality Law of the People’s Republic of China*, which was effective as from September 1, 1993 and amended by the SCNPC on July\n8, 2000, August 27, 2009 and December 29, 2018, respectively, products for sale must satisfy relevant safety standards and sellers shall\nadopt measures to maintain the quality of products for sale. Sellers may not mix impurities or imitations into products, or pass counterfeit\ngoods off as genuine ones, or defective products as good ones or substandard products as standard ones. For sellers, any violation of\nstate or industrial standards for health and safety or other requirements may result in civil liabilities and administrative penalties,\nsuch as compensation for damages, fines, confiscation of products illegally manufactured or sold and the proceeds from the sales of such\nproducts illegally manufactured or sold and even revoking business license; in addition, severe violations may subject the responsible\nindividual or enterprise to criminal liabilities.\n\n \n\nIn addition to *Product\nQuality Law of the People’s Republic of China*, there are also other PRC laws that apply to the product liability. Under the\n*Civil Code of the People’s Republic of China*, which became effective on January 1, 2021, if a substandard product causes\nproperty damage or physical injury to others, the producer or seller shall bear civil liability according to Law. If the transporter or\nstorekeeper is responsible for the matter, the producer or seller shall have the right to demand compensation for its losses.\n\n \n\n**Regulations on Consumer Protection**\n\n \n\nAccording to the *Consumers\nRights and Interests Protection Law of the People’s Republic of China*, or the Consumers Rights and Interests Protection Law,\nwhich became effective on January 1, 1994 and was amended by the SCNPC on August 27, 2009 and October 25, 2013 respectively, business\noperators should guarantee that the products and services they provide satisfy the requirements for personal or property safety, and provide\nconsumers with authentic information about the quality, function, usage and term of validity of the products or services. The consumers\nwhose interests have been damaged due to the products or services that they purchase or accept on the internet trading platforms may claim\ndamages to sellers or service providers. Where the operators of the online trading platforms are unable to provide the real names, addresses\nand valid contact details of the sellers or service providers, the consumers may also claim damages to the operators of the online trading\nplatforms. Operators of online trading platforms that clearly knew or should have known that sellers or service providers use their platforms\nto infringe upon the legitimate rights and interests of consumers but fail to take necessary measures must bear joint and several liabilities\nwith the sellers or service providers. Moreover, if business operators deceive consumers or knowingly sell substandard or defective products,\nthey should not only compensate consumers for their losses, but also pay additional damages equal to three times the price of the goods\nor services.\n\n \n\nOn January 6, 2017, the SAIC\nissued the *Interim Measures for Seven-day Unconditional Return of Online Purchased Goods*, which became effective on March 15, 2017\nand amended on October 23, 2020, further clarifying the scope of consumers’ rights to make returns without a reason, including exceptions,\nreturn procedures and online trading platform operators’ responsibility to formulate seven-day unconditional return rules and related\nconsumer protection systems, and supervise the merchants for compliance with these rules.\n\n** **\n\n**Regulations on Pricing**\n\n \n\nIn China, the prices of a\nsmall number of products and services are guided or fixed by the government. According to the *Pricing Law of the People’s Republic\nof China*, or the Pricing Law, promulgated by the SCNPC on December 29, 1997 and became effective on May 1, 1998, business operators\nmust, as required by the government departments in charge of pricing, mark the prices explicitly and indicate the name, origin of production,\nspecifications and other related particulars clearly. Business operators may not sell products at a premium or charge any fees that are\nnot explicitly indicated. Business operators must not commit the specified unlawful pricing activities, such as colluding with others\nto manipulate the market price, using false or misleading prices to deceive consumers to transact, or conducting price discrimination\nagainst other business operators. Failure to comply with the Pricing Law may subject business operators to administrative sanctions such\nas warning, ceasing unlawful activities, compensation, confiscating illegal gains and fines. The business operators may be ordered to\nsuspend business for rectification or have their business licenses revoked under severe circumstances.\n\n \n\n87\n\n \n\n \n\n**Regulations on Advertising**\n\n \n\nIn 1994, the SCNPC promulgated\nthe *Advertising Law of the People’s Republic of China*, or the Advertising Law, which was recently revised on April 29, 2021\nand became effective on the same date. The Advertising Law regulates commercial advertising activities in the PRC and sets out the obligations\nof advertisers, advertising operators, advertising publishers and advertisement endorser, and prohibits any advertisement from containing\nany obscenity, pornography, gambling, superstition, terrorism or violence-related content. Any advertiser in violation of such requirements\non advertisement content will be ordered to cease publishing such advertisements and imposed a fine, the business license of such advertiser\nmay be revoked, and the relevant authorities may revoke the approval document for advertisement examination and refuse to accept applications\nsubmitted by such advertiser for one year. In addition, any advertising operator or advertising publisher in violation of such requirements\nwill be imposed a fine, and the advertisement fee received will be confiscated; in severe circumstances, the business license of such\nadvertising operator or advertising publisher may be revoked.\n\n \n\nThe *Measures for the Administration\nof Internet Advertising*, or the Internet Advertising Measures, regulating the internet-based advertising activities were promulgated\nby the SAMR on February 25, 2023 and became effective on May 1, 2023. According to the Internet Advertising Measures, internet advertisers\nare responsible for the authenticity of the advertisements content and all online advertisements must be marked “Advertisement”\nso that viewers can easily identify them as such. Publishing and circulating advertisements through the Internet shall not affect the\nnormal use of the Internet by users. It is not allowed to induce users to click on the content of advertisements by any fraudulent means,\nor to attach advertisements or advertising links in the emails without permission.\n\n** **\n\n**Regulations on Cyber Security and Privacy**\n\n \n\nThe PRC Constitution states\nthat the PRC laws protect the freedom and privacy of communications of citizens and prohibit infringement of such rights. PRC government\nauthorities have enacted laws and regulations with respect to internet information security and protection of personal information from\nany abuse or unauthorized disclosure, and which includes the *Decision of the Standing Committee of the National People’s Congress\non Internet Security Protection*enacted and amended by the SCNPC on December 28, 2000 and August 27, 2009, respectively, the *Provisions\non the Technical Measures for Internet Security Protection*issued by the Ministry of Public Security on December 13, 2005 and took\neffect on March 1, 2006, the *Decision of the Standing Committee of the National People’s Congress on Strengthening Network Information\nProtection*promulgated by the SCNPC on December 28, 2012, the *Several Provisions on Regulating the Market Order of Internet Information\nServices*promulgated by the MIIT on December 29, 2011, and the *Provisions on Protection of Personal Information of Telecommunication\nand Internet Users*released by the MIIT on July 16, 2013. Internet information in China is regulated and restricted from a national\nsecurity standpoint.\n\n* *\n\n*The Provisions on Protection\nof Personal Information of Telecommunication and Internet Users*regulate the collection and use of users’ personal information\nin the provision of telecommunications services and Internet information services in the PRC. Telecommunication business operators and\nInternet service providers are required to institute and disclose their own rules for the collecting and use of users’ information.\nTelecommunication business operators and Internet service providers must specify the purposes, manners and scopes of information collection\nand uses, obtain consent of the relevant citizens, and keep the collected personal information confidential. Telecommunication business\noperators and Internet service providers are prohibited from disclosing, tampering with, damaging, selling or illegally providing others\nwith, collected personal information. Telecommunication business operators and Internet service providers are required to take technical\nand other measures to prevent the collected personal information from any unauthorized disclosure, damage or loss. Once users terminate\nthe use of telecommunications services or Internet information services, telecommunications business operators and Internet information\nservice providers shall stop the collection and use of the personal information of users and provide the users with services for deregistering\ntheir account numbers.\n\n \n\nThe *Provisions on Protecting\nPersonal Information of Telecommunication and Internet Users*further define the personal information of user to include user name,\nbirth date, identification number, address, phone number, account number, passcode, and other information that may be used to identify\nthe user independently or in combination with other information and the timing, places, etc. of the use of services by the users. Furthermore,\naccording to the *Interpretations on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement\nof Citizens’ Personal Information*, or the Interpretations, issued by the Supreme People’s Court and the Supreme People’s\nProcuratorate on May 8, 2017 and took effect on June 1, 2017, personal information means various information recorded electronically or\nthrough other manners, which may be used to identify individuals or activities of individuals, including but not limited to the name,\nidentification number, contact information, address, user account number and passcode, property ownership and whereabouts.\n\n \n\n88\n\n \n\n \n\nOn November 1, 2015, the\n*Ninth Amendment to the Criminal Law of the People’s Republic of China*issued by the SCNPC became effective, pursuant to which,\nany internet service provider that fails to comply with obligations related to internet information security administration as required\nby applicable laws and refuses to rectify upon order is subject to criminal penalty for (i) any large-scale dissemination of illegal information;\n(ii) any severe consequences due to the leakage of the user information; (iii) any serious loss of criminal evidence; or (iv) other severe\ncircumstances. Furthermore, any individual or entity that (i) sells or distributes personal information in a manner which violates relevant\nregulations, or (ii) steals or illegally obtains any personal information is subject to criminal penalty in severe circumstances.\n\n \n\nOn June 1, 2017, the *Cyber\nSecurity Law of the People’s Republic of China*, or the Cyber Security Law, promulgated by SCNPC took effect, which is formulated\nto maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights\nand interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others,\ninternet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation\nof the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity,\nconfidentiality and availability of network data. The Cyber Security Law reaffirms the basic principles and requirements set forth in\nother existing laws and regulations on personal information protections and strengthens the obligations and requirements of internet service\nproviders, which include but are not limited to: (i) keeping all user information collected strictly confidential and setting up a comprehensive\nuser information protection system; (ii) abiding by the principles of legality, rationality and necessity in the collection and use of\nuser information and disclosure of the rules, purposes, methods and scopes of collection and use of user information; and (iii) protecting\nusers’ personal information from being leaked, tampered with, destroyed or provided to third parties. Any violation of the provisions\nand requirements under the Cyber Security Law and other related regulations and rules may result in administrative liabilities such as\nwarnings, fines, confiscation of illegal gains, revocation of licenses, suspension of business, and shutting down of websites, or, in\nsevere cases, criminal liabilities. After the release of the Cyber Security Law, on April 13, 2020, the CAC together with other relevant\nadministrative departments jointly promulgated *Cybersecurity Review Measures*, which was subsequently amended on December 28, 2021\nand became effective on February 15, 2022.\n\n \n\nThe recommended national\nstandard, *Information Security Technology Personal Information Security Specification*, puts forward specific refinement requirements\non the collection, preservation, use and commission processing, sharing, transfer, public disclosure, etc. Although it is not mandatory,\nin the absence of clear implementation rules and standards for the law on Cyber security and other personal information protection, it\nwill be used as the basis for judging and making determinations.\n\n \n\nOn August 20, 2021, the SCNPC\npromulgated the *Personal Information Protection Law of People’s Republic of China*, which became effective on November 1,\n2021. It stipulates the scope of personal information and the ways of processing personal information, establishes rules for processing\npersonal information and for transfer offshore, and clarifies the individual’s rights and the processor’s obligations in the\nprocessing of personal information.\n\n \n\nOn June 10, 2021, the SCNPC\npromulgated the *Data Security Law of People’s Republic of China*, which became effective on September 1, 2021. It is formulated\nso as to regulate the handling of data, ensure data security, promote the development and exploitation of data, protect the legitimate\nrights and interests of citizens and organizations, and preserve state sovereignty, security, and development interests. The law stipulates\nthat the carrying out of data handling activities shall obey laws and regulations, respect social mores and ethics, comply with commercial\nethics and professional ethics, be honest and trustworthy, perform obligations to protect data security, and undertake social responsibility;\nit must not endanger national security, the public interest, or individuals’ and organizations’ lawful rights and interests.\nFurthermore, the *Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law*, or the Opinions\non Strictly Cracking Down on Illegal Securities Activities, which were issued by the General Office of the State Council and another authority\non July 6, 2021, require the speedup of the revision of the provisions on strengthening the confidentiality and archives coordination\nbetween regulators related to overseas issuance and listing of securities, and improvement to the laws and regulations related to data\nsecurity, cross-border data flow, and management of confidential information.\n\n \n\n89\n\n \n\n \n\nOn September 24, 2024, the\nCAC released the *Regulations for the Administration of Network Data Securit*y, which became effective on January 1, 2025, pursuant\nto which, data processors shall adopt backup, encryption, access control or other necessary measures to protect data from leakage, theft,\ntampering with, damage, loss and illegal use, to respond to data security incidents, and to guard against illegal and criminal activities\ntargeting or using data, in order to maintain the integrity, confidentiality and availability of data. On July 7, 2022, the CAC promulgated\nthe *Data Outbound Transfer Security Assessment Measures* or the Security Assessment Measures, which took effect on September 1,\n2022. The Security Assessment Measures provides that, among others, data processors shall apply to competent authorities for security\nassessment when transferring important data abroad or when, in the case of a critical information infrastructure operator, or a personal\ninformation processor that has processed personal information of more than one million individual, transferring personal information abroad.\n\n** **\n\n**Regulations on Intellectual Property**\n\n \n\nChina has adopted comprehensive\nlegislation governing intellectual property rights, including copyrights, trademarks, patents and domain names. China is a signatory to\nthe primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects\nof Intellectual Property Rights since its accession to the World Trade Organization on December 11, 2001.\n\n \n\n*Copyright*\n\n \n\nOn September 7, 1990, the\nSCNPC promulgated the *Copyright Law of the People’s Republic of China*, or the Copyright Law, effective on June 1, 1991 and\namended on October 27, 2001, February 26, 2010 and November 11, 2020, respectively. The amended Copyright Law extends copyright protection\nto internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration\nsystem administered by the Copyright Protection Center of China. According to the Copyright Law, Chinese citizens, legal persons, or other\norganizations shall, whether published or not, own copyright in their copyrightable works, which include, among others, works of literature,\nart, natural science, social science, engineering technology and computer software. Copyright owners enjoy certain legal rights, including\nright of publication, right of authorship and right of reproduction. An infringer of the copyrights shall be subject to various civil\nliabilities, which include ceasing infringement activities, apologizing to the copyright owners and compensating the loss of copyright\nowner. Infringers of copyright may also be subject to fines and/or administrative or criminal liabilities in severe situations.\n\n \n\nUnder the *Regulations\non the Protection of the Right to Network Dissemination of Information*that took effect on July 1, 2006 and was amended on January\n30, 2013, it is further provided that an Internet information service provider may be held liable under various situations, including\nthat if it knows or should reasonably have known a copyright infringement through the Internet and the service provider fails to take\nmeasures to remove or block or disconnect links to the relevant content, or, although not aware of the infringement, the Internet information\nservice provider fails to take such measures upon receipt of the copyright holder’s notice of such infringement.\n\n \n\nIn order to further implement\nthe *Regulations on Computer Software Protection*, promulgated by the State Council on June 4, 1991 and recently amended on January\n30, 2013, the National Copyright Administration issued the *Measures for the Registration of Computer Software Copyright*on February\n20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.\n\n* *\n\n*Trademark*\n\n \n\nAccording to the *Trademark\nLaw of the People’s Republic of China*promulgated by the SCNPC on August 23, 1982, and amended on February 22, 1993, October\n27, 2001, August 30, 2013 and April 23, 2019 respectively, the Trademark Office of the SAIC is responsible for the registration and administration\nof trademarks in China. The SAIC under the State Council has established a Trademark Review and Adjudication Board for resolving trademark\ndisputes. Registered trademarks are valid for ten years from the date the registration is approved. A registrant may apply to renew a\nregistration within 12 months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace\nperiod of six additional months may be granted. If the registrant fails to apply before the grace period expires, the registered trademark\nshall be deregistered. Renewed registrations are valid for ten years. On April 29, 2014, the State Council issued the revised *Implementing\nRegulations of the Trademark Law of the People’s Republic of China*, which specified the requirements of applying for trademark\nregistration and renewal.\n\n \n\n90\n\n \n\n \n\n*Patent*\n\n \n\nAccording to the *Patent\nLaw of the People’s Republic of China*, or the Patent Law, promulgated by the SCNPC on March 12, 1984 and amended on September\n4, 1992, August 25, 2000, December 27, 2008 and October 17, 2020, respectively, and the *Implementation Rules of the Patent Law of the\nPeople’s Republic of China*, or the Implementation Rules of the Patent Law, promulgated by the State Council on June 15, 2001\nand revised on December 28, 2002 and January 9, 2010, the patent administrative department under the State Council is responsible for\nthe administration of patent-related work nationwide and the patent administration departments of provincial or autonomous regions or\nmunicipal governments are responsible for administering patents within their respective administrative areas. The Patent Law and Implementation\nRules of the Patent Law provide for three types of patents, namely “inventions,” “utility models” and “designs.”\nInvention patents are valid for twenty years, while utility model patents are valid for ten years, and design patents are valid for fifteen\nyears, in each case from the date of application. The Chinese patent system adopts a “first come, first file” principle, which\nmeans that where more than one person files a patent application for the same invention, a patent will be granted to the person who files\nthe application first. An invention or a utility model must possess novelty, inventiveness and practical applicability to be patentable.\nThird Parties must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the unauthorized use constitutes\nan infringement on the patent rights.\n\n \n\n*Domain Names*\n\n \n\nOn May 29, 2012, the China\nInternet Network Information Center, or the CNNIC, issued the *Implementing Rules for Domain Name Registration,*which took effect\non May 29, 2012, setting forth the detailed rules for registration of domain names. On June 18, 2019, the CNNIC promulgated the *Implementing\nRules for the Registration of National Top-level Domain Names,*which became effective on the same day and totally replaced the *Implementing\nRules for Domain Name Registration*. On August 24, 2017, the MIIT promulgated the *Administrative Measures for Internet Domain Names*,\nor the Domain Name Measures, which became effective on November 1, 2017. The Domain Name Measures regulate the registration of domain\nnames, such as the China’s national top-level domain name “.CN”. According to the Domain Name Measures, the MIIT is\nin charge of the administration of PRC internet domain names. The domain name registration follows a first-to-file principle. Applicants\nfor registration of domain names shall provide the true, accurate and complete information of their identities to domain name registration\nservice institutions. The applicants will become the holder of such domain names upon the completion of the registration procedure. According\nto the *Implementing Rules for the Registration of National Top-level Domain Names,* if any entity or person considers that a domain\nname registered by any other person conflicts with its or his lawful rights or interests, it or he may file a complaint with a dispute\nresolution service provider.\n\n** **\n\n**Regulations on Foreign Exchange**\n\n \n\nThe principal regulations\ngoverning foreign currency exchange in China are the *Administrative Regulations on Foreign Exchange of the People’s Republic\nof China,*or the Foreign Exchange Administrative Regulation, which were promulgated by the State Council on January 29, 1996, became\neffective on April 1, 1996 and was subsequently amended on January 14, 1997 and August 5, 2008 and the *Administrative Regulations on\nForeign Exchange Settlement, Sales and Payment*which was promulgated by the People’s Bank of China, or the PBOC, on June 20,\n1996 and became effective on July 1, 1996. Under these regulations, payments of current account items, such as profit distributions and\ntrade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from State Foreign Exchange\nAdministration of the People’s Republic of China, or the SAFE, by complying with certain procedural requirements. By contrast, approval\nfrom or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted\nout of China to pay capital account items such as the repayment of foreign currency denominated loans, direct investment overseas and\ninvestments in securities or derivative products outside of the PRC. FIEs are permitted to convert their after tax dividends into foreign\nexchange and to remit such foreign exchange out of their foreign exchange bank accounts in the PRC.\n\n \n\nOn March 30, 2015, SAFE promulgated\nthe *Notice on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises,*or the SAFE\nCircular 19, which took effect on June 1, 2015. According to SAFE Circular 19, the foreign currency capital contribution to an FIE in\nits capital account may be converted into RMB on a discretional basis.\n\n \n\n91\n\n \n\n \n\nOn June 9, 2016, the SAFE\npromulgated the *Circular on Reforming and Regulating Policies on the Management of the Settlement of Foreign Exchange of Capital Accounts*,\nor the SAFE Circular 16. The SAFE Circular 16 unifies the discretional foreign exchange settlement for all the domestic institutions.\nThe Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account which has been confirmed by\nthe relevant policies subject to the discretional foreign exchange settlement (including foreign exchange capital, foreign loans and funds\nremitted from the proceeds from the overseas listing) can be settled at the banks based on the actual operational needs of the domestic\ninstitutions. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital is temporarily determined as\n100%. Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties in accordance with the Foreign Exchange\nAdministrative Regulation and relevant provisions.\n\n \n\nFurthermore, SAFE Circular\n16 stipulates that the use of foreign exchange incomes of capital accounts by FIEs shall follow the principles of authenticity and self-use\nwithin the business scope of the enterprises. The foreign exchange incomes of capital accounts and capital in RMB obtained by the FIE\nfrom foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly used for the payment beyond\nthe business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for\ninvestment in securities or financial schemes other than bank guaranteed products unless otherwise provided by relevant laws and regulations;\n(iii) used for granting loans to nonaffiliated enterprises, unless otherwise permitted by its business scope; and (iv) used for the construction\nor purchase of real estate that is not for self-use (except for the real estate enterprises).\n\n \n\nOn October 23, 2019, the\nSAFE promulgated the *Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade\nand Investment*, or the SAFE Circular 28. The SAFE Circular 28 stipulates that non-investment FIEs may use capital to carry out domestic\nequity investment in accordance with the law under the premise of not violating the Negative list and the projects invested are true and\nin compliance with laws and regulations.\n\n \n\nOn December 4, 2023, SAFE\npromulgated the Notice on Further Deepening the Reform to Facilitate Cross-border Trade and Investment, which relaxed restrictions on\nthe scale of preliminary expenses for overseas direct investment, and facilitated the payment and use of funds obtained from equity transfers\nunder domestic reinvestment and funds raised from overseas listing of foreign direct investment.\n\n \n\n**Regulations on Dividend Distributions**\n\n \n\nThe principal regulations\ngoverning distribution of dividends of wholly foreign-owned enterprise, or the WFOE, include the PRC Company Law. Under these regulations,\nWFOEs in China may pay dividends only out of their accumulated profits, if any, determined in accordance with the PRC accounting standards\nand regulations. In addition, FIEs in the PRC are required to allocate at least 10% of their accumulated profits each year, if any, to\nfund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. These reserves are not\ndistributable as cash dividends.\n\n** **\n\n**Regulations on Foreign Debts**\n\n \n\nA loan made by foreign investors\nas shareholders in a foreign-invested enterprise is considered to be foreign debt in the PRC and is regulated by various laws and regulations,\nincluding the Foreign Exchange Administrative Regulation, the *Interim Provisions on the Management of Foreign Debts*promulgated\nby SAFE, the NDRC and the Ministry of Finance, or the MOF, and took effect on March 1, 2003 and the *Administrative Measures for Registration\nof Foreign Debts*promulgated by SAFE on April 28, 2013 and amended by the *Notice of the SAFE on Abolishing and Amending the Normative\nDocuments Related to the Reform of the Registered Capital Registration System*on May 4, 2015. Under these rules, a shareholder loan\nin the form of foreign debt made to a Chinese entity does not require the prior approval of SAFE. However, such foreign debt must be registered\nwith and recorded by local banks. The SAFE Circular 28 provides that a nonfinancial enterprise in the pilot areas may register the permitted\namounts of foreign debts, which is as twice of the nonfinancial enterprise’s net assets, at the local foreign exchange bureau. Such\nnonfinancial enterprise may borrow foreign debts within the permitted amounts and directly handle the relevant procedures in banks without\nregistration of each foreign debt. However, the nonfinancial enterprise shall report its international income and expenditure regularly.\n\n** **\n\n92\n\n \n\n** **\n\n**Regulations on Offshore Special Purpose Companies Held by PRC\nResidents**\n\n \n\nSAFE promulgated *Notice\non Issues Relating to Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic\nResidents via Special Purpose Vehicles*, or the SAFE Circular 37, on July 4, 2014 that requires PRC residents or entities to register\nwith SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas\ninvestment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose\nvehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name\nand term of operation), capital increase or capital reduction, transfers or exchanges of shares, or mergers or divisions. SAFE Circular\n37 was issued to replace the *Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing\nand Roundtrip Investments via Overseas Special Purposes Vehicles*.\n\n \n\nSAFE further enacted the\n*Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Management Policies\nfor Direct Investment*, or the SAFE Circular 13, which allows PRC residents or entities to register with qualified banks in connection\nwith their establishment or control of an offshore entity established for the purpose of overseas investment or financing. However, remedial\nregistration applications made by PRC residents that previously failed to comply with the SAFE Circular 37 continue to fall under the\njurisdiction of the relevant local branch of SAFE. In the event that a PRC shareholder holding interests in a special purpose vehicle\nfails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing\nprofits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle\nmay be restricted in its ability to contribute additional capital into its PRC subsidiary.\n\n \n\nOn January 26, 2017, SAFE\nissued the *Notice on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control*, or the SAFE\nCircular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities\nto offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution,\nthe original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for\nprevious years’ losses before remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed\nexplanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing\nthe registration procedures in connection with an outbound investment.\n\n \n\n**Regulations on Stock Incentive Plans**\n\n \n\nAccording to the *Notice\nof the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating\nin Stock Incentive Plan of Overseas Listed Company*, or the Share Option Rules, which was issued on February 15, 2012 and other regulations,\ndirectors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly listed\ncompany who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain\nexceptions, are required to register with the SAFE. All such participants need to authorize a qualified PRC agent, such as a PRC subsidiary\nof the overseas publicly listed company to register with the SAFE and handle foreign exchange matters such as opening accounts, transferring\nand settlement of the relevant proceeds. The Share Incentive Rules further require an offshore agent to be designated to handle matters\nin connection with the exercise of share options and sales of proceeds for the participants of the share incentive plans. Failure to complete\nthe said SAFE registrations may subject our participating directors, supervisors, senior management and other employees to fines and legal\nsanctions.\n\n \n\nIn addition, the STA, has\nissued certain circulars concerning employee stock options and restricted shares. Under these circulars, employees working in the PRC\nwho exercise stock options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of an overseas\nlisted company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and\nto withhold individual income taxes of employees who exercise their stock option or purchase restricted shares. If the employees fail\nto pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may\nface sanctions imposed by the tax authorities or other PRC governmental authorities.\n\n** **\n\n93\n\n \n\n** **\n\n**Regulations on Outbound Direct Investment**\n\n \n\nOn December 26, 2017, the\nNDRC promulgated the *Administrative Measures on Overseas Investments of Enterprises*, or NDRC Order No. 11, which took effect on\nMarch 1, 2018. According to NDRC Order No. 11, non-sensitive overseas investment projects are required to make record filings with the\nlocal branch of the NDRC. On September 6, 2014, MOFCOM promulgated the revised *Administrative Measures on Overseas Investments*,\nwhich took effect on October 6, 2014. According to such regulations, overseas investments of PRC enterprises that involve non-sensitive\ncountries and regions and non-sensitive industries must make record filings with a local branch of MOFCOM. The *Notice of the State\nAdministration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment*was\nissued by SAFE on November 19, 2012 and amended on May 4, 2015, October 10, 2018, and December 30, 2019, respectively, under which PRC\nenterprises must register for overseas direct investment with local banks. The shareholders or beneficial owners who are PRC entities\nare required to be in compliance with the related overseas investment regulations. If they fail to complete the filings or registrations\nrequired by overseas direct investment regulations, the relevant authority may order them to suspend or cease the implementation of such\ninvestment and make corrections within a specified time.\n\n \n\n**Regulations on Taxation**\n\n* *\n\n*Income tax*\n\n \n\nAccording to the *Enterprise\nIncome Tax Law of the People’s Republic of China*, or the EIT Law, which was promulgated on March 16, 2007, became effective\nas from January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, an enterprise established outside the PRC with de\nfacto management bodies within the PRC is considered a resident enterprise for PRC enterprise income tax purposes and is generally subject\nto a uniform 25% enterprise income tax rate on its worldwide income. The *Implementing Rules of the Enterprise Income Law of the People’s\nRepublic of China*, or the Implementing Rules of the EIT Law, defines a de facto management body as a managing body that in practice\nexercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties”\nof the enterprise. Non-PRC resident enterprises without any branches in the PRC pay an enterprise income tax in connection with their\nincome originating from the PRC at the tax rate of 10%.\n\n \n\nEnterprises that are recognized\nas high and new technology enterprises in accordance with the *Administrative Measures for the Determination of High and New Tech Enterprises*issued by the Ministry of Science, the Ministry of Finance and the STA are entitled to enjoy a preferential enterprise income tax\nrate of 15%. The validity period of the high and new technology enterprise qualification shall be three years from the date of issuance\nof the certificate. An enterprise can reapply for such recognition as a high and new technology enterprise before or after the previous\ncertificate expires.\n\n \n\nOn February 3, 2015, the\nSTA issued the *Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Nonresident Enterprises*,\nor the STA Circular 7. The STA Circular 7 repeals certain provisions in the *Notice of the State Administration of Taxation on Strengthening\nthe Administration of Enterprise Income Tax on Income from Equity Transfer by Nonresident Enterprises*, or the STA Circular 698, issued\nby STA on December 10, 2009 and the *Announcement on Several Issues Relating to the Administration of Income Tax on Nonresident Enterprises*issued by STA on March 28, 2011 and clarifies certain provisions in the STA Circular 698. The STA Circular 7 provides comprehensive\nguidelines relating to, and heightening the Chinese tax authorities’ scrutiny on, indirect transfers by a nonresident enterprise\nof assets (including assets of organizations and premises in PRC, immovable property in the PRC, equity investments in PRC resident enterprises)\nor the PRC Taxable Assets. For instance, when a nonresident enterprise transfers equity interests in an overseas holding company that\ndirectly or indirectly holds certain PRC Taxable Assets and if the transfer is believed by the Chinese tax authorities to have no reasonable\ncommercial purpose other than to evade enterprise income tax, the STA Circular 7 allows the Chinese tax authorities to reclassify the\nindirect transfer of PRC Taxable Assets into a direct transfer and therefore impose a 10% rate of PRC enterprise income tax on the nonresident\nenterprise. The STA Circular 7 lists several factors to be taken into consideration by tax authorities in determining if an indirect transfer\nhas a reasonable commercial purpose. However, regardless of these factors, the overall arrangements in relation to an indirect transfer\nsatisfying all the following criteria will be deemed to lack a reasonable commercial purpose: (i) 75% or more of the equity value of the\nintermediary enterprise being transferred is derived directly or indirectly from PRC Taxable Assets; (ii) at any time during the one-year\nperiod before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is composed directly\nor indirectly of investments in the PRC, or during the one-year period before the indirect transfer, 90% or more of its income is derived\ndirectly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries\nand branches that directly or indirectly hold the PRC Taxable Assets are limited and are insufficient to prove their economic substance;\nand (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC Taxable Assets is lower than the potential\nPRC tax on the direct transfer of those assets. On the other hand, indirect transfers falling into the scope of the safe harbors under\nthe STA Circular 7 may not be subject to PRC tax under the STA Circular 7. The safe harbors include qualified group restructurings, public\nmarket trades and exemptions under tax treaties or arrangements.\n\n \n\n94\n\n \n\n \n\nOn October 17, 2017, STA\nissued the *Announcement on Issues Relating to Withholding at Source of Income Tax of Nonresident Enterprises*, or the STA Circular\n37, which took effect on December 1, 2017. Certain provisions of the STA Circular 37 were repealed by the *Announcement of the State\nAdministration of Taxation on Revising Certain Taxation Normative Documents*. According to the STA Circular 37, the balance after deducting\nthe equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income\nshall mean the consideration collected by the equity transferor from the equity transfer, including various income in monetary form and\nnonmonetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for equity\nshall be: (i) the capital contribution costs actually paid by the equity transferor to a Chinese resident enterprise at the time of investment\nand equity participation, or (ii) the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor\nof the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains or losses may be\nconfirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be adjusted accordingly.\nWhen an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders’ retained earnings such as\nundistributed profits etc., of the investee enterprise, which may be distributed in accordance with the said equity. In the event of partial\ntransfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding to the transferred\nequity in accordance with the transfer ratio, out of all costs of the equity.\n\n \n\nUnder the STA Circular 7\nand the *Law of the People’s Republic of China on the Administration of Tax Collection*promulgated by the SCNPC on September\n4, 1992 and newly amended on April 24, 2015, in the case of an indirect transfer, entities or individuals obligated to pay the transfer\nprice to the transferor shall act as withholding agents. If they fail to make withholding or withhold the full amount of tax payable,\nthe transferor of equity shall declare and pay tax to the relevant tax authorities within seven days from the occurrence of tax payment\nobligation. Where the withholding agent does not make the withholding, and the transferor of the equity does not pay the tax payable amount,\nthe tax authority may impose late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents\nliable and impose a penalty of ranging from 50% to 300% of the unpaid tax on them. The penalty imposed on the withholding agents may be\nreduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the PRC\ntax authorities in accordance with the STA Circular 7.\n\n* *\n\n*Withholding tax on dividend distribution*\n\n \n\nThe EIT Law prescribes a\nstandard withholding tax rate of 20% on dividends and other China-sourced income of non-PRC resident enterprises which have no establishment\nor place of business in the PRC, or if established, the relevant dividends or other China-sourced income are in fact not associated with\nsuch establishment or place of business in the PRC. However, the Implementing Rules of the EIT Law reduced the rate from 20% to 10%, effective\nfrom January 1, 2008. However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction\nof the foreign holding companies. For example, pursuant to the *Arrangement Between the Mainland of China and the Hong Kong Special\nAdministrative Region for the Avoidance of Double Taxation on Income*, or the Double Tax Avoidance Arrangement, and other applicable\nPRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions\nand requirements under the Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends that the\nHong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from the tax authority\nin charge.\n\n \n\nBased on the *Notice on\nRelevant Issues Relating to the Enforcement of Dividend Provisions in Tax Treaties*issued on February 20, 2009 by the STA, if the\nrelevant PRC tax authorities determine, at their discretion, that a company benefits from such reduced income tax rate due to a structure\nor arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. The *Announcement of\nthe State Administration of Taxation on Issues concerning “Beneficial Owners” in Tax Treaties*, which was promulgated by\nthe STA on February 3, 2018 and took effect on April 1, 2018, further clarified the analysis standard when determining one’s qualification\nfor beneficial owner status.\n\n* *\n\n95\n\n \n\n* *\n\n*Value-Added Tax*\n\n \n\nPursuant to the *Interim\nRegulations on Value-Added Tax of the People’s Republic of China*, which was promulgated by the State Council on December 13,\n1993 and amended on November 5, 2008, February 6, 2016 and November 19, 2017, and the *Implementation Rules for the Interim Regulations\non Value-Added Tax of the People’s Republic of China*, which was promulgated by the MOF, and STA on December 15, 2008 and became\neffective on January 1, 2009 and as amended on October 28, 2011, entities or individuals engaging in sale of goods, provision of processing\nservices, repairs and replacement services or importation of goods within the territory of the PRC shall pay value-added tax, or the VAT.\nUnless provided otherwise, the rate of VAT is 17% on sales and 6% on services. On April 4, 2018, MOF and STA jointly promulgated the *Circular\nof the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates*, or the Circular 32, according\nto which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates\nshall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such\ntax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing\nof goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to\ntax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and\ncross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be\nadjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular\n32.\n\n \n\nSince November 16, 2011,\nthe MOF and the STA have implemented the *Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax*, or the VAT Pilot\nPlan, which imposes VAT in lieu of business tax for certain “modern service industries” in certain regions and eventually\nexpanded to nation-wide application in 2013. According to the *Implementation Rules for the Pilot Plan for Imposition of Value-Added\nTax to Replace Business Tax*released by the MOF and the STA on the VAT Pilot Program, the “modern service industries”\ninclude research, development and technology services, information technology services, cultural innovation services, logistics support,\nlease of corporeal properties, attestation and consulting services. The *Notice on Comprehensively promoting the Pilot Plan of the Conversion\nof Business Tax to Value-Added Tax*, which was promulgated on March 23, 2016, became effective on May 1, 2016 and amended on July 11,\n2017 and March 20, 2019, sets out that VAT in lieu of business tax be collected in all regions and industries.\n\n** **\n\nOn March 20, 2019, MOF, STA\nand the General Administration of Customs jointly promulgated the *Announcement on Relevant Policies for Deepening Value-Added Tax Reform*,\nwhich became effective on April 1, 2019 and provides that (i) with respect to VAT taxable sales acts or import of goods originally subject\nto VAT rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) with respect to purchase\nof agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase\nof agricultural products for the purpose of production or consigned processing of goods subject to tax rate of 13%, such tax shall be\ncalculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export\ntax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and cross-border\ntaxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to\n9%.\n\n \n\nOn December 25, 2024, The\nSCNPC promulgated PRC Value-added Tax Law, which came into effect on January 1, 2026. According to the PRC Value-added Tax Law, the VAT\nrate for general VAT taxpayers engaging in sale of goods, services, lease of tangible and movable goods or importation of goods was adjusted\nto 13%, the VAT rate for general VAT taxpayers engaging in, among others, the sale of transportation services, postal services, basic\ntelecommunications services, construction services, the lease and sale of real properties, and the transfer of land use rights was adjusted\nto 9%. From the effective date of the PRC Value-added Tax Law, which will be January 1, 2026, the Interim Regulations on Value-added Tax\nof the PRC will be repealed.\n\n** **\n\n96\n\n \n\n** **\n\n**Regulations on Employment and Social Welfare**\n\n \n\nAccording to the *Labor\nContract Law of the People’s Republic of China*, or the Labor Contract Law, promulgated by the SCNPC on June 29, 2007 and amended\non December 28, 2012, and the *Implementation Rules of the Labor Contract Law of the People’s Republic of China*, or the Implementation\nRules of the Labor Contract Law, promulgated by the State Council on September 18, 2008, a written employment contract shall be concluded\nin the establishment of an employment relationship. If an employer fails to enter into a written employment contract with an employee\nwithin one year from the date on which the employment relationship is established, the employer must rectify the situation by entering\ninto a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the day\nfollowing the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the\nwritten employment contract. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations.\nIn addition, if an employer intends to enforce a non-compete provision in an employment contract or noncompetition agreement with an employee,\nit has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiry of the\nlabor contract. Employers in most cases are also required to provide severance payment to their employees after their employment relationships\nare terminated.\n\n \n\nPursuant to the *Social\nInsurance Law of the People’s Republic of China*, which was promulgated by the SCNPC on October 28, 2010, effective on July 1,\n2011 and last amended on December 29, 2018, the *Interim Regulations on the Collection of Social Insurance Fees,*issued by the State\nCouncil on January 22, 1999 and last amended on March 24, 2019, and the *Regulations on the Administration of Housing Provident Funds*,\nissued by the State Council on April 3, 1999 and last amended on March 24, 2019, enterprises in China are required to participate in certain\nemployee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan,\na work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds\nin amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government\nfrom time to time at locations where they operate their businesses or where they are located.\n\n** **\n\n**Regulations on Overseas Listing and M&A**\n\n \n\nOn August 8, 2006, six PRC\nregulatory agencies, including the China Securities Regulatory Commission, or the CSRC, promulgated the *Rules on the Merger and Acquisition\nof Domestic Enterprises by Foreign Investors*, or the M&A Rules, which became effective on September 8, 2006 and were amended on\nJune 22, 2009. The M&A Rules, among other things, require offshore special purpose vehicles formed for overseas listing purposes through\nacquisitions of PRC domestic companies and controlled by PRC domestic enterprises or individuals to obtain the approval of the CSRC prior\nto the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. In September 2006, the CSRC\npublished on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The CSRC approval\nprocedures require the filing of a number of documents with the CSRC. Although (i) the CSRC currently has not issued any definitive rule\nor interpretation concerning whether offerings like ours under this annual report are subject to the M&A Rules, (ii) the company established\nthe WFOEs by means of direct investment and not through a merger or acquisition of the equity or assets of a “PRC domestic company”\nas such term is defined under the M&A Rules; and (iii) no provision in the M&A Rules classifies the contractual arrangements under\nthe VIE Agreements as a type of acquisition transaction falling under the M&A Rules, the interpretation and application of the regulations\nremain unclear. The M&A Rules, and other regulations and rules concerning mergers and acquisitions established additional procedures\nand requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example,\nthe M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control\nof a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact\nnational economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark\nor PRC time-honored brand.\n\n \n\nIn addition, according to\nthe *Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors*issued\nby the General Office of the State Council on February 3, 2011 and which became effective on March 4, 2011, the *Rules on Implementation\nof Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors*issued by the MOFCOM on August\n25, 2011 and which became effective on September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense\nand security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises\nthat raise “national security” concerns are subject to strict review by the MOFCOM, and the regulations prohibit any activities\nattempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.\n\n \n\n97\n\n \n\n \n\nOn February 17, 2023, the\nCSRC, as approved by the State Council, released the Overseas Listing Trial Measures. According to the Overseas Listing Trial Measures,\ndomestic companies in the Chinese mainland that directly or indirectly offer or list their securities in an overseas market, are required\nto file with the CSRC. Specifically, the securities under the Overseas Listing Trial Measures refer to stocks, depositary receipts, convertible\ncorporate bonds, exchangeable bonds and other equity-linked securities to be issued and offered in overseas markets by domestic companies\ndirectly or indirectly, while a direct offering and listing refers to the overseas offering and listing of a joint-stock company incorporated\nin the Chinese mainland, and an indirect offering and listing refers to the overseas offering and listing of a domestic company which\nconducts its business operations primarily in the Chinese mainland, in the name of an offshore company and based on the underlying equities,\nassets, earnings or similar interests of the domestic company. In particular, the determination of an indirect offering and listing will\nbe conducted on a “substance over form” basis, and an offering and listing should be considered as an indirect overseas offering\nand listing by a domestic company if the issuer meets both of the following conditions: (i) any of the revenue, profits, total assets\nor net assets of such domestic company in the most recent financial year account for more than 50% of the corresponding data in the issuer’s\naudited consolidated financial statements for the same period; and (ii) the majority of its business operations are conducted in the Chinese\nmainland or its principal place of business is located in the Chinese mainland, or the majority of senior management in charge of business\noperations are Chinese citizens or have domicile in the Chinese mainland. According to the Overseas Listing Trial Measures, an overseas\noffering and listing is prohibited under any of the following circumstances: (i) if the intended securities offering and listing is specifically\nprohibited by the laws, administrative regulations and relevant national provisions; (ii) if the intended securities offering and listing\nmay constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council\nin accordance with law; (iii) the domestic companies or their controlling shareholders or actual controllers have committed corruption,\nbribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy\nin the past three years; (iv) the domestic companies are currently under investigations in connection with suspicion of having committed\ncriminal offenses or material violations of applicable laws and regulations, and there is still no explicit conclusion; (v) there are\nmaterial ownership disputes over the shareholdings held by the controlling shareholder or the shareholder under the control of the controlling\nshareholder or the actual controllers. According to the Overseas Listing Trial Measures, the issuer or its affiliated domestic company,\nas the case may be, is required to file with the CSRC (i) with respect to its initial public offering and listing and its subsequent securities\noffering in an overseas market different from the market where it has listed, within three business days after its submission of listing\napplication documents to the relevant regulator in the place of intended listing, (ii) with respect to its follow-on offering in the same\noverseas market where it has listed (including issuance of any corporate convertible bonds, exchangeable bonds and other equity-linked\nsecurities, but excluding the offering for employees incentive, dividend distribution by shares and share split), within three business\ndays after completion of such follow-on offering, (iii) with respect to listing by means of single or multiple acquisitions, share swap,\ntransfers of shares and similar transactions, within three business days after its initial filing of the listing application or the first\npublic announcement of the transaction, as case may be. Failure to comply with the filing requirements may result in an order of rectification,\na warning and fines up to RMB10 million to the non-compliant domestic companies, and the directly responsible persons of the companies\nwill be warned and fined between RMB500,000 and RMB5 million. Furthermore, if the controlling shareholder and the actual controller of\nthe non-compliant companies organizes or instigates the breach, they will be fined between RMB1 million and RMB10 million. In addition\nto above filing requirements, the Filings Rules also requires an issuer to report to the CSRC within three business days after occurrence\nof any the following events: (i) its change of control; (ii) its being subject to investigation or sanctions by any overseas securities\nregulators or overseas authorities; (iii) its change of listing status or listing segment; (iv) voluntary or mandatory delisting; and\n(v) material change of its principal business operations to the extent that it ceases to be subject to the filing requirements of the\nOverseas Listing Trial Measures.\n\n \n\nFurthermore, on February\n24, 2023, the CSRC released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities\nOffering and Listing by Domestic Enterprises, or, the Confidentiality Provisions, which came into effect on March 31, 2023. Pursuant to\nthe Confidentiality Provisions, any future inspection or investigation conducted by overseas securities regulator or the relevant competent\nauthorities on our PRC domestic companies with respect to our overseas issuance and listing shall be carried out in the manner in compliance\nwith PRC laws and regulations.\n\n \n\n98\n\n \n\n \n\n**Regulations on Anti-Monopoly**\n\n \n\nThe *Anti-Monopoly Law*promulgated by the Standing Committee of the National People’s Congress which became effective on August 1, 2008 and the *Provisions\non the Review of Concentrations of Undertakings* promulgated by the SAMR which became effective on April 15, 2023 require that transactions\nwhich are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the SAMR before they can be\ncompleted. Where the participation in concentration of undertakings by way of foreign-funded merger and acquisition of domestic enterprises\nor any other method which involves national security, the examination of concentration of undertakings shall be carried out pursuant to\nthe provisions of this law and examination of national security shall be carried out pursuant to the relevant provisions of the state.\nFailure to comply with above regulations may result in an order to stop concentration, dispose the shares/assets or transfer the operation\nwithin a stipulated period, or adopt other necessary measures to reinstate the preconcentration status, or fines.\n\n \n\nOn October 23, 2021, the\nSCNPC issued a draft of the amended Anti-Monopoly Law for public comments. On June 24, 2022, *the Decision of the Standing Committee\nof the National People’s Congress on Revising the Anti-monopoly Law of the People’s Republic of China*, or the Revised\nAnti-monopoly Law was released, which became effective on August 1, 2022. According to the Revised Anti-monopoly Law, the fines for illegal\nconcentration of business operators have been increased to no more than ten percent of its last year’s sales revenue if the concentration\nof business operator has or may have an effect of excluding or limiting competitions; or a fine of up to RMB5 million if the concentration\nof business operator does not have an effect of excluding or limiting competition. The Revised Anti-monopoly Law also stipulates that\nthe relevant authority shall investigate a transaction where there is any evidence that the concentration has or may have the effect of\neliminating or restricting competitions, even if such concentration does not reach the filing threshold. And in order to adapt the Revised\nAnti-monopoly Law, on March 10, 2023, the SAMR issued* *the *Provisions on Prohibition of the Abuse of Market Dominance*,\nwhich took effect on April 15, 2023.\n\n \n\nOn February 7, 2021, the\nAnti-Monopoly Commission of the State Council issued the *Anti-Monopoly Guidelines for the Internet Platform Economy Sector* that\naims to specify some of the circumstances under which an activity of internet platforms may be identified as monopolistic as well as to\nclarify that concentration of undertakings involving VIE structure shall also be subject to anti-monopoly review.\n\n** **\n\n**Regulations on Anti-Long-Arm Jurisdiction**\n\n \n\nThe MOFCOM issued the *Provisions\non the List of Unreliable Entities*, or the MOFCOM Order No. 4 of 2020, on September 19, 2020. Pursuant to the MOFCOM Order No. 4 of\n2020, the working mechanism shall, according to the investigation results and by taking the following factors into comprehensive consideration,\ndecide whether or not to include a foreign entity concerned in the list of unreliable entities, and make an announcement on such inclusion:\n(i) the extent of damage caused to China’s sovereignty, security and development interests; (ii) the extent of the damage to the\nlegitimate rights and interests of Chinese enterprises, other organizations or individuals; (iii) whether or not the international economic\nand trade rules are followed; (iv) other factors that shall be taken into consideration. If a foreign entity is included in the list of\nunreliable entities, the working mechanism may decide to take one or more of the following measures: (i) restricting or prohibiting the\nforeign entity from engaging in import or export activities related to China; (ii) restricting or prohibiting the foreign entity’s\ninvestment within the territory of China; (iii) restricting or prohibiting the entry of the foreign entity’s relevant personnel\nor transport vehicles into the territory of China; (iv) restricting or canceling the work permit, stay or residence qualification of the\nforeign entity’s relevant personnel in China; (v) imposing a fine corresponding to the seriousness of the case against the foreign\nentity; and (vi) other necessary measures.\n\n \n\nOn January 9, 2021, the MOFCOM\npromulgated the *Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures*, or\nthe MOFCOM Order No. 1 of 2021. Pursuant to the MOFCOM Order No. 1 of 2021, where a citizen, legal person or other organization of China\nis prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with\na third state (or region) or its citizens, legal persons or other organizations, he/she/it shall truthfully report such matters to the\ncompetent department of commerce of the State Council within 30 days. The working mechanism will take the following factors into overall\naccount when assessing whether there exists unjustified extra-territorial application of foreign legislation and other measures: (i) whether\ninternational law or the basic principles of international relations are violated; (ii) potential impact on China’s national sovereignty,\nsecurity and development interests; (iii) potential impact on the legitimate rights and interests of the citizens, legal persons or other\norganizations of China; (iv) other factors that shall be taken into account. If the working mechanism determines that there exists unjustified\nextra-territorial application of foreign legislation and other measures, MOFCOM may issue an injunction that the relevant foreign legislation\nand other measures shall not be accepted, executed or observed. A citizen, legal person or other organization in China may apply for exemption\nfrom compliance with an injunction.\n\n \n\n99\n\n \n\n \n\n**4.C. Organizational Structure**\n\n \n\nThe following diagram illustrates\nour corporate structure, including our principal subsidiaries and VIEs, as of the date of this annual report.\n\n \n\n \n\n*Notes:*\n\n \n\n \n \nEquity interest\n\n \n \n \n\n \nContractual arrangements, including the exclusive technical consulting and service agreement, intellectual property license agreement, equity pledge agreement, exclusive call option agreement, shareholders’ voting rights proxy agreement and loan agreement. See *“Item 3. Key Information-Contractual Arrangements with the VIEs and Their Respective Shareholders.”*\n\n** **\n\n**4.D. Property, Plant and Equipment**\n\n \n\nWe are headquartered in Shanghai.\nAs of March 31, 2026, we did not have any self-owned properties, and we leased 11 properties with an aggregate gross floor area of approximately\n3,466 square meters in China, which are primarily used as office building and warehouse. We believe our existing properties are adequate\nfor current operational needs, but we expect to seek additional space to accommodate our future growth."}