A.History and Development of the Company Our Company We are a holding company incorporated in the Cayman Islands and conduct our business through our subsidiaries and the consolidated variable interest entities in China. We started our operations in August 2008 when our founders established Vipshop Information in China. In order to facilitate foreign investment in our company, our founders incorporated Vipshop Holdings Limited, an offshore holding company in Cayman Islands, in August 2010. In October 2010, Vipshop Holdings Limited established Vipshop International Holdings Limited, a wholly-owned subsidiary, in Hong Kong. Subsequently, Vipshop International Holdings Limited established a wholly-owned PRC subsidiary, Vipshop China, in January 2011 and a wholly-owned PRC subsidiary, Chongqing Pinwei, in March 2024. Along with the growth of our mobile active customers and mobile service offerings, Vipshop China formed Guangzhou Pinwei Software Co., Ltd. in 2012 as a research and development center to focus on our mobile product and solutions. To support our regional business expansion, Vipshop China established a number of wholly-owned PRC subsidiaries that focus on warehousing services, retail business, product procurement, as well as software development and information technology support over the years since 2011. As of December 31, 2025, we mainly rely on Chongqing Pinwei and a number of significant subsidiaries of Vipshop China for our business operations. Foreign ownership of internet-based businesses is subject to significant restrictions under current PRC laws and regulations. The PRC government regulates internet access, the distribution of online information, and the operation of online commerce through strict business licensing requirements and other government regulations. We, as a Cayman Islands company, and our PRC subsidiary Vipshop China, as a WFOE, are both restricted from holding the licenses that are necessary for our online operation in China. To comply with these restrictions, our online retail channels are operated by the consolidated variable interest entities in China. As a result of our efforts to streamline our contractual arrangements among the consolidated variable interest entities in the past, Vipshop E-Commerce currently holds the primary licenses necessary to conduct our internet-related operations of our online retail channels in China. We face risks associated with our corporate structure, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure” for details. Our principal executive offices are located at 128 Dingxin Road, Haizhu District, Guangzhou, Guangdong 510220, People’s Republic of China. Our telephone number at this address is +86 (20) 2233-0025. Our registered office in the Cayman Islands is located at the office of International Corporation Services Ltd, P.O. Box 472, 2nd Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands. Our website is https://www.vip.com. The information on our websites should not be deemed to be part of this annual report. All information filed with the SEC can be obtained over the internet at SEC’s website at https://www.sec.gov. B.Business Overview We operate as an off-price retailer, offering a broad spectrum of high-quality branded products at deep discounts. Our product offerings include womenswear and menswear, sportswear and sporting goods, baby and children products, shoes and bags, skincare and cosmetics, supermarket and other products, and home goods and other lifestyle products from desirable domestic and international brands. As of December 31, 2025, we had 312.1 million cumulative customers, and promoted and sold products for over 52,000 popular domestic and international brands. Our GMV increased from RMB208.0 billion in 2023 to RMB209.3 billion in 2024, and further increased to RMB213.5 billion in 2025. The total orders were 812.3 million, 757.5 million and 732.4 million in 2023, 2024 and 2025, respectively. With our dedicated operations in the off-price retailer industry and through our continuous innovations to stimulate customers’ excitement in their shopping experience, we have accumulated a large number of highly engaged and loyal customers. The total number of our active customers was 87.4 million, 84.7 million and 84.8 million in 2023, 2024 and 2025, respectively. Our active Super VIP customers increased from 7.6 million in 2023 to 8.8 million in 2024, and further increased to 9.8 million in 2025. We are the first company in China to introduce “flash sale,” an online retail format that transforms how off-price products are transacted. Over the years, we have refined our business operations through innovation and commitment to quality. Today, Vipshop has become a byword for quality branded products, value-oriented offerings and reliable service. By integrating value-conscious shopping with quality experiences, we have created a contemporary approach to quality living, making every purchase at Vipshop a practical choice for a better life. 60 Table of Contents Merchandising Capability As an established off-price retailer, we have cultivated our unique merchandising capabilities. Our Professional Merchandising Team We believe that merchandising expertise is a key element in exercising our merchandising practices. To implement our merchandising practices in a strict and methodical manner, we established a professional merchandising team in 2008. As of December 31, 2025, our merchandising team consisted of over 900 specialists. Our merchandising team is responsible for sourcing authentic high-quality branded products at deep discounts in alignment with our selection guidelines, while constantly adapting to shifting consumer and market trends. Our merchandising team demonstrates deep expertise in identifying emerging trends, managing price volatility, and executing comprehensive category planning, product selection, and pricing strategies. Their sharp market intuition and analytical capabilities allow them to anticipate shifts in consumer behavior and optimize procurement decisions accordingly. We optimize organizational structure of our professional merchandising team from time to time to stay abreast of market trends. To foster innovation and agility, we have designed a decentralized structure that grant our merchandising specialists significant operational autonomy to respond swiftly to local demand and seize opportunities driven by value. To source globally, we have established a global division with merchandising specialists deployed across Europe, North America, and Asia. We also unveiled the manifesto of our global merchandising specialists, highlighting the merchandising teams’ commitment to certain core principles in merchandising. Our Core Merchandising Strategy Our core merchandising strategy is to differentiate through unique offering and superior value. Brand Partners and Brand Selection We have cultivated a broad and diverse group of brand partners. Our brand partners primarily include brand owners, and, to a lesser extent, brand distributors and resellers. As of December 31, 2023, 2024 and 2025, we had worked with over 29,000, 30,000, and 32,000 brand partners, respectively. In 2023, 2024 and 2025, none of the brands accounted for more than 3% of our total revenues, ensuring a diversified and resilient supply base. Leveraging the industry expertise of our professional merchandising team and our proprietary consumer insights, we carefully select prospective brand partners and work with those that offer high-quality or premium products that are desirable among consumers in China, and that are willing to provide competitive prices and favorable payment and product return terms. In addition to brands that have an established network of offline stores in China, we also proactively introduce new and up-and-coming brands that appeal to younger generations and middle-class consumers, such as trendy and boutique brands, and the prestigious brands that have not been introduced to our platform. Once a potential brand partner is identified, we conduct due diligence reviews on its qualifications, including whether it holds the proper business operation licenses, safety, sanitary and quality certifications, trademark registration certificates, and license agreements in relation to the branded products. This review process helps ensure that we maintain a portfolio of brands with high standards and a good reputation that can meet our customers’ expectations. Differentiated Merchandise Offering We have been making efforts to differentiate our offering. For example, we collaborate with our brand partners to develop merchandise specifically for our channels, known as “Made for Vipshop,” providing our customers differentiated products that are only available on Vipshop. In 2025, over 250 brands participated in the “Made for Vipshop” program. We also implement opportunistic buying, wherein we strategically purchase excess inventory directly from brands at reduced prices. Through this outright purchase approach, we acquire full ownership of these authentic branded goods, enabling us to offer them exclusively at discounts. Our professional merchandising team seeks out market dynamics and brand inventory situations worldwide, identifying purchasing opportunities that align with consumer preferences. 61 Table of Contents Quality Assurance In addition to our merchandising strategy, we have adopted stringent quality assurance and control procedures for products delivered through our logistics network. We have put in place and implemented a comprehensive quality and safety control system across the pre-sale, during-sale, and after-sale stages. We inspect products delivered to our logistics network, rejecting or returning products that do not meet our quality standards or the purchase order specifications. We also inspect products before shipment from our logistics network to our customers. In addition, we take sampling quality inspection from time to time of the products that are allowed to be shipped from the suppliers’ warehouses directly to our customers. As part of our quality assurance framework, we maintain direct sourcing relationships with brand owners and authorized distributors and conduct strict screening of supplier qualifications. In October 2023, we entered into a strategic partnership with China Certification and Inspection Group to collaborate on consumer product quality inspection and certification and corporate social responsibility, among other things. In 2025, we deepened this collaboration by stationing professional authenticators from China Certification and Inspection Group Luxury Goods Authentication Center at our warehouses in Huzhou and Zhengzhou to conduct pre-sale authentication of high-end consumer goods, with the goal of progressively extending individual authentication reports to every item. This marks a transformative shift from traditional post-sale sampling to pre-sale authentication, enhancing consumer trust and setting a new industry benchmark for quality assurance. Our Retail Channels We have developed diverse online and offline retail channels. Our Online Channels Our online channels primarily include the Vipshop mobile app, the vip.com website, and the Vipshop WeChat Mini-Program, each of which is owned and operated by us. We offer a curated selection of products and services through our online channels for shoppers of varying age groups and income levels throughout China. In 2023, 2024 and 2025, we generated more than 96% of our net revenues from our online channels (i.e., from our vip.com segment). The Vipshop mobile app, available on mainstream mobile operating systems including iOS and Android since 2011, is our top online portal in terms of GMV generated and the numbers of registered members. We have been upgrading the Vipshop mobile app, adding new features from time to time to increase our customer stickiness and engagement. In 2023, 2024 and 2025, GMV generated by our Vipshop mobile app users accounted for approximately 90% of our total online GMV. The vip.com website has been with us since our inception. It is an integral part of our online channels by providing an alternative access point for customers to browse and purchase our merchandise, alongside our Vipshop mobile app and Vipshop WeChat Mini-Program. Our Vipshop WeChat Mini-Program, which we launched in 2017, offers key features of our Vipshop mobile app and allows users to access our platform directly through the WeChat App, either through the Mini-Program interface or the WeChat Pay and Services interface. 62 Table of Contents Below is a screenshot of the main interface of our Vipshop mobile app solely for illustrative purpose. ​ 63 Table of Contents Flash Sales Our online channels feature “flash sales,” an innovative online retail format that we introduced in China in 2008. Flash sales combine online retail with discounted sales by offering a limited quantity of high-quality branded products at deep discounts for a short period of time. Before each flash sales event, our professional merchandising team analyzes historical patterns, fashion trends, seasonality, and customer feedback to curate a balanced and diverse product mix. We leverage consumer insights from our business intelligence systems to enhance the timeliness and relevance of our offerings, enabling us to select appealing products, negotiate favorable terms, and occasionally secure items available exclusively on Vipshop. Flash sales embody characteristics of value, quality, and convenience that are well suited for brand-conscious Chinese consumers. We host new sales events twice a day at 10 a.m. and 8 p.m. Beijing time, respectively, presenting curated selections of popular branded merchandise through our prime traffic portals Fengqiang and Kuangmiao. The products we offer on Fengqiang are generally apparel-related products with a discount level of 70% or more off the market retail price. Kuangmiao, on the other hand, generally distributes standardized products, such as skincare and cosmetics, home goods, and other lifestyle products, with a discount level ranging from 10% to 90% off the market retail price. Each item is available in limited quantity and remains on sale only while supplies last, with purchase quantity limited to provide more customers with the opportunity to access these featured discounted products. We enhance our customer shopping experience by optimizing our signature sales events, including Super Product Category Day, Super Brand Day, and Today’s Top Brands. These events serve as effective touchpoints for customer acquisition and retention. To help customers discover products easily, we organize our merchandise through various product category channels covering womenswear and menswear, sportswear and sporting goods, baby and children products, shoes and bags, skincare and cosmetics, supermarket and other products, and home goods and other lifestyle products. We have also developed specialized channels such as Everyday Low Prices for value-conscious customers, while our Luxury and Outlet channels cater to customers who desire new, trendy, premium designers and luxury brands at affordable prices. Features and Functions Our online channels are designed to deliver an online shopping environment that blends convenience with personalization. Our online channels offer many features that enhance customer experience, including AI-powered searches, personalized recommendations, AI customer service agent, and other innovative functions that simulate “in-store” shopping experience. ● AI-powered search engine: An AI-powered search engine has been embedded in our online channels. Our AI-powered search engine can understand customer intent, recognizing search patterns and product associations to deliver relevant results even with limited input. Our AI-powered search engine learns from customer interactions, refining its capabilities to anticipate shoppers’ needs with increasing accuracy. ● Personalized recommendations: Supported by the experience that we have amassed from our operations, we are able to garner insights into evolving market preferences and construct an understanding of each individual customer by analyzing individual shopping histories, browsing patterns, and preference indicators. These insights, processed through our data analytics and AI-powered recommendation engines, allow us to update our brand mix and product offerings on a timely basis to better catch market trends and curate tailored product suggestions. ● AI customer service agent: Powered by AI, our AI customer service agent is designed to enhance shopping experience and operational efficiency. Leveraging advanced technologies, our AI customer service agent assists pre-sales consultation, provides smart recommendation, and handles after-sales inquiries. ● Other innovative functions: On top of these features, our online channels also incorporate other innovative functions and features from time to time. For example, we developed and launched an AI virtual try-on feature called “Try it on,” which provides customers with real-time outfit visualization effects utilizing image AI algorithms. Furthermore, we are actively integrating AIGC (AI-Generated Content) to streamline content creation and enrich the customer journey. This includes generating diverse and realistic AI-powered model photography to showcase products, creating compelling product highlights efficiently, and automatically synthesizing customer feedback into concise, easy-to-digest summaries of product reviews. These applications allow us to present products more vividly and help customers make more informed purchasing decisions. 64 Table of Contents Our Offline Channels In addition to our online channels, we operate a nationwide offline network consisting of 22 Shan Shan Outlets and a number of other offline retail stores as of December 31, 2025. Complementary to our online channels, these offline stores offer popular branded products at discounts, capturing the consumers who prefer to try on and physically interact with products. Shan Shan Outlets In July 2019, we acquired Shan Shan Outlets, which has since evolved under our management into a significant player in China’s outlet groups. Shan Shan Outlets is dedicated to the development and operation of high-quality outlet complexes. With years of deep industry experience, Shan Shan Outlets absorbs management practices from international outlet industries while adapting to Chinese consumer characteristics and preferences. Shan Shan Outlets has introduced an “Outlets +” concept that goes beyond traditional retail, positioning its outlet malls as “daycation destination” that integrate entertainment experiences, family interactive spaces, dining, and diverse business formats alongside its core “brand + discount” retail offering. Shan Shan Outlets partners with premium international and domestic brands to offer quality branded products at significant discounts. The product categories primarily include luxury international brands, sports and outdoor brands, and well-known domestic brands. ​ 65 Table of Contents We operate Shan Shan Outlets primarily through joint operation and leasing models. Under the joint operation model, we provide venue and unified management to brands and charge brands based on contractually agreed deduction rates applied to actual sales revenue. We are responsible for organizing marketing planning and providing unified payment settlement and customer services, among other key functions of the outlets. The leasing model employs three pricing mechanisms: fixed rental rates, percentage-based rent calculated on brands’ sales turnover, or the higher of fixed rent or percentage rent. Under both models, we charge property management fees, data management fees, and promotional service fees to maintain outlet operations and support marketing activities. Vipshop Offline Stores We also directly operate our Vipshop offline stores to sell off-price products to offline consumers. The offline stores serve as an extension and complements to our online business, sharing brand resources and reinforcing the “off-price retail” positioning in consumers’ minds. As of December 31, 2025, we had 46 directly-operated Vipshop offline stores nationwide, including in Guangzhou, Wuhan, Chongqing, Chengdu, and Beijing, among others. Our Customers We have an engaged and loyal customer base. We provide shoppers with a curated assortment of authentic high-quality branded products at discounts, bringing a “treasure-hunting” shopping experience on our platform. We had active customers of 87.4 million, 84.7 million and 84.8 million in 2023, 2024, and 2025, respectively. Super VIP Members We have rolled out our Super VIP Membership (SVIP), a dedicated membership program, that entitles paid members to enjoy premium services alongside their shopping experience. Our active SVIP customers increased from 7.6 million in 2023 to 8.8 million in 2024, and further increased to 9.8 million in 2025. They tend to possess strong purchasing power and are more willing to make frequent purchases of high-value items on our platform. 66 Table of Contents Our SVIP members constitute a customer segment with demonstrated willingness to invest in annual membership fees in exchange for exclusive membership privileges. These exclusive membership privileges available to our SVIP members include, but are not limited to, unlimited free shipping, exclusive discounts, private special sales, and 24/7 VIP customer service. We also offer our SVIP members a wide variety of popular lifestyle benefits, covering local services, entertainment, and leisure, among others. The standard list price of our SVIP membership is typically at RMB199 for one year. We also offer discounted price for membership package subscriptions that are automatically renewed. Furthermore, we also offer joint memberships from time to time with selected popular entertainment platforms and lifestyle brand, to further promote our SVIP members. 67 Table of Contents Procurement and Inventory Management Procurement We seek to build long-term relationships with qualified brand partners. We generally enter into agreements with brand partners based on our standard form, in which brand partners grant us authorization to market and sell certain brands products on our online channels. In most cases, we enter into annual framework agreements with our brand partners, with supplemental purchase orders for sales events. We implement a variety of flexible procurement practices, coupled with our fulfillment solutions. We regularly communicate with our brand partners to discuss the schedules and product offerings for specific sales events. In addition, we require our brand partners that contract with us to comply with the anti-bribery and anti-corruption provisions specifically included in such agreement. Inventory Management We typically do not pay any deposit on the products we purchase. We generally settle with our brand partners every 10 to 30 days for purchases made within a certain period of time net of customer returns. We generally have the right to return unsold items within a period of time after the end of a sales event. For certain types of products such as certain sporting goods, beauty products, and cross-border products, we typically do not have the right to return unsold items to brand partners. For these unreturnable products, we have been able to leverage our strong marketing expertise regarding customer preferences to achieve quick inventory turnover. Additionally, we can continue to sell any excess inventory through our Vipshop offline stores. We have implemented an inventory management system to manage the information relating to our procurement plan, quality control upon receipt, stock maintenance, stock deliveries, sales invoicing, and sales recording. We use a big data business analysis system to monitor and actively track sales data. This system helps us make timely adjustments to our procurement plan and minimize excess inventory. Payment, Fulfillment, and Return Payment We provide our customers with the flexibility to choose from a number of payment options. Our payment options include our Vipshop Payment service and payment through third-party channels. We have obtained the requisite Payment Business License to provide our Vipshop Payment service. All of our online orders are collected through online payment services. Fulfillment We have established a logistics network and warehousing capacity with nationwide coverage. We have adopted a flexible logistics model supported by our robust and advanced warehouse management system. We work with top delivery companies with nationwide coverage. Logistics Network and Warehouse Management System We maintain seven regional distribution centers to facilitate the distribution of standardized and frequently purchased products and several bonded warehouses in China. 68 Table of Contents Our proprietary automated warehouse management system enables us to closely monitor each step of the fulfillment process, from when a purchase order is confirmed with a brand partner, to when the products are stocked in our logistics network, and eventually when the product is packaged and picked up for shipment to the customer. We have continually focused on implementing new initiatives to refine our automated warehouse management system throughout our operations. For example, we have implemented the honeycomb system, an automated goods-to-person warehousing system well-suited for handling large quantities with high access speeds, in our South China, Southwest China, and East China regional distribution centers to improve picking efficiency and accuracy of consumers’ orders. As we offer a curated selection of brands and products for each daily sale, our logistics network and inventory management systems are also specifically designed to support the frequent sales events on our flash sales platform and a large volume of inventory turnover. In 2023, 2024 and 2025, substantially all of the logistics services used either “just-in-time” model or “just-in-time X” model. The “just-in-time” model allows some of our suppliers to load inventories to our warehouses only within a period of time after being notified when orders have been generated. Compared to the traditional bulk load-in and bulk load-out model, the “just-in-time” model enables us and our suppliers to increase the number of products offered on our platform and further diversify our product offerings. The “just-in-time X” model, which is an upgrade from the “just-in-time” model, allows single-supplier orders from certain reliable brand partners to be shipped directly from the suppliers’ warehouses to the end customers, further improving our logistic efficiency. Delivery Services We deliver orders placed on our online channels to all areas in China through reputable third-party delivery companies with nationwide coverage, such as SF Express. We have entered into a strategic business cooperation agreement with SF Holding (which operates the SF Express business) to enhance cooperation and utilize its delivery services to optimize the efficiency of our logistics operations, improve operating leverage in our fulfillment expenses, and provide our customers with quality delivery services. For luxury goods orders, we deliver the products with an “anti-tampering lock” device to further enhance customer trust. We leverage our large-scale operations and reputation to obtain favorable contractual terms from third-party delivery companies. To reduce the risk of reliance on any single delivery company, we work with most of the major delivery companies in China. We regularly monitor and review the delivery companies’ service quality and their compliance with our contractual terms. Return and Exchange Policy We generally offer our customers the right to return or exchange products purchased from our online channels within seven days of receipt of the products as long as the products are unused, unwashed, unworn, undamaged, and in their original packaging and original condition. To facilitate the return or exchange, and to enhance customer experience, we provide door-to-door collection and free return or exchange services without charging any service or warehousing fee. For the return of luxury products, the anti-tampering lock on the product must remain intact. For purchases through our offline channels, we generally offer our customers the right to return or exchange products within 15 days of purchases. We believe that our hassle-free return and exchange policies help increase customer spending and enhance customer loyalty. Price Assurance To enhance the shopping experience of our customers, we have established a price assurance policy to allow qualified customers to receive compensation for price differences in the event that the price of the product at our platform experiences a decrease within a certain period of time after the purchase. We post our price assurance policy, including its applicable exceptions, on our platform and label the qualified products accordingly to make sure our customers are well informed of our price assurance arrangements. 69 Table of Contents Customer Service We believe that our emphasis on customer service enhances our ability to maintain a large and loyal customer base and create a positive customer experience, encouraging repeat visits and purchases. We have a dedicated customer service team responsible for handling general customer inquiries and requests, assisting customers with their ordering process, investigating the status of orders, shipments, and payments, resolving customer complaints, and providing other after-sales services. Our customers can contact customer service representatives through our customer service hotline, real-time online chat, or our customer service e-mail. Our Super VIP members enjoy 24/7 customer service support. We also engage certain high-quality third-party service centers to undertake certain customer services for us. As of December 31, 2025, we had over 1,800 customer service personnel, including independent contractors. With a specialized team dedicated to effectively tackling customer concerns, we strive to align closely with customer expectations and sentiments. We maintain service quality by carefully selecting personnel, providing our customer service representatives with extensive training, and regularly monitoring and evaluating the performance of each representative. Each new customer service representative is required to complete a mandatory training program in Guangzhou, conducted by experienced managers, covering product knowledge, complaint handling, service attitude, and communication skills. To facilitate timely resolution of customer complaints, we also train and delegate our customer service representatives to resolve complaints and remedy situations within a specified authorized amount without having to get approval from their supervisors. We have also developed AI customer service agents to provide intelligent customer service to our customers. Marketing Our business model and associated value propositions help us build a large base of active customers. We continue to enhance the engaging and discovery-driven nature of our customer shopping experience to promote word-of-mouth referrals and repeat customer purchases through on our online channels. We leverage various marketing channels, especially digital marketing channels, to strengthen our brand awareness, acquire new customers, and retain existing customers. We utilize our big data analytics and insights from our large customer base and business intelligence system to refine our targeted marketing initiatives. For example, we launched social campaigns, such as SVIP special sessions to give customers more benefits and increase customer interaction. In addition, we proactively expanded targeted marketing, and adopted various marketing campaigns such as advertising in TV series and reality shows and marketing on new media channels to keep customers informed of our latest promotional offerings and our Vipshop brand. Furthermore, we encourage our customers to share their shopping experiences through an “easy-to-share” function on social media platforms in China, such as WeChat, which can increase their customer stickiness while also serving as a means to attract new customers. Moreover, some of our offline stores are making efforts to utilize private domain traffic by operating their own WeChat groups and provide direct marketing to consumers. Technology Our technological capabilities play an important role in the success of our business, and enable us to enhance operating efficiency and site scalability. We rely on a combination of our internally developed proprietary technologies, open-source solutions, and licensed technologies to optimize every aspect of our operations for the benefit of our customers and brand partners. Technology-driven Analytical Capabilities We have accumulated a large customer base and observed customer behavior and performance throughout our operations. Our big data analytics and business intelligence systems enable us to use our proprietary transaction information to further analyze and study customer behavior and customer preferences. We regularly use this information in planning our marketing initiatives for upcoming events and making profile-based personalized recommendations to enhance our customers’ shopping experiences. For instance, the customer profiles allow us to provide personalized product recommendations to customers that are within their price range, suit their brand preference, and are within their categories of interest. We also use customer profiles in various scenarios for our sales initiatives to interact with its customers, such as notification via push method, text messages, e-mails, and sales events on our WeChat Mini-Program and other social media platforms. In addition, we have developed a real-time customer-intent identification system, which employs proprietary algorithm technologies with recent and real time customer behavioral data to provide recommendations to customers based on the different intentions of customers visiting our platform. Furthermore, our business intelligence system is built with our proprietary cloud computing infrastructure, providing insights for many aspects of our business operations and site functionalities. 70 Table of Contents System Infrastructure Our systems can be divided into front-end, mid-end, and back-end modules, all built on a foundational infrastructure platform that integrates cutting-edge technologies, such as cloud computing, big data analytics, and AI. Together, they form a reliable technology ecosystem that optimizes customer experiences and supports efficient business operations. The front-end modules, which refer to modules supporting the customer-interfaces of our online channels, mainly include customer account management, SVIP membership program, product display, category browsing, AI-powered product search and recommendation, promotion management, online shopping cart, order processing functions, payment, chatbots, and customer support functions. The front-end modules are supported by our multi-IDC (internet data center) cloud platform and deployed across data centers, providing our customers with quick access to the product display they are interested in and facilitating a smooth online shopping experience. Please see “—Payment, Fulfillment, and Return—Fulfillment” for details. The mid-end modules, which refer to modules supporting the merchant platform that we have launched to equip our brand partners with refined analysis and insights as well as all-round operating capacities, deepen the synergies between our brand partners and us, and further improve operating performance. The merchant platform is an output of our proprietary big data analytics and business intelligence capacities. It enables our brand partners to establish their own data analytics infrastructure and diversify their operations monitoring metrics, through which they can fine tune the marketing and branding strategies tailored for target customer groups, optimize their operating strategies, establish additional touchpoints to effectively direct customer traffic, and set up membership programs to further enhance customer loyalty. The merchant platform allows our brand partners and ourselves to simultaneously focus on improving customer growth and experience while optimizing each other’s business operations, in turn serving as an additional value proposition that we offer to our brand partners. With such simultaneous development, we strengthen our relationships with the brand partners and open up more opportunities to pursue further in-depth collaborations. The back-end modules, which refer to modules supporting our business operations, mainly include customer service, supply chain management, ERP, warehouse and logistics management, product information management, business intelligence, and administration management systems. Our customer service system integrates intelligent customer service robot to provide sentiment analysis and intelligent query handling. Our supply chain management system integrates business operations with brand partners on contract management, procurement, product management, inventory management and order fulfillment mainly consists of our customer relationship management system. Our ERP system acts as the core of our financial operations, efficiently managing accounting, fiscal management, and seamless financial workflow integration. Our operations system for warehouse and logistics management primarily consists of our warehouse management system, automating our warehouse and logistics operations and allowing us to efficiently manage our inventories, track our products, and deliver the orders to our customers in a timely fashion. We have designed our product information management system to perform a variety of functions. Other than basic product information management, it also offers category, pricing, and sales inventory management, and facilitates product lifecycle management for our online and offline businesses. These systems enhance the efficiency of our operations. Artificial Intelligence We leverage AI capabilities to serve customers and brand partners. We apply AI technology to multiple scenarios, with a primary focus on improving customer experiences, serving our brand partners, driving business growth, and increasing operational efficiency. AI technology supports our search engine and personalized recommendations to improve their relevance and accuracy, helping us to better understand customer behavior patterns and transaction decision processes. Through customer stratification and differentiated product offering, AI optimizes search efficiency and experience while enhancing recommendation diversity. We have also incorporated AI-generated content (AIGC), such as product highlights, photos and videos across our platform to enhance the overall shopping experience. In addition, we use AI to produce outfit recommendation content that provides personalized shopping suggestions, as well as virtual try-on optimizations. Furthermore, with the assistance of AI, our intelligent customer service systems have refined conversational capabilities in pre-sale consultations, product recommendations, and after-sales support. We also leverage AI to enhance marketing efficiency through intelligent product selection and creative strategy generation for advertising placement channels. Our AI tools empower us with data-driven in-depth insights into customer behavior and business management, enabling us to uncover critical business trends and patterns and provide our brand partners with quality service and value. As we progress, we will continue exploring opportunities to incorporate AI technology throughout our ecosystem. 71 Table of Contents Safety and Scalability We have developed disaster tolerant systems for our key business modules, which include real-time data mirroring, daily data back-up, and system redundancy solutions. We also adopted a “DevOps” software development methodology that automates and integrates software development and IT operations, which enables us to respond quickly towards business requests, significantly decreasing our development cost and improving our time-to-market. Our site is built upon real event processing platforms, and it leverages service-oriented architecture supported by internally developed cloud solutions. This enables us to achieve internal efficiency. Cybersecurity is another key aspect of site operations. Leveraging the real-time event processing systems that keep our site running smoothly, we have improved our protection against online and offline fraud and potential cyber-attacks. We believe that our module-based systems are highly scalable, which enables us to quickly expand system capacity and add new features and functionality to our systems in response to the evolving needs of both our business and our customers without affecting the operation of existing modules. Data Privacy and Security We are committed to protecting our customers’ personal information and privacy. During our ordinary course of business, we may collect and use customer data, which could include personal information (such as mobile phone number, gender, and age), transactional information (such as purchase records and orders on our platform), and device information. We collect the personal information and data necessary for the use of our platform and use the collected information and data solely for the stated purposes disclosed to the customers or in accordance with the applicable laws and regulations. We notify customers and obtain their prior consent about how we collect and use their personal information and data in compliance with the requirements of the applicable laws and regulations. We have established and implemented internal policies on all aspects of data lifecycle management, including data collection, processing, and usage, to secure and protect data over its entire use to our business and services. To ensure the confidentiality and integrity of our data, we maintain comprehensive and rigorous data security policies and measures. We take technological measures to ensure the secure processing, transmission, and use of data. These technological measures include encryption of confidential personal information and data masking for de-identification, for example, replacing certain digits in a data field with special symbols. We have also established stringent internal protocols under which we grant classified access to confidential personal data only to limited number of employees with access authorization. We maintain data storage servers across multiple provinces and cities in mainland China, including Guangdong, Beijing, Jiangsu, Zhejiang, Hubei, Tianjin, Liaoning, Shaanxi, and Sichuan. We also have servers in Hong Kong and Singapore. In particular, servers located in Hong Kong are used to support overseas employees’ operations and cross-border network routing without storing personal information, whereas servers located in Singapore are used to facilitate overseas e-commerce operations. We have built a backup system that runs on different servers to minimize the risk of data loss. Our back-end security system handles malicious attacks to safeguard the security of our data. See “Risk Factors—Risks Relating to Our Business and Industry—Our business is subject to complex and developing laws and regulations regarding cybersecurity and data privacy. Any failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, increased cost of operation, or declines in customer growth or engagement, or otherwise harm our business.” We store data generated from domestic business on our local servers within the PRC. We transfer personal information of users, such as delivery details, to overseas merchants and customs clearance service providers to facilitate cross-border services. This falls under the exemption scenario outlined in Article 5 of the Provisions on Promoting and Regulating Cross-Border Data Flows, which states that the provision of personal information to overseas recipients is exempt from the requirements of conducting a data export security assessment, entering into standard contractual clauses, or obtaining personal information protection certification if it is necessary for the conclusion or performance of a contract to which the individual is a party, such as in the case of cross-border shopping or international mail delivery. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Relating to Information Security” for cross-border data transfer regulations of the PRC. As of the date of this annual report, we had not experienced any leakage of personal information, nor had we been subject to any claims by customers or received any regulatory inquiries, investigations, notices, warnings, penalties, litigations or other legal proceedings related to personal information protection laws, which, individually or in the aggregate, have had or are reasonably likely to have a material and adverse impact on our business, financial condition or results of operations. 72 Table of Contents Environmental, Social, and Governance (ESG) We are committed to promoting corporate social responsibility and sustainable development as well as integrating these principles into all major aspects of our business operations. In 2025, we scored 60 on S&P Global’s Corporate Sustainability Assessment, placing us in the 95th percentile of our industry. We have been included in the S&P Global Sustainability Yearbook (China Edition) for four consecutive years. Moreover, we bagged the titles of China’s Best Employer of the Year and China’s Most Sustainable Employer of the Year in 2022, and the Most Popular Employer Among Employees in 2024, in the selection by Forbes China and Russell Reynolds Associates, a global search and leadership advisory firm. We have established a three-tiered governance structure that includes (i) our board of directors, (ii) an ESG committee under the board of directors, consisting of Mr. Eric Ya Shen, Mr. Authur Xiaobo Hong, and Mr. Frank Lin, and (iii) an ESG Task Force. The ESG committee is responsible for defining ESG related strategy, targets, and action plans, assessing and evaluating proposals from the ESG Task Force, and coordinating the resources required to progress with ESG topics. The ESG Task Force is headed by the main person responsible for each department or division, including our compliance and legal departments, asset protection department, and corporate social responsibility department. The ESG Task Force is responsible for making proposals to the ESG committee as well as the implementation and execution of ESG work. We define our ESG strategy with the goal of “co-creation of a new sustainable life” to explore a path of sustainable development across five core areas: New Sustainable Choices, Happy Consumption, Proactive Inclusivity, Beautiful Society, and Dependable Compliance. We regard environmental protection as an important corporate responsibility and are committed to carbon mitigation measures and will continue to explore ways to further improve energy efficiency. We have formulated carbon neutrality goal and action path planning, committing to making our own operations carbon neutral no later than 2030, and achieve a 50% reduction in the intensity of scope 3 greenhouse gas emissions no later than 2030 using 2022 as the baseline year. In 2025, we advanced a series of carbon reduction initiatives, resulting in a 41% reduction in scope 1 and 2 carbon emissions and a 2.5% decrease in total carbon emissions. In addition, we have conducted climate scenario analysis utilizing scenarios published by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) to systematically evaluate climate-related risks and opportunities across our business and value chain, and are in the process of formulating corresponding measures to address them. We are committed to creating positive social impact through our resources and capabilities. We continue to support public welfare initiatives focused on women empowerment, rural vitalization, and assistance for disadvantaged social groups, with cumulative investment in such programs exceeding RMB861 million as of December 31, 2025. We have also continued to strengthen our corporate governance through dedicated efforts in integrity education, compliance culture, information security, risk management, and product quality. Intellectual Property We regard our trademarks, service marks, domain names, trade secrets, proprietary technologies, and similar intellectual property as critical to our success, and we rely on trademark, copyright, and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions with our employees, partners, service providers, suppliers, and other parties to protect our proprietary rights. As of December 31, 2025, we had been granted 415 patents and submitted 1,167 patent applications in China. We also had 2,294 registered trademarks in China and 132 registered trademarks outside China, 291 copyrights (including copyrights to 253 software products in China that we develop relating to various aspects of our operations), and six registered domain names that are material to our business, including vip.com and vipshop.com. Competition As a leading player in the off-price retailer industry, we face competition from other major off-price retailers who compete directly with us for brands and customers. We also compete with other online or offline retail businesses for customers’ wallet share. As a result, we face significant competition from a wide array of existing and potential competitors. 73 Table of Contents We believe that we compete primarily on the basis of, among other things: ● ability to curate an attractive and differentiated product selection; ● ability to deliver reliable capabilities across the supply chain; ● ability to refine customer experiences and services; ● multi-channel operation that covers diverse online and offline scenarios; and ● advanced R&D and technological capabilities. We believe that our early-mover advantage and strong market position help us compete effectively against our competitors. However, some of our current and potential competitors may have longer operating histories, larger customer bases, better brand recognition, stronger platform management and fulfillment capabilities, and greater financial, technical, and marketing resources than we do. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—If we do not compete effectively against existing or new competitors, we may lose market share and customers.” Regulation This section sets forth a summary of the most significant laws and regulations that affect our business in China. Regulations Relating to Foreign Investments Investment activities in China by foreign investors are principally governed by the Industry Guidelines of Encouraged Foreign Investment and the Special Administrative Measures (Negative List) for Foreign Investment Access, which were promulgated and are amended from time to time by the Ministry of Commerce and the NDRC, and together with the PRC Foreign Investment Law and its respective implementation rules and ancillary regulations. The industry guidelines and the negative list lay out the basic framework for foreign investments in China, classifying businesses into three categories with regard to foreign investments: “encouraged,” “restricted,” and “prohibited.” Industries not listed in the industry guidelines or the negative list are generally deemed as falling into a fourth category “permitted” unless specifically restricted by other PRC laws. On December 15, 2025, the Ministry of Commerce and the NDRC released the Industry Guidelines of Encouraged Foreign Investment (2025 Version), which came into effect on February 1, 2026 and replaced the previous version of the Industry Guidelines of Encouraged Foreign Investment. On September 6, 2024, the Ministry of Commerce and the NDRC promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Version), or the 2024 Negative List, which became effective on November 1, 2024 and replaced the previous version of the Special Administrative Measures (Negative List) for Foreign Investment Access. On March 15, 2019, the National People’s Congress approved the PRC Foreign Investment Law, which came into effect on January 1, 2020 and replaced three then existing laws on foreign investments in China, namely, the PRC Sino-foreign Equity Joint Venture Enterprise Law, the PRC Sino-foreign Cooperative Joint Venture Enterprise Law, and the PRC Wholly Foreign-invested Enterprise Law. The PRC Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign- and domestic-invested enterprises in China. The PRC Foreign Investment Law establishes the basic framework for the access to and the promotion, protection, and administration of foreign investments in view of investment protection and fair competition. 74 Table of Contents According to the PRC Foreign Investment Law, foreign investments should enjoy pre-entry national treatment, except for those foreign-invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.” While foreign investors should refrain from investing in any of the foreign “prohibited” industries, foreign-invested entities operating in foreign “restricted” industries are required to obtain market entry clearance and other approvals from the PRC governmental authorities. The PRC Foreign Investment Law does not comment on the concept of “de facto control” or contractual arrangements with variable interest entities, however, it has a catch-all provision under the definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws, administrative regulations, or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations, or provisions to provide for contractual arrangements as a form of foreign investment. Furthermore, the PRC Foreign Investment Law provides that foreign-invested enterprises established according to the said three existing laws regulating foreign investments may maintain their structure and corporate governance within five years after the implementation of the PRC Foreign Investment Law. On December 26, 2019, the State Council promulgated the Regulations for Implementing the PRC Foreign Investment Law, which came into effect on January 1, 2020. The implementation rules further clarified that the state encourages and promotes foreign investments, protects the lawful rights and interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment, and advances a higher-level opening. On December 30, 2019, the Ministry of Commerce and the SAMR jointly promulgated the Measures for Information Reporting on Foreign Investment, which became effective on January 1, 2020. Pursuant to the Measures for Information Reporting on Foreign Investment, where a foreign investor carries out investment activities in China directly or indirectly, the foreign investor or the foreign-invested enterprise must submit the investment information to the competent commerce department. In December 2020, the NDRC and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. Pursuant to such measures, the NDRC establishes a working mechanism office in charge of the security review of foreign investment, which is led by the NDRC and the Ministry of Commerce. Such measures also define foreign investments as direct or indirect investments by foreign investors in China, including (i) investments in new onshore projects or establishment of wholly foreign owned onshore enterprises or joint ventures with other investors; (ii) acquiring equity or assets of onshore companies by merger and acquisition; and (iii) onshore investments by and through any other means. Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services, and key technologies, which results in the acquisition of de facto control of the invested companies, must be filed with the working mechanism office prior to the implementation of such investments. Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the national credit information system, which would then subject such investor to joint punishment as provided by the rules. If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or assets and to take any other necessary measures so as to restore to the status before the implementation of the investment and to erase the impact to national security. Regulations Relating to Foreign Investments in Value-added Telecommunications Businesses Pursuant to the Provisions on Administration of Foreign-invested Telecommunications Enterprises which were promulgated by the State Council on December 11, 2001, and amended on September 10, 2008, February 6, 2016, and March 29, 2022, the ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50%. Before the most recent amendment to the Provisions on Administration of Foreign-invested Telecommunications Enterprises on March 29, 2022, a foreign investor who plans to acquire any equity interest in value-added telecommunication business in China must satisfy a number of stringent performance and operational experience requirements, including demonstrating good track records and experience in operating value-added telecommunication business overseas. However, according to the most recent amendment to the Provisions on Administration of Foreign-invested Telecommunications Enterprises made by the State Council on March 29, 2022, which came into effect on May 1, 2022, requirements of experience in providing value-added telecommunications services overseas and maintenance of good track record for the main foreign investor of a foreign funded telecommunications enterprise operating value-added telecommunications businesses have been removed. 75 Table of Contents On June 19, 2015, the Ministry of Industry and Information Technology issued the Circular on Removing the Restrictions on Equity Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business, allowing foreign investors to own more than 50% of equity interest in an operator of “operating e-commerce” business. The 2024 Negative List further provides that foreign investors are allowed to hold more than 50% equity interests in a value-added telecommunications service provider engaging in e-commerce, domestic multiparty communication, storage-and-forward, and call center businesses, while foreign investors are still prohibited from holding more than 50% of equity interest in a provider of other subcategories of value-added telecommunications services. On April 8, 2024, the Ministry of Industry and Information Technology of China promulgated the Notice of the Ministry of Industry and Information Technology on the Pilot Program for Expanding the Opening up of Value-added Telecommunications Services to the Outside World, providing that in regions approved to carry out the pilot program, the restrictions on the foreign equity ratios for internet data centers (IDC), content delivery networks (CDN), internet service providers (ISP), online data processing and transaction processing, information releasing platforms and delivery services included in information services (excluding the operation of internet news information, online publishing, online audio and video, and internet culture), as well as information protection and processing services, will be removed. The Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business issued by the Ministry of Information Industry in July 2006 reiterates the regulations on foreign investments in telecommunications businesses, which require foreign investors to set up foreign-invested enterprises and obtain value-added telecommunication business operating licenses to operate any value-added telecommunications business in China. Under this circular, a PRC domestic company that holds a Value-added Telecommunication License, is prohibited from leasing, transferring, or selling the Value-added Telecommunication Licenses to foreign investors in any form, and from providing any assistance, including providing resources, sites, or facilities, to foreign investors that conduct value-added telecommunications business illegally in China. The circular further requires each Value-added Telecommunication License holder to have the necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license. In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under the PRC regulations. Regulations Relating to Licenses and Permits Value-added Telecommunication Licenses The PRC Telecommunications Regulations promulgated by the State Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business initially issued by the Ministry of Industry and Information and most recently amended by the Ministry of Industry and Information Technology on June 6, 2019, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services. Under the PRC Telecommunications Regulation, commercial operators of value-added telecommunications services must first obtain a Value-added Telecommunication License from the Ministry of Industry and Information or its provincial level counterparts. In 2017, the Ministry of Industry and Information Technology promulgated the latest Administrative Measures on Telecommunications Business Operating Permit, which set forth more specific provisions regarding the different types of Value-added Telecommunication Licenses required to operate different value-added telecommunications services, the qualifications and procedures for obtaining such different types of Value-added Telecommunication Licenses. Pursuant to the Administrative Measures on Internet Information Services, promulgated on September 25, 2000 and amended on December 6, 2024 by the State Council, commercial internet information services providers, which refer to providers of information or services to internet users with charge through internet, must obtain a Value-added Telecommunication License with the business scope of internet information services, namely the Internet Content Provider License, from competent regulatory authorities before providing any commercial internet content services within China. Pursuant to the Announcement on Launching the Pilot Program of Expanding the Opening-up in Value-added Telecommunications Services, promulgated on April 8, 2024 by the Ministry of Industry and Information Technology, the Pilot Program shall be initially launched in the Comprehensive Demonstration Zone for Expanding Opening-up in the Services Sector in Beijing, the Lingang Special Area of China (Shanghai) Free Trade Zone for Leading Socialist Modernization, the Hainan Free Trade Port, and the Pilot Demonstration Area of Socialism with Chinese Characteristics in Shenzhen. In the approved pilot areas, the restrictions on foreign shareholding percentages for the following value-added telecommunications services shall be lifted: Internet data centers (IDC), content distribution networks (CDN), Internet access services (ISP), online data processing and transaction processing, information release platforms and delivery services (excluding Internet news information, online publishing, online audio-visual services, and Internet-based cultural businesses) within information services, and information protection and processing services. 76 Table of Contents Food Operating Permit China has adopted a licensing system for food supply operations under the Food Safety Law, which was adopted on February 28, 2009 and most recently amended on September 12, 2025, and its implementation rules. Entities or individuals that intend to engage in food production, food distribution, or food service businesses must obtain licenses or permits for such businesses. On June 15, 2023, the SAMR issued the Administrative Measures for Food Operation Licensing and Filing, which was effective as of December 1, 2023. The Administrative Measures for Food Operation Licensing and Filing requires an enterprise engaging in food operating business to obtain a Food Operating Permit. Record-filing by Third-party Platform Providers for Online Food Trading On July 13, 2016, the China Food and Drug Administration promulgated the Measures for Investigation and Handling of Illegal Acts Involving Online Food Safety, which were further amended by the SAMR on April 2, 2021 and on March 18, 2025, pursuant to which a third-party platform provider for online food trading in China must file a record with the competent office of the SAMR at the provincial level and obtain a filing number. Record-filing for Operation of Medical Devices Pursuant to the Regulations on Supervision and Administration of Medical Devices which were issued by the State Council in 2000 and further amended in March 2014, May 2017, February 2021, and December 2024, medical devices are divided into three types based on their risk levels. On July 30, 2014, the China Food and Drug Administration promulgated the Measures on the Supervision and Administration of the Business Operations of Medical Devices, which became effective on October 1, 2014 and were amended on November 17, 2017 and March 10, 2022. Pursuant to the Regulations on Supervision and Administration of Medical Devices and the Measures on the Supervision and Administration of the Business Operations of Medical Devices, any entities that engage in the business operation of Type II medical devices must file a record with the local department responsible for the drug supervision and administration. Furthermore, according to the Measures for the Administration and Supervision of Online Sales of Medical Devices, which were promulgated by the China Food and Drug Administration on December 20, 2017 and became effective on March 1, 2018, enterprises engaged in online sales of medical devices must be medical device operation enterprises that have obtained medical device operation licenses or record-filings and must fill in the table of information of online sales of medical devices and file the information with the competent food and drug administration. Record-filing by Third-party Platforms Providers for Medical Device Online Trading Services Pursuant to the Measures for the Administration and Supervision of Online Sales of Medical Devices, a provider of a third-party platform for online trading services for medical devices must obtain the Internet Drug Information Service Qualification Certificate and must complete filing procedures with the competent provincial food and drug administrative department. Internet Drug Information Service Qualification Certificate Pursuant to the Administrative Measures on Internet Drug Information Service which were promulgated by the China Food and Drug Administration on July 8, 2004 and most recently amended on November 17, 2017, an internet information service operator that provides information regarding drugs (including medical equipment) must obtain an Internet Drug Information Service Qualification Certificate from the competent food and drug administration. Payment Business License On December 9, 2023, the State Council issued the Regulations on the Supervision and Administration of Non-Bank Payment Institutions, which came into effect on May 1, 2024, and on July 9, 2024, the People’s Bank of China issued the Implementation Rules for the Regulations on the Supervision and Management of Non-Bank Payment Institutions. Under these rules, a non-financial institution must obtain a Payment Business License to provide payment services and qualifies as a paying institution. With the Payment Business License, a non-financial institution may serve as an intermediary between payees and payers and provide some or all of the following services: online payment, issuance and acceptance of prepaid card, bank card acceptance, and other payment services as specified by the People’s Bank of China. 77 Table of Contents Registration and Record-filing of E-commerce Livestream Platform Pursuant to Notice of National Radio and Television Administration on Strengthening the Administration of Livestream Shows and E-commerce Livestream promulgated by the State Administration of Radio and Television on November 12, 2020, platforms providing live streaming services for online shows and e-commerce activities should effectively implement their responsibilities as subjects, strive to improve various management systems, responsibility systems, content security systems, and human resources and material allocation for webcast services, actively participate in the development of industry ethics and industry self-discipline, so as to jointly promote the standardized, orderly, and sound development of live streaming of online shows and e-commerce activities. The aforesaid platforms should register and file the information of business operators and business development information in the Information Management System for National Online Audio-visual Platforms by November 30, 2020. As of the date of this annual report, we have submitted an application for the record-filing in the Information Management System for National Online Audio-visual Platforms for the live streaming service we offered to brands and the application is currently under review by the competent authorities. In addition, on December 18, 2025, the State Administration for Market Regulation and the Cyberspace Administration of China jointly promulgated the Measures for the Supervision and Administration of Livestreaming E-commerce, which came into effect on February 1, 2026, which focus on four key entities—livestreaming e-commerce platform operators, livestream room operators, livestream marketing personnel, and livestream marketing personnel service agencies—and seek to regulate business conduct and improve the regulatory framework by defining their respective responsibilities and obligations. Under the new measures, livestreaming e-commerce platform operators are subject to heightened obligations. Key requirements include conducting strict qualification verification, implementing tiered and classified management of anchors, establishing credit evaluation systems, and maintaining dynamic control over livestreaming activities. The measures explicitly authorize regulatory bodies to enforce traffic-based regulatory mechanisms. Upon receiving notifications of violations from the competent market regulation authorities or cyberspace administration authorities, platform operators are required to impose prompt penalties on the infringing entities, including but not limited to issuing warnings, restricting platform functions or user traffic, suspending or terminating livestreaming sessions, closing accounts, prohibiting re-registration, and adding the violators to blacklists. Permits for Spreading Audio-video Program via Information Network On December 20, 2007, the Ministry of Industry and Information Technology and the National Radio and Television Administration jointly issued the Administrative Provisions on the Internet Audio-video Program Service, which came into effect on January 31, 2008 and were amended on August 28, 2015. These administrative provisions define “internet audio-video program services” as activities of producing, editing, and integrating audio-video programs, supplying audio-video programs to the general public via the internet, and providing audio-video programs uploading and transmission services to other people. Entities providing internet audio-video programs services must obtain Permits for Spreading Audio-video Program via Information Network. Applicants for the Permits for Spreading Audio-video Program must be state-owned or state-controlled entities unless the Permits for Spreading Audio-video Program have been obtained prior to the effectiveness of the Administrative Provisions on the Internet Audio-video Program Service in accordance with the then-in-effect laws and regulations. In addition, according to the 2024 Negative List, foreign-invested enterprises are not allowed to engage in the internet audio-video program services. According to the Administrative Provisions on the Internet Audio-video Program Service and other laws and regulations, audio-video programs provided by the entities supplying internet audio-video program services should not contain any illegal content or other content prohibited by the laws and regulations, such as any content against the basic principles in the PRC Constitution, any content that jeopardizes the sovereignty of the country or national security, and any content that disturbs social order or undermines social stability. A full copy of any audio-video program that has already been broadcasted must be retained for at least 60 days. Movies, television programs, and other media content used as internet audio-video program services must comply with applicable administrative regulations on radio, movie, and television programs. Internet audio-video program service providers must immediately remove the audio-video programs violating laws and regulations, keep the records, report to the authorities, and implement other regulatory requirements. 78 Table of Contents The Categories of the Internet Audio-video Program Services (for Trial Implementation) promulgated by the National Radio and Television Administration on March 17, 2010 and amended on March 10, 2017, classify internet audio-video programs into four categories: (I) Category I, internet audio-video program service in the form of radio station or television station; (II) Category II, internet audio-video program service, including (a) re-broadcasting service of current political audio-video news programs; (b) hosting, interviewing, reporting, and commenting service of arts, entertainment, technology, finance and economics, sports, education, and other specialized audio-video programs; (c) producing (interviewing not included) and broadcasting service of arts, entertainment, technology, finance and economics, sports, education, and other specialized audio-video programs; (d) producing and broadcasting service of internet films/dramas; (e) aggregating and broadcasting service of audio-video programs such as films, television dramas, and cartoons; (f) aggregating and broadcasting service of arts, entertainment, technology, finance and economics, sports, education, and other specialized audio-video programs; and (g) live audio-video broadcasting service of cultural activities of common social organizations, sport events, or other organization activities; (III) Category III, internet audio-video program service, including (a) aggregating service of online audio-video content, and (b) re-broadcasting service of the audio-video programs uploaded by internet users; and (IV) Category IV, internet audio-video program service, including (a) re-broadcasting service of the radio or television program channels; (b) re-broadcasting service of internet audio-video program channels; and (c) re-broadcasting service of online live audio- video program. Radio and Television Program Production and Operation License On July 19, 2004, the State Administration of Radio, Film and Television (currently known as the National Radio and Television Administration) promulgated the Regulations on the Administration of Production and Operation of Radio and Television Programs, or the Radio and TV Programs Regulations, which came into effect on August 20, 2004 and was amended on August 2015, October 2020 and June 2025 respectively. Pursuant to the Radio and TV Programs Regulations, entities engaging in the production of radio and television programs must obtain a License for Production and Operation of Radio and TV Programs from the National Radio and Television Administration or its counterparts at the provincial level. Holders of such licenses must conduct their business operations strictly in compliance within the approved scope as provided in the licenses. As of the date of this annual report, we hold a valid License for Production and Operation of Radio and TV Programs as required by the Radio and TV Programs Regulations. Network Cultural Business License Pursuant to the Interim Administrative Provisions on Internet Culture, which was issued by the Ministry of Culture on May 10, 2003 and most recently amended on December 15, 2017, the enterprises engaged in operational internet culture activities must obtain the Network Cultural Business License. Operational internet culture activities mean the activities of providing internet culture products and services to obtain benefits by charging fees from users accessing the internet or by electronic commerce, advertisement, and financial supports, among others, for the purpose of making profits. Record-filing of Issuers of Single-purpose Commercial Prepaid Cards On September 21, 2012, the Ministry of Commerce issued the Administrative Measures on Single-purpose Commercial Prepaid Cards (for Trial Implementation), which came into effect on November 1, 2012 and were amended on August 18, 2016. Under these measures, among other things and subject to implementing rules adopted by the local branch of the Ministry of Commerce, the issuer of single-purpose commercial prepaid cards, which are defined as the prepaid cards that can only be redeemed by the card issuer, the group companies under the same ultimate control of the card issuer, or the franchise entities under one single brand which is the same as the card issuer, must (i) complete the record-filing procedures with the Ministry of Commerce or its local branches within 30 days after it starts offering such single-purpose commercial prepaid cards, and (ii) adopt sufficient measures to control risks, by means of controlling the total balance of the single-purpose commercial prepaid cards and providing advance deposit, guarantee insurance, bank guarantee, or other types of commercial guarantee as required. 79 Table of Contents Record-filing and Registration of Foreign Trade Operators Pursuant to the then effective PRC Foreign Trade Law promulgated by the Standing Committee of the National People’s Congress, as amended, and the Measures for Record-filing and Registration of Foreign Trade Business Operators promulgated by the Ministry of Commerce on June 25, 2004 and most recently amended on May 10, 2021, foreign trade business operators engaging in import or export of goods must go through record-filing and registration formalities with the Ministry of Commerce or authorities entrusted by the Ministry of Commerce, unless otherwise stipulated by laws, administrative regulations, and the Ministry of Commerce. On December 30, 2022, the Standing Committee of the National People’s Congress released the Decision of the Standing Committee of the National People’s Congress on Revising the PRC Foreign Trade Law, which removes the record-filing and registration requirements for foreign trade business operators. However, the Measures for Record-filing and Registration of Foreign Trade Business Operators promulgated by the Ministry of Commerce have not been revised and the record-filing and registration requirements for foreign trade business operators thereunder have not been canceled. Record-filing of a Customs Declaration Entity Pursuant to the Administrative Provisions of the Customs of the People’s Republic of China on the Registration of Customs Declaration Entities promulgated by the General Administration of Customs on March 13, 2014 and most recently amended on May 29, 2018, in completing customs declaration formalities, any customs declaration entity must go through the application registration formalities with the Customs in accordance with the provisions, unless otherwise required by the laws, administrative regulations or rules of the Customs. The Administrative Provisions of the Customs of the People’s Republic of China on the Registration of Customs Declaration Entities was replaced by the Administrative Provisions of the Customs of the People’s Republic of China on Record-filing of Customs Declaration Entities, which were promulgated by the General Administration of Customs on November 19, 2021 and came into effect on January 1, 2022. Pursuant to the Administrative Provisions of the Customs of the People’s Republic of China on Record-filing of Customs Declaration Entities, in order to conduct customs declaration business in China, customs declaration entities must go through the record-filing formalities with the Customs in accordance with such provisions and the record-filing of customs declaration entities will remain valid permanently unless revoked. Record-filing with the Immigration Inspection and Quarantine Agency Pursuant to the Law on Import and Export Commodity Inspection promulgated by the Standing Committee of the National People’s Congress on February 21, 1989 and most recently amended on April 29, 2021, and the Implementing Regulations of the Law on Import and Export Commodity Inspection promulgated by the State Council on August 31, 2005 and most recently amended on March 29, 2022, the consignees or the consignors of imported and exported commodities may complete declaration formalities for inspection on its own or entrust a declaration agent enterprise to complete declaration formalities for inspection and must complete filing formalities with the immigration inspection and quarantine agency in accordance with the law. Record-filing of Internet Information Service Algorithm On December 31, 2021, the CAC, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the SAMR jointly issued the Administrative Provisions on Algorithm Recommendation of Internet Information Services, which became effective on March 1, 2022. These administrative provisions stipulate that algorithm recommendation service provider with public opinion attribute or social mobilization ability must, within ten working days from the date of provision of services, fill in information such as the service provider’s name, service form, application field, algorithm type, algorithm assessment report, and content to be disclosed via the internet information service algorithm record-filing system to go through record-filing formalities. Record-filing of Mobile Internet Applications On July 21, 2023, the Ministry of Industry and Information Technology issued the Notice on the Record-filing of Mobile Internet Applications, which requires any mobile application sponsor that engages in internet information services in China to go through the record-filing formalities in accordance with the Law of the People’s Republic of China Against Telecommunications and Internet Frauds, the Administrative Measures on Internet Information Services, and other regulations. Any mobile application sponsor that fails to complete the record-filing formalities should not engage in internet information services through mobile apps. 80 Table of Contents Regulations Relating to Information Security The Decision Regarding the Safeguarding of Internet Security, enacted by the Standing Committee of the National People’s Congress on December 28, 2000, and amended with immediate effect on August 27, 2009, specifies that certain types of acts conducted through the internet are subject to criminal liabilities if such acts constitute criminal offense, including but not limited to: (i) gaining improper entry into a computer information system relating to state affairs, national defense, or cutting-edge science and technology; (ii) disseminating harmful information, inciting secession, or sabotaging national unity; (iii) stealing or leaking state secrets, intelligence, or military secrets; (iv) undermining the commercial goodwill and product reputation of other people; or (v) infringing intellectual property rights of other people. The Administrative Measures for the Security Protection of International Connections to Computer Information Network, issued by the Ministry of Public Security on December 16, 1997, and amended on January 8, 2011, prohibit use of the internet to harm the national security, divulge state secrets, infringe on legal rights and interests of the state, society, or citizens, or engage in any illegal or criminal activities. Any inter-connected organizations, node network organizations, legal persons, and other organizations which use international connections to computer information networks must go through the filing procedures with the authorities within thirty days of the official connection of the network. On July 1, 2015, the Standing Committee of the National People’s Congress promulgated the PRC National Security Law, which came into effect on the same day. This law provides that the state must safeguard the sovereignty, security, and development interests of cyberspace in the state, and that the state must establish a national security review and supervision system to review, among other things, foreign investment, specific items and key technologies, network information technology products and services, and other important activities that impact or are likely to impact the national security of China. In November 2016, the Standing Committee of the National People’s Congress promulgated the Cybersecurity Law, which was amended on October 28, 2025 and came into effect on January 1, 2026. In accordance with the Cybersecurity Law, network operators must comply with applicable laws and regulations and fulfill their obligations to safeguard network security in conducting business and providing services. Network service providers must take technical and other necessary measures as required by laws, regulations, and mandatory requirements to safeguard the operation of networks, respond to network security effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality, and usability of network data. Additionally, the amended Cybersecurity Law imposes heavier penalties on platform operators for violations of their cybersecurity management obligations and expressly requires them to promptly address unlawful online activities. It also proposed to enhance the punishment against personal information infringement by referencing to the punishment under applicable laws, including those under the Personal Information Protection Law and the Data Security Law. On December 28, 2021, the CAC and other PRC authorities promulgated the Cybersecurity Review Measures, which came into effect on February 15, 2022, and further restate and expand the applicable scope of the cybersecurity review in effect. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services, and network platform operators engaging in data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulates that network platform operators holding personal information of over one million users must apply to the Cybersecurity Review Office for a cybersecurity review before an overseas listing. 81 Table of Contents For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests, on June 10, 2021, the Standing Committee of the National People’s Congress published the Data Security Law, which came into effect on September 1, 2021. The Data Security Law requires data processing, which includes the collection, storage, use, processing, transmission, provision, publication of data, to be conducted in a legitimate and proper manner. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it may cause to national security, public interests, or legitimate rights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired, or illegally used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data is required to designate the personnel and the management body responsible for data security, carry out risk assessments of its data processing activities, and file the risk assessment reports with the competent authorities. State core data, i.e., data having a bearing on national security, the lifelines of national economy, people’s key livelihood, and major public interests, should be subject to stricter management systems. Moreover, the Data Security Law provides a national security review procedure for those data activities which affect or may affect national security and imposes export restrictions on certain data and information. In addition, the Data Security Law also provides that any organization or individual within the PRC territory should not provide any foreign judicial body and law enforcement body with any data without the approval of the competent PRC governmental authorities. On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which, among others, provide for improving the laws and regulations on data security, cross-border data transmission, and confidential information management. These opinions provided that efforts would be made to revise the regulations on strengthening the confidentiality and file management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures. On September 24, 2024, the State Council of China published the Regulations on Network Data Security Administration, which became effective on January 1, 2025. The Regulations on Network Data Security Administration provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant cyberspace administration of the PRC. Network data processing activities refers to the collection, retention, use, processing, transmission, provision, disclosure, deletion, and other activities of network data. On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure. Pursuant to these regulations, critical information infrastructure should mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservancy, finance, public services, e-government affairs, and national defense science, technology, and industry, and important network facilities or information systems which may seriously endanger national security, people’s livelihood, and public interest once there occur damage, malfunctioning, or data leakage to them. The Regulations on Protection of Critical Information Infrastructure provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical information infrastructures, or endanger the security of any critical information infrastructures. These regulations also require that critical information infrastructure operators should establish a cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operator should take full responsibility for the security protection of the critical information infrastructures operated by it. In addition, the administration departments of each important industry and sector should be responsible for formulating the rule of critical information infrastructure determination applicable to their respective industry or sector, and determine the critical information infrastructure operators in their industry or sector. On July 12, 2021, the Ministry of Industry and Information Technology and two other authorities jointly issued the Provisions on the Administration of Security Vulnerabilities of Network Products. These provisions state that, no organization or individual may abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offences should not provide technical support, advertising, payment settlement, and other assistance to the offenders. According to the Provisions on the Administration of Security Vulnerabilities of Network Products, network product providers, network operators, and platforms collecting network product security vulnerabilities should establish and improve channels for receiving network product security vulnerability information and keep such channels available, and retain network product security vulnerability information reception logs for at least six months. These provisions also ban provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers. 82 Table of Contents On July 7, 2022, the CAC issued the Measures for the Security Assessment of Cross-border Data Transfer, which became effective on September 1, 2022. These measures apply to the security assessment conducted by data processors where they provide overseas parties with important data and personal information collected and generated during the operation in China. Based on the these measures, data processors must apply for the security assessment of data cross-border transfer to the national cyberspace administration through the provincial cyberspace administration in the place where they operate if they provide data outside China under any of the following circumstances: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than one million people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of 100,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since January 1 of the previous year; and (iv) other circumstances where an application for the security assessment of an outbound data transfer is required as prescribed by the national cyberspace administration authority. On March 22, 2024, the CAC issued the Provisions on Promoting and Regulating Cross-Border Data Flows, establishing a multi-tiered approach for cross-border data provisions. Depending on the types of data operators and the nature and amount of data involved, different approaches may apply, which may require the data processors to undergo data export security assessments, enter into standard contractual clauses, or obtain personal information protection certifications. For example, the following data processors must undergo data export security assessments for their provision of information to overseas recipients: (i) where a critical information infrastructure operator provides personal information or important data to overseas recipients, and (ii) where data operators other than the critical information infrastructure operators provide important data to overseas recipients, or where data operators other than the critical information infrastructure operators cumulatively provide personal information (excluding sensitive personal information) of more than one million individuals or cumulatively provide sensitive personal information of more than ten thousand individuals since January 1 of a given year. The Provisions on Promoting and Regulating Cross-Border Data Flows also provide the circumstances where data processor providing personal information to overseas recipients may be exempted from undergoing data export security assessments, entering into standard contractual clauses, or obtaining personal information protection certifications, which include, among other things, cross-border transfer of personal information that is necessary for the conclusion or performance of a contract to which the individual is a party, cross-border transfer of personal information that is necessary for the implementation of cross-border human resources management in accordance with lawfully formulated labor regulations and lawfully concluded collective contracts, or in the event that a data processor other than a critical information infrastructure operator cumulatively provides personal information (excluding sensitive personal information) of not more than 100,000 individuals since January 1 of a given year. Furthermore, the Provisions on Technological Measures for Internet Security Protection, promulgated by the Ministry of Public Security in December 2005 and became effective in March 2006, require all internet service providers to keep records of certain information about its users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days. In addition, any user registration information should not be publicized or divulged without users’ approval, unless it is otherwise required by laws or regulations. The Decision on Strengthening Network Information Protection, which was promulgated by the National People’s Congress in December 2012, states that internet service providers must request identity information from users when information publication services are provided to the users. If internet service providers come across prohibited information, they must immediately cease the transmission of such information, take disposal measures such as elimination, keep the records, and report to the government authorities. On October 21, 2019, the Supreme People’s Court and the Supreme People’s Procuratorate jointly issued the Interpretations on Certain Issues Regarding the Applicable of Law in the Handling of Criminal Case Involving Illegal Use of Information Networks and Assisting Committing Internet Crimes, which came into effect on November 1, 2019, and further clarify the meaning of internet service provider and the severe situations of the crimes. 83 Table of Contents Regulations Relating to Internet Privacy The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. In recent years, the PRC government authorities have enacted legislation on the internet use to protect personal information from any unauthorized disclosure. Under the Several Provisions on Regulating the Market Order of Internet Information Services which were promulgated by the Ministry of Industry and Information Technology on December 29, 2011, an internet content provider may not collect any user personal information or provide any such information to third parties without the consent of a user, unless otherwise stipulated by laws and administrative regulations. An internet content provider must expressly inform the users of the method, content, and purpose of the collection and processing of such user personal information and may only collect such information necessary for the provision of its services. An internet content provider is also required to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, the internet content provider must take immediate remedial measures and, in severe circumstances, to make an immediate report to the telecommunication regulatory authority. In addition, the Decision on Strengthening Network Information Protection, which was promulgated by the Standing Committee of the National People’s Congress on December 28, 2012, provides that electronic information that is able to identify personal identities of citizens or is concerned with personal privacy of citizens is protected by law and should not be unlawfully obtained or provided. Internet content providers collecting or using personal electronic information of citizens must specify purposes, manners, and scopes of information collection and use, obtain the consent of citizens concerned, and strictly keep confidential personal information collected. Internet content providers are prohibited from disclosing, tampering with, damaging, selling, or illegally providing others with personal information collected. Technical and other measures are required to be taken by internet content providers to prevent personal information collected from unauthorized disclosure, damage, or being lost. Internet content providers are subject to legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of websites concerned, public security administration punishment, criminal liabilities, or civil liabilities, if they violate the provisions on internet privacy. On February 12, 2025, the CAC published the Administrative Measures for the Compliance Audit of Personal Information Protection, or the Compliance Audit Measures, which took effect on May 1, 2025. According to the Compliance Audit Measures, compliance audit of personal information protection refers to the supervision activities in which the personal information processing activities of personal information processors are examined and evaluated regarding their compliance with laws and administrative regulations. The Compliance Audit Measures further provides, among other things, that personal information processors that process personal information of more than 10 million individuals shall conduct at least one personal information protection compliance audit every two years. Pursuant to the Order for the Protection of Telecommunication and Internet User Personal Information which was promulgated by the Ministry of Industry and Information Technology on July 16, 2013, any collection and use of users’ personal information must be subject to the consent of the users, abide by the principles of legality, rationality, and necessity, and be within the specified purposes, methods, and scopes. Pursuant to the Ninth Amendment to the PRC Criminal Law which was issued by the Standing Committee of the National People’s Congress on August 29, 2015 and became effective on November 1, 2015, any internet service provider that fails to fulfill obligations to manage information and network security as required by applicable laws and refuses to rectify upon orders from government authorities, will be subject to the criminal penalty if such failure (i) causes dissemination of illegal information in large scale; (ii) causes user information leaks resulting in severe consequences; (iii) causes serious loss of evidence to criminal investigations; or (iv) implicates other severe circumstances. 84 Table of Contents To further regulate cybersecurity and privacy protection, the Standing Committee of the National People’s Congress promulgated the Cybersecurity Law on November 7, 2016, which was amended on October 28, 2025 and came into effect on January 1, 2026. The Cybersecurity Law provides that subject to certain exceptions, (i) to collect and use personal information, network operators must follow the principles of legitimacy, rightfulness, and necessity, disclose their rules of data collection and use, clearly express the purposes, means, and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators can neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered, and must dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators cannot divulge, tamper with, or damage the personal information they have collected, and cannot provide the personal information to others without the consent of the persons whose data is collected. Additionally, the amended Cybersecurity Law imposes heavier penalties on platform operators for violations of their cybersecurity management obligations and expressly requires them to promptly address unlawful online activities. It also proposed to enhance the punishment against personal information infringement by referencing to the punishment under applicable laws, including those under the Personal Information Protection Law and the Data Security Law. On June 28, 2016, the CAC issued the Administrative Provisions on Mobile Internet Applications Information Services (2016), which has been replaced by the Administrative Provisions on Mobile Internet Applications Information Services (2022) effective from August 1, 2022, to further strengthen the regulation of the mobile app information services. Pursuant to these provisions, application providers should process personal information by following the principles of legitimacy, rightfulness, necessity, and good faith, have clear and reasonable purposes, disclose processing rules, comply with the provisions on the scope of necessary personal information, regulate personal information processing activities, and take necessary measures to ensure the security of personal information. Application providers should not, for any reason, force users to consent to personal information processing, or refuse users to use the basic functions and services on the reason that users do not agree to provide unnecessary personal information. On May 8, 2017, the Supreme People’s Court and the Supreme People’s Procuratorate issued the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information, which became effective on June 1, 2017. These interpretations provide more practical conviction and sentencing criteria for the infringement of citizens’ personal information and marks a milestone for the criminal protection of citizens’ personal information. Pursuant to these interpretations and the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued on April 23, 2013, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of the national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person, and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting, or exchanging such information in violation of applicable rules and regulations. On January 23, 2019, the Office of the Central Cyberspace Affairs Commission and other three authorities jointly issued the Circular on the Special Campaign of Correcting Unlawful Collection and Usage of Personal Information via Apps. Pursuant to this circular, (i) app operators are prohibited from collecting any personal information irrelevant to their services; (ii) information collection and usage policy should be presented in a simple and clear way, and such policy should be consented by the users voluntarily, and (iii) authorization from users should not be obtained by coercing users with default or bundling clauses or making consent a condition of service. App operators violating these rules can be ordered by authorities to correct their non-compliance within a given period of time, be publicly reported, or ordered to quit its operation or cancel its business license or operational permits. On April 10, 2019, the Ministry of Public Security promulgated the Guidelines for Internet Personal Information Security Protection, which establish the management mechanism, security technical measures, and business workflows for personal information security protection. On August 22, 2019, the CAC promulgated the Provisions on the Cyber Protection of Children’s Personal Information which require, among others, that network operators who collect, store, use, transfer, and disclose personal information of children under the age of 14 must establish special rules and user agreements for the protection of children’s personal information, inform the children’s guardians in a noticeable and clear manner, and must obtain the consent of the children’s guardians. 85 Table of Contents On November 28, 2019, the CAC, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the SAMR jointly promulgated the Measures for the Determination of the Collection and Use of Personal Information by Apps in Violation of Laws and Regulations, which provide guidance for the regulatory authorities to identify the illegal collection and use of personal information through mobile apps, and for the app operators to conduct examination and correction and social supervision by netizens. On May 28, 2020, the National People’s Congress approved the Civil Code, which came into effect on January 1, 2021. Pursuant to the Civil Code, the personal information of a natural person must be protected by the law. Any organization or individual that needs to obtain personal information of others must obtain such information legally and ensure the safety of such information, and should not illegally collect, use, process, or transmit personal information of others, or illegally purchase or sell, provide, or make public personal information of others. On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and came into effect on November 1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly relating to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information. Personal information processors must adopt necessary measures to safeguard the security of the personal information they handle. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines, or other penalties. On February 6, 2023, the Ministry of Industry and Information Technology promulgated the Circular of the Ministry of Industry and Information Technology on Further Improving Mobile Internet Application Service Capabilities, which reiterates the principles of legality, justification, and necessity. The circular provides that engaging in personal information processing activities must have clear and reasonable purposes, and users must not be compelled to consent to personal information processing beyond the scope or that is irrelevant to the service scenarios, solely for the sake of service experience, product development, algorithmic recommendation, and risk control, among others. When a user refuses to provide personal information that is not necessary for the current services, it must not impact the user’s basic functions of the service. Regulations on Algorithm Recommendations On September 17, 2021, the CAC and eight other PRC governmental authorities jointly promulgated the Guiding Opinions on Strengthening the Comprehensive Governance of Algorithms Related Internet Information Services, which provide that, among others, enterprises must establish an algorithm security responsibility system and a science and technology ethical review system, improve the algorithm security management organization, strengthen risk prevention and control as well as potential danger investigation and governance, and improve the capacity and level to respond to algorithm security emergencies. Enterprises must also strengthen their sense of responsibility and assume the main responsibility for the results arising from the application of algorithms. On December 31, 2021, the CAC, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the SAMR jointly issued the Administrative Provisions on Algorithm Recommendation of Internet Information Services, which became effective on March 1, 2022. These administrative provisions stipulate that algorithm recommendation service providers must (i) fulfill their responsibilities for algorithm security, (ii) establish and improve management systems and technical measures for algorithm mechanism examination, scientific and technological ethics review, user-registration, information release review, data security and personal information protection, anti-telecommunications and internet fraud, security assessment and monitoring, and security incidents emergency response, among others, and (iii) formulate and disclose the rules for algorithm recommendation services, and be equipped with professional staff and technical support appropriate to the scale of the algorithm recommendation service. Algorithm recommendation service providers should not take advantage of algorithm recommendation services to (i) engage in any illegal activity which may endanger national security and social public interest, disturb economic and social order, or infringe others’ legitimate rights and interest, or (ii) disseminate any information prohibited by laws and regulations. 86 Table of Contents On November 25, 2022, the CAC, the Ministry of Industry and Information Technology, and the Ministry of Public Security jointly issued the Administrative Provisions on the Deep Synthesis of Internet Information Services, which came into effect on January 10, 2023. According to these provisions, no organization or individual may use deep synthesis services to produce, reproduce, release, or disseminate information prohibited by laws and administrative regulations, or to engage in activities that endanger the national security and interests, damage the national image, infringe upon social public interests, disrupt the economic and social order, or undermine the legitimate rights and interests of others. Specifically, the providers of deep synthesis services should, among other things, establish and maintain the management systems for algorithmic mechanism review, data security, and personal information protection. On July 10, 2023, seven governmental authorities including the CAC published the Provisional Measures on AI-Generated Content Services, or the AIGC Measures, setting compliance standards for generative AI service providers. The AIGC Measures require generative AI service providers to take responsibility for the content they produce in accordance with the law and ensure information security. Besides, providers of generative AI services that influence public opinion or could mobilize society shall undergo security assessments and follow procedures for registering or updating their algorithms as required by applicable regulations. Non-compliance with the AIGC Measures may subject the providers of generative-AI services to penalties, including warning, public denouncement, rectification orders and suspension of the provision of relevant services. On September 24, 2024, the State Council promulgated the Regulations on Network Data Security Administration, which provides that a network data processor that provides generative artificial intelligence services shall strengthen its security management of training data and processing activities of training data and take effective measures to prevent and address network data security risks. On March 7, 2025, Cyberspace Administration of China, Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration of Radio and Television jointly promulgated the Measures for Labeling AI-Generated or Composed Content, which applies to the labeling of AI-generated or composed content by Internet information service providers. According to the Measures for Labeling AI-Generated or Composed Content, Internet information service providers shall add explicit labels to content generated or edited by simulating a natural person through intelligent dialogue and writing. Additionally, they are required to include implicit labels in the file metadata of such generated or composed content. The Measures for Labeling AI-Generated or Composed Content became effective on September 1, 2025. On December 27, 2025, the Cyberspace Administration of China issued the Interim Administrative Measures for AI-based Anthropomorphic Interactive Services (Draft for Comments), which are intended to apply to the provision of AI-driven interactive services that simulate human characteristics, such as AI companions and digital human customer service. According to this draft, providers of such services are required to implement technical measures, including negative sampling and adversarial training, to ensure the safety and compliance of the generated content. Furthermore, they are required to submit a renewed security assessment report to the competent cyberspace administration authorities if there are significant modifications to the underlying algorithmic models or the interactive services provided. As these measures have not been formally adopted as of the date of this annual report, substantial uncertainties exist with respect to their final provisions, formal enactment timetable, and ultimate interpretation and enforcement. Regulations Relating to E-commerce On March 18, 2025, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions (2025), which came into effect on May 1, 2025. Under these measures, online transaction operators engaging in business activities should follow the principles of voluntariness, equality, fairness, and good faith, comply with laws, regulations, rules, business ethics, public order, and good morals, participate in market competition fairly, earnestly perform statutory obligations, actively assume subject responsibilities, and accept supervision from all sectors of the society. Online transaction platform operators should require business operators that are applying to sell goods or provide services on their platforms to provide authentic information such as information relating to identity, address, contact, and administrative license, verify and register such information, establish registration files, and verify and update such information at least once every six months. In addition, online transaction platform operators should establish an inspection and monitoring system relating to information of business operators on their platforms and relating to goods and services such business operators advertise. Where an online transaction platform operator identifies any information relating to goods and services on its platforms that is in violation of laws, regulations, or rules on market supervision and administration, damages national or public interests, or is detrimental to public order or good morals, it must take necessary measures to dispose such information in accordance with the law, maintain the records, and report the same to the administration for market regulation. 87 Table of Contents On March 24, 2016, the State Taxation Administration, the Ministry of Finance, and the General Administration of Customs jointly issued the Circular on Tax Policy for Cross-border E-commerce Retail Imports, which came into effect on April 8, 2016. Pursuant to this circular, goods imported through the cross-border e-commerce retail are subject to the tariff, import value-added tax, and consumption tax based on the types of goods. Individuals purchasing any goods imported through cross-border e-commerce retail are taxpayers, while e-commerce companies, companies operating e-commerce transaction platforms or logistic companies should be the withholding agents regarding such taxes. To further regulate the e-commerce industry, on August 31, 2018, the Standing Committee of the National People’s Congress promulgated the E-commerce Law, which came into effect on January 1, 2019, providing that e-commerce operators must comply with the principles of voluntariness, equality, fairness, and good faith, abide by laws, observe business ethics, equally participate in market competition, perform obligations regarding the protection of consumers’ rights and interests, environmental protection, intellectual property protection, and the protection of cybersecurity and personal information, take charge of the quality of products and services, and receive the supervision of the government and the general public. For example, an operator of an e-commerce platform must (i) comply with the requirements for the protection of personal safety and property security and the requirements for environmental protection regarding its sales of goods or provisions of services; (ii) disclose information of goods or services fully, truthfully, accurately, and promptly, and protect consumers’ right to know and right to choose; (iii) deliver goods or services to a consumer in accordance with the method and deadline committed or agreed with the consumer, and bear the risks and liability for transportation of goods, except where the consumer separately selects a courier service provider. On June 12, 2019, the State Post Bureau and the Ministry of Commerce promulgated the Guiding Opinions on Regulating the Interconnection and Sharing of Data between Express Delivery and E-commerce Industries, which provide that if e-commerce participants agree to deliver commodities through express delivery, an e-commerce operator will be supported in providing the necessary delivery data to an express delivery service provider through the agreed means of data transmission. The e-commerce platform operator cannot, by restricting the interconnection and sharing of data, hinder the e-commerce participants from freely choosing the express delivery service. When collecting and sharing user information, e-commerce operators and enterprises engaged in express delivery business must abide by the provisions of laws and administrative regulations on information protection, and cannot be used for purposes unrelated to the delivery service they provide. On March 24, 2025, the SAMR promulgated the Interim Measures for the Administration of Data Submission on Compliance for Online Transactions, which came into effect on April 25, 2025. Under these measures, platform operators must, on a semi-annual basis, report to the relevant provincial-level market regulation authorities the identity information of all online business operators hosted on their platforms. In particular, for individual sellers operating without a business license, the platform is mandated to identify those whose annual transaction volume exceeds RMB 100,000. Regulations Relating to Internet Finance On July 18, 2015, ten PRC governmental authorities jointly issued the Guidance on Promoting the Healthy Development of Internet Finance. This guidance refers to internet finance as a new financial business model in which traditional financial institutions and internet companies provide financing, payment, investment, and information intermediary services by using internet technologies and information and communication technologies. In accordance with this guidance, internet finance is part of the finance sector, and internet finance business operators are still required to comply with the regulations in relation to the provision of each sub-category of specific financial services they provide. On April 12, 2016, the General Office of the State Council issued the Implementing Proposals for the Special Rectification of Internet Financial Risks. This notice aims to, among others, impose stricter market entry regulation on internet finance, strengthen monitoring of funds, encourage whistleblowers with rewards and enhance penalties for violations, and curb unfair competition. On May 4, 2008, the People’s Bank of China and China Banking Regulatory Commission jointly promulgated the Guidance on the Pilot Establishment of Microcredit Companies, which allowed provincial governments to approve the establishment of microcredit companies on a trial basis. Many governmental authorities at the provincial or equivalent level, including Shanghai, issued local implementing rules on the administration of microcredit companies pursuant to this guidance. The specific local authority that supervises microcredit business in each administrative region may vary, and usually is the financial office of the local government. Any entities intend to engage in microcredit business in certain administrative region must obtain an approval from the local authority that supervises over the microcredit business in such administrative region, and a microcredit company is not permitted to conduct microcredit business outside the administrative region where it is approved to conduct the business. 88 Table of Contents On November 2, 2020, the China Banking and Insurance Regulatory Commission and the People’s Bank of China released the Interim Measures for the Administration of Online Microcredit Business (Draft for Comments), which provide that a microcredit company that intends to engage in online microcredit business must obtain the legal approval of the competent regulator and a microcredit company that intends to engage in online microcredit business across provincial-level administrative regions must obtain the legal approval of the banking regulator under the State Council. In addition, the aforesaid draft sets out the statutory qualified requirements for an online microcredit company. On December 31, 2024, the National Financial Regulatory Administration issued the Interim Measures for the Supervision and Administration of Small Loan Companies. The Measures regulate the operating behavior of small loan companies and strengthen corporate governance and risk management. Meanwhile, the Measures refine the protection of consumer rights and interests and further clarify the supervisory responsibilities of local financial management institutions. Regulations Relating to Commercial Factoring Services On June 27, 2012, the Ministry of Commerce issued the Notice on the Pilot Launch of Commercial Factoring which launched a commercial factoring pilot program in the Shanghai Pudong New Area and the Tianjin Binhai New Area. The Ministry of Commerce further expanded the list of commercial factoring pilot areas to include Chongqing Liangjiang New Area and certain other areas in August 2013. Pursuant to the notices of Ministry of Commerce, the local government of those pilot areas promulgated its own rules to implement the pilot program. Under these notices and local implementing rules, commercial factoring companies may be established in these areas upon the approval of the local counterpart of the Ministry of Commerce or other competent authority. The business scope of a commercial factoring company may include the services of trade financing, management of sales ledgers, investigation and assessment of client credit standings, management and collection of accounts receivable, and credit risk guarantee. A commercial factoring company is not allowed to conduct other financial business, such as taking deposits and lending loans or to specialize in or carry out debt collection. On October 18, 2019, the General Office of the China Banking and Insurance Regulatory Commission issued the Notice of Strengthening the Supervision and Administration of Commercial Factoring Enterprises, which was amended on June 21, 2021. It provides that commercial factoring enterprises must conduct business operations in accordance with laws and regulations, and may not commit any of the following conduct or provide any of the following services: (i) absorbing, or absorbing in any disguised form, public deposits, (ii) borrowing funds through online lending information intermediary institutions, various local trading places, asset management institutions, privately offered investment funds and other institutions; (iii) borrowing funds from other commercial factoring enterprises or doing so in any disguised form; (iv) providing loans for its account or for the account of another party; (v) engaging in the collection of accounts receivable or debts irrelevant to commercial factoring in a specialized manner or conducting the same on behalf of another party; (vi) factoring financing based on any illegal underlying transaction contract, consignment contract, accounts receivable with disputable ownership, or a claim for payment arising from any bill or other negotiable securities; and (vii) other activities prohibited by the state. Regulations Relating to Product Quality and Consumer Protection The Product Quality Law, which was promulgated by the Standing Committee of the National People’s Congress on February 22, 1993 and most recently amended on December 29, 2018, applies to all production and sale activities in China. Pursuant to this law, products offered for sale must satisfy the quality and safety standards. Enterprises may not produce or sell counterfeit products in any fashion, including forging brand labels or giving false information regarding a product’s manufacturer. Violations of state or industrial standards for health and safety and any other related violations may result in civil liabilities and administrative penalties, such as compensation for damages, fines, suspension or shutdown of business, as well as confiscation of products illegally produced and sold and the proceeds from such sales. 89 Table of Contents The Consumer Rights and Interests Protection Law, which was promulgated by the Standing Committee of the National People’s Congress on October 31, 1993 and most recently amended on October 25, 2013, sets out the obligations of business operators and the rights and interests of the consumers in China. Pursuant to this law, business operators must guarantee that the commodities they sell satisfy the requirements for personal or property safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage, and term of validity of the commodities. The Consumer Rights and Interests Protection Law was amended in October 2013 and became effective in March 2014. The amended Consumer Rights and Interests Protection Law further strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially on the business operators through the internet. The consumers whose interests have been damaged due to their purchase of goods or acceptance of services on online marketplace platforms may claim damages from sellers or service providers. Where the providers of the online marketplace platforms are unable to provide the real names, addresses, and valid contact details of the sellers or service providers, the consumers may also claim damages from the providers of the online marketplace platforms. Providers of online marketplace platforms that know or should have known that sellers or service providers use their platforms to infringe upon the legitimate rights and interests of consumers but fail to take necessary measures must bear joint and several liabilities with the sellers or service providers. On March 15, 2024, the State Council promulgated the Implementing Regulations of the Consumer Rights and Interests Protection Law, which came into effect on July 1, 2024. The Implementing Regulations of the Consumer Rights and Interests Protection Law provide detailed provisions on business operators’ obligations, including protection of consumers’ personal and property safety, the handling of defective products, avoidance of fraudulent advertisement, promotion of price transparency, assurance of quality guarantee, and protection of consumers’ personal information. These regulations also refine provisions regarding online consumption and stipulated operators’ obligations concerning prepaid consumption. Specifically, business operators are prohibited from using technological means to forcibly or indirectly compel consumers to purchase goods or receive services, or excluding or limiting consumers’ choices of goods or services provided by other operators. In addition, the Civil Code provides that if a network service provider knows or should know that a network user is committing infringing activities through its network services and fails to take necessary measures, it should be jointly liable with the said network user for such infringement. If a network service provider receives any notice from the infringed party on any infringing activities, the network service provider should take necessary measures, including deleting, blocking, and unlinking the infringing content, in a timely manner. Otherwise, it will be held jointly liable with the network user for the extended damages. Regulations Relating to Leasing Pursuant to the Interim Regulations of the People’s Republic of China Concerning the Assignment and Transfer of the Land Use Right of the State-owned Land in the Urban Areas promulgated by the State Council on May 19, 1990 and most recently amended on November 29, 2020, the lease of the allocated land use rights and of the buildings or houses erected on such land should be subject to the approval of the real estate administration department. Pursuant to the Law on Administration of Urban Real Estate, which was promulgated on July 5, 1994 and most recently amended on August 26, 2019 by the Standing Committee of the National People’s Congress, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing such provisions as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. The Law on Administration of Urban Real Estate further provides that where the owner of a building leases the building on state-owned land of which the land use right is granted to such owner by way of allocation for the purpose of profit- making, the gains on land included in the rental should be turned over to the state. In addition, the Administrative Measures on Leasing of Commodity Housing, issued by the Ministry of Housing and Urban-rural Development on December 1, 2010 and became effective on February 1, 2011, provide that the lessor and lessee are also required to register the lease with the competent real estate administration department within 30 days upon the execution of the lease agreement. If the lessor and lessee fail to go through the registration procedures, the competent authorities may urge the lessor and lessee to make corrections within a specified time limit and impose a fine ranging from RMB1,000 to RMB10,000 for each non-registered lease agreement if the lessor and lessee fail to make corrections within the specified time limit. According to the Civil Code, the lessee may sublease the leased premises to a third party, subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. In addition, in the event of change of ownership of the leased premises, the lease contract between the lessee and the lessor will still remain effective. The Civil Code further provides that where the leased property has been leased and transferred for possession before the creation of the mortgage, the established leasehold relationship will not be affected by the mortgage. 90 Table of Contents Regulations Relating to Overseas Listing and M&A On August 8, 2006, six PRC governmental and regulatory agencies, including the Ministry of Commerce and the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, a regulation with respect to the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006 and were revised on June 22, 2009. Foreign investors must comply with these regulations when they purchase equity interests of a domestic company or subscribe for the increased capital of a domestic company, and thus changing the nature of the domestic company into a foreign-invested enterprise; or when the foreign investors establish a foreign-invested enterprise in China for the purpose of purchasing the assets of a domestic company and operating the assets; or when the foreign investors purchase the assets of a domestic company and establish a foreign-invested enterprise by injecting such assets, and operate the assets. The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, among other things, purports to require that an offshore special purpose vehicle, or a special purpose vehicle, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals, to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. In addition, the General Office of the State Council promulgated the Circular of the General Office of the State Council on the Establishment of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, that became effective on March 3, 2011. This circular officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. Furthermore, the Ministry of Commerce promulgated the Rules of the Ministry of Commerce on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, effective on September 1, 2011, to implement such circular. Under this circular, security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns. Under the Rules of the Ministry of Commerce on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, the Ministry of Commerce will focus on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition is subject to security review. If the Ministry of Commerce decides that a specific merger or acquisition is subject to a security review, the Ministry of Commerce will submit it to the Inter-ministerial Panel, an authority established pursuant to the Circular of the General Office of the State Council on the Establishment of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors and is initiated by the NDRC and the Ministry of Commerce under the leadership of the State Council, to carry out security review. These rules prohibit foreign investors from bypassing the security review by structuring transactions through holding shares on behalf of others, trusts, multi-tier re-investments, leases, loans, control through contractual arrangements or offshore transactions. On December 19, 2020, the NDRC and the Ministry of Commerce promulgated the Measures for the Security Review of Foreign Investment, which came into effect on January 18, 2021. Pursuant to such measures, the NDRC establishes a working mechanism office in charge of the security review of foreign investment, which is led by the NDRC and the Ministry of Commerce. Such measures also define foreign investments as direct or indirect investments by foreign investors in China, including (i) investments in new onshore projects or establishment of wholly foreign owned onshore enterprises or joint ventures with other investors; (ii) acquiring equity or assets of onshore companies by merger and acquisition; and (iii) onshore investments by and through any other means. Foreign investments in certain key areas with national security concerns, such as important transport services, important cultural products and services, important information technology and internet products and services, important financial services, and key technologies, which results in the acquisition of de facto control of the invested companies, must be filed with the working mechanism office prior to the implementation of such investments. Failure to make such filing may subject the foreign investor to rectification within a prescribed period, and the foreign investor will be negatively recorded in the national credit information system, which would then subject such investor to joint punishment as provided by the rules. If such investor fails to or refuses to undertake such rectification, it would be ordered to dispose of the equity or assets and to take any other necessary measures so as to restore to the status before the implementation of the investment and to erase the impact to national security. On July 6, 2021, the PRC government authorities issued the Opinions on Strictly and Lawfully Cracking Down Illegal Securities Activities. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of the regulatory systems to deal with the risks and incidents faced by overseas-listed China-based companies. 91 Table of Contents On September 6, 2024, the NDRC and the Ministry of Commerce jointly issued the 2024 Negative List, which came into effect on November 1, 2024. Pursuant to the 2024 Negative List, if a domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it must obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company should not be involved in the company’s operation and management, and their shareholding percentage should be subject to, mutatis mutandis, the regulations on the domestic securities investments by foreign investors. On February 17, 2023, the CSRC promulgated the Overseas Offering and Listing Measures, which came into effect on March 31, 2023. On the same day, the CSRC also published a series of guidance rules and Q&As in connection with the implementation of the Overseas Offering and Listing Measures. The Overseas Offering and Listing Measures establish a new filing-based regime to regulate overseas offerings and listings by PRC domestic companies. According to the Overseas Offering and Listing Measures, an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares, and other securities in nature of equity) and listing by a PRC domestic company, whether directly or indirectly, are required to fulfill the filing procedures with, and to report the information to, the CSRC. Specifically, the examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and an offering and listing will be considered as an indirect overseas offering and listing by a PRC domestic company if the issuer meets both of the following conditions: (i) any of the operating revenue, total profit, total assets, or net assets of the PRC domestic enterprise(s) of the issuer in the most recent fiscal year accounts for more than 50% of the corresponding item in the issuer’s audited consolidated financial statements for the same period; and (ii) the main parts of the issuer’s operation activities are conducted in China, or the principal operation premises are located in China, or the majority of senior management personnel in charge of its business operations and management are PRC citizens or have habitual residences located in China. On the same day, the CSRC also held a press conference for the release of the Overseas Offering and Listing Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that PRC domestic companies that have already been listed overseas on or before the effective date of the Overseas Offering and Listing Measures (i.e., March 31, 2023) can be deemed as Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately for their historical offerings and listing, and they may be required to file with the CSRC when they conduct subsequent financing activities. The Guideline No. 2 (the Content and Format of Filing Materials) on the Application of Regulatory Rules on Overseas Securities Offerings and Listings, as one of the supporting guidelines for the Overseas Offering and Listing Measures, provides that the filing documents submitted to the CSRC must specify, among other things: (i) whether the PRC laws, administrative regulations, or provisions restrict or prohibit the PRC domestic companies from conducting business and/or holding licenses or qualifications for the issuers through contractual arrangements; and (ii) whether the PRC domestic operating entities that have contractual arrangements with the issuers fall into the industries in which foreign investments are restricted or prohibited. The officials from the CSRC have also confirmed that for the PRC domestic companies that seek to list overseas with variable interest entity structure, the CSRC will solicit opinions from the regulatory authorities and complete the filing procedures for the overseas offering and listing of PRC domestic companies with variable interest entity structure which duly meet the compliance requirements. The Overseas Offering and Listing Measures also set forth certain regulatory red lines for overseas offerings and listings by PRC domestic enterprises. According to the Overseas Offering and Listing Measures, an overseas offering and listing of securities by a PRC domestic company under any of the following circumstances is prohibited: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations, and the state rules; (ii) the proposed securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the PRC domestic company proposing to conduct the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property, or undermining the order of the socialist market economy during the past three years; (iv) the PRC domestic company proposing to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has been made thereof; or (v) there are material ownership disputes over equity held by the PRC domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller. 92 Table of Contents Furthermore, the Overseas Offering and Listing Measures also provide that (i) where a PRC domestic company seeks to indirectly offer and list securities in overseas markets, the issuer should designate a major PRC domestic operating entity, which should, as the domestic responsible entity, fulfill the filing procedures with the CSRC; (ii) a filing relating to an initial public offering and listing must be made with the CSRC within three business days after the application is submitted overseas; (iii) a filing relating to subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities must be made with the CSRC within three business days after the offering is completed; (iv) a filing relating to subsequent securities offerings and listings of an issuer in overseas markets other than where it has offered and listed must be made pursuant to provisions as stipulated for initial public offerings and listings. Where a PRC domestic company fails to fulfill the filing procedure, withholds any material fact, or makes false statements in its filing documents that are material, such PRC domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge, and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. The PRC Securities Law, which came into effect in March 2020, provides that no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of China. On February 24, 2023, the CSRC and certain other PRC regulatory authorities promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, which came into effect on March 31, 2023. Pursuant to these provisions, a PRC domestic enterprise that seeks overseas offering and listing, whether in a direct or indirect manner, must strictly abide by applicable PRC laws and regulations, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations. Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to any individuals or entities including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level. In the event that such documents and materials, if leaked, will be detrimental to national security or public interest, the PRC domestic company must strictly fulfill the procedures stipulated by applicable national regulations. Where a PRC domestic company, after fulfilling the procedures, provides to securities companies, securities service providers, and other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that will be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the PRC laws and regulations, which must specify, among other things, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers, and overseas regulators and individuals, it must fulfill due procedures in compliance with applicable national regulations. 93 Table of Contents Regulations Relating to Anti-monopoly The PRC Anti-monopoly Law, which was promulgated by the Standing Committee of the National People’s Congress on August 30, 2007 and effective from August 1, 2008, prohibits monopolistic conduct such as entering into monopoly agreements, abuse of dominant market position, and concentration of undertakings that have the effect of eliminating or restricting competition. On June 24, 2022, the Standing Committee of the National People’s Congress adopted the Decision of the Standing Committee of the National People’s Congress on Amending the PRC Anti-monopoly Law, which became effective on August 1, 2022. This decision increased the fines on business operators for illegal concentration to no more than ten percent of the preceding year’s sales revenue of the business operators if the concentration of business operators has or may have an effect of excluding or limiting competition, or a fine of up to RMB5 million if the concentration of business operators does not have an effect of excluding or limiting competition; the anti-monopoly enforcement agency may also order the business operators to cease the implementation of the concentration, to dispose of shares, assets, and the business within a period of time, or to take other necessary measures to restore to the status before the concentration if the concentration of the business operators has or may have an effect of excluding or limiting competition. In addition, according to this decision, where a concentration of business operators does not meet the filing threshold set by the State Council, but there is evidence that the concentration has or may have the effect of excluding or limiting competition, the anti-monopoly law enforcement agency may order the operators to file the concentration of business operators. The dominant market position refers to a market position where an operator may manipulate the price, volume, and other trade conditions of commodities on a relevant market, or may obstruct or otherwise affect the entrance of other operators into relevant markets. An operator who holds the dominant market position is prohibited from engaging in such practices which may be classified as an abuse of said position as: (a) selling commodities at unfairly high or buying commodities at unfairly low prices, (b) selling commodities at prices lower than cost without justified reasons; (c) refusing to trade with a trading counterparty without justified reasons; (d) restricting a trading counterparty to trade exclusively with it or trade exclusively with the operators designated by it without justifiable reasons; (e) conducting tie-in sales or adding other unreasonable conditions on a deal without justified reasons, (f) discriminating among trading counterparties of the same qualifications with regard to trade price, among others, without justified reasons, or (g) other practices recognized by the enforcement authorities as abuse of dominant market position. Furthermore, where an operator violates the provisions of the Anti-monopoly Law by abusing dominant market position, the enforcement authorities will order such operator to stop the illegal activities, confiscate the illegal earnings, and impose a fine of 1% to 10% of the previous year’s sales revenue. In March 2018, the SAMR was formed to take over, among other things, the anti-monopoly enforcement functions from the relevant departments under the Ministry of Commerce, the NDRC, and the State Administration for Industry and Commerce, respectively. Since its inception, the SAMR has continued to strengthen its anti-monopoly enforcement. The SAMR issued the Notice on Anti-monopoly Enforcement Authorization on December 28, 2018, which grants authorizations to the SAMR’s provincial branches for anti-monopoly enforcement within their respective jurisdictions, and further issued the Anti-monopoly Compliance Guideline for Operators on September 11, 2020, which was amended on April 25, 2024, for establishing an anti-monopoly compliance management system and preventing anti-monopoly compliance risks. On August 3, 2008, the State Council promulgated the Rules of the State Council on Declaration Threshold for Concentration of Undertakings. The Rules of the State Council on Declaration Threshold for Concentration of Undertakings require that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the anti-monopoly enforcement agency of the State Council before they can be completed. The Rules of the State Counsel on Declaration Threshold for Concentration of Undertakings, amended by the State Council on January 22, 2024, set forth the latest filing threshold for concentration of undertaking, which is, during the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds RMB12 billion in the preceding fiscal year and at least two of these operators each has a turnover of more than RMB800 million within China in the preceding fiscal year, or (ii) the total turnover within China of all the operators participating in the concentration exceeds RMB4 billion in the preceding fiscal year, and at least two of these operators each has a turnover of more than RMB800 million within China in the preceding fiscal year. On February 7, 2021, the Anti-monopoly Committee of the State Council promulgated the Anti-monopoly Guidelines for the Platform Economy Sector, aiming to improve anti-monopoly administration on online platforms. The Anti-monopoly Guidelines for the Platform Economy Sector, operating as the compliance guidance under the existing PRC anti-monopoly regulatory regime for platform economy operators, specifically prohibits certain acts of the platform economy operators that may have the effect of eliminating or limiting market competition, such as forcing the users to choose the product or service of one operator exclusively from the other. 94 Table of Contents On March 10, 2023, the SAMR released four regulations supporting the Anti-monopoly Law, namely the Review Measures of Concentration of Undertakings, the Provisions on the Prohibition of Monopoly Agreements, the Provisions on the Prohibitions of Acts of Abuse of Dominant Market Positions, and the Provisions on Curbing the Abuse of Administrative Power to Exclude or Restrict Competition, all of which came into effect on April 15, 2023. Subsequently, the Provisions on the Prohibition of Monopoly Agreements and the Provisions on Curbing the Abuse of Administrative Power to Exclude or Restrict Competition were further amended by the SAMR on December 9, 2025 and December 18, 2025 respectively, both of which became effective on February 1, 2026. The supporting regulations have, among other things, elaborated the specific requirements under the Anti-Monopoly Law, optimized the regulatory and enforcement procedures, and imposed more stringent legal responsibilities on the relevant parties. Specifically, the Review Measures of Concentration of Undertakings clarified the factors to be considered for the recognition of “control” and “implementation of concentration” under the review mechanism of concentration of undertakings, and elaborated the implementation rules regarding the suspension of review. According to the Review Measures of Concentration of Undertakings, where a concentration of undertakings does not meet the threshold for declaration but there is evidence that the concentration of undertakings has or may have the effect of excluding or limiting competition, the SAMR may order the operators to file the concentration of undertakings. On January 10, 2024, the Anti-monopoly and Anti-unfair Competition Committee of the State Council issued the Anti-monopoly Guidelines for Industry Associations. The guidelines clarify prohibited practices for industry associations in organizing horizontal and vertical monopoly agreements, explicitly forbid interference with market pricing mechanisms, and specify corresponding legal liabilities for violations. On June 6, 2024, the State Council issued the Fair Competition Review Regulation. It is the first administrative regulation to comprehensively and systematically stipulate fair competition review, standardizing the review criteria for policy measures. On October 13, 2024, the SAMR issued the Work Rules for Handling Reports on Fair Competition Review. It clarifies the report handling mechanism and safeguards the public’s right to report policies and measures suspected of violating the fair competition review regulations. On February 28, 2025, the SAMR promulgated the Implementing Measures for the Fair Competition Review Regulations, which elaborate and refine the general requirements, departmental responsibilities, review standards, review mechanisms, review procedures, and supervisory and safeguard measures for the fair competition review regime. On November 4, 2024, the SAMR issued the Anti-monopoly Guidelines for Standard Essential Patents. It introduces ex-ante and interim supervision mechanisms, encourages best practices, and details monopolistic behaviors related to standard essential patents, clarifying their typical types and identification factors. On December 10, 2024, the SAMR issued the Guidelines for the Review of Horizontal Concentrations of Undertakings. It clarifies the review criteria for business operator concentrations with different market, focuses on dynamic competitive impacts, and removes the data protection clause. The Guidelines for the Review of Non-Horizontal Concentrations were promulgated and implemented by SAMR on December 15, 2025. These guidelines primarily outline the analytical framework used by anti-monopoly enforcement agencies when reviewing non-horizontal relationships in concentrations of undertakings. Pursuant to the Guidelines, non-horizontal concentrations include both vertical concentrations and conglomerate concentrations. Regulations Relating to Anti-unfair Competition Competition among business operators is generally governed by the PRC Anti-unfair Competition Law, which was promulgated by the Standing Committee of the National People’s Congress on September 2, 1993, and amended on November 4, 2017, April 23, 2019 and June 27, 2025. The amended Anti-unfair Competition Law came into effect on October 15, 2025. According to the amended Anti-unfair Competition Law, business operators must abide by the principles of voluntariness, equality, fairness, and good faith, and observe laws and business ethics. In particular, business operators are prohibited from any of the following unfair activities: (i) committing acts of confusion; (ii) seeking transaction opportunities or competitive advantages by bribing entities or individuals with property or by any other means; (iii) conducting commercial promotions for the performance, function, quality, sales status, user evaluation, honor received concerning its products in a false or misleading manner; (iv) infringing trade secrets; (v) premium campaign in contravention to the Anti-unfair Competition Law; and (vi) fabricating or disseminating false or misleading information to undermine the goodwill or commodity reputation of any competitors. The amended Anti-unfair Competition Law further intensified the regulation of unfair competition in the data economy area by explicitly prohibiting business operators from abusing platform rules for activities like fake transactions or malicious reviews or using data, algorithms, or technology to disrupt or interfere with the legitimate network services of other operators. The amended Anti-unfair Competition Law further provides that the regulatory authority may interview the responsible person, require him/her to explain the situation and propose corrective measures for the violation. 95 Table of Contents On October 29, 2020, the SAMR issued the Interim Provisions on Regulating Promotional Activities, which came into effect on December 1, 2020. Among other things, these interim provisions are designed to promote consumer protection and prohibit false or misleading commercial information used in promotional activities. Failure to comply with these provisions may subject the business operators to penalties or other administrative actions by the regulatory authorities. On March 16, 2022, the Supreme People’s Court promulgated the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Anti-unfair Competition Law, which came into effect on March 20, 2022, setting out more detailed standards to apply the Anti-unfair Competition Law. On May 6, 2024, the SAMR issued the Interim Provisions on Anti-Unfair Competition on the Internet, which prohibit business operators from using data, algorithms, and other technical means to commit traffic hijacking, interference, malicious incompatibility, and other improprieties to influence user choices or hinder or damage the normal operation of network products or services offered by other business operators. Regulations Relating to Advertising The PRC government regulates advertising, including online advertising, principally through the SAMR. The PRC Advertising Law, as promulgated on October 27, 1994 and most recently amended on April 29, 2021 by the Standing Committee of the National People’s Congress, outlines the general regulatory framework for advertising. According to the Advertising Law, advertisers, advertising service providers, and advertising publishers are required to ensure that the contents of the advertisements they prepare or distribute are true and in full compliance with applicable laws and regulations. For example, advertisements must not contain terms such as “the state-level,” “the highest grade,” “the best,” or such similar wording. In addition, the use of internet to distribute advertisements must not affect the normal use of the internet by users. Where internet information service providers are aware or ought to be aware that illegal advertisements are being published or distributed using their services, they are obliged to prevent such distribution. On February 25, 2023, the SAMR published the Administrative Measures for Internet Advertising, which came into effect on May 1, 2023. These administrative measures aim to regulate various kinds of commercial advertising activities conducted within the territory of China to directly or indirectly promote a product or service through text, images, audio, video, or any other form, using any website, web page, web application, or other online media. According to these administrative measures, internet advertising operators and publishers should establish, improve, and implement systems for receipt, registration, review, and filing management of the internet advertising businesses according to the regulations, and should examine, verify, and register the identity information of advertisers, such as their names, addresses, and valid contact details, set up registration files and check and update them on a regular basis. Relevant files should be kept for no less than three years from the date of termination of the advertisement release. Internet advertising operators and publishers are required to have advertisement reviewers who are familiar with advertising laws and regulations or establish a special department responsible for the review of internet advertisements. Where an internet advertisement is published by means such as algorithmic recommendation, the rules and records of such algorithmic recommendation must be included in the advertising files. In addition, the advertisers and advertising publishers are required to set prominent buttons in the internet advertisements, including the pop-up advertisements, to ensure the closure of such advertisements can be done by one click. The Administrative Measures for Internet Advertising further clarify that product sellers or service providers promoting products or services through online live streaming that constitutes commercial advertisements should assume the responsibilities and obligations of an advertiser. Violation of the foregoing laws and regulations may subject the operators to civil liabilities and penalties, including fines, confiscation of advertising income, orders to stop dissemination of the advertisements, and orders to publish an advertisement correcting the misleading information. In case of serious violations, the SAMR or its local branches may force the violators to terminate its advertising operation or revoke its business license. 96 Table of Contents Regulations Relating to Pricing According to the PRC Pricing Law, as promulgated on December 29, 1997 and effective on May 1, 1998 by the Standing Committee of the National People’s Congress, business operators must, as required by the government departments in charge of pricing, mark the prices explicitly and indicate the name, origin of production, specifications, and other related particulars clearly. Business operators may not sell products at a premium or charge any fees that are not explicitly indicated. Business operators must not commit the specified unlawful pricing activities, such as colluding with others to manipulate the market price, using false or misleading prices to deceive consumers to purchase, or conducting price discrimination against other business operators. Failure to comply with the Pricing Law may subject business operators to administrative sanctions such as warning, stopping unlawful activities, confiscating illegal gains, and fines. The business operators may be ordered to suspend business for rectification, or have their business licenses revoked if the circumstances are severe. Regulations Relating to Intellectual Property Rights China has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks, and domain names. Copyright Copyright in China, including copyrighted software, is principally protected under the PRC Copyright Law which was promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and of which the most recent amendment came into effect as of June 1, 2021. Under the Copyright Law, PRC citizens, legal persons, or other organizations enjoy copyright over their works which refer to original intellectual achievements in the fields of literature, art, and science which can be expressed in a certain form including written works, oral works, computer software, and other intellectual achievements which comply with the characteristics of the works, whether published or not. The term of protection for copyrighted software is 50 years. In addition, the Regulations on the Protection of Rights to Information Network Communication, which were promulgated by the State Council on May 18, 2006 and amended on January 30, 2013, provide specific rules on fair use, statutory license, and a safe harbor for use of copyrights and copyright management technology and specify the liabilities of various entities for violations, including copyright holders, libraries, and internet service providers. The Computer Software Copyright Registration Procedures, which were promulgated by the State Copyright Bureau on February 20, 2002, apply to software copyright registration, license contract registration, and transfer contract registration. Patent According to the PRC Patent Law, which was promulgated by the Standing Committee of the National People’s Congress on March 12, 1984 and most recently amended on October 17, 2020, patent protection is divided into three categories, namely, invention patents, utility model patents, and design patents. Invention patents are valid for twenty years from the date of application, while design patents and utility patents are valid for fifteen years and ten years from the date of application, respectively. To be patentable, invention or utility models must meet three criteria: novelty, inventiveness, and practicability. Once an invention patent, or an utility model patent is granted, unless otherwise permitted by law, no individual or entities are permitted to engage in the manufacture, use, sale, or import of the product protected by such patent or otherwise engage in the manufacture, use, sale, or import of the product directly derived from applying the production technology or method protected by such patent, without consent of the patent holder, otherwise, the use will constitute an infringement of the patent rights. 97 Table of Contents Trademark Registered Trademarks are protected by the Trademark Law which was adopted by the Standing Committee of the National People’s Congress on August 23, 1982 and most recently amended on April 23, 2019 as well as the Implementation Regulation of the PRC Trademark Law which was adopted by the State Council on August 3, 2002 and amended on April 29, 2014. The Trademark Office of the National Intellectual Property Administration under the SAMR handles trademark registrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. For licensed use of a registered trademark, the licensor must file record of the licensing of the said trademark with the Trademark Office, otherwise it may not defend against a bona fide third party. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. Under PRC law, any of the following acts will be deemed as an infringement to the exclusive right to use a registered trademark: (i) use of a trademark that is the same as a registered trademark for identical goods without the permission of the trademark registrant; (ii) use of a trademark that is similar to a registered trademark for identical goods, or use of a trademark that is the same as or similar to a registered trademark for similar goods which may lead to confusion, without the permission of the trademark registrant; (iii) sale of any goods that have infringed the exclusive right to use any registered trademark; (iv) counterfeit or unauthorized production of the label of another’s registered trademark, or sale of any such label that is counterfeited or produced without authorization; (v) change of any trademark of a registrant without the registrant’s consent, and selling goods bearing such replaced trademark on the market; (vi) intentionally facilitate infringement of other’s exclusive right to use trademarks, and assisting others in implementation of infringement of exclusive right to use trademarks; or (vii) other acts that have caused any other damage to another’s exclusive right to use a registered trademark. According to the PRC Trademark Law, in the event of any of the foregoing acts, the infringing party will be ordered to stop the infringement immediately and may be imposed a fine; the counterfeit goods will be confiscated. The infringing party may also be held liable for the right holder’s damages, which will be equal to the losses suffered by the right holder as a result of the infringement, including reasonable expenses incurred by the right holder for stopping the infringement, or the gains obtained by the infringing party if the losses are difficult to be ascertained. Domain Names Domain names are protected under the Administrative Measures on the Internet Domain Names which were promulgated by the Ministry of Industry and Information Technology on August 24, 2017 and became effective on November 1, 2017, and its implementing rules. The Ministry of Industry and Information Technology is the major regulatory body responsible for the administration of the PRC internet domain names, under supervision of which the China Internet Network Information Center is responsible for the daily administration of.cn domain names and Chinese domain names. The China Internet Network Information Center adopts the “first-to-file” principle with respect to the registration of domain names. On November 27, 2017, the Ministry of Industry and Information Technology promulgated the Notice of the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Providing Internet-based Information Services, which became effective on January 1, 2018. Pursuant to the notice, the domain name used by an internet-based information service provider in providing internet-based information services must be registered and owned by such provider in accordance with the law. If the internet-based information service provider is an entity, the domain name registrant must be the entity (or any of the entity’s shareholders), or the entity’s principal or senior manager. 98 Table of Contents Regulations Relating to Foreign Currency Exchange and Dividend Distribution Foreign Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations which were promulgated by the State Council on January 29, 1996 and most recently amended on August 5, 2008. Under the Foreign Exchange Administration Regulations, payments of current account items, such as profit distributions and trade- and service-related foreign exchange transactions, may be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities or banks is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency denominated loans or foreign currency is to be remitted into China under the capital account, such as a capital increase or foreign currency loans to our PRC subsidiaries. On March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises, which came into effect as of June 1, 2015 and was partially amended on December 30, 2019 and March 23, 2023. This circular launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises and allows foreign-invested enterprises to settle their foreign exchange capital at their discretion, but continues to prohibit foreign-invested enterprises from using the Renminbi converted from their foreign exchange capitals for expenditure beyond their business scopes. On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, which came into effect on the same date and was partially amended on December 4, 2023. Pursuant to this circular, foreign-invested enterprises (excluding financial institutions) may go through foreign exchange settlement formalities for their foreign debts at their discretion. Violations of such circulars of SAFE could result in severe monetary or other penalties. On October 23, 2019, SAFE issued SAFE Circular 28, pursuant to which foreign-invested enterprises whose approved business scope does not include equity investments are allowed to use their capital funds obtained from foreign exchange settlement to make domestic equity investments in China, provided that such investments do not violate the Negative List and the target investment projects are genuine and in compliance with laws. PBOC Notice No. 9, issued by the People’s Bank of China on January 12, 2017, provides that within a transition period of one year from January 12, 2017, the foreign-invested enterprises may adopt the current cross-border financing management mechanism or the mechanism as provided in PBOC Notice No. 9 at their own discretion. PBOC Notice No. 9 also provides that enterprises may conduct independent cross-border financing in RMB or foreign currencies in accordance with PBOC Notice No. 9. According to PBOC Notice No. 9, the outstanding cross-border financing of an enterprise should be calculated using a risk-weighted approach and should not exceed the specified upper limit, and as of the date hereof, the upper limit of risk-weighted outstanding cross-border financing of a PRC enterprise is 200% of its net assets. As of the date of this annual report, neither the People’s Bank of China nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard. It is uncertain which mechanism will be adopted by the People’s Bank of China and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiary. In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which was most recently amended in December 2019. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts, and guarantee accounts, the reinvestment of RMB proceeds by foreign investors in China, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which was further revised in 2018 and 2019, specifies that the administration by SAFE or its local branches over direct investment by foreign investors in China should be conducted by way of registration and banks should process foreign exchange business relating to the direct investment in China based on the registration information provided by SAFE and its branches. 99 Table of Contents On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which came into effect on the same day. This circular sets out various measures to tighten genuineness and compliance verification of cross-border transactions and cross-border capital flow, which include without limitation requiring banks to verify board resolutions, tax filing form, and audited financial statements before wiring foreign-invested enterprises’ foreign exchange profit distribution above US$50,000, and strengthening genuineness and compliance verification of foreign direct investments. On April 10, 2020, SAFE issued the Notice of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business. This circular provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment. Dividend Distribution The principal regulations governing distribution of dividends of the foreign-invested enterprises include the PRC Foreign Investment Law, the Implementing Regulation of the Foreign Investment Law, and the PRC Company Law which was issued on December 29, 1993 and most recently amended on December 29, 2023. Under these laws and regulations, WFOEs in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, WFOEs in China are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends. Offshore Financing SAFE promulgated SAFE Circular 37 on July 4, 2014. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct or indirect offshore investment activities. Under SAFE Circular 37, (i) a “special purpose vehicle” refers to an offshore entity directly established or indirectly controlled by PRC residents for the purpose of seeking offshore equity financing or making offshore investment, using legitimate domestic or offshore assets or interests owned by such PRC residents; (ii) “round trip investment” refers to the direct investment in China by such PRC residents through the special purpose vehicle, including, without limitation, establishing foreign-invested enterprises and using such foreign-invested enterprises to purchase or control onshore assets through contractual arrangements; and (iii) “control” is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles or PRC companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds, or other arrangements. SAFE Circular 37 requires PRC residents to complete a foreign exchange registration of overseas investment with the competent local branches of SAFE before making capital contribution into a special purpose vehicle. SAFE Circular 37 further requires the filing of amendment to the registration in the event of any changes with respect to the special purpose vehicle, including basic information changes such as changes in a PRC resident individual shareholder, name of special purpose vehicle, or operation period, and significant changes such as changes in the capital contributed by PRC residents, share transfer or exchange, merger, division, or other material events. On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, which became effective on June 1, 2015 and was amended on December 30, 2019. After this notice becomes effective, application for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE. Beneficial owners of the special purpose vehicle who are PRC citizens are also required to make annual filing with the local banks regarding their overseas direct investment status. If any PRC resident shareholder of the special purpose vehicle fails to make the required registration or to update the previously filed registration, the PRC subsidiaries of the special purpose vehicle may be prohibited from distributing their profits or the proceeds from any capital reduction, share transfer, or liquidation to the special purpose vehicle, and the special purpose vehicle may also be prohibited from making additional capital contribution into its PRC subsidiaries. 100 Table of Contents Foreign Debt On January 5, 2023, the NDRC promulgated the Administrative Measures for Examination and Registration of Medium- and Long-term Foreign Debts of Enterprises, which came into effect on February 10, 2023. For the purpose of these measures, medium- and long-term foreign debts, or foreign debts, refer to debt instruments with a maturity of more than one year that are borrowed from overseas by enterprises within the territory of China and by overseas companies or branches controlled by them, denominated in Renminbi or a foreign currency, and with the principal repaid and interest accrued as agreed. According to these measures, before the borrowing of any foreign debts, enterprises must obtain from the NDRC the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises and complete the formalities of examination and registration. The enterprises that have not completed such examination and registration formalities cannot borrow foreign debts. In addition, such enterprise must, within 10 business days after each borrowing of foreign debts, report the information on such borrowing of foreign debts to the NDRC. Pursuant to these measures, the requirement of the examination and registration formalities also apply to the indirect borrowing of foreign debts overseas by PRC domestic enterprises. These measures also provide that if an enterprise, whose principal business activities are conducted in China, issues bonds or borrows commercial loans overseas in the name of an enterprise registered overseas, based on the equity, assets, earnings or other similar rights and interests of the PRC domestic enterprise, such conduct of the enterprise would be deemed as an indirect borrowing of foreign debts overseas by domestic enterprises. However, substantial uncertainties remain as to the implementation and interpretation of these measures. On December 4, 2023, SAFE promulgated the Circular on Further Deepening the Reform to Facilitate Cross-border Trade and Investment, pursuant to which the pilot policies for facilitating cross-border financing are extended nationwide. Qualified high and new technology enterprises, specialized and sophisticated enterprises that produce new and unique products and core technologies and technology-based small and medium-sized enterprises within 14 provinces can independently borrow foreign debts within the limit of the equivalent of US$10 million, The qualified enterprises within other provinces can borrow foreign debts within the limit of the equivalent of US$5 million. Stock Incentive Plans Pursuant to the Administrative Measures for Individual Foreign Exchange, which were promulgated by the People’s Bank of China on December 25, 2006 and became effective on February 1, 2007, all foreign exchange matters involved in employee share ownership plans and share option plans in which PRC citizens participate require approval from SAFE or its authorized branch. On January 5, 2007, SAFE issued the Detailed Rules on the Implementation of the Administrative Measures for Individual Foreign Exchange, which came into effect on February 1, 2007 and were last amended on March 23, 2023. Such detailed rules, among other things, specify the approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company. Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, which was promulgated by SAFE on February 15, 2012, PRC residents or non-PRC citizens residing in China for a consecutive period of no less than one year, subject to a few exceptions, who are granted shares or stock options by companies listed on overseas stock exchanges based on the stock incentive plans are required to register with SAFE or its local branches. Pursuant to this notice, PRC residents participating in the stock incentive plans of overseas-listed companies must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly-listed company or another qualified institution selected by such PRC subsidiary, to conduct registration with SAFE and other procedures with respect to the stock incentive plans on behalf of these participants. Such participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, purchase and sale of corresponding stocks or interests, and fund transfer. In addition, the PRC agents are required to amend the registration with SAFE with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agents, or the overseas entrusted institution, or other material changes. The PRC agents should, on behalf of these individuals who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with such individuals’ exercise of the employee share options. The foreign exchange proceeds received by such individuals from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas-listed companies must be remitted into the bank accounts in China opened by the PRC agents before distribution to such individuals. 101 Table of Contents Under the Circular of the State Taxation Administration on Issues Concerning Individual Income Tax in Relation to Equity Incentives promulgated and became effective on August 24, 2009 and amended on April 18, 2011 by the State Taxation Administration, listed companies and their domestic organizations will, according to the individual income tax calculation methods for “wage and salary income” and stock option income, lawfully withhold and pay individual income tax on such income. Regulations Relating to Tax Enterprise Income Tax The PRC enterprise income tax is calculated based on the taxable income determined under the Enterprise Income Tax Law, which became effective on January 1, 2008 and was most recently amended on December 29, 2018. The Enterprise Income Tax Law imposes a uniform enterprise income tax rate of 25% on all PRC resident enterprises, including foreign-invested enterprises. The Enterprise Income Tax Law and its implementation rules permit “high and new technology enterprises” to benefit from a preferential enterprise income tax rate of 15% subject to these high and new technology enterprises meeting certain qualification criteria. Moreover, under the Enterprise Income Tax Law, enterprises organized under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered PRC resident enterprises and are therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income. Though the implementation rules of the Enterprise Income Tax Law define “de facto management bodies” as “establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties, among others, of an enterprise,” the only detailed guidance currently available for the definition of “de facto management body” as well as the determination of offshore incorporated PRC tax resident status and its administration are set forth in STA Circular 82 and STA Bulletin 45, both issued by the State Taxation Administration, which provide guidance on the administration as well as determination of the tax residency status of a Chinese-controlled offshore-incorporated enterprise, defined as an enterprise that is incorporated under the law of a foreign country or territory and that has a PRC company or PRC corporate group as its primary controlling shareholder. According to STA Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions set forth in STA Circular 82 are met: (i) the primary location of the day-to-day operational management and the places where they perform their duties are in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval of organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in China; and (iv) 50% or more of voting board members or senior executives habitually reside in China. In addition, STA Bulletin 45 provides clarification on the resident status determination, post-determination administration, and competent tax authorities. It also specifies that when provided with a copy of a PRC resident determination certificate from a resident Chinese-controlled offshore-incorporated enterprise, the payer should not withhold 10% income tax when paying certain PRC-sourced income such as dividends, interest, and royalties to the Chinese-controlled offshore-incorporated enterprise. 102 Table of Contents Dividend Withholding Tax The Enterprise Income Tax Law and the implementation rules provide that an income tax rate of 10% will normally be applicable to dividends payable to investors that are “non-PRC resident enterprises,” and gains derived by such investors, which (i) do not have an establishment or place of business in China or (ii) have an establishment or place of business in China, but the income is not effectively connected with the establishment or place of business to the extent such dividends and gains are derived from sources within China. The State Council or a tax treaty between China and the jurisdictions in which the non-PRC investors reside may reduce such income tax. Pursuant to an Arrangement Between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the conditions and requirements, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However, based on the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued by the State Taxation Administration on February 20, 2009, if the PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. Based on the Circular on Issues concerning the “Beneficial Owner” in Tax Treaties issued by the State Taxation Administration on February 3, 2018, which became effective on April 1, 2018, a comprehensive analysis should be conducted based on the factors set out in the present article and in combination with the actual conditions of specific cases, and certain factors which will negatively affect the determination of an applicant’s status as a “beneficial owner” are provided, such as the business activities engaged in by the applicant do not constitute substantive business activities. On October 14, 2019, the State Taxation Administration promulgated the Administrative Measures for Non-resident Taxpayers to Enjoy Treatment under Treaties, which became effective on January 1, 2020. These administrative measures provide that non-PRC resident enterprises are not required to obtain pre-approval from the tax authorities in order to enjoy the reduced withholding tax. Instead, non-PRC resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and include necessary forms and supporting documents in the tax filings, which will be subject to post-tax filing examinations by the tax authorities. Indirect Transfer of Properties On February 3, 2015, the State Taxation Administration issued STA Public Notice 7. In December 2017, Article 13 and Paragraph 2 of Article 8 of STA Public Notice 7 were abolished by Decision of the State Taxation Administration on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents effective on December 29, 2017 and the Circular on Issues concerning Withholding of Enterprise Income Tax for Non-PRC Resident Enterprises, or STA Circular 37, effective on December 1,2017, which was amended on June 15, 2018, respectively. By promulgating and implementing these notices, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-PRC resident enterprise. Pursuant to STA Public Notice 7, as amended, in the event that a non-PRC resident enterprise indirectly transfers equities and other properties of a PRC resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for reasonable commercial purpose, such indirect transfer should be re-identified and recognized as a direct transfer of equities and other properties of the PRC resident enterprise. STA Public Notice 7, as amended, provides clear criteria for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. STA Public Notice 7 also brings challenges to both offshore transferor and transferee (or another person who is obligated to pay for the transfer) of taxable assets. Where a non-PRC resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an offshore holding company, which is an indirect transfer, the non-PRC resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the tax authority. Using a “substance-over-form” principle, the PRC tax authority may disregard the existence of the offshore holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to enterprise income tax, and the transferee or another person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes. 103 Table of Contents Issues concerning the withholding of enterprise income tax of the China-sourced income, which refers to income obtained from sources within China by non-PRC resident enterprises that (a) do not have an establishment or place of business in China or (b) have an establishment or place of business in China, but the income is not effectively connected with the establishment or place of business in China, should be subject to STA Circular 37. China-sourced income includes income from equity investment such as dividend and bonus, income from interest, rental and royalties, income from the property transfer, and other income. Pursuant to STA Circular 37, non-PRC resident enterprises must pay enterprise income tax in relation to their China-sourced income, and the entities which have the direct obligation to make certain payments to a non-PRC resident enterprise should be the tax withholders for such non-PRC resident enterprise. The tax withholders must, within seven days of the day on which the withholding obligation occurs, which is the day when the payment is made in fact or becomes due, declare and remit the withholding tax to the competent tax authority. When declaring and remitting the withholding tax payable, the tax withholders must complete the Withholding Statement of China for Enterprise Income Tax. In the event that the tax withholder fails to withhold and remit the taxable enterprise income tax for a non-PRC resident enterprise, or is unable to perform its obligation mentioned above, the non-PRC resident enterprise must declare and pay the enterprise income tax to the competent tax authority, and complete the Withholding Statement of China for Enterprise Income Tax. Value-added Tax All taxpayers selling goods, services, intangible assets, real property or importing goods in China must pay a value-added tax in accordance with the Value-added Tax Law, which was promulgated by the Standing Committee of the National People’s Congress on December 25, 2024 and became effective on January 1, 2026. The Value-added Tax Law replaces the Provisional Regulations on Value-added Tax, which were issued by the State Council in December 1993 and last amended on November 19, 2017, and provides that VAT rates generally applicable are simplified as 13%, 9% and 6%, and the VAT rate for simplified tax calculation method is 3%. The rate of value-added tax applicable to our PRC subsidiaries and the variable interest entities generally varies up to 13% depending on the product type. Regulations Relating to Employment Laws The PRC Labor Law, which became effective on January 1, 1995, and was amended on August 27, 2009 and December 29, 2018, and the PRC Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012, provide requirements concerning employment contracts between an employer and its employees. Pursuant to the Labor Contract Law, a written labor contract is required when an employment relationship is established between an employer and an employee. An employer is obligated to sign a labor contract with an employee with an indefinite term if the employer continues to employ the employee after two consecutive fixed-term labor contracts. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations. Other labor-related regulations and rules of China stipulate the maximum number of working hours per day and per week as well as the minimum wages. An employer is required to set up occupational safety and sanitation systems, implement the national occupational safety and sanitation rules and standards, educate employees on occupational safety and sanitation, prevent accidents at work, and reduce occupational hazards. On October 28, 2010, the Standing Committee of the National People’s Congress promulgated the PRC Social Insurance Law, which became effective on July 1, 2011 and was amended on December 29, 2018. In accordance with the PRC Social Insurance Law and other laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance. An employer must pay the social insurance for its employees in accordance with the rates provided under the regulations and must withhold the social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employer’s compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. On July 31, 2025, the PRC Supreme People’s Court promulgated the Supreme People’s Court’s Interpretation (II) on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases, which came into effect on September 1, 2025. Article 19(1) thereof stipulates that if an employer and an employee agree or the employee undertakes that there is no need to pay social insurance contributions, the People’s Court shall determine that such agreement or undertaking is invalid. Furthermore, where an employer fails to pay social insurance contributions in accordance with the law, and the employee seeks to terminate the labor contract and claims economic compensation from the employer pursuant to Article 38(3) of the PRC Labor Contract Law, the People’s Court shall support such claims in accordance with the law. 104 Table of Contents Under the Regulations on the Administration of Housing Fund, which were promulgated on April 3, 1999, and were most recently amended on March 24, 2019, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds. An enterprise that fails to make housing fund contributions may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement. Pursuant to the PRC Labor Law and Interim Provisions on Labor Dispatch, which were promulgated by the Ministry of Human Resources and Social Security on January 24, 2014 and became effective on March 1, 2014, labor dispatch employment is a supplemental form which can only be adopted for temporary, auxiliary, or alternative job positions. Temporary positions are positions subsisting for no more than six months; auxiliary positions are positions of non-major business serving for major businesses; and alternative positions are positions that can be held by dispatched laborers for a certain period of time during which the formal laborers are temporarily out of their positions for reasons. An employer is required to strictly control the number of dispatched laborers, which should not exceed 10% of the total number of its labor force. C.Organizational Structure Corporate Structure The following diagram illustrates our corporate structure, including our principal subsidiaries and the principal consolidated variable interest entity as of the date of this annual report: Notes: (1) A subsidiary primarily engaged in warehousing, logistics, product procurement, research and development, technology development and consulting businesses. (2) Subsidiaries primarily engaged in product procurement business. 105 Table of Contents (3) Vipshop E-Commerce is a consolidated variable interest entity that primarily engages in e-commerce platform operation. Shareholders of Vipshop E-Commerce include Eric Ya Shen, our chairman of the board of directors and chief executive officer, and Chan Huang, our employee, holding 66.7% and 33.3% of the total equity interests in Vipshop E-Commerce, respectively. (4) Vipshop Information is a consolidated variable interest entity that primarily engages in finance service-related business, which represents a nominal portion of our business. Shareholders of Vipshop Information include Eric Ya Shen and Chan Huang, holding 99.2% and 0.8% of the total equity interests in Vipshop Information, respectively. (5) Pin Jun Tong is a consolidated variable interest entity with no substantive business. Shareholders of Pin Jun Tong include our co-founders and shareholders Eric Ya Shen and Arthur Xiaobo Hong, holding 65% and 35% of the total equity interests in Pin Jun Tong, respectively. (6) Subsidiaries primarily engaged in retail businesses and warehousing services. (7) Subsidiaries primarily engaged in software development and information technology (including consulting, research, support) services. Foreign ownership of internet-based businesses is subject to significant restrictions under current PRC laws and regulations. The PRC government regulates internet access, the distribution of online information, and the conduct of online commerce through strict business licensing requirements and other government regulations. We are a Cayman Islands company and our PRC subsidiaries, including Vipshop China and its subsidiaries, are WFOEs. As a WFOE, Vipshop China is restricted from holding the licenses that are necessary for our online operation in China. To comply with these restrictions, our online retail channels are operated by the consolidated variable interest entities in China. Vipshop E-Commerce currently holds the primary licenses necessary to conduct our internet-related operations in China. Our PRC subsidiaries have entered into three sets of contractual arrangements with the consolidated variable interest entities and their respective shareholders. The one primary set of contractual arrangement that we currently rely on to conduct our main business is entered into by Vipshop China, Vipshop E-Commerce, and shareholders of Vipshop E-Commerce. The other two sets of contractual arrangements include: (i) one set entered into by Vipshop China, Vipshop Information, and shareholders of Vipshop Information; and (ii) one set entered into by Vipshop China, Pin Jun Tong, and shareholders of Pin Jun Tong. The contractual arrangements enable us to: ● make management decisions of the consolidated variable interest entities; ● receive substantially all of the economic benefits of the consolidated variable interest entities through service fees, which are equal to 100% of the consolidated variable interest entities’ net income and may be adjusted at our PRC subsidiaries’ sole discretion, in consideration for the technical and consulting services provided by our PRC subsidiaries; and ● have an exclusive option to purchase, or designate one or more person(s) to purchase, all of the equity interests in the consolidated variable interest entities to the extent permitted under PRC laws, regulations and legal procedures. We do not have any equity interest in the consolidated variable interest entities. However, as a result of contractual arrangements, we are considered the primary beneficiary of the consolidated variable interest entities, and we treat them as the consolidated variable interest entities under U.S. GAAP. We have consolidated the financial results of the consolidated variable interest entities in our consolidated financial statements included in this annual report in accordance with U.S. GAAP. 106 Table of Contents We face risks with respect to the contractual arrangements with the consolidated variable interest entities and their shareholders. If the consolidated variable interest entities or their shareholders fail to perform their obligations under the contractual arrangements, our ability to enforce the contractual arrangements may be limited. If we are unable to maintain the contractual arrangements with the consolidated variable interest entities, we would not be able to continue to consolidate their financial results. The revenues generated by our directly owned subsidiaries, apart from revenues earned in respect of the contractual arrangements with the consolidated variable interest entities, are primarily derived from our product promotion activities for brands. In the years ended December 31, 2023, 2024 and 2025, our subsidiaries contributed in aggregate approximately 99.7%, 99.7% and 99.7%, respectively, of our total consolidated net revenues, excluding revenues derived from the consolidated variable interest entities. As of December 31, 2023, 2024 and 2025, our holding company and our subsidiaries accounted for an aggregate of 89.7%, 91.3% and 92.8%, respectively, of our consolidated total assets (excluding assets attributable to transactions with the consolidated variable interest entities). For a detailed description of the regulatory environment that necessitates the adoption of our corporate structure, see “Item 4. Information on the Company—B. Business Overview—Regulation.” For a detailed description of the risks associated with our corporate structure, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” Contractual Arrangements Relating to the Consolidated Variable Interest Entities The following is a summary of the material provisions of the agreements for our three sets of contractual arrangements, each among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity. As of the date of this annual report, the equity holding structures of each of the consolidated variable interest entities are as follows: ● Eric Ya Shen and Chan Huang hold 66.7% and 33.3% of Vipshop E-Commerce, respectively; ● Eric Ya Shen and Chan Huang hold 99.2% and 0.8% of Vipshop Information, respectively; and ● Eric Ya Shen and Arthur Xiaobo Hong hold 65% and 35% of Pin Jun Tong, respectively. Equity Interest Pledge Agreements. Under each equity interest pledge agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity pledge all of their equity interests in the applicable consolidated variable interest entity to the applicable WFOE to guarantee the applicable consolidated variable interest entity’s and its shareholders’ performance of the obligations under the exclusive business cooperation agreement, exclusive option agreement, and loan agreement. If any stipulated event of default occurs, including the failure by the applicable consolidated variable interest entity or its shareholders to perform the contractual obligations under the exclusive business cooperation agreement, exclusive option agreement, or loan agreement, the applicable WFOE, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests. Without the applicable WFOE’s prior written consent, shareholders of the applicable consolidated variable interest entity cannot transfer or otherwise dispose of, or create or allow the creation of, any encumbrance on the pledged equity interests. The equity interest pledge agreement will remain in full force and effect until all of the obligations of the applicable consolidated variable interest entity and its shareholders under the exclusive business cooperation agreement, exclusive option agreement, and loan agreement have been duly performed or terminated. We have completed registering the pledge of the equity interests in the consolidated variable interest entities with the local branches of the SAMR. Exclusive Option Agreements. Under each exclusive option agreement among our applicable WFOE, the applicable consolidated variable interest entity, and the shareholders of the applicable consolidated variable interest entity, the shareholders of the applicable consolidated variable interest entity grant the applicable WFOE an exclusive option to purchase, or designate one or more person(s) to purchase, all or part of their respective equity interests in the applicable consolidated variable interest entity at a purchase price equal to the higher of: (i) the amount of registered capital actually contributed by the shareholders; or (ii) a minimum price permitted by applicable PRC laws. The applicable WFOE may exercise the option by issuing a written notice to the shareholders of the applicable consolidated variable interest entity. Without the applicable WFOE’s written consent, the applicable consolidated variable interest entity and its shareholders may not transfer, sell, pledge, or otherwise dispose of, or create any encumbrance on, any assets, business, or equity or beneficiary interests of the applicable consolidated variable interest entity. This agreement will remain in full force and effect for a term of ten years from the date of execution, and may be extended for a period to be determined by the applicable WFOE. 107 Table of Contents Powers of Attorney. Each shareholder of the consolidated variable interest entity has signed an irrevocable power of attorney. Under the powers of attorney, each shareholder of the consolidated variable interest entity has irrevocably appointed the applicable WFOE as his attorney-in-fact to act on his behalf and exercise all of his rights as a shareholder of the applicable consolidated variable interest entity, including the right to attend shareholder meetings, to exercise voting rights, to appoint directors and senior management of the applicable consolidated variable interest entity, and to effect transfers of all or part of his equity interests in the applicable consolidated variable interest entity pursuant to the equity interest pledge agreements and the exclusive option agreements. The applicable WFOE has the right to appoint any individual or entity to exercise the power of attorney on its behalf. Each power of attorney will remain in full force and effect until the shareholder ceases to hold any equity interests in the applicable consolidated variable interest entity. Exclusive Business Cooperation Agreements. Under each exclusive business cooperation agreement between the applicable WFOE and the applicable consolidated variable interest entity, the applicable consolidated variable interest entity agrees to engage the applicable WFOE as its exclusive provider of technical, consulting, and other services in relation to its business operations. In consideration of such services, the applicable consolidated variable interest entity will pay to the applicable WFOE service fees that amount to all of the applicable consolidated variable interest entity’s net income. The service fees may be adjusted at the applicable WFOE’s sole discretion based on the services rendered and the operational needs of the applicable consolidated variable interest entity. The applicable WFOE will exclusively own any intellectual property arising from the performance of the exclusive business cooperation agreement. The term of this agreement is ten years from the date of execution, and may be extended for a period to be determined by the applicable WFOE. The applicable WFOE may terminate this agreement at any time by giving 30 days’ prior written notice. Generally, the applicable consolidated variable interest entity has no right to terminate this agreement unless the applicable WFOE commits gross negligence or fraud. Loan Agreements. Under each loan agreement between the applicable WFOE and the shareholders of the applicable consolidated variable interest entity, the applicable WFOE provided loans to the shareholders of the applicable consolidated variable interest entity solely for the purpose of contribution or increase of registered capital or working capital of the applicable consolidated variable interest entity. The applicable WFOE has the sole discretion to determine the method of repayment, including requiring the shareholders of the applicable consolidated variable interest entity to transfer their equity interests in the applicable consolidated variable interest entity to the applicable WFOE or its designated person. In the opinion of Han Kun Law Offices, our PRC legal counsel: ● as of the date of this annual report, the current ownership structure of our company, Vipshop China and the consolidated variable interest entities in China, as described in this annual report, is not in violation of any applicable PRC laws and regulations currently in effect; ● as of the date of this annual report, the agreements underlying the contractual arrangements among our PRC subsidiaries, the consolidated variable interest entities and their respective shareholders that are governed by PRC laws and regulations are validly executed and binding in accordance with their terms, and are not in any violation of applicable PRC laws or regulations currently in effect or the respective articles of association of the corporate parties to the agreements as currently in effect; and ● as of the date of this annual report, each of our PRC subsidiaries and the consolidated variable interest entities, as described in this annual report, (i) has all necessary corporate power and authority to conduct its business as described in its business scope under its business license; (ii) has its business license in full force and effect; and (iii) is capable of suing and being sued and may be the subject of any legal proceedings in PRC courts. To the best of Han Kun Law Offices’ knowledge after due inquires, none of our PRC subsidiaries, the consolidated variable interest entities, as described in this annual report, or their respective assets is entitled to any immunity, on the grounds of sovereignty, from any action, suit or other legal proceedings; or from enforcement, execution or attachment. As of the date of this annual report, we had not encountered any interference or encumbrance from any PRC governing bodies in operating our businesses through the variable interest entities through the contractual arrangement. 108 Table of Contents Nevertheless, we face risks with respect to the contractual arrangements with the consolidated variable interest entities and their shareholders. If the variable interest entities or their shareholders fail to perform their obligations under the contractual arrangements, our ability to enforce the contractual arrangements with respect to the variable interest entities and their subsidiaries may be limited. In that case, we would not be able to continue to consolidate their financial results. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” We have been advised by our PRC legal counsel, however, that there are uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules. Accordingly, there can be no assurance that the PRC regulatory authorities will not in the future take a view that is contrary to the above opinion of our PRC legal counsel. It is uncertain whether any new PRC laws relating to contractual arrangements will be adopted, or if adopted, what the laws would provide. If we or the variable interest entities are found to be in violation of existing or future PRC laws and regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authority would have discretion to take action in dealing with the violation or failure, in which case we could be subject to severe penalties, including being prohibited from continuing our operations or unwinding the contractual arrangements. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—The interpretation and application of PRC laws and regulations relating to online commerce and provision of internet content may pose effects on us. If the PRC government finds that the structure we have adopted for our business operations does not comply with PRC laws and regulations, we could be subject to severe penalties, including shut-down of our online retail channels” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in the Jurisdiction Where We Primarily Operate—The PRC legal system is developing, and failure to respond to such development could affect us.” D.Property, Plants and Equipment We are headquartered in Guangzhou. The properties and facilities we owned or we leased as of December 31, 2025 had an aggregate of approximately 6.4 million square meters, among which the owned properties and facilities accounted for over 90% of the total aggregate square meters. Our owned properties were primarily used for the operation of our logistics network, retail operation of Shan Shan Outlets and our office space. As of December 31, 2025, we leased retail property, office space and warehouses with an aggregate gross floor area of over 0.3 million square meters. We believe that our existing facilities are sufficient for our near-term needs.