A.History and Development of the Company We commenced our operations in July 2016 through Guangzhou Yatsen Global Co., Ltd., or Guangzhou Yatsen, a limited liability company under the laws of the PRC. In September 2016, we incorporated Mangrove Bay Ecommerce Holding (Cayman), which later changed its name to Yatsen Holding Limited in January 2019, under the laws of the Cayman Islands as our offshore holding company to facilitate offshore financing. Also in September 2016, Yatsen Holding Limited incorporated Yatsen (HK) Limited (formerly known as Mangrove Bay Ecommerce (Hong Kong) Limited) as its intermediary holding company. In March 2017, Guangzhou Yatsen established Guangzhou Yatsen Cosmetics Co., Ltd. as its wholly-owned subsidiary to engage in offline retail business in areas outside East China. In September 2018, Yatsen (HK) Limited acquired all of the equity interests in Guangzhou Yatsen, from its shareholders to engage in the development, manufacturing and sales of cosmetics and skincare products as well as general administration of the business of the group in China. In February 2019, we gained control and beneficial ownership of Huizhi Weimei. In July 2019, Guangzhou Yatsen signed a series of contractual arrangements with Huizhi Weimei and its shareholder to formalize the control and beneficiary ownership it has over Huizhi Weimei. In June 2019, we consummated the acquisition of Little Ondine. The brand was founded in 2013 and gained popularity with its odorless, non-toxic, easy peel-off and fashionable nail polish. In October 2020, we acquired Galénic, an iconic premium skincare brand, from Pierre Fabre Dermo Cosmetics Laboratory, a preeminent European leader in dermatology and skincare. Galénic was introduced to France and across European markets in the late 1970s by Mr. Pierre Fabre, who is widely credited with the invention and global expansion of the dermo-cosmetics category. In January 2021, we acquired the mainland China business of DR.WU, a professional skincare brand developed by renowned dermatologists. DR.WU created a technologically-advanced skincare line of hypoallergenic and highly efficacious products. In March 2021, we acquired Eve Lom, a prestige skincare brand from Manzanita Capital. Eve Lom combines high quality natural ingredients with the latest scientific innovations to create a radiant effect on the skin. In October 2021, we acquired EANTiM, a professional-channel skincare and haircare brand. We have since strategically phased out its operations. 76 In March 2021, we also launched the Pink Bear brand targeting teens and price-sensitive young adults in the lower mass color cosmetics market. In May 2022, we issued our first Environmental, Social and Governance, or ESG, Report, which details our strategic ESG initiatives to develop a long-term, sustainable and environmentally-friendly business, and reviews achievements made during the 2021 fiscal year. In December 2022, our ESG rating was upgraded to A by one of the world’s largest providers of ESG indexes, MSCI. This rating represents an internationally recognized leading level. In July 2023, we published our 2022 ESG report, outlining our progress and performance in key ESG areas. In August 2023, the R&D and manufacturing hub that we established with Cosmax in Guangzhou commenced operations, enabling further optimization of our supply chain. In May 2024, we officially inaugurated our global innovation R&D center in Shanghai, providing robust support for our product development and technological advancements. In September 2024, we published our 2023 ESG report, underscoring our approach and achievements in implementing ESG initiatives across various dimensions in 2023, while providing insights into future goals. In September 2025, we published our 2024 ESG report, outlining the strategic deepening and progressive development of our ESG undertakings, demonstrating our continuous commitment to sustainable practices. In October 2025, we published our Beauty Innovation Insight report, the first comprehensive white paper from a Chinese beauty company to bridge the gap between scientific advancement, sustainability and corporate responsibility. This publication signals a milestone in the industry’s evolution from traditional storytelling to scientific leadership and highlights our growing influence within the global R&D community. Our principal executive offices are located at Floor 39, Poly Development Plaza, No. 832 Yue Jiang Zhong Road, Haizhu District, Guangzhou 510335, People’s Republic of China. Our telephone number at this address is +86 20-8730 7310. Our registered office in the Cayman Islands is located at c/o Office of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. All information we file with the SEC can be obtained over the internet at the SEC’s website at https://www.sec.gov/. You can also find information on our website https://ir.yatsenglobal.com/. The information contained on SEC’s website or our website is not a part of this annual report. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Material Cash Requirements” for a discussion of our capital expenditures. B.Business Overview Yatsen is a leading China-based beauty group with the vision of becoming a world-class pioneer in beauty innovation. Founded in 2016, we have launched and acquired numerous color cosmetics brands and skincare brands including Perfect Diary, Little Ondine, Pink Bear, Galénic, DR.WU (its mainland China business), and Eve Lom. Our brands initially resonated with younger consumers in China. As our portfolio continues to expand, we have progressively diversified our customer base across broader demographics and geographic markets. Today, our brands are strategically positioned to capture a wide spectrum of consumer demographics and price points, ranging from the mass market to the prestige and clinical segments. Yatsen thrives on the synergy of brand equity, product strength and operational agility, anchored by a strong commitment to R&D and consumer insights. 77 Starting early 2022, we have carried out a comprehensive strategic transformation plan with the goal of fostering a portfolio of strong brands with highly differentiated and effective products to drive sustainable growth. Key business initiatives under the plan include: Driving R&D-led product innovation. We are committed to sustained investment in our technological capabilities, with our R&D expenses consistently exceeding 3.0% of our total net revenues annually since 2022. This financial commitment supports the systematic advancement of our R&D infrastructure and capabilities, the alignment of our operations with global standards, and the facilitation of international collaborations. Leveraging this refined framework, we efficiently translate cutting-edge technology into market-ready solutions. Strengthening brand equity across our multi-brand portfolio. A key pillar of this plan is the rapid expansion of our skincare brands, including Galénic, DR.WU (its mainland China business), and Eve Lom. By prioritizing these distinctive and highly competitive brands, we have successfully rebalanced our revenue mix. Revenue contribution from our skincare brands expanded significantly from 33.5% in 2022 to 53.0% in 2025, driven by a three-year compound annual growth rate of 22.4% for the skincare brands. This strategic shift allowed us to streamline our portfolio and focus resources on brands with stronger equity and higher long-term value. Concurrently, we have been enhancing our Color Cosmetics Brands by upgrading their product offerings through our proprietary technologies to enhance product differentiation and long-term competitiveness. Improving our overall financial performance. We have achieved consistent margin expansion through stricter pricing and discount policies, optimized supply chains and enhanced operating efficiency. Our gross margin increased from 68.0% in 2022 to 78.2% in 2025. Concurrently, we significantly narrowed our net loss margin from 22.2% in 2022 to 2.2% in 2025. Moving forward, we expect to continue executing our five-year strategic plan with a focus on building a vital and sustainable brand portfolio and capturing growth opportunities in the global beauty industry. Our Diverse Brand Portfolio Skincare Brands Our Skincare Brands include Galénic, DR.WU(mainland China business), Eve Lom, and other skincare brands, which offer products featuring high-quality formulas, ingredients and packaging. In 2023, 2024 and 2025, we generated net revenues of RMB1.38 billion, RMB1.39 billion and RMB2.28 billion (US$325.7 million) from the sales of products under our Skincare Brands, respectively, representing 40.5%, 41.1% and 53.0% of our net revenues in 2023, 2024 and 2025, respectively. Galénic Originated in France, Galénic was founded in 1978 by Mr. Pierre Fabre, a well-known pharmacist, botanist and the inventor of dermo-cosmetics, with the aim of offering women high-end dermo-cosmetics with proprietary formulation and highly demonstrable effectiveness. Galénic is Yatsen’s first premium skincare brand which we acquired from the Pierre Fabre group, one of the largest pharmaceutical and dermo-cosmetic group in Europe. With its R&D expertise and strong roots in France, Galénic’s products are known for their scientific formula which are derived from precious plant essence and ingredients to create effective skincare solutions, as well as for offering elegant skincare experiences for women. Building on the R&D foundation established through our acquisition from Pierre Fabre, we have continued to develop and refine Galénic’s products. Today, Galénic’s products are sold in Asia and Europe. In 2021, we launched Galénic in China and embarked on a number of marketing initiatives to increase brand awareness of Galénic among Chinese consumers. Galénic’s No. 1 Brightening Radiance Energy Concentrated Care, a serum featuring a 20% Vitamin C extract to reduce dark spots and brighten the skin, has quickly established itself as a key player in the premium brightening serum category. 78 Building on the success of this iconic serum, we have extensively broadened Galénic’s product portfolio. As of December 31, 2025, we have successfully launched several key products, including the brand’s No.2 Anti-wrinkle Skin-renew Firmness Concentrated Care, Couture Secret D’Excellence Active Cream, and Extreme Brightening Micro Mask. Driven by science and engineered for visible results, Galénic remains committed to delivering skincare solutions to support skin renewal. DR.WU (mainland China business) Founded in 2003, DR.WU is a professional skincare brand developed by renowned dermatologist, Dr. Ying-Chin Wu. Leveraging decades of experience in dermatological expertise and extensive research on skin immunology, DR.WU has pioneered a technologically-advanced line of hypoallergenic and highly efficacious products. Since the acquisition of DR.WU’s mainland China business in January 2021, we have scaled the brand’s market presence. Centered on its signature Mandelic Acid serum, DR.WU was recognized by Euromonitor in 2023 as Asia’s Leading Mandelic Acid Skincare Brand. We further elevated the brand’s positioning as a professional, dermatologist-grade skincare brand specialized in skin renewal. This expansion is supported by the successful launch of high-performing products including the Purifying Renewal Essence Toner. To solidify the brand’s positioning, we have made significant investments in research and development. In-depth studies on the brand’s ingredients have been presented at prestigious international forums, including the International Federation of Societies of Cosmetic Chemists (IFSCC) and the Asian Dermatological Congress (ADC). Furthermore, DR.WU maintains a robust industry-academia-research ecosystem, supported by a scientific advisory board that provides expert guidance on emerging dermatological findings and strategic scientific communication. Eve Lom Founded in 1985 by the renowned facialist Ms. Eve Lom, Eve Lom is a prestige skincare brand built on a philosophy of mindful luxury and radiant skin. Inspired by traditional herbal remedies and refined through decades of professional practice, the brand is grounded in the healing power of botanicals and the belief that holistic skincare profoundly influences emotional well-being. Since its inception, the iconic Eve Lom cleanser balm has remained a timeless fixture among beauty authorities and on vanities worldwide. Its proprietary formula transforms a daily routine into a 5-in-1 ritual, designed to remove, cleanse, hydrate, tone, and exfoliate. We acquired Eve Lom in March 2021 from Manzanita Capital, marking another significant milestone in our expansion into the prestige skincare segment. Currently, Eve Lom is sold through an international distribution network and maintains a sophisticated digital presence. By leveraging our multi-channel capabilities and deep consumer insights, we have further elevated the brand’s strong awareness. Color Cosmetics Brands Our Color Cosmetics Brands consist of Perfect Diary, Little Ondine and Pink Bear and other color cosmetics brands, which offer a broad range of color cosmetics products, including lip, face, and eye products to provide our customers a full-spectrum of beauty experience. In 2023, 2024 and 2025, we generated net revenues of RMB1.97 billion, RMB1.97 billion and RMB2.01 billion (US$286.8 million) from the sales of products under our Color Cosmetics Brands, respectively, representing 57.8%, 58.0% and 46.7% of our net revenues in 2023, 2024 and 2025, respectively. Perfect Diary Perfect Diary is our first and largest brand. We launched Perfect Diary, providing high-quality and innovative color cosmetics with exquisite designs. With a broad and growing portfolio of products that spans the color cosmetics, skincare, beauty tools and kits categories, Perfect Diary offers comprehensive beauty solutions at a mass to mid-end market price point. In 2023, we repositioned the Perfect Diary brand by embracing makeup skintification, a philosophy that integrates skincare benefits into cosmetic products. This transformation was marked by a refreshed visual identity 79 and the launch of a new hero product, the Biolip Essence Lipstick. Featuring our proprietary Biotec™ technology, the lipstick creates a bionic sebum film that reinforces the lips’ fragile skin barrier while delivering vibrant colors. Advancing this synergy between aesthetic excellence and skincare effectiveness, in 2025, Perfect Diary introduced the Bioface Essence Foundation, powered by our third-generation Biotec™ technology, as well as the Translucent Blurring Setting Powder featuring the Smartlock™ technology. Leading the future of makeup skintification, Perfect Diary aims to empower everyone to express and pursue their unique beauty effortlessly. Little Ondine Little Ondine was founded in 2013. Little Ondine initially gained popularity with its odorless, non-toxic, easy peel-off and fashionable nail polish. We acquired Little Ondine in 2019 and have since expanded its product variety and offerings. Little Ondine now features trend-setting and functional face, eye and lip makeup products, such as liquid contour and highlighter, blush and eyebrow liners. Leveraging its iconic visual style and an authentic, bold attitude toward makeup, Little Ondine continues to provide next-generation urban women with surprising beauty experiences and personalized aesthetic choices. Pink Bear Pink Bear is a color cosmetic brand we launched in March 2021 to target the teenage and young adult customer base. Employing a “young girl” style and brand identity, the brand provides high value-for-money products at a lower mass-market price point, with a focus on the lip gloss product category. Our Wide Selection of High-Quality and Memorable Products Skincare Products We started our skincare business by launching the mass-market skincare brand Abby’s Choice in 2020. In the same year, we acquired Galénic, a premium cosmeceutical skincare brand that originated in France in 1978. In January 2021, we acquired the mainland China business of DR.WU, a dermatologist-developed, hypoallergenic and highly efficacious brand founded in 2003. In March 2021, we acquired the skincare brand Eve Lom, a prestige skincare brand with a portfolio of luxurious and effective products, many of which are award-winning. Our assortment of skincare products includes face serums, face creams, makeup removers, masks, toners, eye creams and cleansers, among others. Our most popular skincare products include: (i) Galénic No. 1 Brightening Radiance Energy Concentrated Care, featuring highly-concentrated, 20% Vitamin C extract designed for dark spot reductions and skin brightening applications, a core technology that was published in the Journal of Cosmetics, Dermatological Sciences and Applications, (ii) DR.WU Intensive Renewal Serum with Mandelic Acid, which has been among the top-selling products in the acne-treating serum category on both Douyin and Tmall, (iii) DR.WU Purifying Renewal Essence Toner, leveraging a multi-acid complex to accelerate skin renewal and visibly refine skin texture, and (iv) Eve Lom Cleanser, our iconic cleanser balm that cleanses, hydrates, tones, removes makeup, and exfoliates skin, which is embraced by those who believe the first step to radiant skin is the perfect cleanse, (v) Galénic No.2 Anti-wrinkle Skin-renew Firmness Concentrated Care, an intensive retinol-based serum engineered to maximize anti-aging potency, (vi) Galénic Couture Secret D’Excellence Active Cream, leveraging rare snow algae extract to promote long-term skin firmness and luminosity, and (vii) Galénic Extreme Brightening Micro Mask, an innovative treatment that delivers concentrated active peptides to revitalize the complexion. Color Cosmetics Products We offer a wide range of color cosmetics products featuring lip, face and eye, among others. To attract customers who consistently return for the latest looks, we frequently introduce experimental shades for creating bold ensembles and incorporate innovative themes into our makeup. Our most popular color cosmetics products include the iconic Perfect Diary Biolip Essence Lipstick (including the first, second and third generations), the Perfect Diary Translucent Blurring Setting Powder, the Little Ondine Multi-Use Stick, and the Pink Bear Plumping Lip Gloss. 80 In 2023, Perfect Diary launched its signature hero product, the Biolip Essence Lipstick, which debuted our exclusive Biotec™ technology. This innovation creates a bionic sebum film upon application to protect the lips’ fragile skin barrier and reduce lip lines, with its efficacy validated by the prestigious Ruijin Hospital and the SGS testing agency. We expanded the series to include Biolip Essence Lip Stain and Biolip Essence Matte Lipstick to enrich offerings for customers to experience its advanced formulation. Following the initial launch, we introduced the second generation of Biotec™ in 2024 and the third generation in 2025, reflecting our continued focus on biomimetic research. Little Ondine and Pink Bear gained popularity among young generation with their eye-catching makeup products as well. Both brands formed co-branding partnerships with popular intellectual properties that deeply resonated with young customers. Other Products Our product portfolio also includes categories such as beauty tools and kits, sunscreen and beauty devices. We offer a variety of products to complement our customers’ beauty routine. Our Product Development Process Benefiting from our large customer base and deep consumer insights gathered through data analysis and frequent surveys, our team is able to constantly monitor customer behavior to develop insights into trends and customer needs and then to originate, develop and deliver products that address those needs. We frequently test the popularity of new concepts and adjust our designs based on further customer surveys and feedback. We engage in discussion with customers directly to develop ideas for new products and are able to launch products with concepts that target the specific niche that appeals most to our customers. Our customers frequently participate as part of the product development process, and know that their feedback is valuable and impacts our brand. Complementing our consumer insights, our product development process is powered by a robust R&D infrastructure designed to translate scientific breakthroughs into high-performing solutions. Rather than developing isolated formulas, we focus on creating systemic technological anchors that can be applied across multiple product lines to ensure consistent efficacy. For instance, we developed ActiveAnchorTM, a proprietary delivery and penetration-enhancing technology specifically for Galénic. This platform optimizes the bio-availability of active ingredients and has been integrated into various Galénic formulations, creating a cohesive technological identity for the brand. This approach allows us to maintain a high degree of technical synergy and brand-level efficacy standards. Our dedicated product development team acts as a central hub for innovation, with a wealth of experience across the beauty, luxury, fashion, art and digital technology industries both domestically and globally. This multidisciplinary background enables our team to drive product creativity while ensuring that every concept maintains a high degree of originality and market relevance. Beyond driving the creative vision, the product development team facilitates active and continuous communication across all key functions, including consumer market insights, R&D, marketing and content, and supply chain teams. By bridging the gap between foundational research and real-time market trends, the team aims to develop and launch products more efficiently and strategically. Our Research and Development Capabilities We believe that our research and development capabilities are a fundamental pillar of our competitive advantage, enabling us to continuously innovate and deliver high-quality products that resonate with evolving consumer preferences. Our dedicated R&D team, comprised of experts in biology, chemistry and biochemistry, has developed full-spectrum capabilities spanning fundamental research, ingredient quality testing, formula development, and rigorous efficacy, sensory and safety evaluations. To strengthen our scientific foundation, we have established a comprehensive R&D infrastructure through a systematic approach characterized by sustained investment and our “1-3-4-6-20” global technology framework. This strategy facilitates global collaboration and powers our end-to-end R&D innovation closed-loop, anchored by our global R&D center in Shanghai. Our R&D ecosystem is further enhanced by an integrated digital system across the entire value chain and an international team of scientific experts dedicated to pioneering beauty technology. 81 We drive our innovation through three core technological engines that differentiate our product offerings in the global market. First, we focus on proprietary ingredient development, creating exclusive active components such as the Yatsen Biome Absolute C complex, which provides unique restorative and anti-aging benefits. Second, our Open Lab ecosystem integrates resources across industry, academia, research and medicine. Third, we leverage artificial intelligence to enhance R&D efficiency and speed, enabling us to analyze data and refine formulations with agility. As of December 31, 2025, our patent portfolio consisted of 269 items, including 10 utility model patents, 158 design patents, 72 invention patents (some of which are in the process of being transferred to us), and 29 patents currently pending approval worldwide. In 2023, 2024 and 2025, our R&D expenses totaled RMB111.7 million, RMB109.3 million and RMB137.3 million (US$19.6 million), representing 3.3%, 3.2% and 3.2% of our net revenues, respectively. We intend to continue strategically investing in our R&D capabilities, with a steadfast focus on translating cutting-edge scientific breakthroughs into market-ready solutions that drive long-term value for our consumers. Our R&D Facilities We continue to expand our R&D capabilities. We currently operate a 1,849-square-meter R&D center located in Guangzhou, China, a 3,819-square-meter business complex that serves as both office building and R&D center and a 446-square-meter joint laboratory with Ruijin Hospital located in Shanghai, China. We have also established a beauty manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising 66,462 square meters, which commenced operations in August 2023, enabling further optimization of our supply chain. Beyond China, we operate a facility that serves as both office and laboratory in France for the Galénic brand comprising approximately 920 square meters, which officially commenced operations in February 2023. In June 2022, our R&D Center in Guangzhou was certified by the China National Accreditation Service for Conformity Assessment. Our global R&D center in Shanghai subsequently obtained certification from the same accreditation body as well. These accreditations underscore our technical proficiency in conducting testing in accordance with internationally recognized standards. With testing results recognized by institutions across over 100 economies, the dual-certification of our R&D facilities marks a transformative stage in our commitment to globalized, standardized, and world-class beauty innovation. Our Global R&D Partnerships and Collaborations We collaborate with various renowned research institutions, universities and hospitals in China and around the world through our “1-3-4-6-20” global technology framework, which represents one global manufacturing hub, three global R&D centers, four focus areas, six joint laboratories, and over 20 joint projects. Under this framework, we seek to identify, develop and commercialize the latest innovations in skincare and cosmetics globally by collaborating with a network of highly capable partners and research institutions. In January 2021, we formed a joint research lab with Huazhong University of Science and Technology and the National Engineering Research Center for Nanomedicine to develop nano-based active ingredients for serums in skincare applications. In March 2021, we deployed a nano-based active ingredient, which was developed during this partnership. In June 2021, we launched Perfect Diary Pearl Loose Powder which features the proprietary SmartlockTM technology which we co-developed with the Chinese Academy of Science. SmartlockTM was designed to absorb excess oil from the skin without affecting the effect of makeup. In September 2021, we invested a minority stake in MingMed Biotechnology, a company focusing on the development of industry-leading pharmaceutical products, with a product pipeline covering medical aesthetics, innovative beauty drugs, cell therapy and small molecule immuno-oncology. With this investment, we intend to work with MingMed to develop and commercialize cutting-edge biomedical technologies for future potential applications in the field of beauty products. 82 In October 2021, we formed a R&D partnership with Sun Yat-sen University. Sun Yat-sen University is a nationally renowned academic research institution in China. Our partnership focused on discovering new active ingredients, formulations and advanced applications to address skin issues for Chinese consumers. In November 2022, our partnership with Sun Yat-sen University reached a new level when we announced the launch of our joint laboratory and released the latest results of the Chinese Skin Aging Research Platform at the 5th China International Import Expo. In June 2023, we officially unveiled the Yatsen–Ruijin Medical Skincare Joint Laboratory in Shanghai, a partnership with Ruijin Hospital to jointly conduct research on skin disease mechanisms and develop efficacious skincare products. In September 2023, we launched Perfect Diary’s new hero product, Biolip Essence Lipstick, by leveraging our exclusive BiotecTM technology, which creates a bionic sebum film upon application to protect the lips’ fragile skin barrier. Biolip’s strong efficacy in lip line reduction was validated by the prestigious Ruijin Hospital and the SGS testing agency. In September 2023, we entered into strategic cooperation with the Lubrizol Corporation, a leader in specialty chemicals, to conduct joint research on new ingredients, collaborate on anti-aging product research, and expand Yatsen Open Lab’s research and development boundaries. In May 2024, we deepened our collaboration with the Chinese Academy of Sciences by launching a joint project with its Laboratory of Polymer Physics and Chemistry. In October 2024, we unveiled an exclusive patent for active micro-ecological ingredients in collaboration with the Sun Yat-sen University at the International Federation of Societies of Cosmetic Chemists (IFSCC) conference. In September 2025, we launched DR.WU‘s Ageversal Sodium DNA Hydro-luminous Serum, featuring a core active ingredient developed in our joint research lab with Huazhong University of Science and Technology and the National Engineering Research Center for Nanomedicine. This formulation utilizes a synergy between Sodium DNA and our patented penetration technology for skin rejuvenation. Aside from the aforementioned parties, our R&D team also works extensively with global leading R&D teams of ODM/OEM and packaging supply partners, including Cosmax, Intercos, Kolmar, Sensient Technologies and Naolys, to develop new formulations. Through our acquisition of Galénic, we have also established a long-term collaboration with Pierre Fabre, one of the largest pharmaceutical and dermo-cosmetic groups in Europe. We will continue to strengthen our R&D capabilities by establishing new partnerships with leading global R&D institutions. Our Effective Marketing and Brand-Building Initiatives Our marketing strategy is digitally native and tailored to the unique positioning of each brand within our portfolio. We rely on our ability to cultivate consumer trust through marketing campaigns that resonate with the specific target audiences of each brand. By generating digital content across leading online platforms, such as Douyin and RedNote, and leveraging our expansive network of KOLs, we amplify our brand narratives to reach a broader consumer base. Our approach aligns promotional initiatives with the distinct ethos and value propositions of each brand, aiming to convert social influence into sustained consumer demand while fostering long-term brand equity and customer loyalty. Diversified and Customized Marketing Campaigns We employ a diverse array of marketing approaches customized to the distinctive image of each brand. For our skincare portfolio, we emphasize brand heritage and scientific authority through brand ambassadors, brand discovery tours to Europe, product launch conferences, collaborations with luxury hotels or spas, and so on. For our color cosmetics brands, we focus on fashion-driven and trend-driven initiatives, including intellectual property (IP) collaborations and partnerships with beauty specialty retailers. For example, in 2025, Galénic hosted an offline event 83 in Yunnan, China, to launch its upgraded Extreme Brightening Micro Mask and announced renowned actress Duling Chen as the brand ambassador for the mask series. During the same year, Little Ondine collaborated with the popular IP “Lipu Friends” and launched a dedicated pop-up store in the main atrium of Raffles City Chongqing. Targeted Generation and Distribution of Digital Content Digital content has become a primary driver of consumer engagement in China’s retail sector. We generate high-quality content primarily through our in-house editorial team, which is then distributed across major social platforms including Douyin and RedNote. Our product development and marketing teams collaborate to identify core product highlights, which are translated into compelling digital content. By leveraging real-time market insights and operational agility, we aim to deliver relevant content that enhances marketing efficiency. Powerful KOL Marketing Capability We were among the first beauty companies in China to systematically utilize KOLs at scale, maintaining a robust network of KOLs and celebrities across multiple e-commerce platforms. We continue to foster close partnerships with top-tier influencers, as exemplified by Austin Li. In 2025, three of our brands, Perfect Diary, Galénic and DR.WU, were featured on “All Girls’ Offer,” a prominent brand-centric reality show hosted by Austin Li. This participation allowed us to showcase our products to a large audience in preparation for the Double 11 shopping festival. Our Seamless and Engaging Omni-channel Shopping Experience Online Channels We have established a comprehensive and robust omni-channel ecosystem that spans China’s leading e-commerce, social, and content platforms. While our early growth was initially fueled by our prominent presence on Tmall, complemented by our early entry into JD.com, we have since entered into other e-commerce platforms. This expansion includes a significant and growing presence on Douyin, as well as presence on Pinduoduo, Vipshop, and other channels. Today, our products are available across virtually all major e-commerce platforms in China, providing us with the extensive reach to engage directly with a diverse consumer base. A key pillar of our online strategy is the seamless integration of social commerce and content-driven engagement. We leverage social and content platforms such as Douyin, RedNote and Bilibili to guide consumers through the journey from brand discovery to purchase. Through the deployment of compelling digital content, often in collaboration with an extensive network of KOLs and high-impact live streaming anchors, we are able to drive consumer engagement and influence purchasing decisions in real time. This content-driven approach allows us to maintain high brand resonance and capture consumer demand with exceptional agility. Beyond public marketplaces, we leverage the Weixin infrastructure to foster deep, localized engagement with our user base, particularly for our color cosmetics brands. Through a sophisticated combination of Weixin Official Accounts, Weixin Mini Programs and Weixin Video Channels, complemented by beauty advisor-led groups, we provide a more personalized shopping experience. Experience Stores Empowered by our data and technology capabilities, our offline experience store network provides customers with seamless omni-channel shopping experiences and completes their journey of beauty discovery. As of December 31, 2025, we operated a total of 77 stores. In the case of Perfect Diary, which operates the majority of our offline experience stores, online and offline channels are fully integrated such that our online presence can contribute to more foot traffic at our offline experience stores and customers visiting our offline experience stores are encouraged to engage further with our online content. We leverage our online marketing vehicles to quickly attract customers to new stores, including advertisements on our official accounts, local media and local Weixin official accounts. Customers who visit our experience stores are encouraged to engage with us by joining Weixin groups hosted by our online beauty advisors, achieving the dual goals 84 of fostering a sense of community while continually introducing promotional offers. In the Weixin groups, our beauty advisors constantly introduce attractive promotions, advise on how to put on the best look with our products, post pictures and tutorials, and respond to personal inquiries from group members. Our current experience stores are located in shopping malls and department stores across different cities in China based on our analysis of the geographical locations of our targeted customers. Offline Distribution Channels To complement our direct-to-consumer model, we have established an extensive offline distribution network to further broaden our market reach and enhance brand accessibility. This distribution model encompasses a wide range of partners, including beauty specialty stores, supermarket chains and lifestyle retailers, allowing us to penetrate diverse consumer segments across various city tiers in China. We adopt a highly selective and tailored approach to distribution, strategically matching each brand in our portfolio with channels that align with its unique brand identity. While our prestige skincare brands are placed in premium retail environments like Sephora and Sam’s Club, our color cosmetics brands leverage broader distribution networks, including The Colorist, to maximize consumer touchpoints. We also maintain an international distribution footprint. This integrated strategy enables us to effectively engage with a wider and more diverse consumer base while preserving the distinct brand equity of our portfolio. Supply Chain Our supply chain capability is vital to our business. We closely collaborate with a network of top-class ODM/OEM and packaging supply partners to produce our products, such as Cosmax, Intercos, Shanghai Zhenchen, HCP, Axilone and Qiaxing. Most of the original ODM/OEM and packaging supply partners we work with are located in China, while we also collaborated with top-class suppliers overseas that serve our global premium and luxury beauty brands. The large scale of our business allows us to establish more favorable contract terms with manufacturers and produce high-quality products at a competitive cost. Meanwhile, our cooperation with these ODM/OEM and packaging supply partners enable us to use formulation packaging materials that reflect the latest technological trends and advancements. In order to leverage the scale effect and further strengthen product quality, we also engage directly in the manufacturing of our products either through direct investment or joint venture. For example, we have established a manufacturing and R&D hub equipped with best-in-class R&D capabilities in Guangzhou, China through a joint venture with Cosmax, in which we are a minority shareholder. The R&D and manufacturing hub commenced operations in August 2023, enabling further optimization of our supply chain. We expect the manufacturing and R&D facility to be one of the largest and most technologically advanced cosmetics manufacturing bases of its kind in China. Quality Control We have a comprehensive quality assurance program that gives us visibility and control over the quality and safety of our products during the sourcing and production cycle. Over the course of product development, a series of functionality, stability and compatibility tests are performed on the designed packaging materials and product ingredients under various rigorous conditions. In addition, we implement an intensive audit program to ensure our third-party manufacturers are in compliance with the product safety compliance standards in China. We take great care to ensure that our third-party manufacturers share our commitment to quality and ethics. The suppliers we work with typically have established high quality production standards given their experience in serving global premium and luxury beauty brands. The third-party manufacturers with whom we cooperate adopt strict internal guidelines and conduct regular inspections to ensure the product quality meets our rigorous standards. We cooperate with several internationally renowned quality inspection companies with China Metrology Accreditation, to ensure our products meet global and local standards. We provide oversight through regular on-site inspections and audits of our third-party manufacturers as well as component suppliers. Our quality assurance team also builds a scorecard to evaluate performance of third-party suppliers on a quarterly basis to ensure consistency of manufacturing quality and to provide incentives for top-performing partners. We terminate our collaboration with the 85 partners who fail to meet our quality standards. In addition, we built our own testing laboratory with advanced equipment and our experienced team to validate finished products in 2021. Fulfilment and Logistics Our fulfilment team ensures orders are quickly, efficiently and accurately processed, packed, shipped and delivered to customers. We collaborate with third-party warehouse companies and leverage their warehouse and geographical coverage. For logistics, we work closely with major third-party logistics companies such as SF Express to fulfill shipments to our customers. With the assistance of third-party logistics companies and the wide geographic distribution of the warehouses, our proprietary inventory tracking system enables our customers to receive real-time updates regarding the status of their orders. We are continually improving our fulfilment and logistics system to provide speedy delivery to our customers. Data and Technology Strong In-house Technology Team Our business model is enabled by our technology and data. Our in-house team of engineers dedicated to technology, data and related functions develop and support the software and analytics on which our platform operates. Many of our engineers have years of coding experience in leading technology companies in China and around the world, having performed a variety of roles including product managers, user interface (UI) designers, front end and back end developers, testers, data analysts and architects. The team has developed a series of in-house systems across the value chain, including Supplier Relationship Management (SRM), Office Automation (OA), KOL Management System, Product Management System and Ecommerce Store (Xiaowanzi Weixin Shop). Technologies Empowered by World-class Partners To build direct connections with our customers, we built a flexible and adaptable technology infrastructure with world-class partners. We collaborated with top experts at Alibaba and Ali Cloud to build a technology platform that can support many concurrent transactions. Our data platform now utilizes data lake architecture with storage-compute separation, enabling flexible resource scaling and improved query performance. Meanwhile, to further optimize the computational power of our servers on Ali Cloud, we have deployed flexible container instance technologies based on Kubernetes, enabling us to scale up to ten times the number of container instances in ten minutes. Leveraging the e-commerce experiences of Alibaba and technological leadership of Ali Cloud, our technology team has achieved significant improvements in data processing efficiency. The Social Customer Relationship Management tag scheduling system latency has been reduced from twelve hours to two hours, significantly improving business responsiveness. In order to create unique and engaging customer experiences, we have also been partnering with Tencent extensively to design and refine the social e-commerce experience on our Xiaowanzi Weixin Shop. For example, we occasionally meet with Weixin product managers and engineers to explore new ways to offer seamless social e-commerce experiences, by launching social sharing games, by inviting customers to share their beauty experience with our content community, by building our brand name in search results, and by integrating membership, payment and fulfilment across our online and offline stores. Data Security and Privacy We have adopted data protection policies to ensure the security of our proprietary data and employed a data security team of engineers and technicians dedicated to protecting the security of our data. To ensure data security and avoid data leakage, we have established stringent internal protocols under which we grant classified access to confidential personal data only to limited employees with strictly defined and layered access authority. We strictly manage the use of data across our departments and enforce vigorous policies on sharing data with external third parties or cooperating with third-party vendors in our data analytics efforts. 86 Building on these foundational measures, in 2025, we further fortified our technical defense infrastructure by comprehensively upgrading our internal data loss prevention system. To ensure the seamless implementation and high performance of the system, we established standardized operating procedures and conducted intensive information security awareness training for all employees. By integrating advanced technological interventions with robust management protocols, we have ensured the effective deployment of our data protection mechanisms across complex business scenarios, maintaining a resilient defense for our core data assets. Trademark and Intellectual Property Our most valuable intellectual property is our brand names, including Perfect Diary, Little Ondine, Pink Bear, Galénic, DR.WU, and Eve Lom. We have registered 2,197 trademarks in China and 2,256 trademarks outside China as of December 31, 2025 to protect our brand names. The design of the packaging of our products is an important element of the enhancement of our brand image. Therefore, where possible and economically reasonable, we have registered figurative trademarks in order to protect our original labels and design patents in respect of some of our packaging. As of December 31, 2025, our patent portfolio consisted of 269 patents, including 10 utility model patents, 158 design patents, 72 invention patents (some of which are in the process of being transferred to us), and 29 patents which are currently pending approval worldwide. We further protect our intellectual property, such as unpatented proprietary expertise and production formulation, innovation and other know-how through confidentiality agreements which we have been increasingly including in our employment contracts and in our agreements with third-party manufacturers and business partners to whom our formulas, designs or business information may be made available. We also regularly monitor the market for infringement of our IP, and will vigorously pursue and defend our rights against third parties whom we believe have infringed upon our intellectual property rights. So far, we have not experienced any material difficulties in protecting against the infringement of our intellectual property rights. We have not had any material action brought against us by any third parties claiming that we have infringed any of their intellectual property rights. However, from time to time we may be involved in disputes relating to intellectual property rights belonging to or asserted by third parties. Competition We compete with both established multinational and domestic brands, as well as small targeted niche brands that continue to enter the Chinese and global beauty markets. We believe that we compete primarily on the basis of perceived value, including pricing and innovation, product efficacy, service to the customer, promotional activities, advertising, special events, new product introductions, e-commerce initiatives, direct sales, KOL collaborations, and other activities. It is difficult for us to predict the timing, scale and effectiveness of our competitors’ actions in these areas or the timing and impact of new entrants into the marketplace. For additional risks associated with our competitive position, see “Item 3. Key Information—D. Risk Factors—Risk Relating to Our Business and Industry—The beauty industry is highly competitive. If we are unable to compete effectively, we may lose our market share and our business, results of operations and financial condition may be materially and adversely affected.” Environmental, Social and Governance We are subject to numerous national, municipal and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and environmental protection, including those relating to emissions to the air, discharges to land and surface waters, generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, and registration and evaluation of chemicals. We maintain policies and procedures to monitor and control environmental, health and safety risks, and to monitor compliance with applicable environmental, health and safety requirements. Compliance with such laws and regulations pertaining to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon our capital expenditures, earnings or competitive position. However, environmental laws and regulations have tended to become increasingly stringent and, to the extent regulatory changes occur in the future, they could result in, among other things, increased costs to our company. 87 In May 2022, we issued our first ESG Report, which details our strategic ESG initiatives to develop a long-term, sustainable and environmentally-friendly business, and provides an overview of our achievements made during the fiscal year of 2021. Since then, we have published an ESG report annually, reflecting our continued focus on sustainability governance. In 2025, we further enhanced our transparency and international benchmarking by participating in the Corporate Sustainability Assessment conducted by S&P Global, a global ESG evaluation framework. In response to the challenges posed by global climate change, we systematically conducted greenhouse gas inventories covering both the upstream and downstream of our value chain and established a comprehensive roadmap toward carbon neutrality. Our targets include achieving 100% clean energy usage within our own operations by 2035, attaining net-zero carbon emissions within our own operational boundaries by 2040, and achieving full carbon neutrality across the entire value chain by 2050. These milestones underscore our commitment to aligning our corporate growth with global climate goals. We continue to invest in the fields of research and development and innovation as a cornerstone of our ESG strategy. Guided by the “Yatsen Technology Road” strategy and driven by innovative R&D as our core engine, we persistently provide customers with safe, high-quality products and services. In 2025, for the fourth consecutive year, we showcased our portfolio of brands at the International Federation of Societies of Cosmetic Chemists (IFSCC) Conference, with 11 high-quality research papers shortlisted for poster presentations. This recurring recognition from one of the world’s most prestigious cosmetic science authorities serves as a clear testament to the robustness of our R&D infrastructure and our ongoing commitment to technical innovation. Furthermore, we also continued to explore the journey of beauty, focusing on discovering the beauty of women, protecting the beauty of nature, and passing on the beauty of kindness to enable more people to enjoy a better life. We continue to carry out the “Create Better Life with Beauty Makeup” public welfare makeup training program, which is designed to tailor careers in beauty for women and help them achieve continuous professional growth and personal transformation. At the same time, we are committed to fostering an inclusive and equitable workplace. With a female representation of 78.6% as of our latest ESG report, we are dedicated to safeguarding the equal rights and interests for all employees. We give special attention to female employees’ career development and well-being, providing targeted support and health care. In 2024, we launched the Women-friendly Workplace Program, formally incorporating pay equity into our Diversity, Equity, and Inclusion (DEI) strategy. This initiative established an anonymous monitoring mechanism to track pay disparities and systematically reduce barriers for women in the workplace, including ensuring equal access to promotion opportunities and professional advancement. Insurance We maintain a range of insurance coverage in relation to our business that is customary for our industry, including, without limitation, property damage and public liability insurance. We have not made any material claims on any insurance policy maintained by us during the period beginning January 1, 2025 to the date of this annual report. Seasonality We experience seasonality in our business, reflecting a combination of seasonal fluctuations in internet usage and traditional retail seasonality patterns. For example, we typically generate a substantial portion of our net revenues in the second and the fourth calendar quarters as a result of higher sales during series of shopping festivals across online e-commerce platforms, such as “618” on June 18, “Double 11” on November 11 and “Double 12” on December 12. The seasonal trends that we have experienced in the past may not apply to, or be indicative of, our future operating results. 88 Regulations Most of our business is located in mainland China, and laws and regulations in mainland China are most relevant to our business. We also conduct limited logistics-related cargo import and export operations in Hong Kong, which are not material to our company as a whole. This section sets forth a summary of the most significant rules and regulations that affect our business activities in mainland China and Hong Kong. Regulations Relating to Cosmetic Products Regulatory authorities The National Medical Products Administration, under the State Administration for Market Regulation, is the government authority that monitors and supervises the administration of cosmetics, medical devices, and foods. The National Medical Products Administration’s predecessor, the China Food and Drug Administration, was established in March 2013 and separated from the Ministry of Health of the PRC, as part of an institutional reform of the State Council. Regulations relating to cosmetic products Pursuant to the Regulations on the Supervision and Administration of Cosmetics, promulgated by the State Council on June 16, 2020 and effective as of January 1, 2021, cosmetic products are divided into special cosmetic products and ordinary cosmetic products. Special cosmetic products refer to those cosmetics used for hair dye, hair perm, freckle removal and whitening, sun protection, anti-hair loss, as well as cosmetics claiming new functions and effects not previously regulated. Any cosmetic product not covered by such scope is an ordinary cosmetic product. The Regulations on the Supervision and Administration of Cosmetics highlight certain provisions including without limitation the follows: (i)Responsibilities of the different parties in the operation of cosmetics. Firstly, the Regulations on the Supervision and Administration of Cosmetics for the first time introduce the concepts of registrant and record-filing applicant of cosmetics. The applicant for registration or record-filing of cosmetics shall undertake the main responsibilities for the quality, safety and effectiveness claims of cosmetics. Specifically, an applicant for registration or record-filing of cosmetics shall be responsible for the registration or filing before sale of such cosmetics, the monitoring of adverse reactions, the evaluation and reporting, product risk control and recall, and safety reevaluation of the products and raw materials after sale of such cosmetics to ensure quality and safety of the registered/filed products. In addition, the claims for the effectiveness of all types of cosmetics shall be supported by sufficient scientific basis and an extract of the papers, research data or product evaluation material on which such effectiveness is claimed to be based shall be made public on websites designated by the regulatory authority. An applicant registering or filing the record for cosmetics shall be subject to the supervision of the National Medical Products Administration. Secondly, an applicant for registration or record-filing of cosmetics may entrust another enterprise, or the OEMs, with the production of cosmetics. The OEMs shall obtain the corresponding license for production of cosmetics and shall carry out production in accordance with the laws, regulations, mandatory national standards, technical specifications and contractual agreements, and be responsible for production activities and accept the supervision of the applicant for registration or record-filing of cosmetics. With respect to our business operation, we have applied for registration or record-filing of cosmetics under the Regulations on the Supervision and Administration of Cosmetics and undertake main responsibilities for quality, safety and effectiveness claims of our cosmetics products. (ii)Categories of cosmetics. Cosmetics are divided into special cosmetics and ordinary cosmetics instead of special purpose cosmetic products and non-special purpose cosmetic products. Special cosmetics refer to cosmetics for hair dye, hair perm, freckle removal and whitening, sun protection and hair loss prevention as well as those purporting to have new functions and effects, and ordinary cosmetics refer to cosmetics other than special cosmetics. The production and import of special cosmetics shall be registered with the National Medical Products Administration. The production and import of ordinary cosmetics are subject to the record-filing administration. 89 (iii)Legal consequences of violations. The Regulations on the Supervision and Administration of Cosmetics have raised the limit for penalties for noncompliance compared with former regulations. For example, monetary penalties on production of cosmetics without requisite permits, production of unregistered special cosmetics, use of banned materials and illegal use of materials may be subject to a fine of 30 times the value of the concerned products. Violations of the provisions of the Regulations on the Supervision and Administration of Cosmetics will result in different penalties ranging from fines (fixed range or, in cases of severe violations, based on the values of the illegally manufactured goods), confiscation of raw materials, products illegally manufactured or sold and illegally obtained gains, revoking licenses, and suspension of business. Furthermore, pursuant to the Regulations on the Supervision and Administration of Cosmetics, the responsible individual shall be subject to an industry operation banning period for five or ten years or even criminal liability. Pursuant to the Regulations on the Supervision and Administration of Cosmetics, a producer of cosmetic products shall obtain and maintain a license for cosmetic production issued by the local administrative regulator. In addition, special cosmetics shall be registered from the competent administrative regulator, otherwise those who produce or distribute special cosmetics may be subject to confiscation of the relevant products and illegal gains, a fine according to the value of the cosmetics illegally produced or distributed, or suspension of business or the revocation of the license for cosmetic production. In cases where producers cooperate with OEMs to manufacture such products, the OEM, instead of the producer, shall obtain and maintain the above-mentioned certificates. As for the labels of cosmetic products, information such as name and address of the registrant or the record-filing applicant of cosmetics, production license number, and standard number for product implementation shall be contained. The labels of such cosmetic product shall not contain any statement that explicitly and implicitly implies medical effects, and contain false or misleading content, and contain content contrary to public order and good morals or include any other content prohibited by the laws and regulations. Violation of such provisions may result in confiscation of the relevant products and illegal gains, monetary fine or other punishment. Pursuant to the Measures for the Administration of the Registration and Recordation of Cosmetics promulgated by the State Administration for Market Regulation on January 7, 2021, and effective as of May 1, 2021, ordinary cosmetics produced domestically shall be subject to the online record-filing procedure before the entry into the market. The competent administrative regulator shall conduct supervisory inspection of the activities relating to and recordation of record-filing applicant of cosmetics. Producers of such products will be ordered to take corrective measures if the inspection results revealed any noncompliance. In particular, if the recordation materials in relation to the safety of such cosmetics fail to comply with the requirements, producers of such products may be concurrently ordered to suspense the sale of such cosmetics. In order to coincide with the implementation of the Regulations on the Supervision and Administration of Cosmetics and the Measures for the Administration of the Registration and Recordation of Cosmetics, the National Medical Products Administration promulgated the Notice on Issuing the Measures for the Administration of the Registration and Recordation of Cosmetics on March 5, 2021, which provides that the record-filing applicant of cosmetics shall undergo recordation of cosmetics through the new information service platform for the recordation from May 1, 2021. In addition, it requires that record-filing applicant who has fulfilled the procedure of online record-filing on the original platform shall submit related information of the ordinary cosmetics through the new filing platform before May 1, 2022. As for the ordinary cosmetics, the annual reporting system is adopted from January 1, 2022, which requires that the record-filing applicant of cosmetics shall submit the annual report annually through the new filing platform mentioned above. The Measures for the Administration of the Online Trading of Cosmetics was promulgated by the National Medical Products Administration on March 31, 2023, which regulate the online trading activities of cosmetics and ensures the quality and safety of cosmetics. The measures provide for the obligations of online products operators, services providers and third-party platform operators. The Measures for the Administration on Inspection of Cosmetics, promulgated by the National Medical Products Administration on November 1, 2024, regulate the supervision and administration of cosmetics and the technical requirements specified in the compulsory national standards, technical specifications and materials on registration or recordation of cosmetics for cosmetics manufacturers and distributors. 90 Regulations on Corporate Governance On December 29, 2023, the Standing Committee of the National People’s Congress promulgated the amended PRC Company Law, or the Amended PRC Company Law, which superseded the existing PRC Company Law. The Amended PRC Company Law has made material amendments on corporate governance and shareholders rights of the PRC companies, including, among others, the statutory period for payment of registered capital, the setting of the board of directors and the board of supervisors, and transfer of equity interests in a company. With respect to the period for payment of the registered capital, pursuant to the Amended PRC Company Law, all shareholders of a PRC limited liability company shall fully pay up the registered capital subscribed for by such shareholders within five years since the date of establishment of such PRC limited liability company, unless otherwise provided by laws and regulations. With respect to any company established before the effective date of the Amended PRC Company Law, the period of capital contribution provided in its articles of association shall be amended to meet the time limit provided in the Amended PRC Company Law if such period of capital contribution in its articles of association exceeds that as required by the Amended PRC Company Law; with respect to any company whose period of capital contribution or amount of the registered capital are obviously abnormal, the competent governmental authority may require such company to adjust its period of capital contribution or amount of the registered capital in a timely manner. The Amended PRC Company Law provides that the detailed implementation measures for the aforesaid provisions will be formulated by the State Council of the PRC. If any shareholder fails to make capital contributions on schedule and in full as provided in the articles of association, the company shall send a written notice requesting such shareholder to pay up all overdue registered capital within a grace period no less than sixty days from the issuance date of such notice. If, upon the expiration of the foregoing grace period, such shareholder still hasn’t fulfilled the obligation of capital contribution with respect to such overdue registered capital, the company may, upon adoption of the resolution of the board of directors, send a notice of forfeiture to such shareholder in writing. Since the issuance date of the foregoing notice, such shareholder shall forfeit the equity interests for which the capital contribution has not been paid up. The forfeited equity interests shall be transferred or cancelled in accordance with the applicable laws. The Provisions by the State Council on Implementing the Registered Capital Registration and Management System under the PRC Company Law issued and became effective on July 1, 2024, which further specify the detailed requirements and measures of the registration and management of registered capital under the Amended PRC Company Law. Pursuant to such provisions, there shall be a three-year interim period from July 1, 2024 to June 30, 2027 for the existing companies to adjust their periods of capital contribution. If the period of capital contribution of a company established before the effective date of the Amended PRC Company Law exceeds the period prescribed under the Amended PRC Company Law, such company shall make an adjustment within the foregoing interim period to meet the requirements under the Amended PRC Company Law. The adjusted period of capital contribution shall be recorded in such company’s articles of association and publicized through the national enterprise credit information publicity system in accordance with laws. If a limited liability company established before the effective date of the Amended PRC Company Law fails to adjust its period of capital contribution during the interim period, the competent registration authority may require it to make adjustment so that this company’s period of capital contribution shall not exceed five years commencing from July 1, 2027 in accordance with laws. If such company has not made adjustment within the prescribed period, the competent registration authority shall make a special note which will be publicized through the national enterprise credit information publicity system. With respect to the board of directors and the board of supervisors, the Amended PRC Company Law eliminates the upper limit on the number of the directors of a limited liability company. In addition, after the effective date of the Amended PRC Company Law, limited liability companies, joint stock limited companies with small scale or a small number of shareholders and wholly state-owned companies may set up an audit sub-committee under the board of directors to replace the functions and powers of the board of supervisors, and such companies may not set the board of supervisors or any supervisor, but the limited liability companies with more than 300 employees and without a board of supervisors shall have an employee representative acting as a director, who shall be democratically elected by the company’s employees through a general assembly of employees or other democratic forms. With respect to the transfer of equity interest of a limited liability company, the Amended PRC Company Law stipulates that the shareholders of a limited liability company may transfer the equity interest to other persons except the shareholders of a limited liability company without the consent of the other shareholders, provided that such shareholder shall notify other shareholders in writing with respect to transfer of such equity interest. Other shareholders will be regarded as giving up the right of first refusal if they fail to reply within 30 days after receiving the written notice. If a shareholder transfers the equity interest held by it, it shall notify the company in writing to 91 request the company (i) to change the register of shareholders and (ii) to register the change with the competent enterprise registration authority. If the company refuses or fails to respond, the transferee and transferor may file a lawsuit with the competent court. Regulations Relating to Foreign Investment The Foreign Investment Law of the PRC, or the Foreign Investment Law, and the Implementing Regulations of the Foreign Investment Law of the PRC, or the Implementing Regulations of the Foreign Investment Law, provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment, where “pre-entry national treatment” means that the treatment given to foreign investors and their investments at market entry stage is no less favorable than that given to domestic investors and their investments, and “negative list” means the special administrative measures for foreign investment’s entry to specific fields or industries. Foreign investments beyond the negative list will be granted national treatment. Foreign investors shall not invest in the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with certain special requirements on shareholding and senior management personnel, etc. In the meantime, the competent government departments will formulate a catalogue of the specific industries, fields and regions in which foreign investors are encouraged and guided to invest according to the national economic and social development needs. The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Version), as promulgated on September 6, 2024 by the National Development and Reform Commission, and the Ministry of Commerce, and taking effect on November 1, 2024, and the Encouraged Industry Catalogue for Foreign Investment (2025 Version), as promulgated by the National Development and Reform Commission and the Ministry of Commerce on December 15, 2025 and became effective on February 1, 2026. Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. In order to coincide with the implementation of the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law, the Ministry of Commerce and the State Administration for Market Regulation promulgated the Measures for Reporting of Information on Foreign Investment on December 30, 2019, effective as of January 1, 2020, which provides that foreign investors or the foreign-invested enterprises shall submit investment information by submitting initial reports, change reports, deregistration reports, and annual reports through an enterprise registration system and a national enterprise credit information publicity system. Announcement of the Ministry of Commerce 2019 No.62-Announcement on Matters Concerning the Reporting of Information on Foreign Investment promulgated by the Ministry of Commerce on December 31, 2019 and Circular of the State Administration for Market Regulation on Effective Work on Registration of Foreign-invested Enterprises for the Implementation of the Foreign Investment Law promulgated by the State Administration for Market Regulation on December 28, 2019 further refine the related rules. On June 9, 2025, the Ministry of Finance issued the Notice of Issues Concerning Financial Treatments of Enterprises after the Implementation of the Company Law and Foreign Investment Law, according to which the foreign-owned enterprises are no longer required to accrue the reserve fund, enterprise expansion fund, and staff bonus and welfare fund that were previously mandated under the previous foreign investment laws. Any balances of the reserve fund accrued prior to 2025 are to be transferred to the statutory reserve, and any balances of the enterprise expansion fund are to be transferred to the discretionary reserve. The staff bonus and welfare fund accrued prior to 2025 shall continue to be used according to its original purpose. Foreign investment law On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law of the PRC, or the Foreign Investment Law, which became effective on January 1, 2020, in replacement of the former set of laws, implementation rules and ancillary regulations. The organization form, organization and activities of foreign-invested enterprises shall be governed, among others, by the PRC Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises established before the implementation of the Foreign Investment Law may maintain their original organization form and structure within five years after the implementation of the Foreign Investment Law. The Foreign Investment Law mainly provides for four forms of foreign investments: (a) establishment of a 92 foreign-invested enterprise within PRC by a foreign investor, individually or collectively with other investors; (b) acquisition of shares or equity interests in, asset interests of, or other like rights and interests of an enterprise within PRC by a foreign investor; (c) investments in a new project within the PRC by a foreign investor, individually or collectively with other investors, and (d) foreign investors’ investments in the PRC through any other methods under laws, administrative regulations, or provisions prescribed by the State Council of the PRC. It does not address the concept and regulatory regime of VIE structures and uncertainties remain in relation to its interpretation and implementation. On December 26, 2019, the State Council promulgated the Implementing Regulations of the Foreign Investment Law of the PRC, or the Implementing Regulations of the Foreign Investment Law, which became effective on January 1, 2020. The Implementing Regulations of the Foreign Investment Law strictly implements the legislative principles and purpose of the Foreign Investment Law. It emphasizes promoting and protecting the foreign investment and refines the specific measures to be implemented. On the same day, the Supreme People’s Court issued an Interpretation on the Application of the Foreign Investment Law of the PRC, effective as of January 1, 2020. This interpretation applies to all contractual disputes arising from the acquisition of the relevant rights and interests by a foreign investor by way of gift, division of property, merger of enterprises, division of enterprises. Regulations Relating to Value-Added Telecommunications Services Foreign investment in value-added telecommunications Foreign direct investment in telecommunications companies in China is regulated by the Administrative Provisions on Foreign-Invested Telecommunications Enterprises, which was issued by the State Council on December 11, 2001, and most recently amended on May 1, 2022. The Administrative Provisions on Foreign-Invested Telecommunications Enterprises provides that a foreign-invested telecommunications enterprise in the PRC must be established as a sino-foreign equity joint venture for operations in the PRC except as otherwise provided by the authority. Under these regulations and in accordance with WTO-related agreements, the foreign party investing in a foreign-invested telecommunications enterprise in the PRC engaging in value-added telecommunications services may hold up to 50% of the ultimate equity interests of such enterprise. In addition, the major foreign party as the shareholder of the foreign-invested telecommunications enterprise in the PRC must satisfy a number of stringent performance and operational experience requirements, including demonstrating a good track record and experience in operating a value-added telecommunications business. The foreign-invested telecommunications enterprise in the PRC that meets these requirements must obtain approvals from the Ministry of Industry and Information Technology, and Ministry of Commerce or their authorized local counterparts, which retain considerable discretion in granting approvals. Furthermore, the foreign party investing in e-commerce business, as a type of value-added telecommunications services, has been allowed to hold up to 100% of the equity interests of the foreign-invested telecommunications enterprise in the PRC based on the Circular of the Ministry of Industry and Information Technology on Removing the Restrictions on Shareholding Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business issued on June 19, 2015 and the current effective Catalogue of Telecommunications Services, or the Telecom Catalog. On July 13, 2006, the Ministry of Information Industry of the PRC (which is the predecessor of the Ministry of Industry and Information Technology) promulgated the Notice of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business, or the MII Notice, which reiterates certain requirements of the Administrative Provisions on Foreign-Invested Telecommunications Enterprises and strengthens the administration by the Ministry of Information Industry. Under this notice, if a foreign investor intends to invest in PRC value-added telecommunications business, the foreign investor must establish a foreign invested enterprise and apply for the relevant license for value-added telecommunications services. In addition, a domestic company that holds a license for value-added telecommunications services is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors to conduct value-added telecommunications businesses illegally in China. Trademarks and domain names that are used in the provision of value-added telecommunications services must be owned by the license holder or its shareholders. This notice also requires that each value-added telecommunications services license holder has appropriate facilities for its approved business operations and maintain such facilities in the business regions covered by its license. The holder of a license for value-added telecommunications services shall improve the measures for safeguarding the network and information, establish the administrative policies on information safety, set up the procedures for 93 handling network emergencies and information safety and implement the liabilities system for information safety in accordance with the standards set forth in the relevant PRC regulations. Due to a lack of interpretive materials from the PRC governmental authorities, there are uncertainties regarding whether PRC governmental authorities would consider our corporate structure and contractual arrangements to constitute foreign ownership of a value-added telecommunications business. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related business and companies, including limitations on our ability to own key assets.” In order to comply with PRC regulatory requirements, we operate a portion of our business through the VIE, with which we have contractual relationships but in which we do not have direct ownership interest. If our current ownership structure is found to be in violation of current or future PRC laws, rules or regulations regarding the legality of foreign investment in the PRC internet sector, we could be subject to severe penalties. Telecommunications regulations The Telecommunications Regulations of the PRC promulgated on September 25, 2000 and amended on July 29, 2014 and February 6, 2016 respectively, are the primary PRC regulations governing telecommunications services, which set out the general framework for the provision of telecommunications services within the PRC. These regulations require that telecommunications service providers shall obtain licenses prior to commencing operations. These regulations draw a distinction between basic telecommunications services and value-added telecommunications services. The Telecom Catalog, promulgated by the Ministry of Information Industry on February 21, 2003 and most recently amended by the Ministry of Industry and Information Technology on June 6, 2019, and issued as an attachment to the Telecommunications Regulations of the PRC, identifies internet information services and online data processing and transaction processing as value-added telecommunications services. On July 3, 2017, the Ministry of Industry and Information Technology issued the revised Administrative Measures for the Licensing of Telecommunications Business, or the Telecom License Measures, which became effective on September 1, 2017, to supplement the Telecommunications Regulations of the PRC. The Telecom License Measures require that an operator of value-added telecommunications services obtain a license for value-added telecommunications services from the Ministry of Industry and Information Technology or its provincial level counterparts. The term of a license for value-added telecommunications services is five years and the license holder is subject to annual inspection. Internet information services On September 25, 2000, the State Council promulgated the Measures for the Administration of Internet Information Services, as amended on January 8, 2011 and further amended on December 6, 2024, and effective as of January 20, 2025. Under these measures, internet information services are categorized into commercial internet information services and non-commercial internet services. The operators of non-commercial internet information services must file with the governmental authorities and operators of commercial internet information services in China must obtain an ICP License from the governmental authorities. And the provision of particular information services, such as news, publishing, education, healthcare, medicine and medical advice must also comply with relevant laws and regulations and obtain approval from the competent governmental authorities. Internet information service providers are required to monitor their websites. They shall not post or disseminate any content that falls within prohibited categories provided by laws or administrative regulations and must stop providing any such content on their websites. The PRC governmental authorities may order ICP License holders that violate the content restrictions to correct those violations and revoke their ICP Licenses in cases of gross violations. 94 The Ministry of Industry and Information Technology released the Circular on Regulating the Use of Domain Names in Internet Information Services on November 27, 2017, effective as of January 1, 2018, which provides that the domain names used by the internet information service provider in providing internet information services shall be registered and owned by such internet information service provider, and if the internet information service provider is a legal entity, the domain name registrant shall be the legal entity (or any of its shareholders), or its principal or senior manager. Regulations Relating to Online Trading and E-Commerce On January 26, 2014, the State Administration for Industry and Commerce (which is the predecessor of the State Administration for Market Regulation) promulgated the Administrative Measures for Online Trading, which became effective on March 15, 2014, to regulate all operating activities for product sales and services offered via the internet (including mobile internet). It stipulates the obligations of online products operators and services providers and certain special requirements applicable to third-party platform operators. On August 31, 2018, the Standing Committee of the National People’s Congress promulgated the E-Commerce Law of the PRC, or the E-Commerce Law, which became effective on January 1, 2019. The promulgation of the E-Commerce Law established the basic legal framework for the development of China’s e-commerce business and clarified the obligations of the e-commerce business operators and the possible legal consequences if e-commerce business operators are found to be in violation of legal obligations. For example, pursuant to the E-Commerce Law, the e-commerce business operators shall disclose information about goods or services provided comprehensively, truthfully, accurately and promptly in order to protect the consumers’ rights to know and rights to choose. The e-commerce business operators shall not fabricate transactions or users’ comments to conduct false or misleading business promotions so as to defraud or mislead consumers. Violation of the provisions of the E-Commerce Law may result in being ordered to make corrections within a prescribed period of time, confiscation of illegally obtained gains, fines, suspension of business, inclusion of such violations in the credit records and possible civil liabilities. On March 15, 2021, the State Administration for Market Regulation promulgated the Administrative Measures for Online Trading, which took effect on May 1, 2021 and as amended on March 18, 2025. The measures supplement the obligations of e-commerce business operators under the E-Commerce Law in connection with business activities for product sales and services offered via internet, and specifies the possible legal consequences when e-commerce business operators are found to be in violation of the legal obligations. For example, the e-commerce business operators should act in compliance with the requirements relating to data protection, commercial promotion, registration for record, and unfair trading. Legal consequences of violating the measures may include credit record enforcement as well as civil and even criminal liabilities. 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, or the Livestreaming E-Commerce Measures, which took effect on February 1, 2026. The Livestreaming E-Commerce Measures represent the first specialized regulation dedicated to the livestreaming e-commerce sector, which explicitly define the legal obligations and liabilities of livestreaming platforms, livestreaming channel operators, live streaming marketing personnel, and multi-channel network (MCN) agencies. For example, livestreaming channel operators are required to establish and improve ex-ante compliance review mechanisms and to review displayed content, presentation scripts, clothing, sets, props, and other relevant elements in accordance with applicable regulations prior to each livestream session. On June 20, 2025, the State Council issued the Provisions on the Reporting of Tax-Related Information by Internet Platform Enterprises, which require internet platforms providing network transaction services to business operators within China to report operators’ identity information, transaction volume, revenue information, and fees paid to the platform. For overseas platforms that do not have an established operational entity within China, the platform is required to designate an agent within China to fulfill such reporting obligations. Regulations Relating to Medical Devices The Regulation on the Supervision and Administration of Medical Devices, as amended by the State Council on June 1, 2021, regulates entities that engage in the research and development, production, operation, use, supervision 95 and administration of medical devices in the PRC. Medical devices are classified according to their risk levels. Class I medical devices are medical devices with low risks, and the safety and effectiveness of which can be ensured through routine administration. Class II medical devices are medical devices with moderate risks, which are strictly controlled and administered to ensure their safety and effectiveness. Class III medical devices are medical devices with relatively high risks, which are strictly controlled and administered through special measures to ensure their safety and effectiveness. The evaluation of the risk levels of medical devices takes into consideration the medical devices’ objectives, structural features, methods of use and other factors. Registration certificates are required for Class II and Class III medical devices. The classification of specific medical devices is stipulated in the Medical Device Classification Catalog, which was issued by the China Food and Drug Administration on August 31, 2017 and took effect on August 1, 2018. Violations of the Regulation on the Supervision and Administration of Medical Devices shall result in different penalties ranging from fines (fixed range or based on the values of the illegally manufactured goods in severe violations), confiscation of products illegally sold and illegally obtained gains, revoking licenses, suspension of business, being refused to review and approve the medical device permit within ten years after such violation, or even criminal liability. The Catalogue of Medical Device Classification issued by the China Food and Drug Administration on August 1, 2018 regulates that color soft hydrophilic contact lens, astigmatic soft hydrophilic contact lens, soft corneal contact lens, soft hydrophilic contact lens, and soft contact lens aseptic normal saline solution are Class III medical devices. The Measures for the Administration and Supervision of Online Sales of Medical Devices issued by the China Food and Drug Administration on December 20, 2017, regulates entities that engage in the online sales of medical devices. Enterprises engaged in online sales of medical devices shall be medical device production and operation enterprises that have obtained a medical device production license or operation license in accordance with the law or have been filed for record, unless such license or record-filing is not required by laws and regulations. Regulations Relating to Food Business China has adopted a licensing system for food supply operations under the Food Safety Law and its implementation rules. The Food Safety Law of the PRC, which took effect from June 1, 2009 and was amended by the Standing Committee of the National People’s Congress on April 24, 2015, December 29, 2018 and April 29, 2021, respectively, and the Implementation Regulations of the Food Safety Law of the PRC, which took effect from July 20, 2009 and were amended by the State Council on February 6, 2016 and on October 11, 2019, respectively, set up a system for the supervision and administration of food safety and stipulate food safety standards. The State Council implements a licensing system for food production and transaction. To engage in food production, sale or catering services, the business operator shall obtain a license in accordance with the laws. Furthermore, the State Council implements strict supervision and administration for special categories of foods such as healthcare foods, and formula foods for special medical purposes. Pursuant to the aforementioned laws and regulations, third-party platform providers of online transactions of food shall conduct real name registration for participating food business operators, and specify their food safety management responsibilities, and examine their licenses if such licenses are required in accordance with the laws and regulations. Upon discovery of any violation by participating food business operators, third-party platform providers for online food transactions shall promptly suspend the business of the offender and forthwith report to the food safety supervision and administration department. Upon discovery of a serious illegal act, the third-party platform provider shall forthwith stop providing online trading platform service. In June 2023, the State Administration for Market Regulation promulgated the Administrative Measures for Food Operation Licensing and filing, which became effective on December 1, 2023 and replaces its predecessor regulation. The measures regulate the food business licensing and filing activities, aiming at strengthening the supervision and management of food business and ensuring food safety. Pursuant to the measures, food business operators shall obtain a license for operating a food business with respect to each venue where they engage in food business activities, unless certain exceptions are available. The term of a food business license is five years. Regulations Relating to Product Quality and Consumers Protection According to the Product Quality Law of the PRC, which took effect on September 1, 1993 and was amended by the Standing Committee of the National People’s Congress on July 8, 2000, August 27, 2009 and December 29, 2018 respectively, products for sale must satisfy relevant safety standards and sellers shall adopt measures to maintain 96 the quality of products for sale. Sellers may not mix impurities or imitations into products, or pass counterfeit goods off as genuine ones, or defective products as good ones or substandard products as standard ones. For sellers, any violation of state or industrial standards for health and safety or other requirements may result in civil liabilities and administrative penalties, such as compensation for damages, fines, confiscation of products illegally manufactured or sold and the proceeds from the sales of such products illegally manufactured or sold and revoking business license; in addition, severe violations may subject the responsible individual or enterprise to criminal liabilities. According to the Consumers Rights and Interests Protection Law of the PRC, which became effective on January 1, 1994 and was amended by the Standing Committee of the National People’s Congress on August 27, 2009 and October 25, 2013, respectively, business operators should guarantee that the products and services they provide satisfy the requirements for personal or property safety, and provide consumers with authentic information about the quality, function, usage and term of validity of the products or services. The consumers whose interests have been damaged due to the products or services that they purchase or receive on the internet trading platforms may claim damages against sellers or service providers. Where the operators of the online trading 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 against the operators of the online trading platforms. Operators of online trading platforms that clearly knew 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. Moreover, if business operators deceive consumers or knowingly sell substandard or defective products, they should not only compensate consumers for their losses, but also pay additional damages equal to three times the price of the goods or services. The Regulations on the Implementation of the Law on the Protection of Consumer Rights and Interests, promulgated by the State Council of the PRC on March 19, 2024 and took effect on July 1, 2024, provide detailed guidelines for the implementation of the Consumers Rights and Interests Protection Law of the PRC. On January 6, 2017, the State Administration for Industry and Commerce issued the Interim Measures for Seven-day Unconditional Return of Online Purchased Goods, which became effective on March 15, 2017 and was amended on October 23, 2020, further clarifying the scope of consumers’ rights to make returns without a reason, including exceptions, return procedures and online trading platform operators’ responsibility to formulate seven-day unconditional return rules and related consumer protection systems, and supervise the merchants for compliance with these rules. Regulations Relating to Import and Export Goods Pursuant to the Customs Law of the PRC, promulgated by the Standing Committee of the National People’s Congress on January 22, 1987 and last amended on April 29, 2021, unless otherwise stipulated, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers that have registered with the Customs. The consignees and consignors for import or export of goods and the customs brokers engaged in customs declaration shall register with the Customs in accordance with the laws. Pursuant to the Provisions of the People’s Republic of China on the Administration of Recordation of Customs Declaration Entities, promulgated by the General Administration of Customs on November 19, 2021. The customs declaration entities include the consignee or consignor of imported or exported goods and the customs declaration enterprise, as being filed with the customs. In the event the consignee or consignor of imported or exported goods or a customs declaration enterprise applies for recordation, it shall obtain the qualification of market entities; particularly where the consignee or consignor of imported or exported goods applies for recordation, it shall be filed as a foreign trade business. 97 In addition, pursuant to the Foreign Trade Law of the PRC promulgated by the Standing Committee of the National People’s Congress on May 12, 1994, amended on December 30, 2022 and further amended on December 27, 2025, and the Notice by the Department of Enterprise Management and Audit-Based Control of the General Administration of Customs of Matters Concerning the Recordation of the Consignees and Consignors of Imported and Exported Goods promulgated by the General Administration of Customs of the PRC on January 3, 2023, a consignee or consignor of imported or exported goods who applies for recordation shall be qualified as a market entity and is not required to be filed as a foreign trade business operator. The Standing Committee of the National Congress of the PRC promulgated the Tariff Law of the PRC on April 26, 2024, which took effect on December 1, 2024. The Tariff Law of the PRC provides a comprehensive legal framework for China’s tariff policies, including import and export duties, anti-dumping measures, and countervailing duties. Regulations Relating to Online Transmission of Audio-Visual Programs On April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-State-owned Capital into the Cultural Industry. On July 6, 2005, five PRC regulatory agencies, namely, the Ministry of Culture, or the MOC, the State Administration of Radio, Film and Television (which is the predecessor of the National Radio and Television Administration), the General Administration of Press and Publication, or the GAPP, the National Development and Reform Commission and Ministry of Commerce, jointly promulgated the Several Opinions on Canvassing Foreign Investment into the Cultural Sector. According to these regulations, non-State-owned capital and foreign investors are prohibited from conducting the business of transmitting audio-visual programs through information network. According to the Administrative Provisions on Internet Audio-visual Program Service, jointly promulgated by the State Administration of Radio, Film and Television and the Ministry of Information Industry on December 20, 2007, amended by the State Administration of Press, Publication, Radio, Film and Television, on August 28, 2015 and further amended on June 3, 2025, providers of internet audio-visual program services are required to obtain a License for Online Transmission of Audio-visual Programs issued by the competent department of radio, film and television or complete certain record-filing procedures. Providers of internet audio-visual program services are generally required to be either state-owned or state-controlled by the PRC government, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the State Administration of Radio, Film and Television. In 2008, the State Administration of Radio, Film and Television issued the Notice on Relevant Issues Concerning Application and Approval of License for Online Transmission of Audio-visual Programs, amended on August 28, 2015, which further sets forth detailed provisions concerning the application and approval process regarding the License for Online Transmission of Audio-visual Programs. The notice also provides that the internet audio-visual program services providers who engaged in such services prior to the promulgation of the Administrative Provisions on Internet Audio-visual Program Service shall also be eligible to apply for the license so long as their violation of the laws and regulations is minor and can be rectified in a timely manner and they have no records of violation during the latest three months prior to the promulgation of the Administrative Provisions on Internet Audio-visual Program Service. Further, on March 31, 2009, the State Administration of Radio, Film and Television promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-visual Programs, which reiterates the requirement for the internet audio-visual programs to be published to the public through information networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstitions or other similarly prohibited elements. On March 17, 2010, the State Administration of Radio, Film and Television issued the Internet Audio-visual Program Services Categories (Provisional), amended on March 10, 2017, which classified internet audio-visual program services into four categories. In addition, the Notice concerning Strengthening the Administration of the Streaming Service of Online Audio-Visual Programs promulgated by the State Administration of Press, Publication, Radio, Film and Television on September 2, 2016 emphasizes that, unless a specific license is granted, an audio-visual programs service provider is forbidden from engaging in live streaming on major political, military, economic, social, 98 cultural and sports events. On November 2, 2016, the State Administration of Press, Publication, Radio, Film and Television issued the Notice on Strengthening the Management of Audio-visual Programs Disseminated through Online Social Platforms such as Weibo and Weixin, which stipulates that, as to Internet audio-visual program services carried out by any institutions or individual without a License for Online Transmission of Audio-visual Programs through Weibo accounts, Weixin official accounts, or other social applications, the online platform shall be held as the service provider. The platform is required to assume all management responsibilities, including content screening, in accordance with the regulations governing audio-visual program. Furthermore, the scope of programs provided by such institutions and individuals shall not exceed the business scope specified in the platform’s own license. As of the date of this annual report, we have not obtained a License for Online Transmission of Audio-visual Programs. The PRC regulations do not specify whether short video clips constitute Online Audiovisual Programs requiring such license. For detailed analysis, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—If we fail to obtain and maintain the requisite licenses, permits, registrations and filings applicable to our business, or fail to obtain additional licenses, permits, registrations or filings that become necessary as a result of new enactment or promulgation of government policies, laws or regulations or the expansion of our business, our business and results of operations may be materially and adversely affected.” On November 4, 2016, the Office of the Cyberspace Administration of China promulgated the Administrative Provisions on Internet Live-Streaming Services. According to these provisions, an internet live-streaming service provider shall (i) establish a live-streaming content review platform; (ii) conduct authentication registration of internet live-streaming issuers based on their identity certificates, business licenses and organization code certificates; and (iii) enter into a service agreement with internet live-streaming services user to specify both parties’ rights and obligations. According to the Guidelines on Strengthening Supervision of Online Live Broadcasting Marketing Activities promulgated by the State Administration for Market Regulation on November 5, 2020, any network platform will assume the responsibility and obligation as an e-commerce platform operator according to the E-Commerce Law; provided that this platform provides operators, who sell goods or provide services via internet live broadcasting, with services such as internet operation place, transaction matchmaking and information publication in order for the transaction parties to independently complete their transaction activities. According to the Notice on Strengthening the Management of Online Show Live Broadcasting and E-commerce Live Broadcasting promulgated by the National Radio and Television Administration on November 12, 2020, live broadcasting platforms for online shows are requested to strengthen positive value guidance and enable those tasteful, meaningful, interesting and warm live-broadcasting programs to have good traffic, and to prevent the spread of the trends of wealth flaunting, money worshiping and vulgarity. In addition, the number of content reviewers a platform is required to keep must in principle be no less than 1:50 of the number of live broadcasting rooms. Live broadcasting platforms for online shows need to manage the hosts and “reward” users based on the real-name registration system, and users who have not registered with real names or who are minors are prohibited from making rewards. The live broadcasting platforms are required to implement real-name registration system by real-name verification, face recognition, manual review and other measures to prevent minors from making rewards. The platform shall limit the maximum amount of rewards each user may give per time, day and month. Live streaming platforms for e-commerce shall not illegally produce and broadcast, beyond their business scope of e-commerce, any commentary programs unrelated to sales of goods. According to the Law of the PRC on the Protection of Minors (2020 Revision), which took effect on June 1, 2021, among others, live broadcasting service providers are not allowed to provide minors under age 16 with online live broadcasting publisher account registration service, and must obtain the consent from parents or guardians and verify the identity of the minors before allowing minors aged 16 or above to register live broadcasting publisher accounts. According to the Notice on Strengthening the Administration of the Internet Live Streaming Service jointly promulgated by the Ministry of Industry and Information Technology, the Ministry of Public Security of the PRC and other government agencies on August 1, 2018, internet live streaming service providers shall go through the procedures of filing with the competent department of telecommunications. The internet live streaming service providers engaged in telecommunications business and internet news information, network performances and internet live streaming of audio-visual programs shall apply to the relevant departments for permission to operate such 99 telecommunication business and shall perform the procedures of record-filing with the local public security department within 30 days after the live streaming service being operated. Furthermore, pursuant to the Administrative Provisions on Online Audio and Video Information Services jointly promulgated by the Cyberspace Administration of China, Ministry of Culture and Tourism of the PRC and National Radio and Television Administration on November 18, 2019 and effective on January 1, 2020, online audio and video information services providers shall obtain the legally required qualifications and certificates. They shall also fulfill their responsibilities as information content management entities, such as having in place professional staff commensurate with their service scale, and establishing the systems of user registration, content review, information release, intellectual property rights protection and minority protections and other mechanisms. Moreover, when the online audio and video information services provider produce, publish or spread untrue audio-visual information by way of utilizing new technologies such as deep learning or virtual reality, the disseminated information shall be identified in a noticeable way. Regulations Relating to Production of Radio and Television Programs On July 19, 2004, the State Administration of Radio, Film and Television issued the Regulations on the Administration of Production and Operation of Radio and Television Programs, which took effect on August 20, 2004 and was most recently amended on December 1, 2020. These regulations require any entities engaging in the production and operation of radio and television programs to obtain a license for such businesses from the National Radio and Television Administration or its provincial branches. Entities with the permit to produce and distribute radio and television programs must conduct their business operations strictly in compliance with the approved scope of production and operations and these entities (except radio and TV stations) must not produce radio and TV programs regarding current political news or similar subjects. On July 6, 2012, the State Administration of Radio, Film and Television and the Cyberspace Administration of China issued the Notice Regarding Further Enhancement of Management of Online Audio and Video Programs such as Online Drama Series and Micro Films, pursuant to which providers of internet audio-visual program services which are engaged in the production of online audio-visual programs such as online drama series and micro films and broadcast such programs on their own websites shall lawfully obtain the permit to produce and distribute radio and television programs issued by competent governmental authorities and corresponding License for Online Transmission of Audio-visual Programs at the same time. Providers of internet audio-visual program services shall report the information on online audio-visual programs such as online drama series and micro films which have been reviewed and approved to the provincial branches of the State Administration of Radio, Film and Television in their domiciles for filing. The State Administration of Radio, Film and Television issued a Supplementary Notice on Further Enhancement of Management of Online Audio and Video Programs such as Online Drama Series and Micro Films on January 2, 2014, which reiterates the providers of online audio and video programs such as online drama series and micro films shall lawfully obtain the permit to produce and distribute radio and television programs issued by competent governmental authorities. Online audio and video programs produced by unlicensed organizations shall not be broadcast. Since the PRC laws do not specify whether online short video clips, other than short drama series and micro films, shall be governed by regulations on Radio and Television Programs, there remain uncertainties as to whether we are required to obtain the Permit for Production and Operation of Radio and Television Programs in the level of law. As of the date of this annual report, Huizhi Weimei has obtained the Permit for Production and Operation of Radio and Television Programs. For details on the risks associated with failure to obtain such license or permit, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—If we fail to obtain and maintain the requisite licenses, permits, registrations and filings applicable to our business, or fail to obtain additional licenses, permits, registrations or filings that become necessary as a result of new enactment or promulgation of government policies, laws or regulations or the expansion of our business, our business and results of operations may be materially and adversely affected.” 100 Regulations Relating to Franchising Operations The Administrative Regulations on Commercial Franchise Operations were promulgated by the State Council on February 6, 2007, effective as of May 1, 2007, under which a franchisor shall have a well-established operation model, be able to provide the franchisee with long-term management guidance, technical support, business training and other services, and have at least two direct sales stores and have undertaken the business for more than a year. A franchisor shall, within 15 days of its first franchising contract signing, file with the competent commerce authority accordingly. Pursuant to the Administrative Regulations on Commercial Franchise Operations, a franchising contract shall include but not be limited to the following terms: the basic information of the franchisor and franchisees, the term of the contract, the type, amount and payment(s) of the franchising fees, the specific content of operation guidance, technical supports and business training as well as the method for providing the same, the quality requirements and quality control measures, the marketing and advertisements arrangements, the consumer protection and indemnification, the change, cancelation or termination of the contract, the breach of the contract, and the dispute resolution, which shall all be put in writing. Moreover, according to the these regulations, the franchisee shall be allowed to unilaterally cancel the franchising contract within a certain period of time; the franchising term, unless the franchisee otherwise agrees, shall be no less than three years (renewals are excluded); the purpose and refund conditions and means of the fees paid by the franchisee to the franchisor in advance of the establishment of the franchising contract shall be clarified in writing; the usage of publicity and promotion fees paid by the franchisee to the franchisor shall be disclosed to the franchisee in a timely manner; the franchisee may not transfer the franchise rights to a third party without the consent of the franchisor; and the franchisor shall report the information about the conclusion of franchise contracts in the previous year to the competent commerce authority in the first quarter of each year. In addition to these regulations, the Ministry of Commerce has also promulgated two implementing regulations: the Administrative Measures for Archival Filing of Commercial Franchises, promulgated on May 1, 2007 and most recently amended on December 29, 2023; and the Administrative Measures on Information Disclosure Requirements for Commercial Franchises, which was promulgated on April 30, 2007 and was then amended on February 23, 2012 and came into effect on April 1, 2012. The above two implementing regulations, together with the Administrative Regulations on Commercial Franchise Operations form the basic legal framework for the regulation of the PRC franchise operations. Regulations Relating to Advertising In 1994, the Standing Committee of the National People’s Congress promulgated the Advertising Law of the PRC, which was recently amended on April 29, 2021 and became effective on the same date. The Advertising Law of the PRC regulates commercial advertising activities in the PRC and sets out the obligations of advertisers, advertising operators, advertising publishers and advertisement endorsers, and prohibits any advertisement from containing any obscenity, pornography, gambling, superstition, terrorism or violence-related content. Any advertiser in violation of such requirements on advertisement content will be ordered to cease publishing such advertisements and imposed a fine, the business license of such advertiser may be revoked, and the authorities may revoke the approval document for advertisement examination and refuse to accept applications submitted by such advertiser for one year. In addition, any advertising operator or advertising publisher in violation of such requirements will be imposed a fine, and the advertisement fee received will be confiscated; in severe circumstances, the business license of such advertising operator or advertising publisher may be revoked. The Measures for the Administration of Internet Advertising, which regulate the internet-based advertising activities were adopted by the State Administration for Market Regulation on February 25, 2023 and became effective on May 1, 2023. According to these measures, internet advertisers are responsible for the authenticity of the advertisements content and all online advertisements must be identifiable so that viewers can identify them as advertisements. Publishing and circulating advertisements through the internet shall not affect the normal use of the internet by users. These measures prohibit inducing users to click advertising links or content by the following deceptive or misleading means: (i) using fake system or fake alarms on system updates, system errors, clearances, notices and so on, (ii) using fake symbols for playing content, start, pause, return or so on, (iii) using deceptive promises relating to awards, or (iv) using other means to induce users to click on the content of advertisements. In addition, advertisements for cosmetic products are prohibited from publishing on any internet medium targeting minors. 101 On December 12, 2025, the State Administration for Market Regulation released the Draft Guidelines for Law Enforcement on Advertising Citation Content for public comment, with the consultation period ending on January 12, 2026. The Draft Guidelines are intended to regulate advertising citation practices in China and further elaborate on three key principles. First, the Draft Guidelines clarify standards for authority by imposing specific requirements on the reliability of cited sources. Second, they regulate the presentation of cited content, prohibiting the use of out-of-context or ambiguous statements. Third, they seek to curb improper advertising practices, such as the use of “large-font/small-font” disclaimers, which may enable advertisers to evade responsibility or mislead consumers through inconspicuous disclosures. Regulations Relating to Leasing Pursuant to the Law on Administration of Urban Real Estate of the PRC promulgated by the Standing Committee of the National People’s Congress on July 5, 1994 and amended on August 30, 2007, August 27, 2009, August 26, 2019 and took effect on January 1, 2020, and the Administrative Measures for Commodity House Leasing promulgated by the Ministry of Housing and Urban-Rural Development on December 1, 2010 and taking effect on February 1, 2011, when leasing premises, the lessor and lessee are required to enter into a written lease contract, containing such provisions as the leasing term, use of the premises, rental and repair liabilities, and other rights and obligations of both parties. Both lessor and lessee are also required to register the lease with the real estate administration department within thirty days upon the conclusion of the lease contract. If the lessor and lessee fail to go through the registration procedures, both lessor and lessee may be subject to fines. According to Part III of the PRC Civil Code, which are pertinent to contracts, 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. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid. Pursuant to Part II of the PRC Civil Code, which are pertinent to property rights, if a mortgagor leases the mortgaged property before the mortgage contract is executed, the previously established leasehold interest will not be affected by the subsequent mortgage; and where a mortgagor leases the mortgaged property after the creation and registration of the mortgage interest, the leasehold interest will be subordinated to the registered mortgage. Regulations Relating to Construction Project Pursuant to the Regulations on Planning Administration Regarding Assignment and Transfer of the Rights to Use of the State-Owned Land in Urban Area promulgated by the Ministry of Construction on December 4, 1992 and amended on January 26, 2011, a construction land planning permit shall be obtained from the municipal planning authority with respect to the planning and use of land. Pursuant to the PRC Urban and Rural Planning Law promulgated by the Standing Committee of the National People’s Congress on October 28, 2007 and most recently amended on April 23, 2019, a construction work planning permit must be obtained from the competent urban and rural planning government authority for the construction of any structure, fixture, road, pipeline, or other engineering project within an urban or rural planning area. After obtaining a construction work planning permit, a construction enterprise must apply for a construction work commencement permit from the housing and urban-rural development administrative department of a local people’s government at or above the county level or above pursuant to the Administrative Provisions on Construction Permit of Construction Projects, promulgated by the Ministry of Construction (the predecessor of the Ministry of Housing and Urban-Rural Development) on October 15, 1999, and as most recently amended on March 30, 2021. Pursuant to the Administrative Measures for Reporting Details Regarding Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Construction on April 7, 2000 and amended on October 19, 2009, and the Provisions on Acceptance Examination upon Completion of Buildings and Municipal Infrastructure promulgated by the Ministry of Housing and Urban-Rural Development on December 2, 2013, the construction enterprise shall complete the project inspection required by the above provisions and shall go through the filing procedures with the competent governmental authorities where the construction project is located within 15 days after the inspection is completed. 102 The Construction Law of PRC, which took effect on November 1, 1997 and was most recently amended on April 23, 2019, respectively, is primarily aimed at regulating the construction industry. Pursuant to the Construction Law of PRC, the developer shall apply for a construction permit prior to commencement of a construction project, except for small projects below the limit determined by the construction administrative authorities of the State Council. Unauthorized construction without obtaining construction permit and projects which do not satisfy the criteria for commencement of work may face orders to stop construction and fines by construction administrative authorities. Under the Administrative Provisions on Construction Permit of Construction Projects, construction and decoration of all kinds of buildings and ancillary facilities shall apply for the permission before starting construction project unless the amount investment of the project less than RMB300,000 or the area of the construction project is less than 300 square meters (the administrative department of Housing and Urban-Rural development in provincial level may adjust the limitation capital based on the reality of different regions). According to the Notice of the Department of Housing and Urban-Rural Development of Guangdong Province on Adjusting the Threshold for Housing Construction and Municipal Infrastructure Projects Requiring Construction Permits, from September 1, 2019, housing construction and municipal infrastructure projects with the project amount of not more than RMB1,000,000 or building area of not more than 500 square meters is not required to apply for a construction permit. Some of our leased properties in Guangdong Province are over 500 square meters and the project amount of which are more than RMB1,000,000 thus shall apply for the construction permit. As of the date of this annual report, we have not obtained some of such requisite permissions, which might result in an order of corrections within a time limit, and a fine of 1% to 2% of the project amount. Pursuant to the Regulations on the Quality Management of Construction Projects, which took effect on January 30, 2000 and was most recently amended on April 23, 2019, a construction enterprise may be subject to suspension of construction, a fine of not less than 2% but not more than 4% of the contractual project price, and liabilities for any losses so caused, if it commits any of the following: (i) delivering the project for use before organizing the acceptance inspection, (ii) delivering the project for use in the event that the project has not passed the acceptance inspection, or (iii) inspecting and accepting a construction project not conforming to standard as one meeting the standard. Regulations Relating to Fire Safety Pursuant to the Fire Protection Law of PRC, which took effect on April 29, 1998 and was most recently amended on April 29, 2021, and the Interim Provisions on the Administration of the Fire Protection Design Review and Final Inspection of Construction Projects promulgated by the Ministry of Housing and Urban-Rural Development on April 1, 2020 and amended on August 21, 2023, construction enterprises shall file the record of the construction projects other than the special construction projects after the completion of inspection and acceptance thereof with the competent authority in housing and urban-rural development which will conduct random inspection on the construction projects. Failure to complete the inspection and acceptance of fire protection for the construction project before its use will subject the construction enterprise to an order of suspension of construction, use, or business, with a fine ranging from RMB 30,000 to 300,000. Failure to complete the record filing after the inspection and acceptance of fire protection for the construction project will subject the construction enterprise to an order of correction and a fine not exceeding RMB 5,000. Regulations Relating to Internet Information Security and Privacy Protection The PRC Constitution states that the PRC laws protect the freedom and privacy of communications of citizens and prohibit infringement on such rights. PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure, which include the Decision of the Standing Committee of the National People’s Congress on Internet Security Protection enacted and amended by the Standing Committee of the National People’s Congress on December 28, 2000 and August 27, 2009, respectively, the Provisions on the Technical Measures for Internet Security Protection issued by the Ministry of Public Security on December 13, 2005 and took effect on March 1, 2006, the Decision of the Standing Committee of the National People’s Congress on Strengthening Network Information Protection promulgated by the Standing Committee of the National People’s Congress on December 28, 2012, the Several Provisions on Regulating the Market Order of Internet Information Services promulgated by the Ministry of Industry and Information Technology on December 29, 2011, and the Provisions on Protection of Personal Information of 103 Telecommunication and Internet Users released by the Ministry of Industry and Information Technology on July 16, 2013. Internet information in China is regulated from a national security standpoint. On November 1, 2015, the Ninth Amendment to the Criminal Law of the PRC issued by the Standing Committee of the National People’s Congress became effective, pursuant to which, any internet service provider that fails to comply with obligations related to internet information security administration as required by applicable laws and refuses to rectify upon order is subject to criminal penalty for (i) any large-scale dissemination of illegal information; (ii) any severe consequences due to the leakage of the user information; (iii) any serious loss of criminal evidence; or (iv) other severe circumstances. Furthermore, any individual or entity that (i) sells or distributes personal information in a manner which violates the regulations, or (ii) steals or illegally obtain any personal information is subject to criminal penalty under severe circumstances. On June 1, 2017, the Cyber Security Law of the PRC, promulgated by the Standing Committee of the National People’s Congress, took effect and amended on October 28, 2025, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data. The Cyber Security Law of the PRC reaffirms the basic principles and requirements set forth in other existing laws and regulations on personal information protections and strengthens the obligations and requirements of internet service providers, which include but are not limited to: (i) keeping all user information collected strictly confidential and setting up a comprehensive user information protection system; (ii) abiding by the principles of legality, rationality and necessity in the collection and use of user information and disclosure of the rules, purposes, methods and scopes of collection and use of user information; and (iii) protecting users’ personal information from being leaked, tampered with, destroyed or provided to third parties. Any violation of the provisions and requirements under the Cyber Security Law of the PRC and other related regulations and rules may result in administrative liabilities such as warnings, fines, confiscation of illegal gains, revocation of licenses, suspension of business, and shutting down of websites, or, in severe cases, criminal liabilities. After the release of the Cyber Security Law of the PRC, on May 2, 2017, the Cyberspace Administration of China, together with another ten regulatory authorities jointly issued the Measures for Cybersecurity Review, which become effective on June 1, 2020. These measures establish the basic framework and principle for national cybersecurity reviews of network products and services. For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests, on June 10, 2021, the Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republic of China, or the Data Security Law, which took effect on September 1, 2021. 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, shall be subject to stricter management system. 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 territory of the PRC shall not provide any foreign judicial body and law enforcement body with any data without the approval of the competent PRC governmental authorities. 104 On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which, among others, provides for improving the laws and regulations on data security, cross-border data transmission, and confidential information management. It provided that efforts will 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. For the purposes of protecting rights and interests relating to personal information, regulating personal information processing activities, and promoting the reasonable use of personal information, on August 20, 2021, the Standing Committee of the PRC National People’s Congress published the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which took effect on November 1, 2021. The Personal Information Protection Law integrates the scattered rules with respect to personal information rights and privacy protection. It is clarified that “Personal information” refers to all kinds of information related to identified or identifiable natural persons that are electronically or otherwise recorded, excluding information that has been anonymized, “Sensitive personal information” refers to the personal information of which the leakage or illegal use could easily lead to the violation of the personal dignity of a natural person or harm to personal or property safety, including information on biometric identification, religious beliefs, specific identity, health care, financial accounts, and personal whereabouts, and personal information of minors under the age of fourteen, and “Personal information processing” includes, but is not limited to, the collection, storage, use, processing, transmission, provision, disclosure, and deletion of personal information. From a macro level, the Personal Information Protection Law sets forth on personal information processing rules, sensitive personal information processing rules, cross-border provision of personal information rules, individuals’ rights in personal information processing activities, obligations of personal information processors, authorities performing personal information protection functions and legal liability. The Personal Information Protection Law also focuses on the legal basis of personal information processing, separate consent, automated decision-making, personal information protection impact assessment, etc. On November 14, 2021, the Cyberspace Administration of China released the Regulations on the Network Data Security (Draft for Comments). These draft regulations provide that data processors refer to individuals or organizations that autonomously determine the purpose and the manner of processing data. If a data processor that processes personal data of more than one million users would like to list overseas, it shall apply for a cybersecurity review according to these draft regulations. Besides, data processors that are listed overseas shall carry out an annual data security assessment. On February 12, 2025, Cyberspace Administration of China issued the Measures for the Administration of Personal Information Protection Compliance Audits, which became effective on May 1, 2025. These measures require personal information processors handling the personal information of more than 10 million individuals to conduct compliance audits at least once every two years. On October 14, 2025, the Cyberspace Administration of China and the State Administration for Market Regulation jointly promulgated the Measures for the Certification of the Outbound Transfer of Personal Information, which took effect on January 1, 2026. These measures establish a certification mechanism for non-critical information infrastructure operators transferring personal information overseas within specified volume thresholds, and further complete China’s regulatory framework governing cross-border data transfers, together with the security assessment mechanism and the standard contractual clauses regime. On December 28, 2021, the Cyberspace Administration of China, together with certain other PRC governmental authorities, jointly released the Revised Measures for Cybersecurity Review, which took effect on February 15, 2022. Pursuant to the Revised Measures for Cybersecurity Review, operators of critical information infrastructure that intend to purchase network products and services that affect or may affect national security must apply for a cybersecurity review. In addition, any online platform operator holding over one million users’ individual information must apply for a cybersecurity review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk. The Revised Measures for Cybersecurity Review set out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review. However, as advised by our PRC legal counsel, the scope of network product or service or data processing activities that will or may affect national security is still unclear, and the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws, rules and regulations. 105 On March 22, 2024, the Cyberspace Administration of China released the Provisions on Facilitating and Regulating the Cross-Border Data Transfer with immediate effect. The regulations aim to ensure data security, protect personal information rights and interests, and promote the orderly and free flow of data in accordance with the law. The regulations specify the declaration standards for important data export security assessment, and stipulate various conditions for data export activities that are exempt from declaration of data export security assessment, the establishment of personal information export standard contracts, and the certification of personal information protection. This includes situations where data that does not contain personal information or important data in international trade activities is provided overseas. At the same time, regulations have been made on the validity period and extension application of data export security assessment, data security protection obligations and supervisory management responsibilities, and the connection and application with other regulations on data export security management. The State Council of the PRC published the Regulation on Network Data Security Management on September 24, 2024, which became effective on January 1, 2025. The regulation provides detailed guidelines for the implementation of the Cyber Security Law of the PRC, the Data Security Law of the PRC, and the Personal Information Protection Law of the PRC. The regulation stipulates a series of requirements for network data processors, including to identify, report and take specific measures to protect “important data” involved in their business. Failure to comply with these obligations may result in administrative penalties, including fines, suspension of business operations, and revocation of business licenses. The regulation also requires that network data processors processing the personal information of 10 million or more individuals to implement additional measures on personal information protection, including but not limited to, specifying the person in charge and the management body to perform corresponding responsibilities for network data security protection. Regulations Relating to Intellectual Property China has adopted comprehensive legislation governing intellectual property rights, including copyrights, trademarks, patents and domain names. China is a signatory to the primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the World Trade Organization in December 2001. Copyright On September 7, 1990, the Standing Committee of the National People’s Congress promulgated the Copyright Law of the PRC, or the Copyright Law, effective on June 1, 1991 and amended on October 27, 2001, February 26, 2010 and November 11, 2020, respectively. The amended Copyright Law extends copyright protection to internet activities, products disseminated over the internet and software products, and other intellectual achievements that meet the characteristics of works. In addition, there is a voluntary registration system administered by the Copyright Protection Center of China. Under the Regulations on the Protection of the Right to Network Dissemination of Information that took effect on July 1, 2006 and was amended on January 30, 2013, it further provides that an internet information service provider may be held liable under various situations: (i) if it knows or should reasonably have known a copyright infringement through the internet and the service provider fails to take effective measures to remove, block or disconnect links to the relevant content; or (ii) upon the receipt of the copyright holder’s notice of such infringement, the service provider fails to take aforementioned measures. In order to further implement the Regulations on Computer Software Protection, promulgated by the State Council on December 20, 2001 and amended on January 8, 2011 and January 30, 2013, respectively, the National Copyright Administration issued the Measures for the Registration of Computer Software Copyright on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights. 106 Trademark According to the Trademark Law of the PRC promulgated by the Standing Committee of the National People’s Congress on August 23, 1982, and amended on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019 respectively, the Trademark Office of the State Administration for Industry and Commerce is responsible for the registration and administration of trademarks in China. The State Administration for Industry and Commerce under the State Council has established a Trademark Review and Adjudication Board for resolving trademark disputes. Registered trademarks are valid for ten years from the date the registration is approved. A registrant may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the grace period expires, the registered trademark shall be deregistered. Renewed registrations are valid for another ten years. On April 29, 2014, the State Council issued the revised the Implementing Regulations of the Trademark Law of the PRC, which specified the requirements of applying for trademark registration and renewal. According to this law, using a trademark that is identical to or similar to a registered trademark in connection with the same or similar goods without the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark. The infringer shall, in accordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages. Patent According to the Patent Law of the PRC, or the Patent Law, promulgated by the Standing Committee of the National People’s Congress on March 12, 1984, which was most recently amended on October 17, 2020, and the Implementation Rules of the Patent Law of the PRC, promulgated by the State Council on June 15, 2001 and most recently amended on December 11, 2023, the patent administrative department under the State Council is responsible for the administration of patent-related work nationwide and the patent administration departments of provincial or autonomous regions or municipal governments are responsible for administering patents within their respective administrative areas. The Patent Law and the Implementation Rules of the Patent Law of the PRC provide for three types of patents, namely “inventions,” “utility models” and “designs.” Invention patents are valid for twenty years, while utility model patents and design patents are valid for ten years, from the date of application. The Chinese patent system adopts a “first come, first file” principle, which means that where more than one person files a patent application for the same invention, a patent will be granted to the person who files the application first. An invention or a utility model must possess novelty, inventiveness and practical applicability to be patentable. Third parties must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the unauthorized use constitutes an infringement on the patent rights. Domain names On August 24, 2017, the Ministry of Industry and Information Technology promulgated the Administrative Measures for Internet Domain Names, which became effective on November 1, 2017. These measures regulate the registration of domain names, such as the China’s national top-level domain name “.CN” The China Internet Network Information Center, issued the Administrative Regulations for Country Code Top-Level Domain Name Registration and Country Code Top-Level Dispute Resolutions Rules on June 18, 2019, pursuant to which the China Internet Network Information Center can authorize a domain name dispute resolution institution to decide domain name related disputes. Regulations Relating to Foreign Exchange The principal regulations governing foreign currency exchange in China are the Administrative Regulations on Foreign Exchange of the PRC, which were promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was mostly amended on August 5, 2008 and the Administrative Regulations on Foreign Exchange Settlement, Sales and Payment which was promulgated by the People’s Bank of China, on June 20, 1996 and became effective on July 1, 1996. Under these regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital account items such as the repayment of foreign currency denominated loans, direct 107 investment overseas and investments in securities or derivative products outside of the PRC. Foreign-invested enterprises are permitted to convert their after-tax dividends into foreign exchange and to remit such foreign exchange out of their foreign exchange bank accounts in the PRC. Violations of the Administrative Regulations on Foreign Exchange of the PRC will result in fines (fixed range or based on the amount of the illegal transmitted amount), confiscation of illegally obtained gains, and suspension of business or revoking business license or even criminal liability. On March 30, 2015, the SAFE promulgated the Notice on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or the SAFE Circular 19, which took effect on June 1, 2015. According to SAFE Circular 19, the foreign currency capital contribution to a foreign-invested enterprise in its capital account may be converted into Renminbi on a discretional basis. On June 9, 2016, the SAFE promulgated the Circular on Reforming and Regulating Policies on the Management of the Settlement of Foreign Exchange of Capital Accounts, or the SAFE Circular 16, which was recently amended on December 4, 2023. The SAFE Circular 16 unifies the Discretional Foreign Exchange Settlement for all the domestic institutions. The Discretional Foreign Exchange Settlement means that the foreign exchange capital in the capital account which has been confirmed by the relevant policies to be subject to the discretional foreign exchange settlement (including foreign exchange capital, foreign loans and funds remitted from the proceeds from the overseas listing) can be settled at the banks based on the actual operational needs of the domestic institutions. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital is temporarily determined as 100%. Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties in accordance with the Administrative Regulations on Foreign Exchange of the PRC and relevant provisions. Furthermore, SAFE Circular 16 provides that the use of foreign exchange incomes of capital accounts by foreign-invested enterprises shall follow the principles of authenticity and self-use within the business scope of the enterprises. The foreign exchange incomes of capital accounts and capital in RMB obtained by the foreign-invested enterprise from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by the laws and regulations; (ii) directly or indirectly used for investment in securities or financial schemes (except for the wealth management products with risk assessment results not higher than level 2 and the structured deposits); (iii) used for granting loans to non-affiliated enterprises, unless otherwise permitted by its business scope; and (iv) used for the construction or purchase of real estate that is not for self-use (except for the enterprises engaged in real estate development and management or real estate leasing). On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which was recently amended on December 4, 2023. The SAFE Circular 28 provides that non-investment foreign-invested enterprises may use capital to carry out domestic equity investment in accordance with laws under the premise that the investment is not in violation of the applicable special entry management measures for foreign investment (negative list) and the projects invested are true and in compliance with the laws and regulations. On April 10, 2020, the SAFE issued the Notice of the State Administration of Foreign Exchange on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business, or the SAFE Circular 8. The SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment. On September 12, 2025, the SAFE issued the Notice on Matters Concerning Deepening the Reform of Foreign Exchange Management for Cross-border Investment and Financing, or the SAFE Circular 43. The SAFE Circular 43 introduces a series of measures to deepen foreign exchange administration reforms for cross-border investment and financing, including removing certain registration requirements for preliminary expenses of foreign direct investment and domestic reinvestment, and facilitating capital account receipts and payments by narrowing the negative list for the use of funds. 108 Regulations Relating to Dividend Distributions The principal regulations governing distribution of dividends of wholly foreign-owned enterprise, include the PRC Company Law, the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law. Under these regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with the PRC accounting standards and regulations. In addition, foreign-invested enterprises in the PRC are required to allocate at least 10% of their accumulated profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends. Regulations Relating to Offshore Special Purpose Companies Held by PRC Residents According to the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents promulgated by the SAFE on May 10, 2013 and most recently amended on December 30, 2019, the administration by the SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by the SAFE and its branches. The SAFE promulgated Notice on Issues Relating to Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37, on July 4, 2014 that requires PRC residents or entities to register with the SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their registrations with the SAFE when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and term of operation), capital increase or capital reduction, transfers or exchanges of shares, or mergers or divisions. The SAFE further enacted the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment, or the SAFE Circular 13, which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. However, remedial registration applications made by PRC residents that previously failed to comply with the SAFE Circular 37 continue to fall under the jurisdiction of the local branch of the SAFE. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required registration with the SAFE, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. On January 26, 2017, the SAFE issued the Notice on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control, or the SAFE Circular 3, which provides for several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment. Regulations Relating to Stock Incentive Plans According to the Notice of the State Administration of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company, which was issued on February 15, 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are 109 required to register with the SAFE. All such participants need to authorize a qualified PRC agent, such as a PRC subsidiary of the overseas publicly-listed company to register with the SAFE and handle foreign exchange matters such as opening accounts, transferring and settlement of the proceeds. The notice further requires an offshore agent to be designated to handle matters in connection with the exercise of share options, sales of shares underlying the options and remittance of proceeds for the participants of the share incentive plans. Failure to complete the said registrations with the SAFE may subject our participating directors, supervisors, senior management and other employees to fines and legal sanctions. Regulations Relating to Taxation Income tax According to the Enterprise Income Tax Law of the PRC, which was promulgated on March 16, 2007, became effective as of January 1, 2008 and was most recently amended on December 29, 2018, an enterprise established outside the PRC with de facto management bodies within the PRC is considered a resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. The Implementing Rules of the Enterprise Income Law of the PRC defines a “de facto management body” as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Non-PRC resident enterprises without any branches in the PRC pay an enterprise income tax in connection with their income originating from the PRC at the tax rate of 10%. Enterprises that are recognized as high and new technology enterprises in accordance with the Administrative Measures for the Determination of High and New Tech Enterprises issued by the Ministry of Science, the Ministry of Finance and the State Administration of Taxation are entitled to enjoy a preferential enterprise income tax rate of 15%. Under which the validity period of the high and new technology enterprise qualification shall be three years from the date of issuance of the certificate. An enterprise can re-apply for such recognition as a high and new technology enterprise before or after the previous certificate expires. On February 3, 2015, the State Administration of Taxation issued the Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Non-Resident Enterprises, or the SAT Circular 7. The SAT Circular 7 provides comprehensive guidelines relating to, and heightening the Chinese tax authorities’ scrutiny on, indirect transfers by a non-resident enterprise of assets (including assets of organizations and premises in PRC, fixed assets in the PRC, equity investments in PRC resident enterprises) or the PRC Taxable Assets. For instance, when a non-resident enterprise transfers equity interests in an overseas holding company that directly or indirectly holds certain PRC Taxable Assets and if the transfer is ascertained by the PRC tax authorities to have no reasonable commercial purpose other than to evade enterprise income tax, the SAT Circular 7 allows the PRC tax authorities to reclassify the indirect transfer of PRC Taxable Assets into a direct transfer and therefore impose a 10% rate of PRC enterprise income tax on the non-resident enterprise. The SAT Circular 7 lists several factors to be taken into consideration by tax authorities in determining if an indirect transfer has a reasonable commercial purpose. However, regardless of these factors, the overall arrangements in relation to an indirect transfer satisfying all the following criteria will be deemed to lack a reasonable commercial purpose: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from PRC Taxable Assets; (ii) at any time during the one-year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or during the one-year period before the indirect transfer, 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries and branches that directly or indirectly hold the PRC Taxable Assets are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC Taxable Assets is lower than the potential PRC tax on the direct transfer of those assets. On the other hand, indirect transfers falling into the scope of the safe harbors under the SAT Circular 7 may not be subject to PRC tax under the SAT Circular 7. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties or arrangements. On October 17, 2017, the State Administration of Taxation issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, which took effect on December 1, 2017. Certain provisions of the SAT Circular 37 were repealed by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents. According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income shall mean the consideration collected by the equity transferor from 110 the equity transfer, including various income in monetary form and non-monetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for equity shall be: (i) the capital contribution costs actually paid by the equity transferor to a Chinese resident enterprise at the time of investment and equity participation, or (ii) the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor of the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains or losses may be confirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be adjusted accordingly. When an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders’ retained earnings such as undistributed profits of the investee enterprise, which may be distributed in accordance with the said equity. In the event of partial transfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding to the transferred equity in accordance with the transfer ratio, out of all costs of the equity. Under the SAT Circular 7 and the Law of the PRC on the Administration of Tax Collection promulgated by the Standing Committee of the National People’s Congress on September 4, 1992 and amended on April 24, 2015, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor shall act as withholding agents. If they fail to make withholding or withhold the full amount of tax payable, the transferor of equity shall declare and pay tax to the tax authorities within seven days from the occurrence of tax payment obligation. Where the withholding agent does not make the withholding, and the transferor of the equity does not pay the tax payable amount, the tax authority may impose late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents liable and impose a penalty of ranging from 50% to 300% of the unpaid tax on them. The penalty imposed on the withholding agents may be reduced or waived if the withholding agents have submitted the materials in connection with the indirect transfer to the PRC tax authorities in accordance with the SAT Circular 7. Withholding tax on dividend distribution The Enterprise Income Tax Law of the PRC prescribes a standard withholding tax rate of 20% on dividends and other China-sourced income of non-PRC resident enterprises which have no establishment or place of business in the PRC, or if established, the relevant dividends or other China-sourced income are in fact not associated with such establishment or place of business in the PRC. However, the Implementing Rules of the Enterprise Income Law of the PRC reduced the rate from 20% to 10%, effective as of January 1, 2008. However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, for example, pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income, or the Double Tax Avoidance Arrangement, 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 under the Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends that the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from the tax authority in charge. Based on the Notice on Relevant Issues Relating to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the State Administration of Taxation, if the PRC tax authorities determine, at 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. And the Announcement of the State Administration of Taxation on Issues concerning “Beneficial Owners” in Tax Treaties, promulgated by the State Administration of Taxation on February 3, 2018 and took effect on April 1 2018, further clarified the analysis standard when determining one’s qualification for beneficial owner status. Value-added tax Pursuant to the Interim Regulations on Value-Added Tax of the PRC, which was promulgated by the State Council on December 13, 1993 and as most recently amended on November 19, 2017, and the Implementation Rules for the Interim Regulations on Value-Added Tax of the PRC, which was promulgated by the Ministry of Finance, and the State Administration of Taxation on December 15, 2008 and became effective on January 1, 2009 and as amended on October 28, 2011, entities or individuals engaging in sale of goods, provision of processing services, repairs and replacement services or importation of goods within the territory of the PRC shall pay value-added taxes, or the VATs. Unless otherwise provided, the rate of VAT is 17% on sales and 6% on the services. On April 4, 2018, the Ministry of Finance and the State Administration of Taxation jointly promulgated the Circular of the Ministry of Finance and 111 the State Administration of Taxation on Adjustment of Value-Added Tax Rates, or the Circular 32, according to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular 32. Since November 16, 2011, the Ministry of Finance and the State Administration of Taxation have implemented the Pilot Plan for Imposition of Value- Added Tax to Replace Business Tax, which imposes VAT in lieu of business tax for certain “modem service industries” in certain regions and eventually expanded to nation-wide application in 2013. According to the Implementation Rules for the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax released by the Ministry of Finance and the State Administration of Taxation on the VAT Pilot Program, the “modem service industries” include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services. The Notice on Comprehensively promoting the Pilot Plan of the Conversion of Business Tax to Value-Added Tax, which was promulgated on March 23, 2016, became effective on May 1, 2016 and was amended on July 11, 2017 (Circular on Pilot Policies of Levying Value-added Tax in Lieu of Business Tax on Construction Services and Other Services), sets out that VAT in lieu of business tax be collected in all regions and industries. On March 20, 2019, the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs jointly promulgated the Announcement on Relevant Policies for Deepening Value-Added Tax Reform, which became effective on April 1, 2019 and provides that (i) with respect to VAT taxable sales acts or import of goods originally subject to VAT rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural products for the purpose of production or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%. The Standing Committee of the National People’s Congress published the Value-Added Tax Law of the PRC on December 25, 2024, which came into effect on January 1, 2026 and replaced the Interim Regulations on Value-Added Tax of the PRC. While the Value-Added Tax Law of the PRC mainly preserves the fundamental structure of the current VAT regulations, it further clarifies and adjusts specific rules, including the definition of “taxable transactions occurring in China,” the definition of “deemed taxable transactions,” the tax rate and calculation criteria for small-scale taxpayers. Regulations Relating to Employment The Labor Law of the PRC, or the Labor Law, and its implementation rules provide that enterprises and institutions must establish and improve work safety and health system, strictly enforce national regulations and standards on work safety and health, and carry out work safety and health education for workers. Working safety and health facilities shall meet national standard. Enterprises and institutions shall provide workers with working safety and health conditions meeting national rules and standards on labor protection. 112 The Labor Contract Law of the PRC, or the Labor Contract Law, and its implementation rules provide requirements concerning employment contracts between an employer and its employees. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the one-month anniversary of the commencement date of the employment relationship to the day prior to the execution of the written employment contract. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations. In addition, if an employer intends to enforce a non-compete provision in an employment contract or non-competition agreement with an employee, it has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiry of the labor contract. Employers in most cases are also required to provide severance payment to their employees after their employment relationship is terminated. According to the Labor Contract Law, if an employer requires the employees to work overtime, it shall pay the worker legally required working overtime salaries. When the employer fails to pay the working overtime salary, it will be ordered to pay compensation to the employees at amount based on the actual working overtime salary that has not been duly paid. Pursuant to the Interim Provisions on Labor Dispatch, which was promulgated by the Ministry of Human Resources and Social Security on January 24, 2014, effective as of March 1, 2014, employers may employ dispatched workers in temporary, auxiliary or substitutable positions provided that the number of dispatched workers shall not exceed 10% of the total number of its workers. Pursuant to the Labor Contract Law, if the employer violates the labor dispatch regulations, the labor administrative department shall order it to make corrections within a prescribed time limit; if it fails to make corrections within the time limit, penalty will be imposed on the basis of more than RMB5,000 and less than RMB10,000 per person. Pursuant to the Social Insurance Law of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on October 28, 2010, effective on July 1, 2011 and last amended on December 29, 2018, the Interim Regulations on the Collection of Social Insurance Fees, issued by the State Council on January 22, 1999 and last amended on March 24, 2019, and the Regulations on the Administration of Housing Provident Funds, issued by the State Council on April 3, 1999 and last amended on March 24, 2019, enterprises in China are required to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. Any employer that fails to make sufficient social insurance contributions in a timely manner may be order to rectify the non-compliance and pay the required contributions within a prescribed time limit and be subject to a late fee. If the employer still fails to rectify the failure to make the contributions within the prescribed time, it may be subject to a fine ranging from one to three times the amount overdue. In addition, any employer that fails to make sufficient and timely contributions to the housing funds may be order to rectify the non-compliance and pay the required contributions within a prescribed time limit, and will also be subject to mandatory enforcement by courts in case the employer still fails to make the contributions within the prescribed time. Regulations Relating to Mergers and Acquisitions and Overseas Listing On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which became effective on September 8, 2006 and were amended on June 22, 2009. The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, and other regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. For example, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors require that Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. 113 In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and taking effect as of March 3, 2011, and the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by Ministry of Commerce on August 25, 2011 and taking effect as of September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by Ministry of Commerce, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement. On February 17, 2023, the CSRC promulgated Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, and five relevant supporting guidelines, together referred to as the New Overseas Listing Rules, which became effective on March 31, 2023. Pursuant to the New Overseas Listing Rules, PRC domestic companies that directly or indirectly offer or list their securities in an overseas market, which include (i) any PRC company limited by shares, and (ii) any offshore company that conducts its business operations primarily in China and contemplates to offer or list its securities in an overseas market based on its onshore equities, assets or similar interests, are required to file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing. 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 shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year, any of which was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business is in the PRC or carried out in the PRC. According to the New Overseas Listing Rules, the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business days after its initial filing of the listing application, and submit the filing with respect to its follow-on offering within three business days after completion of the follow-on offering. Failure to complete the record-filing under the New Overseas Listing Rules may subject a PRC domestic company to warnings, orders of correction, or fines of RMB1 million to RMB10 million. Regulations in Hong Kong Under the Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong), our Hong Kong subsidiaries are required to have business registration certificates to carry out business activities. Below is a summary of the most significant rules and regulations which are material to our limited business operations in Hong Kong. Import and export The Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) stipulates that all cargo which is imported or exported shall be recorded in a manifest which shall contain such particulars as the Commissioner of Customs and Excise may prescribe. Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong) provides that every person who imports or exports any article other than an exempted article shall lodge an accurate and complete import or export declaration relating to such article using services provided by a specified body with the Commissioner of Customs and Excise within 14 days after the importation or exportation of the article. Our operations in Hong Kong involve import and export of products. Any person who fails or neglects to declare within 14 days after importation or exportation without reasonable excuse is liable to a fine of HK$1,000 upon summary conviction and HK$100 in respect of every day such declaration has not been lodged. Penalty of up to HK$200 shall also be payable for late lodgment of a declaration. 114 C.Organizational Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business, as of the date of this annual report: Note: (1)In April 2026, Yatsen Global Pte. Ltd. acquired the remaining 10% equity interest in Yalenic Global Holding Pte. Ltd. (2)Mr. Jinfeng Huang, our chief executive officer and controlling shareholder, holds 75.0% of equity interests in Huizhi Weimei. The remaining 25.0% of the equity interests in Huizhi Weimei are held by Yuemei (Guangzhou) Trading Co., Ltd., a PRC company controlled by Mr. Jinfeng Huang, who holds 90% of equity interests therein. Contractual Arrangements with the VIE and Its Shareholders Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services and certain other businesses. Yatsen Holding Limited is an exempted company with limited liability incorporated in the Cayman Islands. Guangzhou Yatsen is our wholly owned PRC subsidiary. To comply with PRC laws and regulations, we conduct the business of online sales of cosmetics products and skincare products in China through Huizhi Weimei, the VIE in China, through a series of contractual 115 arrangements by and among Guangzhou Yatsen, the VIE and its nominee shareholders. The VIE may need to obtain licenses that are otherwise not permitted or advisable to be held directly by our wholly foreign-owned subsidiaries, including the License for Online Transmission of Audio-visual Programs and the Permit for Production and Operation of Radio and Television Programs. Although our wholly foreign-owned subsidiaries produce a significant majority of our revenues and hold a significant majority of our operational assets, the VIE holds certain assets that may be critical to the operation of our business. Main assets held by the VIE and its subsidiaries include the majority of the social platforms and content offering platforms we operate such as Weixin public accounts and mini-programs, which are registered and held by the VIE and its subsidiaries. Our contractual arrangements with the VIE and its shareholders allow us to (i) exercise effective control over the VIE, (ii) receive substantially all of the economic benefits of the VIE, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIE when and to the extent permitted by the PRC laws. As a result of our direct ownership in Guangzhou Yatsen and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of the VIE, and we treat the VIE and its subsidiaries as our consolidated entities under U.S. GAAP. We have consolidated the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. The following is a summary of the currently effective contractual arrangements by and among our WFOE, the VIE and its respective shareholders. Arrangements that provide us effective control over the VIE Proxy Agreement and Power of Attorney. Our WFOE entered into a proxy agreement with Huizhi Weimei and its shareholders and obtained powers of attorney from shareholders of Huizhi Weimei in July 2019, which proxy agreement and powers of attorney were later amended and restated in March 2020, October 2020 and December 2025. Pursuant to the third amended and restated proxy agreement and powers of attorney, each shareholder of Huizhi Weimei irrevocably authorized our WFOE to exercise all of his or its rights as a shareholder of Huizhi Weimei, including, but not limited to, the right to convene and attend shareholder meetings, the right to vote and sign any resolution as a shareholder, the right to appoint or remove directors, and the right to sell, transfer, pledge, and dispose of all or a portion of the equity interests held by such shareholders. The proxy agreement will remain effective so long as Huizhi Weimei exists. The powers of attorney will remain effective unless otherwise notified by our WFOE. Equity Pledge Agreement. Our WFOE, Huizhi Weimei and shareholders of Huizhi Weimei entered into an equity pledge agreement in July 2019, which was later amended and restated in March 2020, October 2020 and December 2025. Pursuant to the third amended and restated equity pledge agreement, shareholders of Huizhi Weimei have agreed to pledge all of their respective equity interests in Huizhi Weimei to our WFOE to guarantee the performance by Huizhi Weimei and its shareholders under the exclusive business cooperation agreement, the proxy agreement, the power of attorneys, the exclusive option agreement and the equity pledge agreement. As of the date of this annual report, we have registered all such equity pledges with the local branch of the State Administration for Market Regulation in accordance with PRC laws to perfect their respective equity pledges. After the completion of the equity pledge registrations, in the event of a breach by Huizhi Weimei or its shareholders of contractual obligations under these agreements, our WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Huizhi Weimei. The shareholders of the VIE also undertake that, during the term of the equity pledge agreement, unless otherwise approved by our WFOE in writing, they will not transfer the pledged equity interests or create or allow any new pledge or other encumbrance on the pledged equity interests. Spousal Consent Letter. Spouse of Jinfeng Huang, the individual shareholder of Huizhi Weimei, who holds 75.0% of equity interests in Huizhi Weimei, has signed a spousal consent letter. The remaining 25.0% of the equity interests in Huizhi Weimei are held by Yuemei (Guangzhou) Trading Co., Ltd., a PRC company controlled by Jinfeng Huang, who holds 90% of the equity interests therein. The spouse of Jinfeng Huang unconditionally and irrevocably disclaimed her rights to the relevant equity interest in Huizhi Weimei and any associated economic rights or interest to which she may be entitled pursuant to applicable laws, and has undertaken not to make any assertion of rights to such equity interest and the underlying assets. The spouse of Jinfeng Huang has agreed and undertaken that she will not carry out in any circumstances any conducts that are contradictory to the contractual arrangements and the spousal consent letter. 116 Agreements that allow us to receive economic benefits from the VIE Exclusive Business Cooperation Agreements. Pursuant to the exclusive business cooperation agreement entered into in July 2019 between our WFOE and Huizhi Weimei, our WFOE has the exclusive right to provide to Huizhi Weimei services related to, among other things, software technology development, technology consulting, and technical services required by Huizhi Weimei’s business. Without our WFOE’s prior written consent, Huizhi Weimei cannot accept any same or similar services subject to this agreement from any third party or enter into any similar business operation agreements with any third party. Huizhi Weimei agrees to pay our WFOE an amount that is adjusted in accordance with our WFOE’s sole discretion for the relevant period and also the mutually-agreed amount for certain other technical services, which should be paid within ten days after our WFOE sends invoice. Our WFOE has the exclusive ownership of all the intellectual property rights created as a result of the performance of this agreement. To guarantee Huizhi Weimei’s performance of its obligations thereunder, the shareholders of Huizhi Weimei have agreed to pledge their equity interests in Huizhi Weimei to our WFOE pursuant to the equity pledge agreement. The Exclusive Business Cooperation agreement will remain effective for an initial ten years and will be renewed automatically except that our WFOE is entitled to terminate the agreement as long as a 30-day prior written termination notice is provided to Huizhi Weimei. Agreements that provide us with the option to purchase the equity interests in the VIE Exclusive Option Agreements. Our WFOE, Huizhi Weimei and shareholders of Huizhi Weimei entered into an exclusive option agreement in July 2019, which was later amended and restated in March 2020, October 2020 and December 2025. Pursuant to the third amended and restated exclusive option agreement, the shareholders of Huizhi Weimei irrevocably grant our WFOE an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of their equity interests in Huizhi Weimei, and Huizhi Weimei has irrevocably granted our WFOE an exclusive option to purchase all or part of its assets. Our WFOE or its designated person may exercise such options to purchase all equity interests and/or all assets at an aggregate consideration of RMB1.00, or the lowest price permitted under applicable PRC laws if there is any statutory requirement about the consideration under PRC laws. The shareholders of Huizhi Weimei further undertake that, without our WFOE’s prior written consent, they will not, among other things, (i) sell, transfer, pledge, or dispose of their equity interests in Huizhi Weimei, (ii) create any pledge or encumbrance on their equity interests in Huizhi Weimei, (iii) change Huizhi Weimei’s registered capital, (iv) merge Huizhi Weimei with any other entity, (v) sell, transfer, pledge, or dispose of Huizhi Weimei’s assets (except in the ordinary course of business), or (vi) amend Huizhi Weimei’s articles of association. The equity option agreement will remain effective for ten years and will be renewed automatically, except that our WFOE is entitled to terminate the agreement as long as a 10-day prior written termination notice is provided to Huizhi Weimei and its shareholders. In the opinions of Zhong Lun Law Firm, our PRC legal counsel: •the ownership structures of our WFOE and the VIE do not violate applicable PRC laws or regulations currently in effect; and •the contractual arrangements among our WFOE, the VIE and its respective shareholders governed by PRC law are valid and binding, and do not violate applicable PRC laws or regulations currently in effect. However, we have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may take a view that is contrary to or otherwise different from the above opinions of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” 117 D.Property, Plants and Equipment Our principal executive office is located on leased premises comprising approximately 9,671 square meters in Guangzhou, China. We have one supplemental office comprising approximately 8,250 square meters and one R&D center comprising approximately 1,849 square meters in Guangzhou, China. We also have a business complex that serves as both office building and R&D center, comprising approximately 3,819 square meters, a 446-square-meter joint laboratory, and a small co-working office space in Shanghai, China. In addition, we lease an aggregate area of 1,320 square meters in other cities of mainland China as office space. We have a manufacturing and R&D hub in Guangzhou, China in connection with our joint venture with Cosmax as a minority shareholder, comprising approximately 66,462 square meters, which commenced operations in August 2023. Beyond China, we have a facility that serves as both office and laboratory for the Galénic brand in France, comprising approximately 920 square meters. We also have a warehouse comprising approximately 1,026 square meters and an office comprising approximately 100 square meters in the UK. In the US, we have an office comprising approximately 150 square meters. All of our properties are leased and we plan to renew our leases as needed. As of December 31, 2025, we also leased properties for 50 of our offline experience stores across 29 cities in mainland China, with an aggregate area of 4,129.2 square meters. We believe that our existing facilities are sufficient for our current needs, and we will obtain additional facilities, principally through leasing, to accommodate our future expansion plans.