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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR(g)OF THE SECURITIES EXCHANGE ACT OF 1934OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year
2、ended December 31,2022OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the tran
3、sition period from to Commission file number:001-38591PDD Holdings Inc.(Exact name of Registrant as specified in its charter)N/A(Translation of Registrants name into English)Cayman Islands(Jurisdiction of incorporation or organization)First Floor,25 St Stephens Green Dublin 2,D02 XF99 Ireland(Addres
4、s of principal executive offices)Jianchong ZhuTel:+353-1-5397938Email:First Floor,25 St Stephens GreenDublin 2,D02 XF99Ireland(Name,Telephone,E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b)of the Act.Title of ea
5、ch class Ticker Symbol Name of each exchange on which registeredAmerican Depositary Shares(one American depositary share representing four Class A ordinary shares,par value US$0.000005 per share)PDDThe Nasdaq Stock Market LLC (The Nasdaq Global Select Market)Class A ordinary shares,par value US$0.00
6、0005 per share*The Nasdaq Stock Market LLC(The Nasdaq)(The Nasdaq Global Select Market)*Not for trading,but only in connection with the listing on The Nasdaq Global Select Market of American depositary shares.Table of ContentsSecurities registered or to be registered pursuant to Section 12(g)of the
7、Act.None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act.None(Title of Class)Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:5,278,34
8、8,396 Class Aordinary shares,par value US$0.000005 per share,and no Class B ordinary shares were outstanding as of December 31,2022.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes NoIf this report is an annual or transition re
9、port,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of1934.Yes NoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of
10、1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically,if any,every Interactive Data
11、 File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of thischapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerate
12、d filer,a non-accelerated filer,or an emerging growth company.See the definitions of“largeaccelerated filer,”“accelerated filer,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company If an emerging growth
13、 company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the extendedtransition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Yes No
14、The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification afterApril 5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment o
15、f the effectiveness of its internal control over financial reportingunder Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark
16、whether the financial statements of the registrant included in the filing reflect the correction of anerror to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation recei
17、ved by any of the registrantsexecutive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP International Financial Reporting Standards as is
18、sued by the International Accounting Standards Board OtherIf“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant
19、 is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Se
20、curities Exchange Act of 1934 subsequent tothe distribution of securities under a plan confirmed by a court.Yes NoTable of ContentsiTABLE OF CONTENTSINTRODUCTION1FORWARD-LOOKING INFORMATION2PART I 3Item 1.Identity of Directors,Senior Management and Advisers3Item 2.Offer Statistics and Expected Timet
21、able3Item 3.Key Information3Item 4.Information on the Company62Item 4A.Unresolved Staff Comments85Item 5.Operating and Financial Review and Prospects85Item 6.Directors,Senior Management and Employees98Item 7.Major Shareholders and Related Party Transactions110Item 8.Financial Information112Item 9.Th
22、e Offer and Listing113Item 10.Additional Information114Item 11.Quantitative and Qualitative Disclosures about Market Risk123Item 12.Description of Securities Other than Equity Securities124PART II125Item 13.Defaults,Dividend Arrearages and Delinquencies125Item 14.Material Modifications to the Rights
23、 of Security Holders and Use of Proceeds125Item 15.Controls and Procedures126Item 16A.Audit Committee Financial Expert126Item 16B.Code of Ethics126Item 16C.Principal Accountant Fees and Services127Item 16D.Exemptions from the Listing Standards for Audit Committees127Item 16E.Purchases of Equity Secu
24、rities by the Issuer and Affiliated Purchasers127Item 16F.Change in Registrants Certifying Accountant127Item 16G.Corporate Governance127Item 16H.Mine Safety Disclosure127Item 16I.Disclosure Regarding Foreign Jurisdictions That Prevent Inspections127Item 16J.Insider Trading Policies128PART III128Item
25、 17.Financial Statements128Item 18.Financial Statements128Item 19.Exhibits128SIGNATURES131Table of Contents1INTRODUCTIONUnless otherwise indicated or the context otherwise requires,references in this annual report to:“active merchants”in a given period are to merchant accounts that had one or more o
26、rders shipped to a buyer on our platforms in thatperiod,regardless of whether the buyer returns the merchandise or the merchant refunds the purchase price;“ADRs”are to the American depositary receipts that evidence our ADSs;“ADSs”are to our American depositary shares,each of which represents four Cl
27、ass A ordinary shares,par value US$0.000005 each;“China”or the“PRC”are to the Peoples Republic of China,excluding,for the purposes of this annual report only,Hong Kong,Macau and Taiwan;“our platforms”are to the Pinduoduo platform and the Temu platform;“PDD Holdings,”“we,”“us,”“our company,”“the Comp
28、any,”and“our”are to PDD Holdings Inc.(formerly known as PinduoduoInc.),our Cayman Islands holding company,its direct and indirect subsidiaries,and,in the context of describing our operations andconsolidated financial information,the VIE(as defined below);“Pinduoduo”or“Pinduoduo platform”are to our P
29、induoduo mobile app and a variety of related features,functionalities,tools andservices that we provide to buyers and merchants via the Pinduoduo mobile app and through social networks and access points;“RMB”and“Renminbi”are to the legal currency of China;“SEC”are to the U.S.Securities and Exchange
30、Commission;“shares”or“ordinary shares”are to our Class A and Class B ordinary shares,par value US$0.000005 per share;“Temu”or“Temu platform”are to our Temu mobile app and website and a variety of related features,functionalities,tools andservices that we provide to buyers and merchants via the Temu
31、mobile app and website;“US$,”“U.S.dollars,”“$,”and“dollars”are to the legal currency of the United States;and“VIE”are to Hangzhou Aimi Network Technology Co.,Ltd.,or Hangzhou Aimi,a PRC entity in which we do not have equityinterests but whose financial results are consolidated into our consolidated
32、financial statements in accordance with U.S.GAAP.Our reporting currency is Renminbi because substantially all of our revenues are denominated in Renminbi.This annual report containstranslations of Renminbi amounts into U.S.dollars at specific rates solely for the convenience of the readers.Unless ot
33、herwise noted,alltranslations from Renminbi to U.S.dollars and from U.S.dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00,the exchange rate on December 30,2022 as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System.Wem
34、ake no representation that any Renminbi or U.S.dollar amounts could have been,or could be,converted into U.S.dollars or Renminbi,as thecase may be,at any particular rate or at all.Table of Contents2FORWARD-LOOKING INFORMATIONThis annual report contains forward-looking statements that reflect our cur
35、rent expectations and views of future events.The forward-looking statements are contained principally in the sections entitled“Item 3.Key InformationD.Risk Factors,”“Item 4.Information on theCompanyB.Business Overview”and“Item 5.Operating and Financial Review and Prospects.”These forward-looking sta
36、tements are madeunder the“safe-harbor”provisions of the U.S.Private Securities Litigation Reform Act of 1995.Known and unknown risks,uncertainties and otherfactors,including those listed under“Item 3.Key InformationD.Risk Factors,”may cause our actual results,performance or achievements to bemateria
37、lly different from those expressed or implied by the forward-looking statements.You can identify some of these forward-looking statements by words or phrases such as“may,”“will,”“expect,”“anticipate,”“aim,”“estimate,”“intend,”“plan,”“believe,”“is/are likely to,”“potential,”“continue”or other similar
38、 expressions.We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition,results of operations,business strategy and financial needs.These forward-looking statements include statements relat
39、ing to:our growth strategies;our future business development,financial conditions and results of operations;the trends in the e-commerce industry in the countries or regions where we have operations;our expectations regarding demand for and market acceptance of our products and services;our expectat
40、ions regarding our relationships with buyers and merchants;competition in our industry;andrelevant government policies and regulations relating to us,and their future development.These forward-looking statements involve various risks and uncertainties.Although we believe that our expectations expres
41、sed in theseforward-looking statements are reasonable,our expectations may later be found to be incorrect.Our actual results could be materially differentfrom our expectations.Important risks and factors that could cause our actual results to be materially different from our expectations are general
42、lyset forth in“Item 3.Key InformationD.Risk Factors,”“Item 4.Information on the CompanyB.Business Overview,”“Item 5.Operating andFinancial Review and Prospects,”and other sections in this annual report.You should read thoroughly this annual report and the documents that werefer to with the understan
43、ding that our actual future results may be materially different from and worse than what we expect.We qualify all of ourforward-looking statements by these cautionary statements.This annual report contains certain data and information that we obtained from various government and private publications
44、.We have notindependently verified the accuracy or completeness of the data contained in these industry publications and reports.Statistical data in thesepublications also include projections based on a number of assumptions.The e-commerce industry may not grow at the rate projected by marketdata,or
45、 at all.Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price ofour ADSs.In addition,the rapidly evolving nature of the e-commerce industry results in significant uncertainties for any projections or estimatesrelating to the
46、growth prospects or future condition of our market.Furthermore,if any one or more of the assumptions underlying the market dataare later found to be incorrect,actual results may differ from the projections based on these assumptions.You should not place undue reliance onthese forward-looking stateme
47、nts.Table of Contents3The forward-looking statements made in this annual report relate only to events or information as of the date on which the statementsare made in this annual report.Except as required by law,we undertake no obligation to update or revise publicly any forward-lookingstatements,wh
48、ether as a result of new information,future events or otherwise,after the date on which the statements are made or to reflect theoccurrence of unanticipated events.You should read this annual report and the documents that we refer to in this annual report and exhibits tothis annual report completely
49、 and with the understanding that our actual future results may be materially different from what we expect.PART IItem 1.Identity of Directors,Senior Management and AdvisersNot applicable.Item 2.Offer Statistics and Expected TimetableNot applicable.Item 3.Key InformationOur CompanyPDD Holdings is a m
50、ultinational commerce group that owns and operates a portfolio of businesses.We aim to bring more businesses andpeople into the digital economy so that local communities and small businesses can benefit from increased productivity and new opportunities.Our Pinduoduo platform provides buyers with a c
51、omprehensive selection of value-for-money merchandise and fun and interactiveshopping experiences.The platform pioneered an innovative“team purchase”model.Buyers are encouraged to share product information on socialnetworks,and invite their friends,family and social contacts to form shopping teams t
52、o enjoy the more attractive prices available under the“teampurchase”option.Pinduoduos buyer base helps attract merchants to the platform,while the scale of the platforms sales volume encouragesmerchants to offer more competitive prices and customized products and services to buyers,thus forming a vi
53、rtuous cycle.We have always seen business opportunities in agriculture,and we seize these opportunities by leveraging the Pinduoduo platform topromote digital inclusion of smallholder farmers.The ability to aggregate demand and generate large volumes of orders helps create economies ofscale for farm
54、er merchants.Farmers can sell directly to consumers through the platform and become less dependent on wholesale distributors.Dedicated training programs are offered to enable farmers to become better business operators.We collaborate with reputable agriculturalinstitutions to invest in technology an
55、d fund research with the objective of improving food production,quality control,food safety andsustainability,so that a greater volume of better,fresher and safer agricultural products can go directly from farm to table.We launched a new initiative,Temu,in September 2022 in Boston,Massachusetts,the
56、United States.Temu is a global online platformdedicated to providing affordable,quality products to consumers.Due to its short operating history and the early stage of development,Temu didnot have a material impact on our financial results in 2022.Table of Contents4Our Holding Company Structure and
57、Contractual Arrangements with the VIEThe following diagram illustrates our corporate structure,including our principal subsidiaries and the VIE and its principal subsidiary,asof the date of this annual report:Note:(1)Messrs.Lei Chen and Jianchong Zhu hold 86.6%and 13.4%equity interests in Hangzhou A
58、imi,respectively.They are employees of our company and have entered into a seriesof contractual arrangements with Hangzhou Weimi Network Technology Co.,Ltd.,or Hangzhou Weimi,pursuant to which the Company has control over and is the primarybeneficiary of Hangzhou Aimi.Holders of our ADSs hold equity
59、 interests in PDD Holdings Inc.,a Cayman Islands holding company that does not conduct operationsdirectly.Instead,we conduct our operations in China through(i)our PRC subsidiaries,(ii)the VIE,and(iii)the subsidiaries of the VIE.We do nothave any equity ownership in the VIE or its subsidiaries.We onl
60、y maintain contractual arrangements with the VIE which allows us to consolidatethe financial results of the VIE and its subsidiaries into our consolidated financial statements in accordance with U.S.GAAP.Holders of our ADSstherefore do not have direct or indirect equity interests in the VIE and its
61、subsidiaries.The VIE structure allows foreign investors to have exposure to China-based operating companies that are subject to restrictions on directforeign investment under Chinese law.In particular,PRC laws and regulations restrict and impose conditions on foreign investment in value-addedtelecom
62、munications services business,such as internet content-related services and online data processing and transaction processing services.Accordingly,we operate these businesses in China through the VIE and its subsidiaries,and rely on contractual arrangements among HangzhouWeimi(one of our PRC subsidi
63、aries),the VIE and its shareholders to direct the business operations of the VIE and its subsidiaries.The VIE wasestablished in April 2015 and holds the value-added telecommunication business operation license,or the VATS License,covering online dataprocessing and transaction processing business(ope
64、rating e-commerce)and internet content-related services.Shanghai Xunmeng was establishedin January 2014 and holds the VATS License covering(i)online data processing and transaction processing business(operating e-commerce),(ii)internet content-related services,(iii)domestic call center business,and(
65、iv)information services.Table of Contents5The VIE structure consists of a series of contractual arrangements,including a shareholders voting rights proxy agreement,equity pledgeagreement,spousal consent letter,exclusive consulting and services agreement and exclusive option agreement,that have been
66、entered into by andamong Hangzhou Weimi,the VIE,the VIEs shareholders and,as applicable,their spouses.As a result of the contractual arrangements,we are ableto direct the activities of and derive economic benefits from the VIE.We are considered the primary beneficiary of the VIE and its subsidiaries
67、 foraccounting purposes,and we have consolidated their financial results in our consolidated financial statements.Revenues contributed by the VIEand its subsidiaries accounted for 65.1%,59.3%and 56.2%of our total revenues for 2020,2021 and 2022,respectively.For more details of thesecontractual arran
68、gements,see“Item 4.Information on the CompanyC.Organizational StructureContractual Arrangements with the VIE andIts Shareholders.”However,the use of these contractual arrangements involves unique risks to investors.The contractual arrangements do not,and maynever,provide holders of our ADSs with dir
69、ect or indirect equity ownership in the VIE and its subsidiaries.Although the contractual arrangementsenable us to direct the activities of and derive economic benefits from the VIE,any control that we have over,as well as any economic benefits thatwe may derive from,the VIE depends on the enforceab
70、ility of the contractual arrangements that we have entered into with the VIE and itsshareholders.Although King&Wood Mallesons,our PRC legal counsel,has advised us that these contractual arrangements are legal,valid,binding and enforceable in accordance with their terms and applicable PRC laws and re
71、gulations,they have also advised us that there areuncertainties under PRC laws and regulations regarding the enforceability of the whole or any part of our contractual arrangements with the VIE.As of the date of this annual report,the legality and enforceability of these contractual arrangements,as
72、a whole,have not been tested in any PRCcourt.There is no guarantee that these contractual arrangements,as a whole,would be enforceable if they were tested in a PRC court,and we mayincur substantial costs to enforce the terms of the arrangements.See“Item 3.Key InformationD.Risk FactorsRisks Related t
73、o Our CorporateStructureWe rely on contractual arrangements with the VIE and its shareholders for a large portion of our business operations,which may not beas effective as direct ownership in providing operational control”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our CorporateStructu
74、reThe shareholders of the VIE may have potential conflicts of interest with us,which may materially and adversely affect our businessand financial condition.”In addition to the uncertainties under PRC laws and regulations regarding the enforceability of the whole or any part of our contractualarrang
75、ements with the VIE,the PRC authorities may also disallow the use of VIE structures.If the whole or any part of our contractualarrangements with the VIE is found to be unenforceable,or if the PRC authorities disallow the use of VIE structures,we may not be able toconsolidate,derive economic interest
76、s from,or direct the activities of the VIE and its subsidiaries,which could result in a material adverse changein the financial performance of our company and cause our ADSs to decline in value or become worthless.See“Item 3.Key InformationD.RiskFactorsRisks Related to Our Corporate StructureIf the
77、PRC government determines that the contractual arrangements that establish part of theVIE structure do not comply with PRC regulations relating to the relevant industries,or if these regulations or the interpretation of existingregulations change in the future,we could be subject to severe penalties
78、 or be forced to relinquish our interests in those operations,and our ADSsmay decline in value or become worthless.”Our Operations in China are subject to PRC Laws and RegulationsThe operations of the businesses that we own and operate in China,and particularly those of the Pinduoduo platform,are su
79、bject to PRClaws and regulations.The laws and regulations governing the internet industry in China are relatively new and quickly evolving,hence bringinguncertainties to their interpretation and enforcement.For example,our operations in China are subject to regulatory approvals and permitrequirement
80、s,oversight on cybersecurity and data privacy,and anti-monopoly and anti-unfair competition laws,with respect to which theapplicable laws and regulations have evolved substantially in recent years.For more information see“Item 4.Information on the CompanyB.Business OverviewRegulation”in this annual
81、report.As of the date of this annual report,our PRC subsidiaries,the VIE and its subsidiaries have obtained the requisite licenses and permitsfrom the PRC government authorities that are material for our business operations in China,including,among others,VATS Licenses.New lawsand regulations may be
82、 adopted from time to time,which may require us to obtain additional licenses and permits for our operations and services.If,in the future,we offer new functions and services in China,we may be required to obtain additional licenses,permits,filings or approvals forsuch functions or services.If we fa
83、il to obtain such additional licenses,permits,filings or approvals,our business and results of operations,as wellas the value of our ADSs,may be materially and adversely affected.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Related to Our Business and IndustryAny lack
84、of additional requisite approvals,licenses or permits or failure to comply with anyrequirements of the applicable laws,regulations and policies may materially and adversely affect our daily operations and hinder our growth.”Table of Contents6The PRC governmental authorities have recently promulgated
85、 PRC laws and regulations relating to cybersecurity review and overseaslistings.Pursuant to the M&A Rules effective as of the date of this annual report,an offshore special purpose vehicle that(i)was formed for listingpurposes through the acquisition of PRC domestic companies and(ii)is controlled by
86、 PRC persons or entities must obtain the approval of theChina Securities Regulatory Commission,or the CSRC,before it can list its securities on an overseas stock exchange.Based on the advice of King&Wood Mallesons,our PRC legal counsel,we are of the view that none of us,our PRC subsidiaries,the VIE
87、or its subsidiaries is required underthe M&A Rules to obtain any permission from the CSRC for our previous offshore offerings because(a)our PRC subsidiaries were incorporated aswholly foreign-owned enterprises through direct investment,rather than by the acquisition,through merger or otherwise,of th
88、e equity interests orassets of a PRC domestic company owned by PRC entities or individuals that are the Companys beneficial owners,and(b)the Company does notconstitute a“special purpose vehicle,”to whom the relevant provisions of the M&A Rules would apply.The Data Security Law,the Regulations on the
89、 Protection of Critical Information Infrastructure,and the Cybersecurity Review Measurespromulgated by PRC authorities(collectively,the“Cybersecurity Laws”)impose cybersecurity review obligations on critical informationinfrastructure operators and network platform operators.Critical information infr
90、astructure operators,as determined and notified by the applicablegoverning authorities,are required to undergo cybersecurity reviews if they procure network products and services which could affect the securityof their information infrastructure,network or data.As of the date of this annual report,w
91、e have not received any notice that we are a criticalinformation infrastructure operator from any government authority.Nor have we received any request from the Cyberspace Administration ofChina,or the CAC,to undergo a cybersecurity review pursuant to the Cybersecurity Laws.Moreover,none of us,our P
92、RC subsidiaries,the VIE orits subsidiaries has received any notice from any PRC authority requiring us to obtain any permissions,in each case in connection with ourprevious issuance of securities to foreign investors.However,in connection with any future overseas capital markets activities,we may ne
93、ed to obtain permission from the CSRC,undergo acybersecurity review conducted by the CAC or meet other regulatory requirements that may be adopted in the future by PRC authorities.To theextent such requirements are or become applicable,we cannot assure you that we would be able to comply with them.A
94、ny failure to obtain ordelay in obtaining such permission,clearing such review process or meeting such requirements would subject us to restrictions and penaltiesimposed by the CSRC,the CAC or other PRC regulatory authorities,which could include fines and penalties on our operations in China,delays
95、ofor restrictions on the repatriation of the proceeds from our offshore offerings into China,restrictions on our ability to remain listed on a U.S.exchange,or other actions that could materially and adversely affect our business,financial condition,results of operations,and prospects,as wellas signi
96、ficantly limit or completely hinder or to offer or continue to offer our securities to investors and cause the value of such securities tosignificantly decline or be worthless.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Related to OurBusiness and IndustryOur business
97、generates and processes a large amount of data,and we are required to comply with PRC and otherapplicable laws relating to privacy and cybersecurity.The improper use or disclosure of data could have a material and adverse effect on ourbusiness and prospects”and“Item 3.Key InformationD.Risk FactorsRi
98、sks Related to Our Business and IndustryThe approval of or filingwith the CSRC or other PRC government authorities may be required in connection with our future offshore offerings under PRC laws,and,ifrequired,we cannot predict whether or for how long we will be able to obtain such approval or compl
99、ete such filing.”In February 2021,the Anti-monopoly Committee of the State Council of the PRC published the Anti-monopoly Guidelines for thePlatform Economy Sector,aiming at enhancing anti-monopoly administration of businesses that operate under the platform model and the overallplatform economy in
100、China.According to these guidelines,business practices such as deploying big data analytics to set discriminatory terms formerchandise price or other transaction terms,coercive exclusivity arrangements with transaction counterparties,blocking of competitor interfacethrough technological means and un
101、lawful collection of user data without consent,are prohibited.The heightened regulatory scrutiny of businessoperators under the Anti-monopoly Law may increase our compliance costs and subject us to heightened risks and challenges that may materiallyand adversely affect our business,results of operat
102、ions and financial results.For more detailed information,see“Item 3.Key InformationD.RiskFactorsRisks Related to Our Business and IndustryWe may be subject to claims under consumer protection laws,including health and safetyclaims and product liability claims,if property or people are harmed by the
103、products and services sold on our platforms.Meanwhile,we are subjectto existing and new laws and regulations imposing various requirements on our business operations.”The Holding Foreign Companies Accountable ActPursuant to the Holding Foreign Companies Accountable Act,or the HFCA Act,if the SEC det
104、ermines that we have filed audit reportsissued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board,or thePCAOB,for two consecutive years,the SEC will prohibit our shares or the ADSs from being traded on a national securitie
105、s exchange or in theover-the-counter trading market in the United States.On December 16,2021,the PCAOB issued a report to notify the SEC of its determination thatthe PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong
106、,including our auditor.Table of Contents7In May 2022,the SEC conclusively listed us as a Commission-Identified Issuer under the HFCA Act following the filing of our annualreport on Form 20-F for the fiscal year ended December 31,2021.On December 15,2022,the PCAOB issued a report that vacated its Dec
107、ember16,2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigatecompletely registered public accounting firms.For this reason,we do not expect to be identified as a Commission-Identified Issuer under theHFCA Act after we
108、file this annual report on Form 20-F.Each year,the PCAOB will determine whether it can inspect and investigate completelyaudit firms in mainland China and Hong Kong,among other jurisdictions.If the PCAOB determines in the future that it no longer has full access toinspect and investigate completely
109、accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquarteredin one of those jurisdictions to issue an audit report on our financial statements filed with the SEC,we would be identified as a Commission-Identified Issuer following the filing of the annual re
110、port on Form 20-F for the relevant fiscal year.There can be no assurance that we would not beidentified as a Commission-Identified Issuer for any future fiscal year,and if we were so identified for two consecutive years,we would becomesubject to the prohibition on trading under the HFCA Act.See“Item
111、 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisdictional OperationsThe PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for ourfinancial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has
112、 deprived our investors of the benefits ofsuch inspections”and“Our ADSs may be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unableto inspect or investigate completely auditors located in China.The delisting of the ADSs,or the threat of their being del
113、isted,may materially andadversely affect the value of your investment.”Summary of Risk FactorsInvesting in our ADSs involves significant risks.You should carefully consider all of the information in this annual report before makingan investment in our ADSs.Below please find a summary of the principa
114、l risks we face,organized under relevant headings.In the event that PRCregulations become applicable to companies in Hong Kong,the legal and operational risks associated with operating in China,as discussed in“Item 3.Key InformationD.Risk FactorsRisks Relating to Our Business and Industry,”may also
115、apply to our operations in Hong Kong.Theserisks are discussed more fully in the section titled“Item 3.Key InformationD.Risk Factors.”Risks Related to Our Business and IndustryRisks and uncertainties related to our business and industry include,but are not limited to,the following:Our limited operati
116、ng history makes it difficult to evaluate our business and prospects.We cannot guarantee that we will be able tomaintain the growth rate that we have experienced to date.If we fail to anticipate buyer needs and provide products and services to attract and retain buyers,or fail to adapt our services
117、orbusiness model to changing buyer needs or emerging industry standards,our business may be materially and adversely affected.Any harm to our brands or reputation may materially and adversely affect our business and results of operations.Merchants on our platforms deliver their products to buyers th
118、rough a variety of third-party logistics service providers,third-partywarehouse operators,third-party pick-up point operators and/or e-waybill systems.Service interruptions,failures,or constraints ofthese third parties or any disruptions or malfunctions of the e-waybill systems could severely harm o
119、ur business and prospects.We face intense competition,and if we fail to compete effectively,we may lose market share,buyers and merchants.If we fail to maintain and expand our relationships with merchants,our revenues and results of operations will be harmed.We have incurred net losses in the past,a
120、nd we may not be able to maintain profitability in the future.We may incur liability for counterfeit,unauthorized,illegal,or infringing products sold or misleading information available on ourplatforms.Table of Contents8We may be subject to claims under consumer protection laws,including health and
121、safety claims and product liability claims,ifproperty or people are harmed by the products and services sold on our platforms.Meanwhile,we are subject to existing and newlaws and regulations imposing various requirements on our business operations.Risks Related to Our Corporate StructureRisks and un
122、certainties related to our corporate structure include,but are not limited to,the following:Holders of our ADSs hold equity interests in PDD Holdings Inc.,a Cayman Islands holding company that does not conductoperations directly.Instead,we conduct our operations in China through(i)our PRC subsidiari
123、es,(ii)the VIE,and(iii)thesubsidiaries of the VIE.We do not have any equity ownership in the VIE or its subsidiaries.We only maintain contractualarrangements with the VIE which allows us to consolidate the financial results of the VIE and its subsidiaries into our consolidatedfinancial statements in
124、 accordance with U.S.GAAP.Holders of our ADSs therefore do not have direct or indirect equity interests inthe VIE and its subsidiaries.In addition to the uncertainties under PRC laws and regulations regarding the enforceability of the wholeor any part of these contractual arrangements,the PRC author
125、ities may also disallow the use of VIE structures.If the whole or anypart of our contractual arrangements with the VIE and its shareholders is found to be unenforceable,or if the PRC authoritiesdisallow the use of VIE structures,we may not be able to consolidate,derive economic interests from,or dir
126、ect the activities of theVIE and its subsidiaries,which could result in a material adverse change in the financial performance of our company and cause ourADSs to decline in value or become worthless.The rights and functions of the PDD Partnership,once effective,may impact your ability to appoint ex
127、ecutive directors and nominatethe chief executive officer of our company,and the interests of the PDD Partnership may conflict with your interests.Any failure by the VIE or its shareholders to perform their obligations under our contractual arrangements with them would have amaterial and adverse eff
128、ect on our business.The shareholders of the VIE may have potential conflicts of interest with us,which may materially and adversely affect our businessand financial condition.Risks Related to our Multi-jurisdictional OperationsWe are also subject to risks and uncertainties associated with having a b
129、usiness presence in multiple jurisdictions,including the PRC andthe United States.These risks and uncertainties include,but are not limited to,the following:Our business is subject to a large number of laws across many jurisdictions,many of which are evolving.Changes in U.S.and international trade p
130、olicies,particularly with regard to China,may adversely impact our business and operatingresults.Changes in Chinas economic,political or social conditions or government policies could have a material adverse effect on ourbusiness and operations.The laws and regulations governing the internet industr
131、y in China are relatively new and quickly evolving,hence bringing risks anduncertainties to their interpretation and enforcement.If we fail to meet or comply with requirements under the applicable laws andregulations,it could result in a material change in our operations and the value of our ADSs.Fo
132、r more details,see“Item 3.KeyInformationD.Risk FactorsRisks Related to Our Multi-jurisdictional OperationsUncertainties with respect to the PRC legalsystem and changes in laws and regulations in China could adversely affect us”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisd
133、ictional OperationsWe may be adversely affected by the complexity,uncertainties and changes inPRC regulation of internet-related businesses and companies,and any lack of requisite approvals,licenses or permits applicable toour business may have a material adverse effect on our business and results o
134、f operations.”Table of Contents9The PRC governments authority in regulating our operations,our overseas offerings of securities and foreign investment in us couldlimit our ability or prevent us from conducting future offerings of securities to investors,which may cause the value of our ADSs tosignif
135、icantly decline.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisdictionalOperationsThe PRC governments significant oversight and discretion over our business operations could result in a materialchange in our operations and the value of our ADSs.”Cash transfe
136、rs from our PRC subsidiaries to entities outside of China are subject to PRC government controls on currencyconversion.To the extent cash in our business is in the PRC or a PRC entity,such cash may not be available to fund operations or forother use outside of the PRC due to restrictions and limitat
137、ions imposed by the governmental authorities on currency conversion,cross-border transactions and cross-border capital flows.Shortages in the availability of foreign currency may temporarily delay theability of our PRC subsidiaries,the VIE and its subsidiaries to remit sufficient foreign currency to
138、 pay dividends or other payments tous,or otherwise satisfy their foreign currency denominated obligations.For more details,see“Item 3.Key InformationD.RiskFactorsRisks Related to Our Multi-jurisdictional OperationsWe may rely on dividends and other distributions on equity paid byour PRC subsidiaries
139、 to fund any cash and financing requirements we may have,and any limitation on the ability of our PRCsubsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisdictional O
140、perationsGovernmental control of currencyconversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”Our ADSs may be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspector fully investigate a
141、uditors located in China.The PCAOB had historically been unable to inspect our auditor in relation to their auditwork performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past hasdeprived our investors of the benefits of such inspections.
142、The delisting of our ADSs,or the threat of their being delisted,maymaterially and adversely affect the value of your investment.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisdictional OperationsThe PCAOB had historically been unable to inspect our auditor i
143、n relation totheir audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in thepast has deprived our investors of the benefits of such inspections”and“Item 3.Key InformationD.Risk FactorsRisks Relatedto Our Multi-jurisdictional Operati
144、onsOur ADSs may be prohibited from trading in the United States under the HFCA Act in thefuture if the PCAOB is unable to inspect or investigate completely auditors located in China.The delisting of the ADSs,or the threatof their being delisted,may materially and adversely affect the value of your i
145、nvestment.”Risks Related to Our ADSsIn addition to the risks described above,we are subject to general risks relating to our ADSs,including,but not limited to,the following:The trading price of our ADSs may be volatile,which could result in substantial losses to investors.The sale or availability fo
146、r sale of substantial amounts of our ADSs could adversely affect their market price.Cash and Asset Flows through Our OrganizationPDD Holdings Inc.is a holding company with no operations of its own.We conduct our operations in China primarily through oursubsidiaries,the VIE and its subsidiaries.As a
147、result,although other means are available for us to obtain financing at the holding company level,PDD Holdings Inc.s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRCsubsidiaries and license and service fees paid by the VIE.If
148、 any of our subsidiaries incurs debt on its own behalf in the future,the instrumentsgoverning such debt may restrict its ability to pay dividends to our offshore holding company.In addition,our PRC subsidiaries are permitted topay dividends to our offshore holding company only out of their retained
149、earnings,if any,as determined in accordance with PRC accountingstandards and regulations.Further,our PRC subsidiaries,the VIE and its subsidiaries are required to make appropriations to certain statutoryreserve funds or may make appropriations to certain discretionary funds,which are not distributab
150、le as cash dividends except in the event of asolvent liquidation of the companies.For more details,see“Item 5.Operating and Financial Review and ProspectsB.Liquidity and CapitalResourcesHolding Company Structure.”Table of Contents10Under PRC laws and regulations,our PRC subsidiaries,the VIE and its
151、subsidiaries are subject to certain restrictions with respect topaying dividends or otherwise transferring any of their net assets to us.Remittance of dividends by a wholly foreign-owned enterprise out of Chinais also subject to examination by the banks designated by the State Administration of Fore
152、ign Exchange,or SAFE.The amounts restricted includethe paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the VIE in which we have no legal ownership,totaling RMB10,789.1 million,RMB23,306.4 million and RMB57,000.1 million(US$8,264.2 million)as of December
153、31,2020,2021 and 2022,respectively.Furthermore,cash transfers from our PRC subsidiaries,the VIE and its subsidiaries to entities outside of China are subject to PRCgovernment controls on currency conversion.To the extent cash in our business is in the PRC or a PRC entity,such cash may not be availab
154、le tofund operations or for other use outside of the PRC due to restrictions and limitations imposed by the governmental authorities on currencyconversion,cross-border transactions and cross-border capital flows.Shortages in the availability of foreign currency may temporarily delay theability of ou
155、r PRC subsidiaries,the VIE and its subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us,orotherwise satisfy their foreign currency denominated obligations.In view of the foregoing,to the extent cash in our business is held in China or bya PRC entity,such cash ma
156、y not be available to fund operations or for other use outside of the PRC.For risks relating to the fund flows of ouroperations in China,see“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-jurisdictional OperationsWe may rely ondividends and other distributions on equity paid by our P
157、RC subsidiaries to fund any cash and financing requirements we may have,and anylimitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct ourbusiness”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our Multi-ju
158、risdictional OperationsGovernmental control ofcurrency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”Under PRC law,PDD Holdings Inc.may provide funding to our PRC subsidiaries only through capital contributions or loans,and to theVIE on
159、ly through loans,subject to satisfaction of applicable government registration and approval requirements.For the years ended December 31,2020,2021 and 2022,(i)PDD Holdings Inc.provided loans to our subsidiaries in an aggregate principal amount of RMB54,469.7 million,RMB15,520.1 million and RMB21,991
160、.6 million(US$3,188.5 million),respectively,(ii)our subsidiaries repaid loans to PDD Holdings Inc.in anaggregate principal amount of RMB2,418.2 million,RMB9,664.8 million and RMB22,057.3 million(US$3,198.0 million),respectively,(iii)theVIE and its subsidiaries provided loans to our subsidiaries in a
161、n aggregate principal amount of RMB21,545.3 million,RMB47,711.8 million andRMB5,443.7 million(US$789.3 million),respectively,(iv)our subsidiaries repaid loans to the VIE and its subsidiaries in an aggregate principalamount of RMB14,760.6 million,RMB29,999.3 and RMB16.0 million(US$2.3 million),respec
162、tively,(v)our subsidiaries provided loans to theVIE and its subsidiaries in an aggregate principal amount of RMB12,204.2 million,RMB7,729.5 million and RMB62,753.7 million(US$9,098.4million),respectively,and(vi)the VIE and its subsidiaries repaid loans to our subsidiaries in an aggregate principal a
163、mount of RMB5,291.6million,RMB7,300.0 million and RMB46,043.4 million(US$6,675.6 million),respectively.As of the date of this annual report,we do not have any cash management policies that dictate how funds are transferred among PDDHoldings Inc.,our subsidiaries,the VIE and its subsidiaries and inve
164、stors.PDD Holdings Inc.has not declared or paid any cash dividends,nor does it have any present plan to pay any cash dividends on ourordinary shares in the foreseeable future.We currently intend to retain most,if not all,of our available funds and any future earnings to operate andexpand our busines
165、s.See“Item 8.Financial InformationA.Consolidated Statements and Other Financial InformationDividend Policy.”ForPRC and United States federal income tax considerations of an investment in our ADSs,see“Item 10.Additional InformationE.Taxation.”Financial Information Related to the VIEThe following tabl
166、e presents the condensed consolidating schedule of financial position and results for(i)PDD Holdings Inc.,(ii)Hangzhou Weimi,a PRC subsidiary of the Company that has entered into contractual arrangements with the VIE,the VIEs shareholders and,asapplicable,their spouses,(iii)the VIE and its subsidiar
167、ies,and(iv)the Companys subsidiaries other than Hangzhou Weimi as of the dates or forthe periods presented.Table of Contents11Selected Condensed Consolidated Statements of Income InformationFor the Year Ended December 31,2022PDD Holdings Inc.(PrimaryOther Subsidiaries beneficiaryHangzhouVIE and Its
168、of PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Revenues 837,973 103,631,702 66,770,734 (40,682,820)130,557,589Total costs and operating expenses(660,216)(803,066)(68,152,664)(71,222,542)40,682,820(100,155,668)Share of profit from subsidiaries,the V
169、IE and subsidiaries of theVIE 32,238,254(32,238,254)Net income/(loss)31,538,062 47,567 33,595,051(1,404,364)(32,238,254)31,538,062For the Year Ended December 31,2021PDD HoldingsInc.(PrimaryOther SubsidiariesbeneficiaryHangzhouVIE and Its of PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.
170、*Eliminations Total (RMB in thousands)Revenues 2,288,608 77,877,339 50,467,506(36,683,514)93,949,939Total costs and operating expenses(649,171)(2,273,922)(62,977,072)(57,836,526)36,683,514(87,053,177)Share of profit from subsidiaries,the VIE and subsidiaries of the VIE 9,579,738(9,579,738)Net income
171、/(loss)7,768,670 43,461 15,169,180(5,632,903)(9,579,738)7,768,670 For the Year Ended December 31,2020PDD Holdings Inc.(PrimaryOther Subsidiaries beneficiaryHangzhouVIE and Its of PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Revenues 1,101,213 51,351
172、,861 21,614,790 (14,575,999)59,491,865Total costs and operating expenses(667,210)(1,332,403)(50,118,546)(31,330,030)14,575,999(68,872,190)Share of profit from subsidiaries,the VIE and subsidiaries of the VIE(5,996,484)5,996,484Net(loss)/income(7,179,742)(229,006)2,552,665(8,320,143)5,996,484(7,179,7
173、42)Table of Contents12Selected Condensed Consolidated Balance Sheets InformationAs of December 31,2022PDD HoldingsOther Inc.(Primary Subsidiaries beneficiary HangzhouVIE and Itsof PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Current assets:Cash and
174、cash equivalents 61,553 73 2,725,249 31,539,317 34,326,192 Restricted cash 57,955,328 18,897 57,974,225 Short-term investments 45,273,907 69,838,647 115,112,554 Amounts due from Group companies(1)1,097,624 34,810,132 24,602,577(60,510,333)Others 443 3,450 7,812,912 1,388,100 9,204,905Total current a
175、ssets 61,996 1,101,147 148,577,528 127,387,538(60,510,333)216,617,876Non-current assets:Other non-current assets 5,005 10,444,964 6,412,148 16,862,117 Investments in subsidiaries,the VIE and itssubsidiaries(2)133,085,591 2,000 1,725,183(134,812,774)Others 109,847 76,235 1,415,413 2,038,465 3,639,960
176、Total non-current assets 133,195,438 83,240 11,860,377 10,175,796(134,812,774)20,502,077Total assets 133,257,434 1,184,387 160,437,905 137,563,334(195,323,107)237,119,953 Current liabilities:Payable to merchants 62,006,946 1,309,749 63,316,695 Merchant deposits 14,681,913 376,316 15,058,229 Amounts
177、due to Group companies(1)1,124,895 22,452,033 125,803,100(149,380,028)Convertible bonds,current portion 13,885,751 13,885,751Others 25,017 194,971 15,014,803 9,394,014 24,628,805Total current liabilities 13,910,768 1,319,866 114,155,695 136,883,179(149,380,028)116,889,480 Non-current liabilitiesConv
178、ertible bonds 1,575,755 1,575,755Others 62,630290,412530,765 883,807Total non-current liabilities 1,575,755 62,630290,412530,765 2,459,562Total liabilities 15,486,523 1,382,496114,446,107137,413,944(149,380,028)119,349,042Table of Contents13As of December 31,2021PDD HoldingsInc.(PrimaryOther Subsidi
179、ariesbeneficiaryHangzhouVIE and Its of PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Current assets:Cash and cash equivalents 2,269 1,033 2,430,440 3,992,973 6,426,715Restricted cash 59,402,079 215,177 59,617,256Short-term investments 12,306,340 74,2
180、10,278 86,516,618Amounts due from Group companies(1)1,239,992 40,425,872 29,829,301(71,495,165)Others 390 9,393 6,198,116 2,140,680 8,348,579Total current assets 2,659 1,250,418 120,762,847 110,388,409(71,495,165)160,909,168Non-current assets:Other non-current assets 5,300,938 11,125,028 16,425,966I
181、nvestments in subsidiaries,the VIE and itssubsidiaries(2)86,252,341 2,000 1,579,309(87,833,650)Others 674,057 9,690 2,581,092 609,745 3,874,584Total non-current assets 86,926,398 11,690 7,882,030 13,314,082(87,833,650)20,300,550Total assets 86,929,057 1,262,108 128,644,877 123,702,491(159,328,815)18
182、1,209,718Current liabilities:Payable to merchants 61,947,517 562,197 62,509,714Merchant deposits 13,360,409 217,143 13,577,552Amounts due to Group companies(1)1,315,756 27,978,153 123,501,613(152,795,522)Others 24,607 191,953 12,619,600 4,806,288 17,642,448Total current liabilities 24,607 1,507,709
183、115,905,679 129,087,241(152,795,522)93,729,714Non-current liabilities Convertible bonds 11,788,907 11,788,907Others 996 75 324,285 251,194 576,550Total non-current liabilities 11,789,903 75 324,285 251,194 12,365,457Total liabilities 11,814,510 1,507,784 116,229,964 129,338,435(152,795,522)106,095,1
184、71Table of Contents14As of December 31,2020PDD HoldingsInc.(PrimaryOther SubsidiariesbeneficiaryHangzhouVIE and Its of PDDConsolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Current assets:Cash and cash equivalents 6,566 9,168 3,593,192 18,812,263 22,421,189R
185、estricted cash 45,000 52,148,852 228,595 52,422,447Short-term investments 5,840,247 7,026,442 51,684,405 64,551,094Amounts due from Group companies(1)999,964 9,932,418 14,699,309(25,631,691)Others 359 38,340 8,788,524 1,301,925 10,129,148Total current assets 5,847,172 1,092,472 81,489,428 86,726,497
186、(25,631,691)149,523,878Non-current assets:Other non-current assets 5,005 4,380,476 2,889,824 7,275,305Investments in subsidiaries,the VIE and itssubsidiaries(2)67,814,679 2,000 1,616,265(69,432,944)Others 1,276,751 23,967 654,790 153,923 2,109,431Total non-current assets 69,091,430 30,972 5,035,266
187、4,660,012(69,432,944)9,384,736Total assets 74,938,602 1,123,444 86,524,694 91,386,509(95,064,635)158,908,614Current liabilities:Payable to merchants 53,417,259 416,722 53,833,981Merchant deposits 10,926,319 10,926,319Amounts due to Group companies(1)1,068,463 9,759,506 92,224,226(103,052,195)Others
188、327,004 334,083 14,809,044 3,651,646 19,121,777Total current liabilities 327,004 1,402,546 88,912,128 96,292,594(103,052,195)83,882,077Non-current liabilities Convertible bonds 14,432,792 14,432,792Others 2,918 10,034 366,834 38,071 417,857Total non-current liabilities 14,435,710 10,034 366,834 38,0
189、71 14,850,649Total liabilities 14,762,714 1,412,580 89,278,962 96,330,665(103,052,195)98,732,726Table of Contents15Selected Condensed Consolidated Cash Flows InformationFor the Year Ended December 31,2022Other PDD Holdings Inc.Subsidiaries(Primary beneficiaryVIE and Itsof PDDConsolidated of the VIE)
190、Hangzhou Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Net cash(used in)/generated from operatingactivities(3)(24,202)25,830 25,650,939 22,855,293 48,507,860 Net cash generated from/(used in)investing activities 65,707(93,576)(43,513,150)(1,053,261)22,232,610(22,361,670)Net ca
191、sh generated from financing activities 10,079 66,786 16,710,269 5,455,555(22,232,610)10,079 For the Year Ended December 31,2021 PDD Holdings Inc.Other Subsidiaries (Primary beneficiary VIE and Its of PDD Consolidated of the VIE)Hangzhou Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thou
192、sands)Net cash generated from/(used in)operatingactivities(3)82,074 (150,891)34,365,025 (5,513,197)28,783,011Net cash used in investing activities (91,170)(270,312)(26,828,581)(33,008,291)24,635,989 (35,562,365)Net cash generated from/(used in)financing activities 318 368,069(1,445,969)23,838,417 (2
193、4,635,989)(1,875,154)For the Year Ended December 31,2020 PDD Holdings Inc.Other Subsidiaries (Primary beneficiary HangzhouVIE and Its of PDD Consolidated of the VIE)Weimi*Subsidiaries Holdings Inc.*Eliminations Total(RMB in thousands)Net cash generated from/(used in)operatingactivities(3)735,231 (45
194、2,435)29,379,799 (1,465,968)28,196,627Net cash used in investing activities(52,266,859)(224,486)(11,802,074)(40,595,102)66,530,620 (38,357,901)Net cash generated from financing activities 50,892,970 678,729 7,818,632 58,939,285 (66,530,620)51,798,996Notes:*Represents Hangzhou Weimi,a PRC subsidiary
195、of the Company that has entered into contractual arrangements with the VIE,the VIEsshareholders and,as applicable,their spouses.These contractual arrangements enable us to direct the activities of and derive economic benefitsfrom the VIE and its subsidiaries.For more information,see“Item 4.Informati
196、on on the CompanyC.Organizational StructureContractualArrangements with the VIE and Its Shareholders.”*Represents all of the Companys subsidiaries other than Hangzhou Weimi.(1)Represents the elimination of the intercompany balances among PDD Holdings Inc.,Hangzhou Weimi,the Companys subsidiaries oth
197、er than Hangzhou Weimi,and the VIE andits subsidiaries.(2)Represents the elimination of the investments in Hangzhou Weimi,the Companys subsidiaries other than Hangzhou Weimi,and the VIE and its subsidiaries.(3)For the years ended December 31,2020,2021 and 2022,cash paid by the VIE and its subsidiari
198、es to Hangzhou Weimi,primarily for service fees,was RMB935.1 million,RMB2,714.2 million and RMB963.9 million(US$139.8 million),respectively.A.ReservedB.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.Table of Contents16D.Risk FactorsInvesting i
199、n our ADSs involves significant risks.You should carefully consider all of the information in this annual report before making aninvestment in our ADSs.Below please find the principal risks we face,organized under relevant headings.In the event that PRC regulationsbecome applicable to companies in H
200、ong Kong,the legal and operational risks associated with operating in China,as discussed in“Item 3.KeyInformationD.Risk FactorsRisks Relating to Our Business and Industry,”may also apply to our operations in Hong Kong.Risks Related to Our Business and IndustryOur limited operating history makes it d
201、ifficult to evaluate our business and prospects.We cannot guarantee that we will be able to maintainthe growth rate that we have experienced to date.The businesses that we own and operate have a limited operating history.The Pinduoduo platform commenced its commercial operationsin 2015.The Temu plat
202、form commenced its commercial operations in 2022.Our revenues grew from RMB93,949.9 million in 2021 toRMB130,557.6 million(US$18,929.1 million)in 2022.However,our historical performance may not be indicative of our future growth orfinancial results.We cannot assure you that we will be able to grow a
203、t the same rate as we did in the past,or avoid any decline in the future.Ourgrowth may slow down or become negative,and revenues may decline for a number of possible reasons,some of which are beyond our control,including decreasing consumer spending,increasing competition,declining growth of our ove
204、rall market or industry,the emergence of alternativebusiness models,changes in rules,regulations,government policies or general economic conditions.In addition,our online marketing services,from which we have generated most of our revenues since 2017,may not grow as quickly as we have anticipated.It
205、 is difficult to evaluate ourprospects,as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may beexposed.If our growth rate declines,investors perceptions of our business,operating results and prospects may be materially and adver
206、selyaffected and the market price of our ADSs could decline.You should consider our prospects in light of the risks and uncertainties that companieswith a limited operating history may encounter.If we fail to anticipate buyer needs and provide products and services to attract and retain buyers,or fa
207、il to adapt our services or businessmodel to changing buyer needs or emerging industry standards,our business may be materially and adversely affected.The e-commerce market in which we operate as well as buyer needs and preferences are constantly evolving.As a result,we mustcontinuously respond to c
208、hanges in the market and buyer demand and preferences to remain competitive,grow our business and maintain ourmarket position.We intend to further diversify our product and service offerings to add to our revenue sources in the future.New products andservices,new types of buyers or new business mode
209、ls may involve risks and challenges we do not currently face.Any new initiatives may requireus to devote significant financial and management resources and may not perform as well as expected.For example,Duo Duo Grocery,a next-daygrocery pick-up service that we started in August 2020 as an extension
210、 of the Pinduoduo platform,and the Temu platform,a global e-commercemarketplace that we launched in September 2022,may each require financial,personnel and other resources commitment over time and may notattract or retain enough users or otherwise perform in accordance with our expectations.Furtherm
211、ore,we may have difficulty in anticipating buyer demand and preferences,and the products offered on our platforms may not beaccepted by the market or be rendered obsolete or uneconomical.Therefore,any inability to adapt to these changes may result in a failure tocapture new buyers or retain existing
212、 buyers,the occurrence of which would materially and adversely affect our business,financial condition andresults of operations.In addition,to remain competitive,we must continue to enhance and improve the responsiveness,functionality and features of ourplatforms.The internet and e-commerce markets
213、are characterized by rapid technological evolution,changes in buyer requirements andpreferences,frequent introductions of new products,features and services embodying new technologies and the emergence of new industrystandards and practices,any of which could render our existing technologies and sys
214、tems obsolete.Our success will depend,in part,on our abilityto identify,develop and adapt to new technologies useful in our business,and respond to technological advances and emerging industry standardsand practices,in particular with respect to mobile internet,in a cost-effective and timely way.We
215、cannot assure you that we will be successful inthese efforts.Table of Contents17Any harm to our brands or reputation may materially and adversely affect our business and results of operations.We believe that the recognition and reputation of our brands,including Pinduoduo and Temu,among our buyers,m
216、erchants and third-party service providers have contributed significantly to the growth and success of our business.Maintaining and enhancing the recognition andreputation of our brands are critical to our business and competitiveness.Many factors,some of which are beyond our control,are important t
217、o maintaining and enhancing our brands.These factors include ourability to:provide a superior shopping experience to buyers;maintain the popularity,attractiveness,diversity,quality and authenticity of our product offerings;maintain the efficiency,reliability and quality of the fulfillment and delive
218、ry services to our buyers;maintain or improve buyers satisfaction with our after-sale services;increase brand awareness through marketing and brand promotion activities;andpreserve our reputation and goodwill in the event of any negative publicity on our consumer experience or merchant service,inter
219、netand data security,product quality,price or authenticity,performance measures,or other issues affecting us or other e-commercebusinesses in the countries or regions where we have operations.Public perception that counterfeit,unauthorized,illegal,or infringing products are sold on our platforms or
220、that we or merchants on ourplatforms do not provide satisfactory consumer services,even if factually incorrect or based on isolated incidents,could damage our reputation,diminish the value of our brands,undermine the trust and credibility we have established and have a negative impact on our ability
221、 to attract newbuyers or retain our current buyers.In particular,we have been and may continue to be subject to negative publicity based on claims andallegations related to intellectual property.For example,the Office of the U.S.Trade Representative,or USTR,has identified the Pinduoduoplatform as a“
222、notorious market”in its Special 301 Reports since 2019.The USTR may continue to identify the Pinduoduo platform as a notoriousmarket in the future.The negative public perception resulted therefrom could damage our reputation,harm our business,diminish the value of ourbrand name and negatively affect
223、 trading price of our ADSs.If we are unable to maintain our reputation,enhance our brand recognition or increase positive awareness of our platforms,products andservices,it may be difficult to maintain and grow our buyer base,and our business and growth prospects may be materially and adversely affe
224、cted.Table of Contents18Merchants on our platforms deliver their products to buyers through a variety of third-party logistics service providers,third-party warehouseoperators,third-party pick-up point operators and/or e-waybill systems.Service interruptions,failures,or constraints of these third pa
225、rties orany disruptions or malfunctions of the e-waybill systems could severely harm our business and prospects.Merchants on our platforms fulfil and deliver their orders through third-party logistics service providers,warehouse operators and/or pick-up point operators.Interruptions to or failures i
226、n services provided by these third parties could affect timely and successful delivery of the orderedproducts to our buyers.As we do not directly control or manage the operations of these third parties,we may not be able to guarantee theirperformance.Any failure to provide satisfactory services to o
227、ur buyers,such as delays in delivery,product damage or product loss during transit,shutdown or termination of pick-up points may damage our reputation and cause us to lose buyers,and may ultimately adversely affect our resultsof operations.In addition,certain of these third parties may be influenced
228、 by our competitors when providing services to us.For example,if third-party logistics service providers raise the shipping rates for delivering products of merchants on our platforms,our merchants may not be willing tobear the increased costs or be able to offer competitive prices for products on o
229、ur platforms.As a result,our business and prospects,as well as ourfinancial condition and results of operations could be materially and adversely affected.If these third parties fail to deliver products to our buyers on time or in good condition,our buyers may refuse to accept merchandisepurchased o
230、n our platforms and have less confidence in our platforms.In such event,we cannot assure you that our merchants or we will be able tofind alternative cost-efficient service providers or operators to offer satisfactory services or pick-up points in a timely manner,or at all,which couldcause our busin
231、ess and reputation to suffer or cause merchants and buyers to move to other platforms and have negative impact on our financialconditions.Most merchants on our platforms use e-waybill systems to arrange and track shipments.While we launched our e-waybill system duringthe first quarter of 2019,mercha
232、nts on our platforms are allowed to choose different e-waybill systems developed and operated by third-partyservice providers.Any disruptions or malfunctions of e-waybill systems used by our merchants could prevent the timely or proper delivery ofproducts to consumers,which would damage our reputati
233、on,harm our business,diminish the value of our brand name.We face intense competition,and if we fail to compete effectively,we may lose market share,buyers and merchants.The e-commerce industry is intensely competitive.We compete to attract,engage and retain buyers,merchants,and other participants o
234、nour platforms.Our current or potential competitors include(i)major e-commerce operators,(ii)major traditional and brick-and-mortar retailers,(iii)retail companies focused on specific product categories and(iv)major internet companies that do not operate e-commerce businesses now butmay enter the e-
235、commerce business area or are in the process of initiating their e-commerce businesses.These current or future competitors mayhave longer operating histories,greater brand recognition,better supplier or merchant relationships,stronger infrastructure,larger buyer bases orgreater financial,technical o
236、r marketing resources than we do.Competitors may leverage their brand recognition,experience and resources tocompete with us in a variety of ways,including making investments and acquisitions for the expansion of their product and service offerings.Someof our competitors may be able to secure more f
237、avorable terms from merchants,devote greater resources to marketing and promotional campaigns,adopt more aggressive pricing or inventory policies and devote substantially more resources to develop their IT systems and technology.Some ofthese competitors may also offer“team purchase”on their platform
238、s or offer innovative purchase models that may turn out to be highly popularamong buyers,and buyers may prefer them over our business model.In addition,new and enhanced technologies may increase the competition inthe market we operate in.Increased competition may reduce our profitability,market shar
239、e,user base and brand recognition.There can be noassurance that we will be able to compete successfully against current or future competitors,and such competitive pressures may have a materialand adverse effect on our business,financial condition and results of operations.Table of Contents19If we fa
240、il to maintain and expand our relationships with merchants,our revenues and results of operations will be harmed.We rely on our merchants to offer merchandise that appeal to our existing and potential buyers at attractive prices.Our ability to providepopular products on our platforms at attractive p
241、rices depends on our ability to develop mutually beneficial relationships with our merchants.Forexample,we rely on our merchants to make available sufficient inventory and fulfill large volumes of orders in an efficient and timely manner toensure our user experience.However,we may experience merchan
242、t attrition in the ordinary course of business resulting from several factors,suchas losses to competitors,perception that marketing on our platforms is ineffective,reduction in merchants marketing budgets,and closures orbankruptcies of merchants.In addition,we may have disputes with merchants with
243、respect to their compliance with our quality control policies andmeasures and the penalties imposed by us for violation of these policies or measures from time to time,which may cause them to be dissatisfiedwith our platforms.Their complaints may in turn result in negative impact on our public image
244、 and reputation.If we experience significantmerchant attrition,or if we are unable to attract new merchants,our revenues and results of operations may be materially and adversely affected.Inaddition,our agreements with merchants also typically do not restrict them from establishing or maintaining bu
245、siness relationships with ourcompetitors.We cannot assure you that merchants will continue to offer merchandise on our platforms if they are pressured to use only oneplatform to market their products.Any change,disruption,discontinuity in the features and functions of major social networks could sev
246、erely limit our ability to continuegrowing our buyer base,and our business may be materially and adversely affected.Our success depends on our ability to attract and retain new buyers and expand our buyer base.Acquiring and retaining buyers on ourplatforms is important to the growth and profitabilit
247、y of our business.We leverage social networks as a tool for buyer acquisition and engagement.Although buyers can access our platforms and make purchases directly through our platforms,we leverage social networks to enable buyers toshare product information and their purchase experiences with their f
248、riends,family and other social contacts to generate effective and organictraffic and active interactions among buyers.A portion of our buyer traffic comes from these recommendations or product introductions that buyersshare through social networks.Due to the nature of our business model,which resemb
249、les a dynamic and interactive shopping experience,it isimpracticable for us to accurately bifurcate and quantify the buyer traffic generated directly through our platforms and through social networks.Therefore,during our daily operations,we focus more on the gross merchandise value on our platforms
250、as a whole and the seamless userexperience across different access points,and believe that the final purchase destination cannot be used to reflect the significance of socialnetworks and our platforms to our business operations.To the extent that we fail to effectively leverage such social networks,
251、our ability to attract or retain buyers may be severely harmed.If anyof these social networks makes changes to its functions or support,such as charging fees for functions or support that are currently provided forfree,or stops offering its functions or support to us,we may not be able to locate alt
252、ernative platforms of similar scale to provide similar functionsor support on commercially reasonable terms in a timely manner,or at all.Furthermore,we may fail to establish or maintain relationships withadditional social network operators to support the growth of our business on economically viable
253、 terms,or at all.Any interruption to ordiscontinuation of our relationships with major social network operators may severely and negatively impact our ability to continue growing ourbuyer base,and any occurrence of the circumstances mentioned above may have a material adverse effect on our business,
254、financial condition andresults of operations.We are dependent on app stores to disseminate our mobile apps.Consumers primarily access our services through the Pinduoduo and Temu mobile apps.Our mobile apps are offered via app storesoperated by third parties,such as Apples App Store,which could suspe
255、nd or terminate users access to our mobile apps,increase access costs orchange the terms of access in a way that makes our apps less desirable or harder to access.As a result,our ability to expand our user base may behindered if potential users experience difficulties in or are barred from accessing
256、 our mobile apps.In the past,our mobile apps were taken downfrom certain third-party app stores for a short period of time.We cannot assure you that we will not experience such incident of similar nature inthe future.The occurrence of the similar incident may adversely affect our brands and reputati
257、on,business,financial condition and results ofoperations.Any disruption to our IT systems could materially affect our ability to maintain the satisfactory performance of our IT systems and deliverconsistent services to our buyers and merchants.The proper functioning of our IT systems is essential to
258、 our businesses.The satisfactory performance,reliability and availability of our ITsystems are critical to our success,our ability to attract and retain buyers and our ability to maintain and deliver consistent services to our buyersand merchants.However,our technology infrastructure may fail to kee
259、p pace with the growth of our business,particularly with respect to our newproduct and service offerings.Our buyers may experience delays as we seek to source additional capacity.If our buyers are dissatisfied with theirexperience on our platforms as a result of such delays,our results of operations
260、 as well as our reputation could be adversely affected.Table of Contents20Additionally,we must continue to upgrade and improve our technology infrastructure to support the growth of our business.However,wecannot assure you that we will be successful in executing these system upgrades,and the failure
261、 to do so may impede our growth.We currently relyon cloud services and servers operated by external cloud service providers to store our data,to allow us to analyze a large amount of datasimultaneously and to update our buyer database and buyer profiles quickly.Any interruption or delay in the funct
262、ionality of these external cloudservice and server providers may materially and adversely affect the operations of our business.We may be unable to monitor and ensure high-quality maintenance and upgrade of our IT systems and infrastructure on a real-time basis,and buyers may experience service outa
263、ges and delays in accessing and using our platforms to place orders.In addition,we may experience surgesin online traffic and orders associated with promotional activities and generally as we scale,which can put additional demand on our platforms atspecific times.Our technology or infrastructure may
264、 not function properly at all times.Any system interruptions caused by telecommunicationsfailures,computer viruses,hacking or other attempts to harm our systems that result in the unavailability or slowdown of our platforms or reducedorder fulfillment performance could reduce the volume of products
265、sold and the attractiveness of product offerings on our platforms.Our serversmay also be vulnerable to computer viruses,physical or electronic break-ins and similar disruptions,which could lead to system interruptions,mobile app slowdown or unavailability,delays or errors in transaction processing,l
266、oss of data or the inability to accept and fulfill buyer orders.Any such occurrence could cause disruption to our daily operations.As a result,our reputation may be materially and adversely affected,ourmarket share could decline and we could be subject to liability claims.We have incurred net losses
267、 in the past,and we may not be able to maintain profitability in the future.We incurred net losses from our inception until 2020,before recording a net income of RMB7,768.7 million in 2021 and a net income ofRMB31,538.1 million(US$4,572.6 million)in 2022.We cannot assure you that we will be able to
268、maintain profitability in the future.In particular,we expect our operating costs and expenses to increase in absolute amounts in the future due to:(i)the continued expansion of our businessoperations,buyer base and merchant network,(ii)the continued investment in technology infrastructure and networ
269、k,(iii)our promotion andmarketing efforts as we continue to enhance our brand recognition,retain and grow our buyer base,and increase our buyer activities,(iv)thelaunch of new services,and(v)the investment in new initiatives,which may incur upfront costs,change our existing revenue and cost structur
270、es,and affect our ability to maintain profitability.In addition to managing the foregoing costs and expenses,our ability to maintain profitability depends on our ability to,among otherthings,attract and retain buyers and increase buyer activities,establish and maintain relationships with merchants,p
271、rovide valuable onlinemarketplace services and broaden service offerings,and optimize our cost structure.We may not be able to achieve any of the above.In particular,our sales and marketing expenses increased by 21.3%from RMB44,801.7 million in 2021 to RMB54,343.7 million(US$7,879.1 million)in 2022,
272、as we invested in cultivating greater user recognition and engagement through online and offline advertising campaigns and promotions.Similarly,our research and development expenses increased by 15.5%from RMB8,992.6 million in 2021 to RMB10,384.7 million(US$1,505.6 million)in2022,as we hired additio
273、nal experienced research and development personnel.If we incur substantial sales and marketing expenses without beingable to achieve the anticipated growth in the number of buyers and merchants on our platforms or their spending,our operating results may bematerially and adversely affected.Moreover,
274、if our investment in our research and development does not result in improvements to the quality orefficiency of our services or otherwise fails to generate returns as expected,our operating results may also be materially and adversely affected.Asa result,we may experience decreasing operating margi
275、n,and may incur net losses in the future.In addition,our ability to use our net losses,to theextent we record such net losses in future periods,to offset future taxable income may be subject to certain limitations,including limitationsresulting from the reorganization of our corporate structure and
276、change of our primary operating entities.As such,we may not be able to fullyutilize our net losses or at all.We rely on certain key operating metrics to evaluate the performance of our business,and perceived inaccuracies in such metrics may harmour reputation and negatively affect our business.We re
277、ly on certain key operating metrics to evaluate the performance of our business.Our operating metrics may differ from estimatespublished by third parties or from similarly titled metrics used by other companies due to differences in methodology and assumptions.If thesemetrics are perceived to be ina
278、ccurate by investors or investors make investment decisions based on operating metrics we disclosed but with theirown methodology and assumptions or those published or used by third parties or other companies,our reputation may be harmed,which couldnegatively affect our business,and we may also face
279、 potential lawsuits or disputes.Table of Contents21We face risks related to natural disasters,health epidemics and other outbreaks,most notably those related to the outbreak of COVID-19,whichcould significantly disrupt our operations.We and our merchants are vulnerable to natural disasters,health ep
280、idemics,and other calamities.Any such occurrence could causedisruption to our and our merchants daily operations or the closure of facilities and logistics delivery networks,which may disrupt our businessoperations and adversely affect our results of operations.In recent years,there have been outbre
281、aks of epidemics in the countries or regions wherewe have operations.For example,from early 2020 to the end of 2022,to contain the spread of COVID-19,the Chinese government took a numberof actions,including quarantine and social distancing measures,among other things.COVID-19 also resulted in the te
282、mporary closure of corporateoffices,retail stores,manufacturing facilities and factories across China,and put significant strain on merchandise shipping and delivery.At the endof 2022,China began to modify its zero-COVID policy,and most of the travel restrictions and quarantine requirements were lif
283、ted in December2022.From late December 2022 to early 2023,certain parts of China experienced a heightened number of COVID-19 cases,which resulted intemporary disruptions to business and other activities.The extent to which the pandemic impacts our results of operations going forward willdepend on fu
284、ture developments which are highly uncertain and unpredictable,including the frequency,duration and extent of outbreaks of COVID-19,the appearance of new variants with different characteristics,the effectiveness of efforts to contain or treat cases,and future actions that may betaken in response to
285、these developments.Consequently,the COVID-19 pandemic may continue to materially and adversely affect our business,financial condition and results of operations in the current and future years.In addition,our results of operations could be adversely affected to theextent that any epidemics or other
286、catastrophic events harm the local or global economy in general.Our success depends on the continuing efforts of our key employees.If we fail to hire,retain and motivate our key employees,our business maysuffer.Our future success is significantly dependent upon the continued service of our key execu
287、tives and other key employees.If we lose theservices of any member of our management or key personnel,we may not be able to locate suitable or qualified replacements,and may incuradditional expenses to recruit and train new staff,which could severely disrupt our business and growth.Our management an
288、d key personnel arecritical to our vision,strategic direction,culture and overall business success.If there is any internal organizational structure change or change inresponsibilities for our management or key personnel,the operation of our business and our business prospects may be adversely affec
289、ted.Ouremployees,including members of our management,may choose to pursue other opportunities.If we are unable to motivate or retain keyemployees,our business may be severely disrupted and our prospects could suffer.The increasing scale of our business also requires us to hire and retain a wide rang
290、e of capable and experienced personnel and technologytalents who can adapt to a dynamic,competitive and challenging business environment.For example,we may need to hire additional personnelwith special sets of skills and experience for our new initiatives and businesses,such as Duo Duo Grocery and t
291、he Temu platform.Competition fortalent is intense,and the availability of suitable and qualified candidates is limited.Competition for talent could cause us to offer highercompensation and other benefits to attract and retain suitable individuals.Even if we were to offer higher compensation and othe
292、r benefits,theseindividuals may choose not to join or continue to work for us.Any failure to attract or retain management and key personnel could severely disruptour business and growth.If we are unable to manage our growth or execute our strategies effectively,our business and prospects may be mate
293、rially and adverselyaffected.We anticipate that further expansion of our businesses will be required.Expansion in general increases the complexity of our operationsand places significant strains on our management,operational and financial resources,and may cause additional risks and costs in relatio
294、n tocompliance,such as dealing with regulatory enforcement or labor disputes.We may continue to hire,train and effectively manage new employeesand contractors.If our new hires perform poorly or if we are unsuccessful in hiring,training,managing and integrating new employees andcontractors,our busine
295、ss,financial condition and results of operations may be materially harmed.In addition,we plan to further establish relationships with more merchants to increase the product offerings on our platforms.Suchexpansion may require us to introduce new products and work with a variety of additional merchan
296、ts to address the evolving needs of our buyers.We may have limited or no experience for certain new product offerings,and our expansion into these new product offerings may not achievebroad buyer acceptance.These offerings may present new and difficult technological or operational challenges,and we
297、may be subject to claims ifbuyers are not satisfied with the quality of the products or do not have satisfactory experiences in general.Table of Contents22To effectively execute our business strategies and manage the expected growth of our operations and personnel,we will need to continueto improve
298、our transaction processing,technological,operational and financial systems,policies,procedures and controls.All of the relevantendeavors involve risks and will require significant management,financial and human resources.We cannot assure you that we will be able toeffectively manage our growth or to
299、 implement our strategies successfully.If we are not able to manage our growth or implement our strategieseffectively,or at all,our business and prospects may be materially and adversely affected.We have launched a number of new initiatives in recent years.For example,we have developed an open,asset
300、-light logistics technologyplatform.As the first pillar to such logistics technology platform,we launched our e-waybill system during the first quarter of 2019.Building ontop of our e-waybill system,our aim is to build a platform that would provide technology solutions to our sizable and growing mer
301、chant base,andfundamentally improve their efficiencies and services to users as we deepen our relationships with them.As a result of the development of thisplatform,we may incur additional costs and expenses,devote more managements attention to its operations and compliance and allocate additionalre
302、sources in dealing with potential disputes relating to its operations and intellectual property rights.In August 2020,as an extension to thePinduoduo platform,we started Duo Duo Grocery,a next-day grocery pick-up service that allows users to order groceries and related productsonline and collect the
303、ir orders the next day at nearby designated pickup points.In September 2022,we launched the Temu platform,a global onlinemarketplace that connects consumers with global sellers,manufacturers and brands around the world.We cannot assure you that we will be able tomanage or operate these new business
304、initiatives successfully or effectively,including by providing the requisite services to the merchants,attracting and retaining capable employees and partners,or leasing suitable facilities on commercially acceptable terms.Failure to manage andoperate Duo Duo Grocery or the Temu platform could mater
305、ially and adversely affect our business,financial condition and results of operations.We may incur liability for counterfeit,unauthorized,illegal,or infringing products sold or misleading information available on our platforms.Under the marketplace model currently in place on our platforms,substanti
306、ally all of products offered on our platforms are supplied bymerchants,who are separately responsible for sourcing and coordinating delivery of the products.We have been and may continue to be subject toallegations and lawsuits claiming that products listed or sold through our platforms by us or thi
307、rd-party merchants are counterfeit,unauthorized,illegal,or otherwise infringe third-party copyrights,trademarks,patents or other intellectual property rights,or that content posted on our userinterface contains misleading information on description of products and comparable prices.Although we have
308、adopted strict measures to protectus against these potential liabilities,including but not limited to,proactively verifying the authenticity and authorization of products sold on ourplatforms through working with brands and conducting offline investigations,blocking prior to product launch or immedi
309、ately taking down anycounterfeit or illegal products or misleading information found on our platforms,closing higher-risk online stores,and freezing the accounts ofmerchants in violation of the platform policies,these measures may not always be successful or timely.For example,in January 2018,we wer
310、erequired by the relevant government authorities to strengthen supervision on the qualifications of the distributors of publications on our platformsand to respond effectively to claims of copyright infringement.We have taken a number of measures in accordance with such requirementsincluding the imp
311、lementation of a comprehensive system in reviewing and tracking the qualification status of the relevant merchants.In August2018,we met with the officials from the relevant governmental authorities to discuss the alleged sale of counterfeit and infringing products on ourplatforms upon their request.
312、Shortly after the meetings,we adopted a number of remediation measures including more rigorous policies of closureof stores and removal of listings with infringing products from our platforms.We may implement further measures in an effort to eliminateinfringing products on our platforms,including ta
313、king legal actions against merchants of counterfeit or infringing products,which may cause us tospend substantial additional resources or result in reduced revenues.In addition,these measures may not appeal to consumers,merchants or otherparticipants on our platforms.A merchant whose account is susp
314、ended or terminated by us,regardless of our compliance with the applicable lawsand regulations,may have disputes with us and commence action against us for damages,make public complaints or engage in publicity campaignsagainst us.We may incur significant costs to defend against these activities,whic
315、h could harm our business.In the event that counterfeit,illegal,unauthorized or infringing products are sold on our platforms or infringing or misleading content isposted on our user interface,we could face claims or be imposed penalties.Counterfeit products sold on our platforms may damage our repu
316、tationand cause buyers to refrain from making future purchases from us,which would materially and adversely affect our business operations andfinancial results.We have in the past received claims alleging the sales of defective,counterfeit or unauthorized items on our platforms.Irrespective of the v
317、alidity of such claims,we could incur significant costs and efforts in either defending against or settling such claims.If there isa successful claim against us in the United States,we might be required to pay substantial damages or be enjoined from permitting further sale ofthe relevant products or
318、 activities by certain merchants.Potential liabilities under PRC law for negligence in participating or assisting ininfringement activities associated with counterfeit goods include injunctions to cease infringing activities,rectification,compensation,administrative penalties and even criminal liabi
319、lity.Table of Contents23Moreover,the alleged sales of counterfeit products and third-party claims or administrative penalties related to them could result insignificant negative publicity and our reputation could be severely damaged.The negative public perception resulted therefrom could damage ourr
320、eputation,harm our business,diminish the value of our brand name and negatively affect trading price of our ADSs.Some of our merchants interact and exchange information with our users through our livestreaming feature.As such communication isconducted in real time,we are unable to verify the informa
321、tion exchanged.Therefore,it is possible that users may engage in conversations oractivities with illegal,obscene or infringing content that may be deemed unlawful under the applicable laws and regulations on our platforms.Inaddition,certain merchants may post and sell on our platforms products that
322、may not be sold via e-commerce platform under the applicableregulations.Failure to identify and remove such products and content from our platforms may subject us to liability and administrative penalties.Any of these events could have a material and adverse effect on our business,results of operati
323、ons or financial condition.Under our standard form agreements,we require our merchants to indemnify us for any losses we suffer or any costs that we incur due toany products sold by these merchants.However,we may not be able to successfully enforce our contractual rights and may need to initiate cos
324、tlyand lengthy legal proceedings in China to protect our rights.In addition to fraudulent transactions with legitimate buyers,merchants on our platforms may engage in fictitious transactions withthemselves or collaborate with third parties in order to artificially inflate their sales records and sea
325、rch results rankings.Such activity may frustrateother merchants by enabling the perpetrating merchants to be favored over legitimate merchants,and may harm buyers by misleading them tobelieve that a merchant is more reliable or trustworthy than the merchant actually is.We are also aware that certain
326、 merchants and users engage infictitious transactions on e-commerce platforms to facilitate illegal activities such as online gambling.Fictitious transactions may result our keymetrics being inflated.Although we have implemented strict measures to detect and penalize merchants who engaged in fictiti
327、ous transactions onour platforms,there can be no assurance that such measures will be effective in preventing all fraudulent transactions or deter illegal activities.Moreover,illegal,fraudulent or collusive activities by our employees could also subject us to liability or negative publicity.There we
328、reoccasions where we found our employees accepting payments from merchants in exchange for preferential treatment on our platforms,and wereported such behavior to the relevant government authorities.Although we implement a zero-tolerance policy towards these activities and have not been charged with
329、 any wrongdoing,there can be noassurance that our controls and policies will prevent all fictitious,fraudulent or illegal activities by merchants,users or our employees or thatsimilar incidents will not occur in the future.Any inquiries,investigations and other governmental actions associated with a
330、nd negative publicityand user sentiment resulting from similar incidents could divert significant management time and attention,severely diminish consumer confidencein us and the value of our brands,and would materially and adversely affect our business,financial condition and results of operations.
331、We may be subject to claims under consumer protection laws,including health and safety claims and product liability claims,if property orpeople are harmed by the products and services sold on our platforms.Meanwhile,we are subject to existing and new laws and regulationsimposing various requirements
332、 on our business operations.The products sold on our platforms may be defectively designed or manufactured,and offerings of defective products on our platformsmay expose us to liabilities associated with consumer protection laws.Third parties who purchased defective products sold by us and sustained
333、personal injury or property damage may bring claims or legal proceedings against us as the retailer of the product.Although we would have legalrecourse against the manufacturer of such products under the applicable law,attempting to enforce our rights against the manufacturer may beexpensive,time-consuming and ultimately futile.Also,operators of e-commerce platforms may be subject to certain provi