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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACT OF 1934ORANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Decemb
2、er 31,2022.ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ORSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report .For the transition period from to Commission file number:
3、001-40533 Dingdong(Cayman)Limited(Exact name of Registrant as specified in its charter)N/A(Translation of Registrants name into English)Cayman Islands(Jurisdiction of incorporation or organization)Building 1,56 Fanchang Road Shanghai,201201Peoples Republic of China+86 21-6858-5011(Address of princip
4、al executive offices)Le Yu,Chief Strategy OfficerTelephone:+86 21-6858-5011Email:ir100.me Building 1,56 Fanchang Road Shanghai,201201Peoples Republic of China(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Sect
5、ion 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredAmerican depositary shares(two American depositary shares representing three Class A ordinary share,par value US$0.000002 per share)DDLNew York Stock Exchange Class A ordinary shares,par value US$0.00000
6、2 per share*New York Stock Exchange *Not for trading,but only in connection with the listing on the New York Stock Exchange of American depositary shares.Securities registered or to be registered pursuant to Section 12(g)of the Act:None(Title of Class)Securities for which there is a reporting obliga
7、tion 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.299,797,728 Class A ordinary shares(including 153,346 treasury shares held in f
8、orms of ADSs by our depositary bank,and 29,701,893 shares held by our ESOP platforms for future exercise of share option awards granted under our share incentive plans),par value US$0.000002 per share,as of December 31,2022.54,543,800 Class B ordinary shares,par value US$0.000002 per share,as of Dec
9、ember 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 No If this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the S
10、ecurities Exchange Act of 1934.Yes NoNote Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 from their obligations under those Sections.Indicate by check mark whether the registrant:(1)has filed all r
11、eports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 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 ma
12、rk whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes NoIndicate b
13、y check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accele
14、rated filer Non-accelerated filer Emerging growth companyIf an emerging growth 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 extended transition period for complying with any new or revised financial acc
15、ounting standards provided pursuant to Section 13(a)of the Exchange Act.Yes No The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,2012.Indicate by check mark whether the
16、registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under 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.Yes NoI
17、f securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections
18、are restatements that required a recovery analysis of incentive based compensation received by any of the registrants executive 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 stat
19、ements included in this filing:U.S.GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other If“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follo
20、w.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant 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 ha
21、s filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes No TABLE OF CONTENTS PageINTRODUCTION1FORWARD-LOOKING INFORMATION2PART I4Item 1.Identity of Direc
22、tors,Senior Management and Advisers4Item 2.Offer Statistics and Expected Timetable4Item 3.Key Information4Item 4.Information on the Company47Item 4A.Unresolved Staff Comments78Item 5.Operating and Financial Review and Prospects78Item 6.Directors,Senior Management and Employees93Item 7.Major Sharehol
23、ders and Related Party Transactions103Item 8.Financial Information103Item 9.The Offer and Listing104Item 10.Additional Information105Item 11.Quantitative and Qualitative Disclosures about Market Risk120Item 12.Description of Securities Other than Equity Securities121PART II124Item 13.Defaults,Divide
24、nd Arrearages and Delinquencies124Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds124Item 15.Controls and Procedures124Item 16A.Audit Committee Financial Expert125Item 16B.Code of Ethics125Item 16C.Principal Accountant Fees and Services125Item 16D.Exemptions from
25、the Listing Standards for Audit Committees126Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers126Item 16F.Change in Registrants Certifying Accountant126Item 16G.Corporate Governance126Item 16H.Mine Safety Disclosure127Item 16I.Disclosure Regarding Foreign Jurisdictions
26、that Prevent Inspections127PART III128Item 17.Financial Statements128Item 18.Financial Statements128Item 19.Exhibits128SIGNATURES130 INTRODUCTIONExcept where the context otherwise requires and for purposes of this annual report only:“ADRs”refers to the American depositary receipts that evidence the
27、ADSs;“ADSs”refers to the American depositary shares,each two of which represent three Class A ordinary shares;“average order value”refers to a typical amount spent by a customer in each order,which is calculated by dividing total GMV during a given period by the number of orders placed in that perio
28、d;“China”or the“PRC”refers to the Peoples Republic of China,excluding,for the purposes of this annual report only,Hong Kong,Macau and Taiwan;“Class A ordinary shares”refers to our Class A ordinary shares with a par value of US$0.000002 per share;“Class B ordinary shares”refers to our Class B ordinar
29、y shares with a par value of US$0.000002 per share;“Dingdong,”“we,”“us,”“our company”and“our”refer to Dingdong(Cayman)Limited,a Cayman Islands exempted company,and its subsidiaries and their respective subsidiaries,as the context requires;“D-G.A.P.”refers to“Dingdong-Good Agricultural Practices,”a s
30、et of good agricultural for production and sustainability designed by the Company,based on global G.A.P.and China G.A.P.standards,with adjustment in accordance with the actual characteristics of existing suppliers in China;“GMV”refers to gross merchandise value,which is the total value of all orders
31、 placed with us based on listed discounted prices of the ordered products.For the avoidance of doubt,the calculation of GMV does not take into consideration of discounts through coupons,and excludes shipping fees and orders that are returned,not delivered or not sold by all means;“ordinary shares”or
32、“shares”refers to our Class A ordinary shares and Class B ordinary shares,par value US$0.000002 per share;“Renminbi”or“RMB”refers to the legal currency of China;“SEC”refers to the United States Securities and Exchange Commission.“transacting user”refers to a user account that paid for transactions o
33、f products on Dingdong Fresh,our app and mini programs,in a given period,regardless of whether the order is subsequently refunded;“U.S.dollars”or“US$”refers to the legal currency of the United States.Our reporting currency is the Renminbi.This annual report contains translations from Renminbi to U.S
34、.dollars solely for the convenience of the reader.Unless otherwise stated,all translations of Renminbi into U.S.dollars were made at RMB6.8972 to US$1.00,the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 30,2022.We make no representation that the Re
35、nminbi or U.S.dollars amounts referred to in this annual report could have been or could be converted into U.S.dollars or Renminbi,as the case may be,at any particular rate or at all.Due to rounding,numbers presented throughout this annual report may not add up precisely to the totals provided and p
36、ercentages may not precisely reflect the absolute figures.1FORWARD-LOOKING INFORMATIONThis annual report contains forward-looking statements that reflect our current expectations and views of future events.Known and unknown risks,uncertainties,and other factors,including those listed under“Risk Fact
37、ors,”may cause our actual results,performance or achievements to be materially 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,
38、”“plan,”“believe,”“is/are likely to,”“potential,”“continue,”or other similar 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 a
39、nd financial needs.These forward-looking statements include statements relating to:our goals and strategies;our future business development,financial conditions,and results of operations;the expected outlook of the fresh grocery e-commerce market in China;our expectations regarding demand for and ma
40、rket acceptance of our products and services;our expectations regarding our relationships with our users,clients,business partners,and other stakeholders;competition in our industry;our proposed use of proceeds;andrelevant government policies and regulations relating to our industry.These forward-lo
41、oking statements involve various risks and uncertainties.Although we believe that our expectations expressed in these forward-looking statements are reasonable,our expectations may later be found to be incorrect.Our actual results could be materially different from our expectations.You should read t
42、horoughly this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect.We qualify all of our forward-looking statements by these cautionary statements.This annual report contains certain dat
43、a and information that we obtained from various government and private publications.Statistical data in these publications also include projections based on a number of assumptions.Our industry may not grow at the rate projected by market data,or at all.Failure of this market to grow at the projecte
44、d rate may have a material and adverse effect on our business and the market price of the ADSs.In addition,the rapidly evolving nature of this industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market.Furthermore
45、,if any one or more of the assumptions underlying the market data are later found to be incorrect,actual results may differ from theprojections based on these assumptions.You should not place undue reliance on these forward-looking statements.The forward-looking statements made in this annual report
46、 relate only to events or information as of the date on which the statements are made in this annual report.Except as required by law,we undertake no obligation to update or revise publicly any forward-looking statements,whether as a result of new information,future events or otherwise,after the dat
47、e on which the statements are made or to reflect the occurrence of unanticipated events.You should read this annual report and the documents that we have referred to in this annual report,completely and with the understanding that our actual future results may be materially different from what we ex
48、pect.2NON-U.S.GAAP FINANCIAL INFORMATIONIn this annual report,we disclose non-GAAP financial measures,such as non-GAAP net loss,which is our net loss excluding share-based compensation expenses,or non-GAAP net loss margin,which is our non-GAAP net loss as a ratio to revenues,in evaluating our operat
49、ing results and for financial and operational decision-making purposes.We believe that the non-GAAP financial measures help identify underlying trends in our business by excluding the impact of share-based compensation expenses,which are non-cash charges and do not correlate to any operating activit
50、y trends.We also believe that the non-GAAP financial measures provide useful information about our companys results of operations,enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its
51、financial and operational decision-making.The non-GAAP financial measures are not defined under U.S.GAAP and are not presented in accordance with U.S.GAAP.The non-GAAP financial measures have limitations as analytical tools,and when assessing our operating performance,cash flows or liquidity,investo
52、rs should not consider them in isolation,or as a substitute for net loss,cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S.GAAP.Our definition of non-GAAP financial measures may differ from those of industry
53、 peers and may not be comparable with their non-GAAP financial measures.We mitigate these limitations by reconciling the non-GAAP financial measures to the most comparable U.S.GAAP performance measures,all of which should be considered when evaluating our performance.For more information on the non-
54、GAAP financial measures,please see“Item 5.Operating and Financial Review and ProspectsA.Operating ResultsNon-GAAP Measures.”3PART IItem 1.Identity of Directors,Senior Management and AdvisersNot applicable.Item 2.Offer Statistics and Expected TimetableNot applicable.Item 3.Key InformationOur Corporat
55、e StructureDingdong(Cayman)Limited is a Cayman Islands holding company with no material operations of its own.We conduct our operations through our subsidiaries located in China,or PRC subsidiaries.Investors in the ADSs are not purchasing equity securities of our PRC subsidiaries but instead are pur
56、chasing equity securities of a Cayman Islands holding company.We face various risks and uncertainties relating to doing business in China.Our business operations are primarily conducted in China,and we are subject to complex and evolving PRC laws and regulations.For example,we face risks associated
57、with regulatory approvals on offshore offerings,anti-monopoly regulatory actions,and oversight on cybersecurity and data privacy,which may impact our ability to conduct certain businesses,accept foreign investments,or list and conduct offerings on a United States or other foreign exchange.The PRC go
58、vernments significant authority in regulating our operations and its oversight and control over offerings conducted overseas by,and foreign investment in,China-based issuers may limit or completely hinder our ability to offer or continue to offer securities to investors.Implementation of industry-wi
59、de regulations in this nature may cause the value of such securities to significantly decline.Moreover,risks and uncertainties arising from the legal system in China,including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China,may also resul
60、t in a material adverse change in our operations and the value of our ADSs.For a detailed description of risks relating to doing business in China,see“Item 3.Key InformationD.Risk FactorsRisks Relating to Doing Business in China.”The Holding Foreign Companies Accountable ActThe Holding Foreign Compa
61、nies Accountable Act,or the HFCA Act,was enacted on December 18,2020.The HFCA Act states that if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years,the SEC shall prohibit our
62、 shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.The delisting of our ADSs,or the threat of their being delisted,may materially and adversely affect the value of your investment.These risks could result in a material a
63、dverse change in our operations and the value of our ADSs,significantly limit or completely hinder our ability to offer or continue to offer securities to investors,or cause the value of such securities to significantly decline or become worthless.Furthermore,on December 2,2021,the SEC adopted final
64、 amendments implementing the disclosure and submission requirements under the HFCA Act,pursuant to which the SEC will identify a“Commission-Identified Issuer”if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined
65、 it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction,and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years.On December 16,2021,the PCAOB issued a
66、 report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong,including our auditor.On May 9,2022,we were named by the SEC as a Commission-Identified Issuer,following our
67、filing of annual report on Form 20-F for the fiscal year ended December 31,2021 with the SEC on May 2,2022.On December 15,2022,the PCAOB issued a report that vacated its December 16,2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspe
68、ct or investigate completely registered public accounting firms.Our auditor is located in China,a jurisdiction where the PCAOB was historically 4unable to conduct inspections completely.Each year,the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China
69、 or Hong Kong,among other jurisdictions.If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China or Hong Kong,and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audi
70、t report on our financial statements filed with the SEC,we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.There can be no assurance that we would not be identified as a Commission-Identified Issuer for any fut
71、ure fiscal year,and if we were so identified for two consecutive years,we would become subject to the prohibition on trading under the HFCA Act.The related risks and uncertainties could cause the value of our ADSs to significantly decline.For more details,see“Item 3.Key InformationD.Risk FactorsRisk
72、s Relating to Our Business and IndustryThe PCAOB had historically been unable to inspect our auditor in relation to their audit work.Our ADSs will be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspect or fully investigate auditors located
73、in China.The delisting of our ADSs,or the threat of their being delisted,may materially and adversely affect the value of your investment.”Permissions Required from the PRC Authorities for Our OperationsWe conduct our operations through our PRC subsidiaries.Our operations in China are governed by PR
74、C laws and regulations.As of the date of this annual report,our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for their business operations,including,among others,Food Operating Permit,Record-filing for Operation of Medical De
75、vices,and Registration of Single-Purpose Commercial Prepaid Cards.Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities,we may be required to obtain additional licenses,permits,filings,or approval
76、s for our business operations in the future.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Relating to Doing Business in ChinaWe may be adversely affected by the complexity,uncertainties and changes in PRC regulation of internet-related businesses and companies,and any l
77、ack of requisite approvals,licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.”Furthermore,in connection with our historical issuance of securities to foreign investors,under currently effective PRC laws,regulations,and regulat
78、ory rules,as of the date of this annual report,we(i)are not required to obtain permissions from the China Securities Regulatory Commission,or the CSRC,(ii)are not required to proactively go through cybersecurity review by the Cyberspace Administration of China,or the CAC,and(iii)have not been reques
79、ted to obtain such permissions by any PRC authority.However,the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas by and/or foreign investment in China-based issuers.On February 17,2023,the CSRC released Trial Administrative Measure
80、s of Overseas Securities Offering and Listing by Domestic Companies,or the Trial Administrative Measures,and five supporting guidelines,which will come into effect on March 31,2023.Pursuant to the Trial Administrative Measures,if any issuer completes the overseas listing and intends to conduct secur
81、ities offering in the same market,such issuer shall file with CSRC within three business days after its completion of securities offering.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Relating to Doing Business in ChinaThe PRC governments significant oversight over our
82、business operation could result in a material adverse change in our operations and the value of our ADSs.”Cash Flows through Our OrganizationDingdong(Cayman)Limited is a Cayman Islands holding company with no material operations of its own.We conduct our operations through our PRC subsidiaries.As a
83、result,although other means are available for us to obtain financing at the holding company level,the ability of Dingdong(Cayman)Limited to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends primarily paid by our PRC subsidiaries.If any of our PRC subsid
84、iaries incurs debt on its own behalf,the instruments governing such debt may restrict its ability to pay dividends to Dingdong(Cayman)Limited.In addition,under PRC laws and regulations,our PRC subsidiaries are permitted to pay dividends to Dingdong(Cayman)Limited only out of their retained earnings,
85、if any,as determined in accordance with PRC accounting standards and regulations.Further,our PRC subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds,which are 5not distributable as cash dividends except in the
86、event of a solvent liquidation of the PRC subsidiaries.For more details,see“Item 5.Operating and Financial Review and ProspectsB.Liquidity and Capital ResourcesHolding Company Structure.”Under PRC laws and regulations,our PRC subsidiaries are subject to certain restrictions with respect to paying di
87、vidends or otherwise transferring any of their net assets to us.Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by State Administration of Foreign Exchange,or SAFE.These restrictions are benchmarked against the paid-up
88、capital and the statutory reserve funds of our PRC subsidiaries.For risks relating to the fund flows of our operations in China,see“Item 3.Key InformationD.Risk FactorsRisks Relating to Doing Business in ChinaRestrictions on the remittance of Renminbi into and out of China and governmental control o
89、f currency conversion may limit our ability to pay dividends and other obligations,and affect the value of your investment.”For the years ended December 31,2020,2021 and 2022,no dividends or distributions were made to Dingdong(Cayman)Limited by our PRC subsidiaries.We have never declared or paid any
90、 dividends on our ordinary shares since our inception,nor have any present plan to pay any dividends on our ordinary shares or ADSs in the foreseeable future.We currently intend to retain most,if not all,of our available funds and any future earnings to operate and expand our business.See“Item 8.Fin
91、ancial Information A.Consolidated Statements and Other Financial InformationDividend Policy.”For PRC and United States federal income tax considerations of an investment in our ADSs,see“Item 10.Additional InformationE.Taxation.”Under PRC laws,Dingdong(Cayman)Limited may fund our PRC subsidiaries onl
92、y through capital contributions or loans,subject to satisfaction of applicable government registration and approval requirements.For the years ended December 31,2020,2021 and 2022,the aggregate amount of capital contribution by Dingdong(Cayman)Limited and our intermediate holding companies to our PR
93、C subsidiaries were RMB1,947.6 million,RMB2,951.2 million and RMB3,889.9 million(US$564.0 million),respectively.For the years ended December 31,2020,2021 and 2022,the Cayman Islands holding company and our intermediary holding companies provided loans of nil,RMB2,900.4 million and RMB539.1 million(U
94、S$78.2 million),respectively,to our PRC subsidiaries,and received loan repayments of nil,RMB333.0 million and RMB3,279.0 million(US$475.4 million),respectively.A.ReservedB.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.D.Risk FactorsSummary of
95、 Risk Factor Set forth below is only a summary of the principal risks associated with an investment in our shares.See below under this“Item 3.Key InformationD.Risk Factors”for a detailed discussion of the numerous risks and uncertainties to which the Company is subject.Our limited operating history
96、makes it difficult to evaluate our business and prospects.We cannot guarantee that we will be able to maintain the growth rate that we have experienced to date.We have incurred net losses in the past and we may continue to incur losses in the future.We face intense competition,and if we fail to comp
97、ete effectively,we may lose market share,users and our business partners.6If we fail to anticipate user needs and provide superior user experience to attract and retain users and increase their purchase with us or fail to adapt our services or business model to evolving user needs or emerging indust
98、ry standards,our business may be materially and adversely affected.Any harm to our brand or reputation may materially and adversely affect our business and results of operations.We rely on our suppliers and other business partners to provide quality products and services which are critical to our bu
99、siness.Any changes,interruptions or disruptions of our relationships with them or any interruptions or disruptions of,or negative publicity around,their business may adversely affect our operation.Any failure to maintain food safety and consistent quality could have a material and adverse effect on
100、our brand,business and financial performance.Our expansion into new product offerings or substantial increase in the number of our product offerings may expose us to new and increased challenges and risks.If our expansion into new geographical areas is not successful,our business prospects and resul
101、ts of operations may be materially and adversely affected.We had in the past withdrawn from certain cities due to our shift of strategic focus,which resulted in decline in transacting user number and order volume,and we may continue to do so in the future.Failure to manage our fulfillment infrastruc
102、ture cost-effectively or any interruption in the operation of the warehouse facilities for an extended period may negatively affect our business,prospects and results of operations.If we fail to manage our inventory effectively,our results of operations,financial condition and liquidity may be mater
103、ially and adversely affected.There could be adverse legal,tax,and other consequences if delivery riders or workers at our regional processing centers and frontline fulfillment stations were to be classified as our employees or dispatched employees instead of independent contractors.We engage labor s
104、ervice companies to provide outsourced personnel for a portion of our operations.We have limited control over these personnel and may be subject to liabilities arisen from contracts we enter into with such labor service companies.Failure to protect confidential information of our users and network a
105、gainst security breaches could damage our reputation and brand and substantially harm our business and results of operations.Our business is subject to complex and evolving laws and regulations regarding privacy and data protection.Many of these laws and regulations are subject to change and uncerta
106、in interpretation,and could result in claims,changes to our business practices,increased cost of operations,or declines in user growth or engagement,or otherwise harm our business.We are subject to payment processing risk.Any lack of requisite approvals,licenses,permits or filings or failure to comp
107、ly with any requirements of PRC laws,regulations and policies may materially and adversely affect our daily operations and hinder our growth.We may engage in acquisitions,investments or strategic alliances in the future,which could require significant management attention and materially and adversel
108、y affect our business and results of operations.If we fail to hire,retain and train qualified employees or sufficient workforce while controlling our labor costs,our business may suffer.Our business may be subject to seasonal sales fluctuations.7If we fail to maintain an effective system of internal
109、 controls,we may not be able to accurately or timely report our financial condition or results of operations,meet our reporting obligations or prevent fraud.The defects in certain leased property interests and failure to register certain lease agreements may materially and adversely affect ourbusine
110、ss,financial condition,results of operations,and prospects.The COVID-19 pandemic has had and may continue to have an adverse impact on our business,operations and financial condition.The PCAOB had historically been unable to inspect our auditor in relation to their audit work.Our ADSs may be prohibi
111、ted from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspect or fully investigate auditors located in China.The delisting of our ADSs,or the threat of their being delisted,may materially and adversely affect the value of your investment.Changes in Chinas e
112、conomic,political or social conditions or government policies could materially and adversely affect our business and results of operations.The PRC governments significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs.We ma
113、y be adversely affected by the complexity,uncertainties and changes in PRC regulation of internet-related businesses and companies,and any lack of requisite approvals,licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.Restricti
114、ons on the remittance of Renminbi into and out of China and governmental control of currency conversion may limit our ability to pay dividends and other obligations,and affect the value of your investment.Risks Relating to Our Business and IndustryOur limited operating history makes it difficult to
115、evaluate our business and prospects.We cannot guarantee that we will be able to maintain the growth rate that we have experienced to date.We commenced our commercial operations in 2017 and have a limited operating history.We experienced significant growth since our inception.Our revenues increased f
116、rom RMB11,335.8 million in 2020 to RMB24,221.2 million(US$3,511.7 million)in 2022,representing a CAGR of 46.2%.Our average order value increased from RMB65.7 in 2020 to RMB74.5 in 2022.However,our historical performance may not be indicative of our future growth or financial results.We cannot assure
117、 you that we will be able to grow at the same rate as we did in the past,or avoid any decline in the future.Our growth 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 user spending,increasing competi
118、tion,declining growth of our overall market or industry,the emergence of alternative business models,decreasing demand for online groceries,and changes in rules,regulations,government policies or general economic conditions.In addition,our growth pace may also be impacted by our strategic shift of f
119、ocus on sustainable growth.It is difficult to evaluate our prospects as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed.If our growth rate declines,investors perceptions of our business and prospects may be materia
120、lly and adversely affected,and the market price of our ADSs could decline.You should consider our prospects in light of the risks and uncertainties that companies with a limited operating history may encounter.We have incurred net losses in the past and we may continue to incur losses in the future.
121、Our total revenues grew from RMB11,335.8 million in 2020 to RMB20,121.1 million in 2021 and further grew to RMB24,221.2 million(US$3,511.7 million)in 2022,and our GMV grew from RMB13,032.2 million in 2020 to RMB22,704.1 million in 2021 and further grew to RMB26,247.9 million(US$3,805.6 million)in 20
122、22.However,we recorded net loss of RMB3,176.9 million,RMB6,429.1 million and RMB806.9 million(US$117.0 million)in 2020,2021 and 2022,respectively,and non-GAAP net loss of RMB3,023.8 million,RMB 6,113.7 million and RMB571.0 million(US$82.8 million)in 2020,2021 and 2022,respectively.Starting from the
123、third quarter of 2021,we shifted our strategic focus to“efficiency first,with due consideration of scale”,and managed to achieve profitability.Guided by such strategy,we recorded GAAP net profit in the fourth quarter of 2022 for the first time since our inception.8However,we cannot assure you that w
124、e will be able to generate net profits in the future.Our ability to achieve and maintain profitability depends in large part on our ability to increase our gross margin by leveraging our product capabilities to manage our product mix and expand our product offerings,and our growth in scale to obtain
125、 more favorable terms from our suppliers.Accordingly,we intend to continue to invest for the foreseeable future in enhancement of product capabilities,technology innovation and research and development capabilities to support our sustainable growth.As a result of the foregoing,we may continue to inc
126、ur losses in the future.In addition,any change in macroeconomic and regulatory environment,competitive dynamics and our inability to respond to these changes in a timely and effective manner may also affect our ability to achieve profitability,and cause us to incur losses in the future.We face inten
127、se competition,and if we fail to compete effectively,we may lose market share,users and our business partners.The e-commerce industry in China,in particular the fresh grocery e-commerce industry,is intensely competitive.We compete for users,orders,products and third-party suppliers.Our current or po
128、tential competitors include(i)other fresh grocery e-commerce players in China,(ii)traditional e-commerce and other Internet companies in China,and(iii)major traditional retailers in China that are moving into fresh grocery e-commerce and physical retail stores and supermarkets.See“Item 4.Information
129、 on the CompanyB.Business OverviewCompetition.”Increased competition may reduce our pricing power and market share and impact brand recognition,or result in significant losses.When we set prices,we have to consider how competitors have set prices for the same or similar products.When they cut prices
130、 or offer additional benefits to compete with us,we may have to lower our own prices or offer additional benefits or risk losing market share,either of which could harm our financial condition and results of operations.Some of our current or future competitors may have longer operating histories,gre
131、ater brand recognition,better supplier relationships,larger user bases,better access to users,higher penetration in certain regions or greater financial,technical or marketing resources than we do.In addition,smaller companies or new entrants may be acquired by,receive investment from or enter into
132、strategic relationships with well-established and well-financed companies or investors which would help enhance their competitive positions.Some of our competitors may be able to secure more favorable terms from suppliers,devote greater resources to marketing and promotional campaigns,adopt more agg
133、ressive pricing or inventory policies and devote substantially more resources to their websites,mobile apps and systems development than us.We cannot assure you that we will be able to compete successfully against current or future competitors,and competitive pressures may have a material and advers
134、e effect on our business,financial condition and results of operations.If we fail to anticipate user needs and provide superior user experience to attract and retain users and increase their purchase with us or fail to adapt our services or business model to evolving user needs or emerging industry
135、standards,our business may be materially and adversely affected.The fresh grocery e-commerce market in which we operate has been rapid changing,and user needs and preferences are constantly evolving.As a result,we must continually respond to changes in the market and user demand and preferences to r
136、emain competitive,grow our business and maintain our market position.We intend to further diversify our product and service offerings to add to our revenue sources in the future.New products and services,new types of users or new business models may involve risks and challenges we do not currently f
137、ace.Any new initiatives may require us to devote significant financial and management resources and may not perform as well as we expected.Furthermore,we may have difficulty in anticipating user demand and preferences,and the products offered by us may not be accepted by the market.Therefore,any ina
138、bility to adapt to these changes may result in a failure to capture new users or retain existing ones,the occurrence of which would materially and adversely affect our business,financial condition and results of operations.In addition,to remain competitive,we must continue to enhance and improve the
139、 responsiveness,functionality and features of our app and mini programs to provide hassle-free experience for our users.The e-commerce market is characterized by rapid technological evolution,changes in user requirements and preferences,frequent introductions of new features and services embodying n
140、ew technologies and the emergence of new industry standards and practices,any of which could render our existing technologies and systems obsolete,or not satisfying for users.Our success will 9depend,in part,on our ability to identify,develop and adapt to new technologies useful in our business,and
141、respond to technological advances and emerging industry standards and practices,in particular with respect to mobile internet,in a cost-effective and timely way,so as to improve users satisfaction.We cannot assure you that we will be successful in these efforts.Any harm to our brand or reputation ma
142、y materially and adversely affect our business and results of operations.We believe that the recognition and reputation of our Dingdong or“叮咚买菜”brand among our users,suppliers and third-party service providers have contributed significantly to the growth and success of our business.Maintaining and e
143、nhancing the recognition and reputation of our brand are critical to our business and competitiveness.Many factors,some of which are beyond our control,are important to maintaining and enhancing our brand.These factors include our ability to:offer and maintain a wide selection of high-quality produc
144、ts;provide a superior online shopping experience to users;maintain the popularity,attractiveness,diversity,quality and authenticity of our product offerings;maintain the efficiency,reliability and quality of fulfillment and delivery services to our users;maintain or improve users satisfaction with o
145、ur 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 consumer experience,internet and data security,product quality,price or authenticity,or other issues affecting us or othe
146、r fresh grocery e-commerce businesses in China.Public perception that tainted,spoiled,counterfeit,unauthorized,illegal,or infringing products are sold on Dingdong Fresh or that we do not provide satisfactory user services,or that we are incapable of sustaining our historical growth,even if factually
147、 incorrect or based on isolated incidents or biased complaints,could damage our reputation,diminish the value of our brand,undermine the trust and credibility we have established and have a negative impact on our ability to attract new users or retain our current users.If we are unable to maintain o
148、ur reputation,enhance our brand recognition or increase positive awareness of our brand,products and services,it may be difficult to maintain and grow our user base,and our business and growth prospects may be materially and adversely affected.We rely on our suppliers and other business partners to
149、provide quality products and services which are critical to our business.Any changes,interruptions or disruptions of our relationships with them or any interruptions or disruptions of,or negative publicity around,their business may adversely affect our operation.We source products from third-party s
150、uppliers and vendors.We had approximately 2,600 suppliers in 2022.Our suppliers include local farms,cooperatives,brands,regional distributors and manufacturers.Maintaining strong relationships with these suppliers is important to the growth of our business.In particular,we depend significantly on ou
151、r ability to procure products from suppliers on favorable pricing and payment terms and in sufficient quantities.We typically enter into one-year framework agreements with suppliers on an annual basis,and these framework agreements do not ensure the availability of products or the continuation of pa
152、rticular pricing practices or payment terms beyond the end of the contractual term.In addition,our agreements with suppliers typically do not restrict the suppliers from selling products to other buyers.We cannot assure you that our current suppliers will continue to sell products to us on commercia
153、lly acceptable terms,or at all,after the term of the current agreement expires.Even if we maintain good relationships with our suppliers,their ability to supply products to us in sufficient quantity and at competitive prices may be adversely affected by economic conditions,labor actions,regulatory o
154、r legal decisions,customs and import restrictions,pandemics,natural disasters or other causes.In the event that we are not able to procure products at favorable prices and at sufficient quantities,our revenues and cost of revenues may be materially and adversely affected.In the event any distributor
155、 or reseller does not have authority from the relevant farms or manufacturers to sell certain products to us,such distributor or reseller may cease selling such products to us at any time.If our suppliers cease to provide us with favorable payment terms,our requirements for working capital may incre
156、ase and our operations may be materially and adversely affected.Our accounts payable turnover days decreased from 47.3 days in 2020 to 41.3 days in 2021,primarily due to increased scale of reversed factoring arrangements we 10entered with our suppliers over the years.Our accounts payable turnover da
157、ys was 43.0 days in 2022 which was relatively stable compared with 2021.Despite our best efforts to have our suppliers paid in time,if we fail to pay our suppliers in a timely manner in accordance with the current payment terms,disputes may arise,and our relationship with our suppliers may deteriora
158、te.We will also need to establish new supplier relationships to ensure that we have access to a steady supply of products on favorable commercial terms.If we are unable to develop and maintain good relationships with suppliers that would allow us to obtain a sufficient amount and variety of authenti
159、c and quality products on acceptable commercial terms,it may inhibit our ability to offer sufficient products sought by our users,or to offer these products at competitive prices.Any adverse developments in our relationships with suppliers could materially and adversely affect our business and growt
160、h prospects.Any disputes with suppliers could adversely affect our reputation and subject us to damages and negative publicity.In addition,as part of our growth strategy,we plan to further expand our product offerings.If we fail to attract new suppliers to sell their products to us due to any reason
161、,our business and growth prospects may be materially and adversely affected.Additionally,we also rely on a large number of business partners,such as logistic service providers,lessors of our regional processing centers and frontline fulfillment stations,and labor service companies to provide various
162、 services to our customers and ourselves.To the extent they are unable to provide satisfactory services,which may be attributable to events that are beyond our or their control,such as inclement weather or transportation service quality disruptions,our business and reputation may be adversely affect
163、ed.Claims and negative publicity related to their business,e.g.personal injury,death or property damage resulting from traffic accidents caused by our riders,may result in our liabilities or negatively affect our brand image and reputation among customers and in the local community.As our business p
164、artners are not directly managed by us,we cannot assure you that breaches will not occur in the future regardless of the precautionary measures we have taken,and will take,to screen and monitor their performance.If we are unable to effectivelyaddress these risks,our brand image,reputation and financ
165、ial performance may be materially and adversely affected.Any failure to maintain food safety and consistent quality could have a material and adverse effect on our brand,business and financial performance.Food safety and quality are critical to our reputation and success.Maintaining high and consist
166、ent quality and food safety depends significantly on the effectiveness of our quality control measures and assurance system.Although we have developed end-to-end quality control procedures through our 7+1 Quality Control Procedure across the entire procurement and fulfillment process,we cannot assur
167、e you that we can always identify every quality control issue due to potential flaws,loopholes and bugs of our procedures and human errors,and our efforts to patch up or update our quality control procedures may suffer from delays or failures due to external factors not entirely under our control.In
168、 addition,there are inherent limitations in sampling inspection of non-standard products such as fresh produce,seafood,meats,which may not identify all the defects and flaws.Our business growth and development,which result in increased cooperation with an increasing number of suppliers and business
169、partners,evolving and increasingly complex supply chain,and continued digitalization of the fulfillment process all possess the potential to exacerbate the pressure on our quality control procedures,which are in turn required to be perfected in a timely manner.We have detected and remedied several c
170、ases of sub-par products being sold on Dingdong Fresh,e.g.excessive pesticide or heavy metal residues.Despite our rectification efforts,we are unable to entirely rule out the possibility that similar incidents will take place again in the future.As the performance,reliability and robustness of our q
171、uality control procedures are vital to our success,our reputation may be materially and adversely affected,our market share could decline and we could be subject to product recalls,penalties or liability claims if we encounter disruptions caused by failures in our quality control procedures.As a res
172、ult,we may be exposed to product liability claims relating to food tampering,food safety or other related issues.Third parties subject to such injury or damage may bring claims or legal proceedings against us as the retailer of the product.Although we would have legal recourse against the suppliers
173、of such products under PRC laws,attempting to enforce our rights against the manufacturer may be expensive,time-consuming and ultimately futile.In addition,we do not currently maintain any third-party liability insurance or product liability insurance in relation to products we sell,which is consist
174、ent with the industry norm,according to CIC.As a result,any material product liability claim or litigation could have a material and adverse effect on our business,financial condition and results of operations.Even unsuccessful claims could result in the expenditure of funds and managerial efforts i
175、ndefending 11them and could have a negative impact on our reputation.We may also experience negative impact on our reputation due to actual or perceived quality or health issues with the food products we sold.Our expansion into new product offerings or substantial increase in the number of our produ
176、ct offerings may expose us to new and increased challenges and risks.We have expanded our offerings from fresh produce,meat and seafood to prepared food and other food products such as baked goods,dairy,seasonings,beverage,instant food,oil,and snacks,and we may expand to other offerings in the futur
177、e.In the future,we will continue to offer new and innovative products to fuel our business growth.Offering new SKUs,and expanding into diverse new products and offerings involves risks and challenges.Our lack of familiarity with new products and lack of relevant experience relating to these new offe
178、rings may make it more difficult for us to anticipate user demand and preferences.We may misjudge user demand and the potential profitability of a new product.We may find it more difficult to inspect and control quality and ensure proper handling,storage,and delivery of new products.We may experienc
179、e higher return rates on new products,user complaints about new products and services,and costly liability claims as a result of selling such products and services,any of which would harm our brand and reputation as well as our results of operations.We may need to adjust our pricing strategies and m
180、ake additional marketing efforts to gain market share or remain competitive in new categories including offering users category-specific coupons and organizing cross-category promotion events.It may be difficult for us to achieve profitability in the new product or service categories and our profit
181、margin,if any,may be lower than we anticipate or have experienced historically,which would adversely affect our results of operations.We cannot assure you that we will be able to recoup our investments in introducing any new product and service categories.If our expansion into new geographical areas
182、 is not successful,our business prospects and results of operations may be materially and adversely affected.We have successfully expanded our business to around 30 cities across China as of December 31,2022.And,as of the date of this annual report,a significant portion of our revenue and GMV was de
183、rived from the Yangtze River Delta Megalopolis.We may selectively expand into more markets which we believe have growth potential.Expansion into new geographical areas involves new risks and challenges.Our lack of familiarity with,and relevant transaction data relating to,these geographical areas ma
184、y make it more difficult for us to keep pace with the evolving consumer demands and preferences.In addition,there may be one or more existing market leaders in any geographical area that we decide to expand into.Such companies may be able to compete more effectively than us by leveraging their exper
185、ience in doing business in that market as well as their deeper data insight and greater brand recognition among consumers.We may need to adjust our pricing strategies and make additional marketing efforts to gain market share or remain competitive in new markets.Furthermore,we cannot assure you that
186、 we will be able to lease suitable fulfillment facilities on commercially acceptable terms or at all.Moreover,there may be a lack of demand for fresh grocery,the order density in those smaller,less developed areas may not be sufficient to allow us to operate our own delivery network in a cost-effici
187、ent manner and we may need to adjust our pricing strategies to adapt to local economic conditions.Also,the expansion into new geographical areas may strain our managerial,financial,operational and other resources.If we fail to manage such expansion successfully,our growth potential,business and resu
188、lts of operations may be materially and adversely affected.We had in the past withdrawn from certain cities due to our shift of strategic focus,which resulted in decline in transacting user number and order volume,and we may continue to do so in the future.Starting from the third quarter of 2021,we
189、shifted our strategic focus to“efficiency first,with due consideration of scale”.Led by such initiative,we had withdrawn from cities which contributed immaterial GMV historically but required substantial investment and efforts to build up a strong market presence and achieve economy of scale.We also
190、 closed down certain regional processing centers and frontline fulfillment stations in these cities.This had resulted in increases in certain of our costs and expenses,including among others,(i)penalties we paid to landlord for early termination of leases for our fulfillment facilities,(ii)employee
191、severance payment due to early termination of their employment agreements,and(iii)loss on disposal of property and equipment.Moreover,this also resulted in declines in the number of transacting user and order volume in the short-term,however,we believe that this will enhance our operating efficiency
192、 and cost-effectiveness in the longer term.Going forward,we will closely monitor the performance of our existing markets,and may continue to withdraw from cities when necessary to further enhance our operational efficiency,which may negatively impact our performance and reputation.12Failure to manag
193、e our fulfillment infrastructure cost-effectively or any interruption in the operation of the warehouse facilities for an extended period may negatively affect our business,prospects and results of operations.We believe that our fulfillment infrastructure,consisting of strategically located regional
194、 processing centers and frontline fulfillment stations,is essential to our success.In the future,to accommodate our growth and development strategy,we may establish regional processing centers and frontline fulfillment stations in new regions,or combine,relocate or close existing ones,to enhance our
195、 fulfillment efficiency.As our business grows,our fulfillment network becomes increasingly complex and challenging to operate.We cannot assure you that we will be able to take on suitable fulfillment facilities on commercially acceptable terms or at all.We may not be able to recruit a sufficient num
196、ber of qualified employees for our fulfillment infrastructure.In addition,management of our fulfillment infrastructure may strain our managerial,financial,operational and other resources.If we fail to manage the overall fulfillment infrastructure successfully,our growth potential,business and result
197、s of operations may be materially and adversely affected.Even if we manage our fulfillment infrastructure cost-effectively,it may not give us the competitive advantage that we expect if improved third-party fulfillment services become widely available at reasonable prices to e-commerce companies in
198、China.In addition,our ability to process and fulfill orders accurately and provide high quality user service depends on the smooth operation of our regional processing centers and frontline fulfillment grid and their respective facilities.Most of the fulfillment facilities we use are operated by our
199、selves and staffed by our fulfillment specialists and outsourced workers recruited through third-party vendors.We provide our operating standards under our agreements with third-party vendors and typically renew these agreements on an annual basis.Any decrease in the quality of service offered by th
200、ese third-party vendors will adversely affect our reputation and business operations.The warehouse facilities may be vulnerable to damage caused by fire,flood,power outage,telecommunications failure,break-ins,earthquake,human error and other events.If any of such facilities were rendered incapable o
201、f operations,then we may be unable to fulfill our orders on a timely basis.For example,business operations at certain of our frontline fulfillment stations had been temporarily disrupted in various ways during the COVID-19 pandemic.For details,please see“The COVID-19 pandemic has had and may continu
202、e to have an adverse impact on our business,operations and financial condition.”Furthermore,a large portion of the products we offer are perishable in nature,or require strict temperature-controlled storage condition.In the event of any interruption or disruption of our storage,processing and fulfil
203、lment,we may suffer significant inventory losses.In addition,we may be required to search for and relocate to,alternative properties in case of such damages or if the properties concerned are challenged by third parties or governmental authorities,which would cause interruption to our business.Pleas
204、e also refer to“The defects in certain leased property interests and failure to register certain lease agreements may materially and adversely affect our business,financial condition,results of operations,and prospects.”We do not carry business interruption insurance,and the occurrence of any of the
205、 foregoing risks could have a material adverse effect on our business,prospects,financial condition and results of operations.If we fail to manage our inventory effectively,our results of operations,financial condition and liquidity may be materially and adversely affected.Our scale and business mod
206、el require us to manage a large volume of inventory,including perishable fresh groceries,effectively.We depend on our demand forecasts for various kinds of products to make purchase decisions and to manage our inventory.Demand for products,however,can change significantly between the time inventory
207、is ordered and the date by which we target to sell it.Demand may be affected by seasonality,new product launches,changes in product cycles and pricing,product defects,changes in consumer spending patterns,changes in consumer tastes with respect to our products and other factors,and our users may not
208、 order products in the quantities that we expect.In addition,when we begin selling a new product,it may be difficult to establish supplier relationships,determine appropriate product selection,and accurately forecast demand.The acquisition of certain types of inventory may require significant lead t
209、ime and prepayment,and they may not be returnable.Our inventories increased by 39.1%from RMB386.4 million as of December 31,2020 to RMB537.5 million as of December 31,2021,and further increased by 12.5%from RMB537.5 million as of December 31,2021 to RMB604.9 million(US$87.7 million)as of December 31
210、,2022.While our inventory turnover days are shorter than those of our peers,as we plan to continue expanding our product offerings,we expect to include more products in our inventory,which will make it more challenging for us to manage our inventory effectively and will put more pressure on our ware
211、housing system.13If we fail to manage our inventory effectively,we may be subject to a heightened risk of inventory obsolescence,a decline in inventory values,and significant inventory write-downs or write-offs.In addition,we may be required to lower sale prices in order to reduce inventory level,wh
212、ich may lead to lower gross margins.High inventory levels may also require us to commit substantial capital resources,preventing us from using that capital for other important purposes.Any of the above may materially and adversely affect our results of operations and financial condition.Furthermore,
213、if we underestimate demand for our products,or if our suppliers fail to supply quality products in a timely manner,we may experience inventory shortages,which might result in missed sales,diminished brand loyalty and lost revenues,any of which could harm our business and reputation.There could be ad
214、verse legal,tax,and other consequences if delivery riders or workers at our regional processing centers and frontline fulfillment stations were to be classified as our employees or dispatched employees instead of independent contractors.We have established business outsourcing relationships with thi
215、rd-party labor service companies for provision of delivery riders and workers at our regional processing centers and frontline fulfillment stations,pursuant to which we pay service fees to third-party labor service companies who,as our independent contractors,shall be responsible for the hire of wor
216、kers and entry into relevant agreement with those workers accordingly.We believe that our workforce model is consistent with the prevailing practice in the fresh grocery e-commerce industry and recent policies of the State Council of the Peoples Republic of China,or the State Council,that promote co
217、nsumer service businesses and the associated workforce model through flexible regulatory measures.Furthermore,as those workers do not have any contractual relationships with us and get paid from third-party labor service companies,webelieve such delivery riders and workers are independent from us.As
218、 such,we do not believe that they should be deemed as our employees or dispatched employees under the relevant PRC laws and regulations.As of the date of this annual report,our workforce arrangement had not been investigated or challenged by any government authorities,nor are we aware of any governm
219、ent action contemplated or threatened,and we have not received any material complaints from,or had any material disputes with any parties in respect of such workforce arrangement.However,we had in the past been involved in individual lawsuits brought by third parties to seek compensation from us for
220、 injuries caused by delivery riders during their course of services.While third-party labor service companies have purchased insurance policies for the delivery riders,we cannot assure you that such insurance coverage is sufficient to prevent the delivery riders from any loss.We cannot assure you th
221、at we will not be involved in lawsuits or arbitration cases in which the judge or arbitrator may side with the claimant in determining the relationship with delivery riders in the future.We also cannot assure you that we will not be subject to government investigations on or challenges to the legali
222、ty of our workforce model in the future.If,as a result of legislation or judicial decisions,we are required to classify delivery riders or workers at our regional processing centers and frontline fulfillment stations as our employees or dispatched employees,we would incur significant additional expe
223、nses for compensating delivery riders,potentially including expenses associated with various employee benefits pursuant to relevant PRC laws and regulations.In addition,we may be required to fundamentally change our operation model to comply with the relevant PRC laws and regulations,including the r
224、equirement that the total number of dispatched employees may not exceed 10%of the total number of workforce.We would also be subject to claims for vicarious liability in relation to torts committed by delivery riders during their course of services,or other claims under the relevant PRC laws and reg
225、ulations under such scenario.Any of the foregoing could significantly increase our costs to serve users,harm our reputation and brand,subject us to rectification orders and fines,and cause us to significantly alter our existing business model and operations.As a result,our business,financial conditi
226、on,results of operations and prospects will be materially and adversely affected.We engage labor service companies to provide outsourced personnel for a portion of our operations.We have limited control over these personnel and may be subject to liabilities arisen from contracts we enter into with s
227、uch labor service companies.We engage labor service companies who send a large number of their employees to work at our facilities for picking,packing and delivery,etc.We enter into agreements with the labor service companies only and therefore do not have any direct contractual relationship with th
228、ese outsourced personnel.Since these outsourced personnel are not directly employed by us,our control over them is more limited as compared to our own employees.If any outsourced personnel fails to operate or perform its duties in accordance with our protocols,policies and business guidelines,our ma
229、rket reputation,brand image and results of operations could be materially and adversely affected.14Our agreements with the labor service companies provide that they independently assume employers responsibilities or other responsibilities stipulated by laws and regulations for outsourced personnel a
230、nd that they will be the party responsible for any personal or property losses during the outsourced personnels work.However,if the labor service companies violate any relevant requirements under the applicable PRC labor laws,regulations or their employment agreements with the personnel,such personn
231、el may claim compensation from us as they provide their services at our facilities.As a result,we may incur legal or financial liability,and our market reputation,brand image as well as our business,financial condition and results of operations could be materially and adversely affected.Failure in o
232、ur IT systems or delays in the development and implementation of updates or enhancements to those systems could significantly disrupt our operations.The proper functioning of our IT systems is essential to our business.The satisfactory performance,reliability and availability of our IT systems are c
233、ritical to our success,our ability to attract and retain users and our ability to maintain and deliver consistent services to our users.However,our technology infrastructure may fail to keep pace with increased sales on Dingdong Fresh,in particular with respect to our new product and service offerin
234、gs,and therefore our users may experience delays as we seek to source additional capacity,which would adversely affect our results of operations as well as our reputation.Additionally,we must continue to upgrade and improve our technology infrastructure to support our business growth.However,we cann
235、ot assure you that we will be successful in executing these system upgrades,and the failure to do so may impede our growth.We currently rely on cloud services and servers operated by external cloud service providers to store our data,to allow us to analyze a large amount of data simultaneously and t
236、o update our user database and profiles quickly.Any interruption or delay in the functionality of these external cloud service 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
237、 systems and infrastructure on a real-time basis,and users have experienced service outages and delays in the past in accessing and using our app and mini programs to place orders.In addition,we may experience surges in online traffic and orders associated with promotional activities and generally a
238、s we scale,which can put additional online demand at specific times.Our technology or infrastructure may not function properly at all times.Any system interruptions caused by telecommunications failures,computer viruses,hacking or other attempts to harm our systems that result in the unavailability
239、or slowdown of our app and mini programs or reduced order fulfillment performance could reduce the volume of products sold and the attractiveness of our product offerings.Our servers may also be vulnerable to computer viruses,physical or electronic break-ins and similar disruptions,which could lead
240、to system interruptions,website or mobile app slowdown or unavailability,delays or errors in transaction processing,loss of data or the inability to accept and fulfill orders.Any of such occurrences could cause severe disruption to our daily operations.As a result,our reputation may be materially an
241、d adversely affected,our market share could decline and we could be subject to liability claims.15Undetected programming errors or flaws or failure to maintain effective user service could harm our reputation or even cause direct loss to us which would materially and adversely affect our results of
242、operations.Our app,mini programs and internal systems rely on software that is highly technical and complex.In addition,our app,mini programs and internal systems depend on the ability of such software to store,retrieve,process and manage an immense amount of data and the ability of its operators to
243、 operate this complex system properly.The software on which we rely may contain undetected programming errors or design defects,some of which may only be discovered after the code has been released for external or internal use.Improper operations or other human errors may also occur from time to tim
244、e as a result of operating this software and complex system.Programming errors or design defects within the software or human errors in connection with the operation of the software may result in negative user experience,delay in introductions of new features or enhancements or compromise our abilit
245、y to provide effective user service and enjoyable user engagement.They could cause harm to our reputation,loss of users,and/or direct economic loss to us.Failure to protect confidential information of our users and network against security breaches could damage our reputation and brand and substanti
246、ally harm our business and results of operations.A significant challenge to the e-commerce industry is the secure storage of confidential information and its secure transmission over public networks.A majority of the orders and the payments for our products are made through our mobile app.In additio
247、n,almost all online payments are settled through third-party online payment services.Maintaining complete security on app and mini programs and systems for the storage and transmission of confidential or private information,such as users personal information,payment-related information and transacti
248、on information,is essential to maintain consumer confidence in our systems.We have adopted strict security policies and measures,including encryption technology,to protect our proprietary data and order information.Wehave not encountered instances of material data breach or unauthorized system intru
249、sion.However,advances in technology,the expertise of hackers,new discoveries in the field of cryptography or other events or developments could result in a compromise or breach of the technology that we use to protect confidential information.We may not be able to prevent third parties,especially ha
250、ckers or other individuals or entities engaging in similar activities,from illegally obtaining such confidential or private information we hold with respect to our users.Such individuals or entities obtaining confidential or private information may further engage in various other illegal activities
251、using such information.In addition,we have limited control or influence over the security policies or measures adopted by third-party providers of online payment services through which some of our users may choose to make payment for purchases.Any negative publicity on our safety or privacy protecti
252、on mechanisms and policies,and any claims asserted against us or fines imposed upon us as a result of actual or perceived failures,could have a material and adverse effect on our public image,reputation,financial condition and results of operations.Any compromise of our information security or the i
253、nformation security measures of our contracted third-party online payment service providers could have a material and adverse effect on our reputation,business,prospects,financial condition and results of operations.Our business is subject to complex and evolving laws and regulations regarding priva
254、cy and data protection.Many of these laws and regulations are subject to change and uncertain interpretation,and could result in claims,changes to our business practices,increased cost of operations,or declines in user growth or engagement,or otherwise harm our business.Our business collects,generat
255、es and processes a large amount of data.We face risks inherent in handling and protecting them.Concerns about the collection,use,or security of personal information or other privacy-related matters,even for those without merit,could damage our reputation,cause us to lose users and adversely affect o
256、ur 16business and results of operations.In particular,we face a number of challenges relating to data from transactions and other activities on our app and mini programs,including:protecting the data in and hosted on our system,including against attacks on our system by outside parties or fraudulent
257、 behavior by our employees;addressing concerns related to privacy and safety,security and other factors;andcomplying with applicable laws,rules and regulations relating to the collection,use,disclosure or security of personal information,including any requests from regulatory and government authorit
258、ies relating to such data.We are required by privacy and data protection laws in China and other jurisdictions,including,without limitation,the PRC Cybersecurity Law,the PRC Data Security Law and Personal Information Protection Law,to ensure the confidentiality,integrity and availability of the info
259、rmation of our users,members,and suppliers,which is also essential to maintaining their confidence in our services.However,the interpretation and implementation of such laws in China and elsewhere are often uncertain and in flux.In November 2016,the Standing Committee of the National Peoples Congres
260、s promulgated the PRC Cybersecurity Law,which provides that network operators must meet their cybersecurity obligations and must take technical measures and other necessary measures to protect the safety and stability of their networks.Although we only gain access to user information that is necessa
261、ry for,and relevant to,the services provided,the data we obtain and use may include information that is deemed as“personal information”under the PRC Cybersecurity Law and related data privacy and protection laws and regulations.See“Item 4.Information on the CompanyB.Business OverviewRegulationRegula
262、tions Relating to Internet Privacy.”In addition,on June 10,2021,the Standing Committee of the National Peoples Congress promulgated the PRC Data Security Law,which took effect on September 1,2021.The PRC Data Security Law provides for a data security review procedure for the data processing activiti
263、es that affect or may affect national security.It also imposes data security obligations on persons and entities conducting data processing activities and requires data processors to take necessary measures to protect data security.Furthermore,on August 20,2021,the Standing Committee of the National
264、 Peoples Congress issued the Personal Information Protection Law,which provides the basic regime for personal information protection and sets forth detailed obligations and responsibilities for personal information handlers in their collecting and processing personal information.Although we follow o
265、ur long-standing policy that is to only access and process users personal information that is necessary for,and relevant to provision of our services and we update our privacy policies and practices from time to time for compliance with regulatory developments,we may be required to make further adju
266、stments to our data processing practices as the PRC Data Security Law and PRC Personal Information Protection Law are newly promulgated and the interpretation of many of their specific requirements remain to be clarified by the government authorities or is otherwise subject to uncertainties.While we
267、 take measures to comply with all applicable data privacy and protection laws and regulations,we cannot guarantee the effectiveness of the measures undertaken by us and our business partners.The activities of third parties,such as our users,suppliers,and other business partners are beyond our contro
268、l.If any of these parties violate the applicable data privacy and protection and related laws and regulations,or fail to fully comply with the service agreements with us,or if any of our employees fails to comply with our internal control measures and misuses the information,we may be subject to reg
269、ulatory actions.Any failure or perceived failure to comply with all applicable data privacy and protection laws and regulations,or any failure or perceived failure of our business partners to do so,or any failure or perceived failure of our employees to comply with our internal control measures,may
270、result in negative publicity and legal proceedings or regulatory actions against us,and could damage our reputation,discourage current and potential users and business partners from using our services and subject us to claims,fines,and damages,which could have a material adverse effect on our busine
271、ss and results of operations.New laws or regulations concerning data protection,or the interpretation and implementation of existing data security and privacy protection laws or regulations may be announced,published for public consultations,issued,or promulgated from time to time.For example,on Dec
272、ember 28,2021,the Cyberspace Administration of China,or the CAC,together with other PRC governmental authorities,promulgated the Measures for Cybersecurity Review,or the Cybersecurity Measures,which took effect from February 15,2022.Pursuant to the Cybersecurity Measures,(i)the purchase of network p
273、roducts and services of a critical information infrastructure operator and data processing 17activities of an online platform operator that affect or may affect national security shall be subject to the cybersecurity review,(ii)particularly,if a critical information infrastructure operator purchases
274、 network products and services that affect or may affect national security,or an online platform operator possessing personal information of over one million users and pursues a foreign listing,such operator must apply for cybersecurity review,and(iii)relevant governmental authorities in the PRC may
275、 initiate cybersecurity review if such governmental authorities determine any network products and services,and data processing activities affect or may affect national security.On November 14,2021,the CAC published the Regulations on the Administration of Cyber Data Security(Draft for Comments),or
276、the Draft Cyber Data Regulations.The Draft Cyber Data Regulations provides that data processor conducting the following activities shall apply for conducting the following activities shall apply for cybersecurity review:(i)merger,reorganization,or division of internet platform operators that have ac
277、quired a large number of data resources related to national security,economic development,or public interests,which affects or may affect national security;(ii)a foreign listing by a data processor processing personal information of over one million users;(iii)a listing in Hong Kong which affects or
278、 may affect national security;or(iv)other data processing activities that affect or may affect national security.As of the date of this annual report,there has been no further clarifications from the authorities as to the standards for determining such activities that“affects or may affect national
279、security.”The period for which the CAC solicited comments on the Draft Cyber Data Regulations ended on December 13,2021,but there is no timetable as to when the draft regulations will be enacted.As such,substantial uncertainties exist with respect to the enactment timetable,final content,interpretat
280、ion,and implementation of the Draft Cyber Data Regulations.As of the date of this annual report,the Draft Cyber Data Regulations is still in draft form and has not come into force.New laws or regulations concerning data protection and cyber security,or the interpretation and implementation of such n
281、ew laws or regulations,which is often uncertain and in flux,may be inconsistent with our practices.The introduction of new products or other actions that we may take may subject us to additional laws,regulations,or other government scrutiny.Complying with new laws and regulations could cause us to i
282、ncur substantial costs or require us to change our business practices in a manner materially adverse to our business.We are subject to payment processing risk.Our users pay for our products using a variety of different online payment methods.We rely on third parties to process such payment.Acceptanc
283、e and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees.To the extent there are increases in payment processing fees,material changes in the payment ecosystem,such as delays in receiving payments from payment processors
284、 and/or changes to rules or regulations concerning payment processing,our revenue,operating expenses and results of operation could be adversely impacted.We also do not have control over the security measures of our third-party payment service providers,and security breaches of the online payment sy
285、stems that we use could expose us to litigation and possible liability for failing to secure confidential customer information and could,among other things,damage our reputation and the perceived security of all of the online payment systems that we use.If a well-publicized internet security breach
286、were to occur,users concerned about the security of their online payments may become reluctant to purchase our products and services through payment service providers even if the publicized breach did not involve payment systems or methods used by us.If any of the above were to occur and damage our
287、reputation or the perceived security of the payment systems that we use,we may lose users as they may be discouraged from purchasing products or services in our community,which may adversely affect our business and results of operations.Any lack of requisite approvals,licenses,permits or filings or
288、failure to comply with any requirements of PRC laws,regulations and policies may materially and adversely affect our daily operations and hinder our growth.Our business is subject to governmental supervision and regulation by the relevant PRC governmental authorities,including the Ministry of Commer
289、ce,or MOFCOM,the State Administration for Market Regulation and other governmental authorities in charge of the relevant categories of products sold by us.Together,these government authorities promulgate and enforce regulations that cover many aspects of the operation of online retailing,including e
290、ntry into this industry,the scope of permissible business activities,licenses and permits for various business activities,and foreign investment.The fresh grocery e-commerce industry is subject to comprehensive government regulations and supervisions,and we are required to hold or apply for various
291、permits,licenses or filings for conducting our business covering various business type,such as hot or cold food production,online operating,food sale or food distribution.See“Item 4.Information on the CompanyB.Business OverviewRegulationRegulations Relating 18to Licenses,Permits,Registrations and Fi
292、lings.”We have made great efforts to obtain all the applicable permits,licenses or filings,but due to the large number of products sold on our mobile app and our business expansion to other areas,we may not always be able to obtain such permits,licenses or filings in a timely manner.Under relevant P
293、RC laws and regulations,the address of any warehouse which is established outside the operation place of any of our PRC operating subsidiary shall be specified in the food operating license of such PRC operating subsidiary,or otherwise,such subsidiary may be ordered to rectify,and even subject to wa
294、rnings and regulatory fines of up to RMB2,000 if fails to rectify as per requested by relevant governmental authority.As of the date of this annual report,not all of the addresses of our regional processing centers and frontline fulfillment stations are currently specified in the relevant foodoperat
295、ing licenses.While we are in the process of completing such registration to cover the addresses of all of our regional processing centers and frontline fulfillment stations,we cannot assure you that we can complete such registration in a timely manner or at all due to certain factors that are beyond
296、 our control.If the relevant regulators require us to rectify and we fail to do so,we may be subject to regulatory fines of up to RMB2,000 per incidence of violation.As of the date of this annual report,we have not received any notice of warning or been subject to penalties or other disciplinary act
297、ion from the relevant governmental authorities regarding the conducting of our business without the above mentioned approvals,filings,registration and permits.However,we cannot assure you that we will not be subject to any penalties in the future.As the online retail industry is still evolving in Ch
298、ina,new laws and regulations may be adopted from time to time and regulators may interpret existing laws and regulations differently from what they do now to require additional licenses and permits other than those we currently have,and to address new issues that arise from time to time.As a result,
299、substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC laws and regulations applicable to online retail businesses.Any of these regulatory actions by the PRC governmental authorities,including issuance of official notices,change of policies,prom
300、ulgation of regulations and imposition of sanctions,may adversely affect our business and have a material and adverse effect on our results of operations.In addition to licenses,filings,registration and permits,laws and regulations may require e-commerce operators to take measures to protect consume
301、r rights.Failure to do so may subject the e-commerce operators to rectification requirements and penalties.Although we endeavor to follow the laws and regulations,there is no assurance that we can timely react to the evolving requirements,and the government authorities may,to certain extent,have dis
302、cretion in determining whether such requirements have been strictly complied with.If the government authorities deem that we fail to meet such requirements,we may receive warnings,be ordered to make rectifications,or subject to other administrative sanctions that may have material adverse effect on
303、our business,financial condition and our results of operations.We may engage in acquisitions,investments or strategic alliances in the future,which could require significant management attention and materially and adversely affect our business and results of operations.We may identify strategic part
304、ners to form strategic alliances,invest in or acquire additional assets,technologies or businesses that are complementary to our existing business.These transactions may involve minority investments in other companies,acquisitions of controlling stakes in other companies or acquisitions of selected
305、assets.In the past,we have invested in or acquired additional businesses that are complementary to our existing business.Provided with suitable opportunities,we may pursue alliances and investment in the future.Any future strategic alliances,investments or acquisitions and the subsequent integration
306、 of the new assets and businesses obtained or developed from such transactions into our own may divert management from their primary responsibilities and subject us to additional liabilities.In addition,the costs of identifying and consummating investments and acquisitions may be significant.We may
307、also incur costs and experience uncertainties in completing necessary registrations and obtaining necessary approvals from relevant government authorities in China and elsewhere in the world.The costs and duration of integrating newly acquired assets and businesses could also materially exceed our e
308、xpectations.Any such negative developments could have a material adverse effect on our business,financial condition,results of operations and cash flow.19If we fail to hire,retain and train qualified employees or sufficient workforce while controlling our labor costs,our business may suffer.We depen
309、d on the continued contributions of our senior management and other key employees,many of whom are difficult to replace.The loss of the services of any of our executive officers or other key employees could harm our business.Our future success depends on our ability to attract,retain and train a lar
310、ge number of qualified employees.Our fulfillment infrastructure is labor intensive and requires a substantial number of workers,and these positions tend to have higher than average turnover.We have observed an overall tightening of the labor market and an emerging trend of shortage of labor supply.F
311、ailure to obtain stable and dedicated warehousing,delivery personnel and other labor support may lead to underperformance of these functions and cause disruption to our business.Labor costs in China have increased with Chinas economic development,particularly in the large cities where we operate our
312、 regional processing centers and frontline fulfillment stations.Because we operate our own fulfillment infrastructure,which requires a large and rapidly growing workforce,our cost structure is more vulnerable to labor costs than that of many of our competitors,which may put us at a competitive disad
313、vantage.If we are unable to attract and retain sufficient and qualified personnel,our business and growth may be materially and adversely affected.Our need to significantly increase the number of our qualified employees and retain key employees may cause us to materially increase compensation-relate
314、d costs,including stock-based compensation.Our operating metrics and other estimates are subject to inherent challenges in measuring our operating performance,which may harm our reputation.We regularly review our operating metrics in relation to our users to evaluate growth trends,measure our perfor
315、mance,and make strategic decisions.These metrics are calculated using our internal data,have not been validated by an independent third party,and may not be indicative of our future operation results.While these numbers are based on what we believe to be reasonable estimates for the applicable perio
316、d of measurement,there are inherent challenges in measuring how our app and mini programs are used across a large population in China.Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies.For instance,if a significant understatement or overstat
317、ement of transacting users were to occur,we might expend resources to implement unnecessary business measures or fail to take required actions to remedy an unfavorable trend.If investors do not perceive our user or other operating metrics to accurately represent our user base,or if we discover inacc
318、uracies in our user or other operating metrics,our reputation may be harmed.We may be subject to intellectual property infringement claims,which may be expensive to defend and may disrupt our business and operations.We cannot be certain that our operations or any aspects of our business do not or wi
319、ll not infringe upon or otherwise violate patents,copyrights or other intellectual property rights held by third parties.We have been,and from time to time in the future may be,subject to legal proceedings and claims relating to the intellectual property rights of others.In addition,there may be oth
320、er third-party intellectual property that is infringed by products offered by our suppliers and our services or other aspects of our business.There could also be existing patents of which we are not aware that our products may inadvertently infringe.We cannot assure you that holders of patents purpo
321、rtedly relating to some aspect of our technology platform or business,if any such holders exist,would not seek to enforce such patents against us in China,the United States or any other jurisdictions.Further,the application and interpretation of Chinas patent laws and the procedures and standards fo
322、r granting patents in China are still evolving and are uncertain,and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis.If we are found to have violated the intellectual property rights of others,we may be subject to liability for our infringement activities
323、 or may be prohibited from using such intellectual property,and we may incur licensing fees or be forced to develop alternatives of our own.In addition,we may incur significant expenses,and may be forced to divert managements time and other resources from our business and operations to defend agains
324、t these infringement claims,regardless of their merits.Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question.Fina
325、lly,we use open source software in connection with our products and services.Companies that incorporate open source software into their products and services have,from time to time,faced claims challenging the ownership of open source software and compliance with open source license terms.As a resul
326、t,we could be subject to suits by parties claiming ownership of what we believe to be open source software or noncompliance with open source licensing terms.Some open source software licenses require users who distribute open source software as part 20of their software to publicly disclose all or pa
327、rt of the source code to such software and make available any derivative works of the open source code on unfavorable terms or at no cost.Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business,results of operations and financial condition.W
328、e may not be able to prevent others from unauthorized use of our intellectual property,which could harm our business and competitive position.We regard our trademarks,copyrights,patents,domain names,know-how,proprietary technologies,and similar intellectual property as critical to our success,and we
329、 rely on a combination of intellectual property laws and contractual arrangements,including confidentiality,invention assignment and non-compete agreements with our employees,to protect our proprietary rights.We are aware of certain copycat websites that attempt to cause confusion or diversion of tr
330、affic from us at the moment,against which we are considering initiating lawsuits,and we may continue to become an attractive target to such attacks in the future because of our brand recognition in the online retail industry in China.Despite these measures,any of our intellectual property rights cou
331、ld be challenged,invalidated,circumvented or misappropriated,or such intellectual property may not be sufficient to provide us with competitive advantages.In addition,there can be no assurance that(i)our application for registration of trademarks,patents,and other intellectual property rights will b
332、e approved,(ii)any intellectual property rights will be adequately protected,or(iii)such intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable.Further,because of the rapid pace of technological change in our industry,part
333、s of our business rely on technologies developed or licensed by third parties,and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.It is often difficult to register,maintain and enforce intellectual property rights in China.Statutory laws and regulations are subject to judicial interpretation and enforcement and may