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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACTOF 1934OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal yea
2、r ended December 31,2023OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toOR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934Date of event requiring this shell company reportCommission f
3、ile number 001-37922ZTO Express(Cayman)Inc.(Exact Name of Registrant as Specified in Its Charter)N/A(Translation of Registrants Name into English)Cayman Islands(Jurisdiction of Incorporation or Organization)Building One,No.1685 Huazhi Road,Qingpu District,Shanghai,201708 Peoples Republic of China(Ad
4、dress of Principal Executive Offices)Huiping Yan,Chief Financial OfficerBuilding One,No.1685 Huazhi Road,Qingpu District,Shanghai,201708 Peoples Republic of China Phone:(86 21)5980 4508 Email:(Name,Telephone,Email and/or Facsimile Number and Address of Company Contact Person)Securities registered or
5、 to be registered pursuant to Section 12(b)of the Act:Title of each class TradingSymbol(s)Name of Each Exchange on Which RegisteredAmerican depositary shares,each representing oneClass A ordinary share par value US$0.0001 pershareZTONew York Stock ExchangeClass A ordinary shares,par value US$0.0001
6、pershare2057The Stock Exchange of Hong Kong LimitedTable of ContentsSecurities registered or to be registered pursuant to Section 12(g)of the Act:None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act:None(Title of Class)Indicate the number of ou
7、tstanding shares of each of the Issuers classes of capital or common stock as of the close of the period covered by the annual report.As of December 31,2023,there were 812,866,663 ordinary shares outstanding,par value$0.0001 per share,being the sum of 606,766,663 Class A ordinary shares,and 206,100,
8、000 Class B ordinary shares.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes NoIf this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
9、15(d)of the SecuritiesExchange Act of 1934.Yes NoIndicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period that the registrant was required to file
10、such reports),and(2)has been subject to such filing requirements for the past90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T(232.405 of this chapter)during the precedin
11、g 12 months(or for such shorter period that the registrant was required to submit such files).Yes NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.Seedefinition of“accelerated filer and large accel
12、erated filer”and“emerging growth company”in Rule 12b-2 of the Exchange Act:Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Emerging Growth Company If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant
13、 has elected not to usethe extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Boa
14、rd to its Accounting StandardsCodification after April 5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control overfinancial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.
15、7262(b)by the registered public accounting firm that prepared or issued its auditreport.If 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 filingreflect the correction of an error to previously is
16、sued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by anyof the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by che
17、ck mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other If“other”has been checked in response to the previous question,in
18、dicate by check mark which financial statement item the registrant has elected to follow.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
19、PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities Exchange Act of1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes NoTable of
20、ContentsiTABLE OF CONTENTSPageINTRODUCTION1FORWARD-LOOKING STATEMENTS4Part I5EXPLANATORY NOTE5Item 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS10Item 2.OFFER STATISTICS AND EXPECTED TIMETABLE10Item 3.KEY INFORMATION11Item 4.INFORMATION ON THE COMPANY66Item 4A.UNRESOLVED STAFF COMMENTS104It
21、em 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS104Item 6.DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES116Item 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS130Item 8.FINANCIAL INFORMATION133Item 9.THE OFFER AND LISTING134Item 10.ADDITIONAL INFORMATION135Item 11.QUANTITATIVE AND QUALITATIVE DISCLO
22、SURES ABOUT MARKET RISK151Item 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES152Part II154Item 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES154Item 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OFPROCEEDS MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS15
23、4Item 15.CONTROLS AND PROCEDURES154Item 16A.AUDIT COMMITTEE FINANCIAL EXPERT155Item 16B.CODE OF ETHICS155Item 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES155Item 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES155Item 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHA
24、SERS156Item 16F.CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT156Item 16G.CORPORATE GOVERNANCE156Item 16H.MINE SAFETY DISCLOSURE156Item 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS156Item 16J.Insider Trading Policies157Item 16K.Cybersecurity157Part III158Item 17.FINANCIAL STA
25、TEMENTS158Item 18.FINANCIAL STATEMENTS158Item 19.EXHIBITS158SIGNATURES160Table of Contents1INTRODUCTIONZTO Express(Cayman)Inc.,which we refer to as ZTO,is not a Chinese operating company but rather a Cayman Islands holdingcompany.ZTO conducts its operations in China both through its subsidiaries and
26、 through contractual arrangements with ZTO Express Co.,Ltd.,which we refer to as ZTO Express.PRC laws and regulations restrict and impose conditions on foreign direct investment in companies involved inthe provision of domestic mail delivery services.Therefore,we operate that part of our business in
27、 China through ZTO Express and its subsidiaries.We rely on contractual arrangements among Shanghai Zhongtongji Network Technology Co.Ltd.,or Shanghai Zhongtongji Network,one of ourPRC subsidiaries,ZTO Express and the shareholders of ZTO Express to consolidate the financial results of ZTO Express wit
28、h ours under U.S.GAAP.These contractual arrangements enable us to direct the activities of ZTO Express,receive the economic benefits that could potentially besignificant to ZTO Express in consideration for the services provided by Shanghai Zhongtongji Network,and hold an exclusive option to purchase
29、all or part of the equity interests in ZTO Express when and to the extent permitted by PRC law.Because of these contractual arrangements,we arethe primary beneficiary of ZTO Express and hence consolidate its financial results with ours under U.S.GAAP.Revenues contributed by ZTOExpress accounted for
30、97.7%,90.4%and 81.4%of our total revenues for the fiscal years 2021,2022 and 2023,respectively.As used in this annualreport,“ZTO”refers to ZTO Express(Cayman)Inc.,and“we,”“us,”“our company”or“our”refer to ZTO Express(Cayman)Inc.and itssubsidiaries.Investors in our ADSs and/or Class A ordinary shares
31、 thus are not purchasing equity interest in ZTO Express but instead arepurchasing equity interest in ZTO Express(Cayman)Inc.,a Cayman Islands holding company.Our corporate structure is subject to risks associated with our contractual arrangements with ZTO Express.The contractual arrangement ispercei
32、ved as replicating foreign investment in China-based companies where PRC regulations prohibit direct foreign investment in the operatingcompanies.ZTO and its investors may never have a direct ownership interest in ZTO Express or in the businesses that are conducted by ZTOExpress or its subsidiaries.
33、Uncertainties with respect to the legal system in the jurisdiction where we operate could limit our ability to enforcethese contractual arrangements,and these contractual arrangements have not been tested in a court of law.If the PRC government finds that theagreements that establish the structure f
34、or operating our business do not comply with PRC laws and regulations,or if these regulations or theirinterpretations change in the future,we could be subject to severe penalties or be forced to relinquish our interests in those operations.This mayresult in ZTO Express being deconsolidated,which wou
35、ld materially and adversely affect our operations,and our ADSs and/or Class A ordinaryshares may decline significantly in value or become worthless.ZTO,our PRC subsidiaries,ZTO Express,and investors of ZTO face uncertaintyabout potential future actions by the PRC government that could affect the enf
36、orceability of the contractual arrangements with ZTO Express and,consequently,significantly affect the financial performance of ZTO Express and our company as a whole.The PRC regulatory authorities coulddisallow the contractual arrangement,which would likely result in a material adverse change in ou
37、r operations,and our Class A ordinary shares orour ADSs may decline significantly in value or become worthless.For a detailed description of the risks associated with our corporate structure,please refer to risks disclosed under“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate Stru
38、cture.”We face various legal and operational risks and uncertainties associated with being based in or having the majority of our operations inChina and the complex and evolving PRC laws and regulations.For example,we face risks associated with regulatory approvals on offeringsconducted overseas by
39、and foreign investment in China-based issuers,the use of VIEs,anti-monopoly regulatory actions,and oversight oncybersecurity and data privacy,as well as the lack of PCAOB inspection on our auditors,which may impact our ability to conduct certainbusinesses,accept foreign investments,or remain listed
40、on a United States or other foreign exchange.These risks could result in a material adversechange in our operations and the value of our ADSs,significantly limit or completely hinder our ability to continue to offer securities to investors,or cause the value of such securities to significantly decli
41、ne.For a detailed description of risks related to doing business in China,see“Item 3.KeyInformationD.Risk FactorsRisks Related to Doing Business in China.”Table of Contents2ZTO,our Cayman Islands holding company,may transfer cash to our wholly-owned Hong Kong subsidiaries(through intermediateholding
42、 companies in the British Virgin Islands)by making capital contributions or providing loans,and our Hong Kong subsidiaries may transfercash to our PRC subsidiaries by making capital contributions or providing loans to them.Because ZTO and its subsidiaries control ZTO Expressthrough contractual arran
43、gements,they are not able to make direct capital contribution to ZTO Express.However,they may transfer cash to ZTOExpress by loans or by making payment to ZTO Express for inter-group transactions.As of December 31,2023,ZTO had made cumulative capitalcontribution and loans to its Cayman,BVI,and Hong
44、Kong subsidiaries of RMB20,592.6 million.For the years ended December 31,2021,2022and 2023,no shareholder loans were provided by ZTO to our PRC subsidiaries,no dividends or distributions were made to ZTO by oursubsidiaries,and dividends of US$208.4 million,US$202.3 million and US$299.3 million were
45、paid by ZTO to its shareholders.Historically,ZTOpaid dividends to its shareholders primarily using proceeds from offshore financing activities.As ZTO is a Cayman Islands holding company withno material operations of its own,its ability to pay dividends may depend upon dividends paid by our PRC subsi
46、diaries in the future.For moredetailed discussion of how cash is transferred between ZTO,our subsidiaries and ZTO Express,see“Cash Transfers and Dividend Distribution”atthe outset of Part I.Unless otherwise indicated and except where the context otherwise requires,references in this annual report on
47、 Form 20-F to:“ADSs”are to our American depositary shares,each of which represents one Class A ordinary share;“ADRs”are to the American depositary receipts that evidence our ADSs;“China”or the“PRC”are to the Peoples Republic of China,excluding,for the purposes of this annual report only,the Hong Kon
48、gSpecial Administrative Region,the Macau Special Administrative Region and the Taiwan Region;“consolidated affiliated entities”are to the VIE and its subsidiaries in China;“delivery service fees”are to service fees directly charged by network partners from parcel senders in connection with expressde
49、livery services rendered.The full delivery service fees collected by pickup outlets upfront from the senders typically comprise(i)the pickup service fees;(ii)the network transit fees payable to our company;and(iii)the last-mile delivery fees payable to thedelivery outlets operated by other network p
50、artners;“Hong Kong”or“HK”are to the Hong Kong Special Administrative Region of the PRC;“HK$”or“Hong Kong dollars”are to the legal currency of Hong Kong;“Hong Kong Listing Rules”are to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited,asamended or supplemented f
51、rom time to time;“Hong Kong Stock Exchange”are to The Stock Exchange of Hong Kong Limited;our“network partners”are to business partners that own and operate pickup and delivery outlets in our network and operate expressdelivery services under our“Zhongtong”or“ZTO”brand;“network transit fees”are to f
52、ees payable by our network partners to us in connection with the services we provide to them,whichmainly include parcel sorting and parcel line-haul transportation;“ordinary shares”are to our Class A and Class B ordinary shares,par value US$0.0001 per share;our“parcel volume”in any given period are
53、to the number of parcels collected by our network partners using our waybills in thatperiod;“RMB”or“Renminbi”are to the legal currency of China;“unit cost per parcel”are to the sum of cost of revenues and total operating expenses of the applicable period divided by our totalparcel volume during the
54、same period;Table of Contents3“US$”or“U.S.dollars”are to the legal currency of the United States;“VIE”are to ZTO Express Co.,Ltd.,a PRC entity in which we do not have equity interests but whose financial results areconsolidated into our consolidated financial statements in accordance with U.S.GAAP;“
55、we,”“us,”“our company”or“our”are to ZTO Express(Cayman)Inc.and its subsidiaries.We conduct our operations in Chinathrough(i)our PRC subsidiaries and(ii)the VIE,with which we have maintained contractual arrangements,and its subsidiaries.TheVIE and its subsidiaries are PRC companies conducting operati
56、ons in China,and their financial results have been consolidated intoour consolidated financial statements under U.S.GAAP for accounting purposes;“ZTO”are to ZTO Express(Cayman)Inc.;and“ZTO Express”are to ZTO Express Co.,Ltd.or,depending on the context,ZTO Express Co.,Ltd.and its subsidiaries.Table o
57、f Contents4FORWARD-LOOKING STATEMENTSThis annual report on Form 20-F contains forward-looking statements that relate to our current expectations and views of future events.These statements involve known and unknown risks,uncertainties and other factors that may cause our actual results,performance o
58、r achievementsto be materially different from those expressed or implied by the forward-looking statements.These statements are made under the“safe harbor”provisions of the U.S.Private Securities Litigations Reform Act of 1995.You can identify some of these forward-looking statements by words or phr
59、ases such as“may,”“will,”“expect,”“anticipate,”“aim,”“estimate,”“intend,”“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 a
60、ffect our financial condition,results of operations,business strategy and 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 growth of the express deliver
61、y industry in China;our expectations regarding demand for and market acceptance of our services;our expectations regarding our relationships with network partners,direct and end customers,suppliers and our other stakeholders;competition in our industry;andgovernment policies and regulations relating
62、 to our industry.You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to this annual reportcompletely and with the understanding that our actual future results may be materially different from what we expect.Other Sections of this ann
63、ualreport discuss factors which could adversely impact our business and financial performance.Moreover,we operate in an evolving environment.New risk factors emerge from time to time,and it is not possible for our management to predict all risk factors,nor can we assess the impact of allfactors on o
64、ur business or the extent to which any factor,or combination of factors,may cause actual results to differ materially from thosecontained in any forward-looking statements.We qualify all of our forward-looking statements by these cautionary statements.You should not rely upon forward-looking stateme
65、nts as predictions of future events.The forward-looking statements made in this annualreport 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,weundertake no obligation to update or revise publicly any forward-looking
66、 statements,whether as a result of new information,future events orotherwise,after the date on which the statements are made or to reflect the occurrence of unanticipated events.Our reporting currency is the Renminbi.This annual report contains translations of RMB and Hong Kong dollar amounts into U
67、.S.dollarsat specific rates solely for the convenience of the reader.Unless otherwise stated,all translations of RMB and Hong Kong dollars into U.S.dollarsand from U.S.dollars into RMB in this annual report were made at a rate of RMB7.0999 to US$1.00 and HK$7.8109 to US$1.00,the respectiveexchange r
68、ates on December 29,2023 set forth in the H.10 statistical release of the Federal Reserve Board.We make no representation that anyRMB,Hong Kong dollar or U.S.dollar amounts referred to in this annual report could have been,or could be,converted into U.S.dollars,RMB orHong Kong dollars,as the case ma
69、y be,at any particular rate or at all.Table of Contents5PART IEXPLANATORY NOTEZTO is a Cayman Islands holding company with no equity ownership in ZTO Express,its consolidated affiliated entity.We conduct ouroperations in China through(i)our PRC subsidiaries and(ii)ZTO Express,with which we have main
70、tained contractual arrangements.Investors inour ADSs thus are not purchasing equity interest in ZTO Express in China but instead are purchasing equity interest in a Cayman Islands holdingcompany.If the PRC government finds that the agreements that establish the structure for operating certain of our
71、 businesses do not comply withPRC laws and regulations,or if these regulations or their interpretations change in the future,we could be subject to severe penalties or be forced torelinquish our interests in those operations.ZTO,our PRC subsidiaries,ZTO Express,and investors of ZTO face uncertainty
72、about potential futureactions by the PRC government that could affect the enforceability of the contractual arrangements with ZTO Express and,consequently,significantly affect the financial performance of ZTO Express and our company as a whole.The PRC regulatory authorities could disallow the VIEstr
73、ucture,which would likely result in a material adverse change in our operations,and our Class A ordinary shares or our ADSs may declinesignificantly in value.PRC governments authority in regulating our operations and its oversight and control over offerings conducted overseas by,and foreigninvestmen
74、t in,China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline.For more details,see“Item 3.Key Informa
75、tionD.Risk FactorsRisks Related to Doing Business in ChinaThe PRC governments significant oversight anddiscretion over our business operation could result in a material adverse change in our operations and the value of our ADSs and ordinary shares.”Risks and uncertainties arising from the legal syst
76、em in the jurisdiction where we operate,including risks and uncertainties regarding theenforcement of laws and quickly evolving rules and regulations in the jurisdiction where we operate,could result in a material adverse change inour operations and the value of our Class A ordinary shares or ADSs.F
77、or more details,see“Item 3.Key InformationD.Risk FactorsRisksRelated to Doing Business in ChinaUncertainties with respect to the legal system in the jurisdiction where we operate could adversely affect us.”Our Holding Company Structure and Contractual ArrangementsZTO Express(Cayman)Inc.is a holding
78、company with no material operations of its own.We conduct our operations primarily throughour PRC subsidiaries and ZTO Express,the consolidated affiliated entity,and its subsidiaries.Our domestic mail delivery services in China havebeen conducted through ZTO Express in order to comply with the PRC l
79、aws and regulations,which prohibit or restrict control of companiesinvolved in the provision of domestic mail delivery services.Revenues contributed by ZTO Express accounted for 97.7%,90.4%and 81.4%of ourtotal revenues for the fiscal years 2021,2022 and 2023,respectively.Investors in our ADSs and/or
80、 Class A ordinary shares are not purchasingequity interest in ZTO Express in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.Table of Contents6The following chart illustrates our companys organizational structure,including our principal subsid
81、iaries and the VIE as of March 31,2024:(1)ZTO Express Co.,Ltd.,or ZTO Express,is the VIE,with which we have maintained contractual arrangements.To the knowledge of ourcompany,Meisong Lai,Jianfa Lai,Jilei Wang,Xiangliang Hu,Shunchang Zhang,Jianying Teng,Xuebing Shang,Baixi Lan and JianchangLai are be
82、neficial owners of the shares of our company and hold 34.35%,12.00%,10.00%,7.05%,6.00%,5.02%,4.40%,1.40%and 1.06%equity interests in ZTO Express,respectively.Among them,Meisong Lai and Jilei Wang are also directors of our company.The remaining18.72%equity interest in ZTO Express are held by 34 other
83、 shareholders.None of these 34 shareholders hold more than 4.00%of the equityinterest in ZTO Express.As of March 31,2024,ZTO Express directly wholly owned 69 subsidiaries.Table of Contents7A series of contractual agreements,including voting rights proxy agreement,equity pledge agreement,exclusive ca
84、ll option agreement,powers of attorney,spouse consent letters and exclusive consulting and services agreement and its supplemental agreement,have been entered intoby and among Shanghai Zhongtongji Network,our wholly owned subsidiary,ZTO Express,the consolidated affiliated entity,and the shareholders
85、of ZTO Express.The following is a summary of the currently effective contractual arrangements:(i)voting rights proxy agreement,pursuant to which each of the shareholders of ZTO Express irrevocably appointed Meisong Lai,Shanghai Zhongtongji Networks designated person,as their attorney-in-fact to exer
86、cise all applicable shareholder rights,including,but not limitedto:(i)calling for and attending shareholders meetings as the proxy of the shareholders;(ii)exercising voting rights and all other shareholdersrights provided under PRC laws and the articles of association of ZTO Express,including but no
87、t limited to,selling,transferring,pledging ordisposing all or a portion of the shares held by such shareholder or the assets of ZTO Express;(iii)voting on all matters submitted to shareholdersmeetings,including but not limited to,the election of directors and senior management officers who shall be
88、appointed by shareholders;and(iv)exercising other voting rights granted to the shareholders by the articles of association of ZTO Express,as may be amended from time to time;(ii)equity pledge agreement,pursuant to which each of the shareholders of ZTO Express pledged all of their equity interests in
89、 ZTOExpress to guarantee their and ZTO Expresss performance of their obligations under the contractual arrangements,including the exclusiveconsulting and services agreement,its related agreements and the equity pledge agreement;(iii)exclusive call option agreement,pursuant to which each of the share
90、holders of ZTO Express irrevocably granted ShanghaiZhongtongji Network an exclusive option to purchase,or have its designated entity or person to purchase,at its discretion,to the extent permittedunder PRC law,all or part of the shareholders equity interests in ZTO Express;(iv)powers of attorney,pur
91、suant to which the shareholders of ZTO Express each irrevocably appointed Shanghai Zhongtongji Networksdesignated person,Meisong Lai,as the attorney-in-fact to exercise all of applicable shareholders voting and related rights with respect to suchshareholders equity interests in ZTO Express;(v)consen
92、t letter,pursuant to which each of the spouses of six key shareholders of ZTO Express unconditionally and irrevocably agreedthat the spouse is aware of the abovementioned exclusive call option agreement,voting right proxy agreement,irrevocable powers of attorney,equity pledge agreement and the exclu
93、sive consulting and services agreement,and has read and understood the contractual arrangements;and(vi)exclusive consulting and services agreement and its supplemental agreement,pursuant to which Shanghai Zhongtongji Network hasthe exclusive right to provide ZTO Express with the technical support an
94、d consulting services required by ZTO Expresss business.ShanghaiZhongtongji Network owns the exclusive intellectual property rights created as a result of the performance of this agreement.ZTO Express agreesto pay Shanghai Zhongtongji Network an annual service fee,at an amount equal to 100%of the ne
95、t income of ZTO Express and its affiliates.For more details of these contractual arrangements,see“Item 4.Information on the CompanyC.Organizational Structure Agreementsthat enable us to direct the activities of ZTO Express”and“Agreement that allows us to receive economic benefits from ZTO Express.”H
96、owever,the contractual arrangements may not be as effective as direct ownership in providing us with the ability to direct the activitiesof ZTO Express,and we may incur substantial costs to enforce the terms of the arrangements.See“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate S
97、tructureWe rely on contractual arrangements with the VIE and its shareholders for a substantial portion of ourbusiness operations,which may not be as effective as direct ownership in providing us with the ability to direct the operational activities”and“Item 3.Key InformationD.Risk FactorsRisks Rela
98、ted to Our Corporate StructureThe shareholders of the VIE may have potential conflictsof interest with us,which may materially and adversely affect our business and financial condition.”Table of Contents8There are also substantial uncertainties regarding the interpretation and application of current
99、 and future PRC laws,regulations and rulesregarding the status of the rights of ZTO with respect to its contractual arrangements with ZTO Express and its shareholders.If we or ZTO Expressare/is found to be in violation of any existing or future PRC laws or regulations,or fail to obtain or maintain a
100、ny of the required permits orapprovals,the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.See“Item 3.KeyInformationD.Risk FactorsRisks Related to Our Corporate StructureIf the PRC government finds that the agreements that establish t
101、hestructure for operating certain of our operations in China do not comply with PRC regulations relating to the relevant industries,or if theseregulations or the interpretation of existing regulations change in the future,we could be subject to severe penalties or be forced to relinquish ourinterest
102、s in those operations,”“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate StructureOur current corporatestructure,business operations and future capital raising activities may be affected by the PRC Foreign Investment Law,the Overseas Listing TrialMeasures and the recently amended P
103、RC Company Law,”“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaUncertainties with respect to the legal system in the jurisdiction where we operate could adversely affect us”and“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaThe PRC governmen
104、ts significant oversight and discretion over our business operationcould result in a material adverse change in our operations and the value of our ADSs and ordinary shares.”Permissions Required from the PRC Authorities for Our OperationsWe conduct our business primarily through our PRC subsidiaries
105、,ZTO Express and its subsidiaries in China.Our operations in China aregoverned by PRC laws and regulations.As of the date of this annual report,our PRC subsidiaries,ZTO Express and its subsidiaries have obtainedthe requisite licenses and permits from the PRC government authorities that are material
106、for the business operations of our holding company,ZTOExpress and its subsidiaries in the PRC,including,among others,the Courier Service Operation Permit and Road Transportation Operation Permit.Given the uncertainties of interpretation and implementation of the laws and regulations and the enforcem
107、ent practice by the governmentauthorities,we may be required to obtain additional licenses,permits,filings or approvals for the functions and services of our platform in thefuture.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Related to Our Business and IndustryAny lack
108、 ofrequisite approvals,licenses or permits applicable to our business operation or those of our network partners may have a material and adverseimpact on our business,financial condition and results of operations.”Permissions Required from the PRC Authorities for Overseas Financing ActivitiesOn Febr
109、uary 17,2023,the China Securities Regulatory Commission,or the CSRC,promulgated the Circular of the Peoples Republic ofChina on Administrative Arrangements for Filing of Overseas Offering and Listing of Domestic Enterprises and the Trial Administrative Measuresof the Overseas Securities Offering and
110、 Listing by Domestic Companies together with five relevant guidelines.The Trial Administrative Measuresof the Overseas Securities Offering and Listing by Domestic Companies became effective on March 31,2023.Pursuant to these measures,PRCdomestic companies that seek to offer and list securities in ov
111、erseas markets,either in direct or indirect means,are required to fulfill the filingprocedure with the CSRC and report the required information.According to the these administrative arrangements,issuers that have already beenlisted in an overseas market by March 31,2023,such as our company,are not r
112、equired to make any immediate filing.However,under the OverseasListing Trial Measures,such issuers will be required to complete certain filing procedures with the CSRC in connection with future securitiesofferings and listings outside of China,including follow-on offerings,issuance of convertible bo
113、nds,offshore relisting after going-privatetransactions,and other equivalent offering activities.In addition,such issuers are required to file a report to the CSRC after the occurrence andpublic disclosure of certain material corporate events,including but not limited to conversion of listing status
114、in overseas markets(such asswitching from secondary listing to dual primary listing).There remain substantial uncertainties about the interpretation,application andimplementation of the Overseas Listing Trial Measures.If we fail to obtain required approval or complete other review or filing procedur
115、es,underthe Overseas Listing Trial Measures or otherwise,for any future securities offerings and listings outside of mainland China,we may face sanctionsby the CSRC or other PRC regulatory authorities,which may include fines and penalties on our operations in mainland China,limitations on ouroperati
116、ng privileges in mainland China,restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China,restrictions on or delays to our future financing transactions offshore,or other actions that could have a material and adverse effect on our business,financial cond
117、ition,results of operations,reputation and prospects,as well as the trading price of our ADSs.See“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaThe approval of or filing to the CSRC or other PRC government authorities may berequired in connection with our offshore offer
118、ings and future capital raising activities under PRC law,and,if required,we cannot predict whetheror for how long we will be able to obtain such approval”and“Our business is subject to complex and evolving laws and regulations regardingcybersecurity,privacy,data protection and information security i
119、n China.Failure to protect confidential information of our end customers orconsumers could damage our reputation and substantially harm our business and results of operations.”Table of Contents9The Holding Foreign Companies Accountable ActPursuant to the Holding Foreign Companies Accountable Act,if
120、the SEC determines that we have filed audit reports issued by a registeredpublic accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board(United States),or thePCAOB,for two consecutive years,the SEC will prohibit our shares or the ADSs from being trad
121、ed on a national securities exchange or in theover-the-counter trading market in the United States.On December 16,2021,the PCAOB issued a report to notify the SEC of its determination thatthe PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in ma
122、inland China and Hong Kong,including our auditor.In May 2022,the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of this annualreport on Form 20-F for the fiscal year ended December 31,2021.On December 15,2022,the PCAOB issued a report that vacated i
123、ts December16,2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigatecompletely registered public accounting firms.As of the date of this annual report,the PCAOB has not issued any new determination that it isunable to i
124、nspect or investigate completely registered public accounting firms headquartered in any jurisdiction.For this reason,we do not expectto be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F.Each year,the PCAOB will determine whether it can ins
125、pect and investigate completely audit firms in mainland China and Hong Kong,among other jurisdictions.If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accountingfirms in mainland China and Hong Kong and we continue to use an accounting firm he
126、adquartered in one of these jurisdictions to issue an auditreport on our financial statements filed with the Securities and Exchange Commission,we would be identified as a Commission-Identified Issuerfollowing the filing of the annual report on Form 20-F for the relevant fiscal year.There can be no
127、assurance that we would not be identified as aCommission-Identified Issuer for any future fiscal year,and if we were so identified for two consecutive years,we would become subject to theprohibition on trading under the HFCAA.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to
128、Doing Business inChinaThe PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements andthe inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections”
129、and“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaOur ADSs may be prohibited from trading in the UnitedStates under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.The delisting of theADSs,or the threat of th
130、eir being delisted,may materially and adversely affect the value of your investment.”Cash Transfers and Dividend DistributionZTO,our Cayman Islands holding company,may transfer cash to our wholly-owned Hong Kong subsidiaries(through intermediateholding companies in the British Virgin Islands),by mak
131、ing capital contributions or providing loans,and our Hong Kong subsidiaries may transfercash to our PRC subsidiaries by making capital contributions or providing loans to them.Because ZTO and its subsidiaries control ZTO Express through contractual arrangements,they are not able to make direct capit
132、alcontribution to ZTO Express.However,they may transfer cash to ZTO Express by loans or by making payment to ZTO Express for inter-grouptransactions.The following table sets forth the amount of the transfers for the periods presented.Year Ended December 31,2021 2022 2023(RMB in millions)Capital cont
133、ributions and loans from Parent to Cayman,BVI,and Hong Kongsubsidiaries,and collection of loans from Cayman,BVI,and Hong Kong subsidiariesto Parent 1,250 2,580 (1,561)Capital contributions from Hong Kong subsidiaries to PRC subsidiaries 3,671 2,282 840Amounts received by subsidiaries of Parent from
134、ZTO Express*15,974 20,739 17,986Note:(1)*The cash flows between the subsidiaries of Parent and ZTO Express included the following:transportation fees,service fees and rentalexpenses.Table of Contents10As of December 31,2023,ZTO had made cumulative capital contribution and loans to its Cayman,BVI,and
135、 Hong Kong subsidiaries ofRMB20,592.6 million.In 2021,2022 and 2023,no shareholder loan was provided by ZTO to our PRC subsidiaries.For the years ended December 31,2021,2022 and 2023,no dividends or distributions were made to ZTO by our subsidiaries.For theyears ended December 31,2021,2022 and 2023,
136、dividends of US$208.4 million,US$202.3 million and US$299.3 million were paid toshareholders of ZTO of record as of designated record dates.Historically,ZTO paid dividends to its shareholders primarily using proceeds from offshore financing activities.As ZTO is a CaymanIslands holding company with n
137、o material operations of its own,its ability to pay dividends may depend upon dividends paid by our PRCsubsidiaries in the future.Our PRC subsidiaries in turn generate income from their own operations,and in addition enjoy substantially all economicbenefit and receive service fees from ZTO Express p
138、ursuant to the exclusive business cooperation agreement with ZTO Express.Under PRC law,each of our subsidiaries and ZTO Express in China is required to set aside at least 10%of its after-tax profits each year,if any,to fund certainstatutory reserve funds until such reserve funds reach 50%of its regi
139、stered capital.In addition,each of our subsidiaries and ZTO Express in Chinamay allocate a portion of its after-tax profits based on PRC accounting standards to a surplus fund at its discretion.The statutory reserve funds andthe discretionary funds are not distributable as cash dividends.Remittance
140、of dividends by a wholly foreign-owned company out of China issubject to examination by the banks designated by the State Administration of Foreign Exchange and declaration and payment of withholding tax.Additionally,if our PRC subsidiaries and ZTO Express incur debt on their own behalf in the futur
141、e,the instruments governing their debt mayrestrict their ability to pay dividends or make other distributions to us.Our PRC subsidiaries did not and will not be able to pay dividends until itgenerates accumulated profits and meets the requirements for statutory reserve funds.For more details,see“Ite
142、m 3.Key InformationD.RiskFactorsRisks Related to Doing Business in ChinaPRC regulation of loans to and direct investment in PRC entities by offshore holdingcompanies and governmental control of currency conversion may delay or prevent us from loaning to or making additional capital contributions too
143、ur PRC subsidiaries and the consolidated affiliated entities in China,which could materially and adversely affect our liquidity and our ability tofund and expand our business”and“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaGovernmentalcontrol of currency conversion ma
144、y limit our ability to utilize our revenues effectively and affect the value of your investment.”Except theseregulatory requirements,there are not any other statutory restrictions and limitations on our ability to distribute earnings from our PRC subsidiariesto the parent company and U.S.investors o
145、r the ability of ZTO Express to settle amounts owned under the VIE agreements.ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.Table of Contents11ITEM 3.KEY INFORMATIONA.Our Selected Consolidated Financial DataThe
146、following summary consolidated statements of comprehensive income data for the years ended December 31,2021,2022 and 2023,summary consolidated balance sheet data as of December 31,2022 and 2023 and summary consolidated cash flow data for the years endedDecember 31,2021,2022 and 2023 have been derive
147、d from our audited consolidated financial statements included elsewhere in this annual report.The summary consolidated statements of comprehensive income data for the years ended December 31,2019 and 2020,the summary consolidatedbalance sheet data as of December 31,2019,2020 and 2021 and the summary
148、 consolidated cash flow data for the years ended December 31,2019and 2020 have been derived from our audited consolidated financial statements that are not included in this annual report.Our consolidatedfinancial statements are prepared and presented in accordance with accounting principles generall
149、y accepted in the United States of America,orU.S.GAAP.You should read the summary consolidated financial information in conjunction with our consolidated financial statements and relatednotes and“Item 5.Operating and Financial Review and Prospects”included elsewhere in this annual report.Our histori
150、cal results are notnecessarily indicative of our results expected for future periods.Years Ended December 31,200222023 RMB RMB RMB RMB RMB US$(in thousands,except for share and per share data)Selected Consolidated Comprehensive Income Data:Revenues 22,109,946 25,214,290 30,405,839 35,376,
151、996 38,418,915 5,411,191Cost of revenues(15,488,778)(19,377,184)(23,816,462)(26,337,721)(26,756,389)(3,768,559)Gross profit 6,621,168 5,837,106 6,589,377 9,039,275 11,662,526 1,642,632Operating income(expenses):Selling,general and Administrative(1,546,227)(1,663,712)(1,875,869)(2,077,372)(2,425,253)
152、(341,590)Other operating income,net 387,890 580,973 789,503 774,578 770,651 108,544Total operating expenses(1,158,337)(1,082,739)(1,086,366)(1,302,794)(1,654,602)(233,046)Income from operations 5,462,831 4,754,367 5,503,011 7,736,481 10,007,924 1,409,586Other income(expenses):Interest income 585,404
153、 442,697 363,890 503,722 706,765 99,546Interest expense(35,307)(126,503)(190,521)(289,533)(40,780)(Loss)/gain from fair value changes of financial instruments(877)52,909 46,246 164,517 23,172(Loss)/gain on disposal of equity investees and subsidiary(2,860)1,086 2,357 69,598 5,485 773Impairment of in
154、vestment in equity investee(56,026)(26,328)Unrealized gain from investment in equity investee 754,468Foreign currency exchange gain/(loss)13,301 (127,180)(56,467)147,254 93,543 13,175Income before income tax and share of loss in equity methodinvestments 6,757,118 5,034,786 5,739,197 8,286,452 10,688
155、,701 1,505,472Income tax expense(1,078,295)(689,833)(1,005,451)(1,633,330)(1,938,600)(273,046)Share of(loss)/gain in equity method investments(7,556)(18,507)(32,419)5,844 4,356 614Net Income 5,671,267 4,326,446 4,701,327 6,658,966 8,754,457 1,233,040Net loss/(income)attributable to noncontrolling in
156、terests 2,878 (14,233)53,500 150,090 (5,453)(768)Net income attributable to ZTO Express(Cayman)Inc.5,674,145 4,312,213 4,754,827 6,809,056 8,749,004 1,232,272Net income attributable to ordinary shareholders 5,674,145 4,312,213 4,754,827 6,809,056 8,749,004 1,232,272Net earnings per share/ADS attribu
157、table to ordinary shareholders Basic 7.24 5.42 5.80 8.41 10.83 1.53Diluted 7.23 5.42 5.80 8.36 10.60 1.49Weighted average shares used in calculating net earnings per ordinaryshare/ADS Basic 784,007,583 796,097,532 819,961,265 809,442,862 807,739,616 807,739,616Diluted 784,331,120 796,147,504 819,961
158、,265 820,273,531 838,948,683 838,948,683Other comprehensive income(loss),net of tax of nil:Foreign currency translation adjustment 104,004 (771,291)(146,533)155,432 (104,052)(14,655)Comprehensive income attributable to ZTO Express(Cayman)Inc.5,778,149 3,540,922 4,608,294 6,964,488 8,644,952 1,217,61
159、7Table of Contents12As of December 31,200222023 RMB RMB RMB RMB RMB US$(in thousands)Selected Consolidated Balance Sheet Data:Current assets:Cash and cash equivalents 5,270,204 14,212,778 9,721,225 11,692,773 12,333,884 1,737,191Short-term investment 11,113,217 3,690,402 2,845,319 5,753,4
160、83 7,454,633 1,049,963Advances to suppliers 438,272 589,042 667,855 861,573 821,942 115,768Prepayments and other current assets 1,964,506 2,334,688 3,142,368 3,146,378 3,772,377 531,328Non-current assets:Property and equipment,net 12,470,632 18,565,161 24,929,897 28,813,204 32,181,025 4,532,603Goodw
161、ill 4,241,541 4,241,541 4,241,541 4,241,541 4,241,541 597,409Total assets 45,890,502 59,204,750 62,772,343 78,523,586 88,465,221 12,460,066Liabilities and equity Current liabilities:Short-term bank borrowings 1,432,929 3,458,717 5,394,423 7,765,990 1,093,817Other current liabilities 3,552,288 4,487,
162、084 5,794,380 6,724,743 7,236,716 1,019,271Total liabilities 7,487,105 10,105,052 13,844,762 24,051,116 28,184,813 3,969,748Total liabilities and equity 45,890,502 59,204,750 62,772,343 78,523,586 88,465,221 12,460,066Years Ended December 31,200222023 RMB RMB RMB RMB RMB US$(in thousands)
163、Selected Consolidated Cash Flow Data:Net cash provided by operating activities 6,304,186 4,950,749 7,220,217 11,479,308 13,360,967 1,881,851Net cash used in investing activities(3,664,213)(3,549,341)(8,756,533)(16,041,890)(12,252,751)(1,725,762)Net cash(used in)/provided by financing activities(1,98
164、2,306)8,337,407 (2,903,985)7,058,202 (769,836)(108,429)Effect of exchange rate changes on cash,cash equivalents and restrictedcash(3,207)(656,137)(150,430)338,106 109,843 15,471Net increase/(decrease)in cash,cash equivalents and restricted cash 654,460 9,082,678 (4,590,731)2,833,726 448,223 63,131Ca
165、sh,cash equivalents and restricted cash at beginning of year 4,622,954 5,277,414 14,360,092 9,769,361 12,603,087 1,775,107Cash,cash equivalents and restricted cash at end of year 5,277,414 14,360,092 9,769,361 12,603,087 13,051,310 1,838,238Table of Contents13Condensed Consolidating Financial Inform
166、ation of ZTO Express(Cayman)Inc.The following table presents the condensed consolidating balance sheet data for ZTO Express(Cayman)Inc.,the VIE and VIEs subsidiaries,andother entities as of the dates presented.For the purpose of this presentation,(i)the intercompany transactions among entities withi
167、n our subsidiaries oramong entities within the VIE and VIEs subsidiaries were eliminated;and(ii)the equity method is used to account for ZTO Express(Cayman)Inc.sinvestments in our subsidiaries and our subsidiarys investment in the VIE,as presented below under“Investments in consolidated subsidiaries
168、,VIE andother equity investees.”As of December 31,2023ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)AssetsCurrent assets:Cash and cash equivalents 8,881 9,516,208 2,808,795 12,333,884Restricted cash 569,244 117,324 686,568Accounts receiva
169、ble,net 213,351 359,207 572,558Financing receivables,net 180,021 955,424 1,135,445Short-term investment 1,020,094 5,886,266 548,273 7,454,633Inventories 7,669 20,405 28,074Advances to suppliers 739,690 82,252 821,942Prepayments and other current assets 1,662,952 2,109,425 3,772,377Amounts due from r
170、elated parties outside the consolidated group 124,640 23,427 148,067Investments in equity investees including subsidiaries and VIE,and amounts duefrom subsidiaries and VIE 64,660,093 15,134,775 10,556,052(90,350,920)Investment in equity investees 1,144,479 2,058,375 252,265 3,455,119Property and equ
171、ipment,net 26,252,559 5,928,466 32,181,025Land use rights,net 4,402,516 1,234,585 5,637,101Intangible assets,net 23,240 23,240Operating lease right-of-use assets 36,546 635,647 672,193Goodwill 84,430 4,157,111 4,241,541Deferred tax assets 579,011 300,761 879,772Long-term investment 69,629 11,601,252
172、 500,000 12,170,881Long-term financing receivables,net 73,589 891,191 964,780Other non-current assets 567,080 134,678 701,758Amounts due from related parties outside the consolidated groups-non-current 584,263 584,263TOTAL ASSETS 66,903,176 80,297,677 31,615,288(90,350,920)88,465,221LiabilitiesCurre
173、nt liabilitiesShort-term bank borrowings 400,000 7,365,990 7,765,990Accounts payable 664,358 1,892,652 2,557,010Advances from customers 36,626 1,709,101 1,745,727Income tax payable 134,963 198,294 333,257Amounts due to related parties outside the consolidated group 37,662 197,021 234,683Amounts due
174、to related parties within the consolidated group 13,302,933(13,302,933)Operating lease liabilities,current 4,978 181,275 186,253Dividends payable 1,548 1,548Other current liabilities 70,333 2,735,803 4,430,580 7,236,716Non-current operating lease liabilities 31,568 424,311 455,879Deferred tax liabil
175、ities 556,229 81,971 638,200Convertible senior bond 7,029,550 7,029,550TOTAL LIABILITIES 7,101,431 17,905,120 16,481,195(13,302,933)28,184,813EquityOrdinary shares 525 17,845,730 600,000(18,445,730)525Additional paid-in capital 24,201,745 600,000 3,918,356(4,518,356)24,201,745Treasury shares,at cost
176、(510,986)(510,986)Retained earnings 36,301,185 44,419,495 10,620,516(55,040,011)36,301,185Accumulated other comprehensive loss(190,724)(956,110)956,110(190,724)Non-controlling interests 483,442(4,779)478,663Total Equity 59,801,745 62,392,557 15,134,093(77,047,987)60,280,408TOTAL LIABILITIES AND EQUI
177、TY 66,903,176 80,297,677 31,615,288(90,350,920)88,465,221Table of Contents14As of December 31,2022ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)AssetsCurrent assets:Cash and cash equivalents 70,937 8,869,361 2,752,475 11,692,773Restricted
178、 cash 895,483 895,483Accounts receivable,net 197,573 621,395 818,968Financing receivables,net 104,295 847,054 951,349Short-term investment 2,487,775 2,995,363 270,345 5,753,483Inventories 12,386 28,151 40,537Advances to suppliers 810,023 51,550 861,573Prepayments and other current assets 1,948,516 1
179、,197,862 3,146,378Amounts due from related parties outside the consolidated group 288,745 25,738 314,483Investments in equity investees including subsidiaries and VIE,andamounts due from subsidiaries and VIE 57,207,495 13,136,215 6,554,502(76,898,212)Investment in equity investees 1,116,085 2,490,76
180、7 343,692 3,950,544Property and equipment,net 22,897,182 5,916,022 28,813,204Land use rights,net 4,225,420 1,217,531 5,442,951Intangible assets,net 29,437 29,437Operating lease right-of-use assets 101,696 706,810 808,506Goodwill 84,430 4,157,111 4,241,541Deferred tax assets 313,539 436,558 750,097Lo
181、ng-term investment 6,622,660 699,885 7,322,545Long-term financing receivables,net 166,948 1,128,807 1,295,755Other non-current assets 434,390 382,449 816,839Amounts due from related parties outside the consolidated groups-non-current 577,140 577,140TOTAL ASSETS60,882,29267,201,56927,337,937(76,898,2
182、12)78,523,586LiabilitiesCurrent liabilitiesShort-term bank borrowings 5,394,423 5,394,423Accounts payable 594,928 1,607,764 2,202,692Notes payable 200,000 200,000Advances from customers 18,781 1,355,910 1,374,691Income tax payable 62,449 165,973 228,422Amounts due to related parties outside the cons
183、olidated group 9,368 39,770 49,138Amounts due to related parties within the consolidated group 12,365,223(12,365,223)Operating lease liabilities,current 12,919 216,799 229,718Dividends payable 1,497 1,497Other current liabilities 63,273 1,752,693 4,908,777 6,724,743Non-current operating lease liabil
184、ities 87,720 422,629 510,349Deferred tax liabilities 254,128 92,344 346,472Convertible senior bond 6,788,971 6,788,971TOTAL LIABILITIES 6,853,741 15,358,209 14,204,389(12,365,223)24,051,116EquityOrdinary shares 535 17,155,492 600,000(17,755,492)535Additional paid-in capital 26,717,727 600,000 3,918,
185、356(4,518,356)26,717,727Treasury shares,at cost(2,062,530)(2,062,530)Retained earnings 29,459,491 32,950,608 8,617,859(41,568,467)29,459,491Accumulated other comprehensive loss(86,672)690,674(690,674)(86,672)Non-controlling interests 446,586(2,667)443,919Total Equity 54,028,551 51,843,360 13,133,548
186、(64,532,989)54,472,470TOTAL LIABILITIES AND EQUITY 60,882,292 67,201,569 27,337,937(76,898,212)78,523,586Table of Contents15 As of December 31,2021 ZTO Express VIE and VIEs Consolidated(Cayman)Inc.SubsidiariessubsidiariesEliminationTotalRMB(in thousands)AssetsCurrent assets:Cash and cash equivalents
187、 621,034 8,169,249 930,942 9,721,225Restricted cash 27,736 27,736Accounts receivable,net 262,167 671,277 933,444Financing receivables,net 133,541 977,920 1,111,461Short-term investment 196,462 2,328,857 320,000 2,845,319Inventories 52,747 30,214 82,961Advances to suppliers 612,842 55,013 667,855Prep
188、ayments and other current assets 1,218,172 1,924,196 3,142,368Amounts due from related parties outside the consolidated group 96,288 37,702 133,990Investments in equity investees including subsidiaries and VIE,and amounts due fromsubsidiaries and VIE 47,472,836 10,685,659 402,488(58,560,983)Investme
189、nt in equity investees 1,027,241 2,402,827 300,380 3,730,448Property and equipment,net 19,063,363 5,866,534 24,929,897Land use rights,net 4,141,241 1,194,308 5,335,549Intangible assets,net 35,634 35,634Operating lease right-of-use assets 26,407 870,831 897,238Goodwill 84,430 4,157,111 4,241,541Defer
190、red tax assets 284,139 650,709 934,848Long-term investment 1,214,500 1,214,500Long-term financing receivables,net 295,953 1,117,003 1,412,956Other non-current assets 377,643 384,630 762,273Amounts due from related parties outside the consolidated groups-non-current 611,100 611,100TOTAL ASSETS 49,317
191、,573 52,124,495 19,891,258(58,560,983)62,772,343LiabilitiesCurrent liabilitiesShort-term bank borrowings 637,260 2,821,457 3,458,717Accounts payable 400,880 1,556,649 1,957,529Notes payable 45,000 129,920 174,920Advances from customers 12,752 1,213,797 1,226,549Income tax payable 86,789 86,789Amount
192、s due to related parties outside the consolidated group 8,352 14,434 22,786Amounts due to related parties within the consolidated group 3,095,386(3,095,386)Operating lease liabilities,current 12,022 238,973 250,995Acquisition consideration payables 22,942 22,942Dividends payable 708 708Other current
193、 liabilities 42,358 3,196,742 2,555,280 5,794,380Non-current operating lease liabilities 22,351 533,740 556,091Deferred tax liabilities 179,813 112,543 292,356TOTAL LIABILITIES 680,326 7,083,029 9,176,793(3,095,386)13,844,762EquityOrdinary shares 535 15,084,658 600,000(15,684,658)535Additional paid-
194、in capital 28,229,026 600,000 3,923,412(4,523,412)28,229,026Treasury shares,at cost(2,067,009)(2,067,009)Retained earnings 22,716,799 28,414,359 6,162,247(34,576,606)22,716,799Accumulated other comprehensive loss(242,104)680,921(680,921)(242,104)Non-controlling interests 261,528 28,806 290,334Total
195、Equity 48,637,247 45,041,466 10,714,465(55,465,597)48,927,581TOTAL LIABILITIES AND EQUITY 49,317,573 52,124,495 19,891,258(58,560,983)62,772,343Table of Contents16The following table presents the condensed consolidating operations data for ZTO Express(Cayman)Inc.,the VIE and VIEs subsidiaries,and ot
196、her entities for the periods presented.For the purpose of this presentation,(i)the intercompany transactions among entities within oursubsidiaries or among entities within the VIE and VIEs subsidiaries were eliminated;and(ii)the equity method is used to account for the interestsof ZTO Express(Cayman
197、)Inc.in earnings of our subsidiaries,and the interests of our subsidiary in earnings of the VIE,as presented below under“Share of profit/(loss)in subsidiaries,consolidated VIE,and equity method investments.”For the Year Ended December 31,2023ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiari
198、es subsidiaries Elimination TotalRMB(in thousands)Revenue 19,966,654 31,276,014 (12,823,753)38,418,915Cost of revenues (12,858,581)(27,791,654)13,893,846 (26,756,389)Gross profit 7,108,073 3,484,360 1,070,093 11,662,526Operating(expenses)/incomeSelling,general and administrative(260,613)(1,292,702)(
199、962,378)90,440(2,425,253)Other operating income,net 52,968 1,857,145 21,071(1,160,533)770,651Other income/(expenses)(23,907)605,560 99,124 680,777Income before income tax and share of profit/(loss)insubsidiaries,consolidated VIE,and equity methodinvestments(231,552)8,278,076 2,642,177 10,688,701Inco
200、me tax expense(26,270)(1,318,961)(593,369)(1,938,600)Share of profit/(loss)in subsidiaries,consolidated VIE,andequity method investments 9,006,826 2,054,159(44,856)(11,011,773)4,356Net income 8,749,004 9,013,274 2,003,952(11,011,773)8,754,457 For the Year Ended December 31,2022ZTO ExpressVIE and VIE
201、sConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)Revenue 17,157,364 31,981,790 (13,762,158)35,376,996Cost of revenues (12,735,655)(28,097,911)14,495,845 (26,337,721)Gross profit 4,421,709 3,883,879 733,687 9,039,275Operating(expenses)/incomeSelling,general and ad
202、ministrative(197,209)(1,285,856)(685,546)91,239(2,077,372)Other operating income,net 59,881 1,411,343 128,280(824,926)774,578Other income/(expenses)(25,490)685,980(110,519)549,971Income before income tax and share of profit/(loss)insubsidiaries,consolidated VIE,and equity methodinvestments(162,818)5
203、,233,176 3,216,094 8,286,452Income tax expense(19,987)(855,788)(757,555)(1,633,330)Share of profit/(loss)in subsidiaries,consolidated VIE,andequity method investments 6,991,861 10,742(4,898)(6,991,861)5,844Net income 6,809,056 4,388,1302,453,641(6,991,861)6,658,966Table of Contents17 For the Year En
204、ded December 31,2021ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)Revenue 15,651,997 29,721,135 (14,967,293)30,405,839Cost of revenues(10,882,964)(27,900,791)14,967,293(23,816,462)Gross profit 4,769,033 1,820,344 6,589,377Operating(expens
205、es)/incomeSelling,general and administrative(251,146)(1,203,138)(492,962)71,377(1,875,869)Other operating income,net 54,620 253,530 552,730(71,377)789,503Other income/(expenses)29,865 272,703(66,382)236,186Income before income tax and share of profit/(loss)insubsidiaries,consolidated VIE,and equity
206、methodinvestments(166,661)4,092,128 1,813,730 5,739,197Income tax expense(23,101)(407,123)(575,227)(1,005,451)Share of profit/(loss)in subsidiaries,consolidated VIE,andequity method investments 4,944,589 1,227,540(979)(6,203,569)(32,419)Net income 4,754,827 4,912,545 1,237,524 (6,203,569)4,701,327Th
207、e following table presents condensed consolidating cash flow data for ZTO Express(Cayman)Inc.,the VIE and VIEs subsidiaries,andother entities for the years ended presented.For the purpose of this presentation,the intercompany transactions among entities within oursubsidiaries or among entities withi
208、n the VIE and VIEs subsidiaries were eliminated.For the Year Ended December 31,2023ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)Net cash provided by/(used in)operating activities 26,445 14,596,176(1,261,654)13,360,967Net cash(used in)/pr
209、ovided by investing activities 3,027,005 (13,182,500)(536,180)(1,561,076)(12,252,751)Net cash(used in)/provided by financing activities(3,096,040)(1,206,350)1,971,478 1,561,076 (769,836)For the Year Ended December 31,2022ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimi
210、nation TotalRMB(in thousands)Net cash provided by operating activities 15,638 10,658,257 805,413 11,479,308Net cash(used in)/provided by investing activities(4,911,571)(12,189,004)(1,521,688)2,580,373 (16,041,890)Net cash provided by/(used in)financing activities 4,222,198 2,878,569 2,537,808 (2,580
211、,373)7,058,202 For the Year Ended December 31,2021ZTO ExpressVIE and VIEsConsolidated (Cayman)Inc.Subsidiaries subsidiaries Elimination TotalRMB(in thousands)Net cash provided by operating activities 88,876 6,155,051 976,290 7,220,217Net cash provided by/(used in)investing activities 1,679,330 (10,8
212、08,233)(877,285)1,249,655 (8,756,533)Net cash(used in)/provided by financing activities(4,518,056)2,808,514 55,212 (1,249,655)(2,903,985)B.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.Table of Contents18D.Risk FactorsSUMMARY OF RISK FACTORSI
213、nvesting in our Class A ordinary shares and/or ADSs involves significant risks.You should carefully consider all of the information inthis annual report before making an investment in our Class A ordinary shares and/or ADSs.The following list summarizes some,but not all,ofthese risks.Risks Related t
214、o Our Business and IndustryOur business and growth are highly dependent on the development of the e-commerce industry and the emergence of New Retail inChina.Our business operations have relied on,and are likely to continue to be significantly influenced by,certain third-party e-commerceplatforms.We
215、 face risks associated with our network partners and their employees and personnel.We face intense competition,which could adversely affect our results of operations and market share.Any service disruptions experienced by our sorting hubs or the outlets operated by our network partners may adversely
216、 affect ourbusiness operations.Our technology systems are critical to our business operations and growth prospects,and failure to continue to improve,andeffectively utilize,our technology systems or develop new technologies could harm our business operations,reputation and growthprospects.We operate
217、 in a labor-intensive industry and an overall contraction in the availability of workers in the labor market or any laborunrest may negatively affect our business.We engage outsourcing firms to provide personnel for our operations.We have limited control over these personnel and may be liablefor vio
218、lations of applicable PRC labor laws and regulations accordingly.We face risks associated with parcels handled and transported through our network and risks associated with transportation.Our past growth rates may not be indicative of our future growth,and if we are unable to manage our growth or ex
219、ecute our strategieseffectively,our business and prospects may be materially and adversely affected.Table of Contents19Risks Related to Our Corporate StructureZTO is a Cayman Islands holding company with no equity ownership in the VIE and we conduct our operations in China primarilythrough(i)our PRC
220、 subsidiaries and(ii)the VIE,with which we have maintained contractual arrangements.Investors in our ADSsand/or Class A ordinary shares thus are not purchasing equity interest in our operating entities in China but instead are purchasingequity interest in a Cayman Islands holding company.If the PRC
221、government finds that the agreements that establish the structure foroperating our business do not comply with the PRC laws and regulations,or if these regulations or their interpretations change in thefuture,we could be subject to severe penalties or be forced to relinquish our interests in those o
222、perations.Our holding company,ourPRC subsidiaries,the VIE,and investors of ZTO face uncertainty about potential future actions by the PRC government that couldaffect the enforceability of the contractual arrangements with the VIE and,consequently,significantly affect the financialperformance of the
223、VIE and our company as a whole.See“Item 3.Key InformationD.Risk FactorsRisks Related to OurCorporate StructureIf the PRC government finds that the agreements that establish the structure for operating certain of ouroperations in China do not comply with PRC regulations relating to the relevant indus
224、tries,or if these regulations or the interpretationof existing regulations change in the future,we could be subject to severe penalties or be forced to relinquish our interests in thoseoperations”on pages 41-42 of this annual report.Risks Related to Doing Business in ChinaChanges in Chinas economic,
225、political or social conditions or government policies could have a material adverse effect on ourbusiness and operations.See“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaChanges in Chinas economic,political or social conditions or government policies could have a mater
226、ial adverse effect on ourbusiness and operations”on page 45 of this annual report.PRC governments significant authority in regulating our operations and its oversight and control over securities offerings conductedoverseas by,and foreign investment in,China-based issuers could significantly limit or
227、 completely hinder our ability to offer orcontinue to offer securities to investors.Implementation of industry-wide regulations in this nature may cause the value of suchsecurities to significantly decline.See“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaThe PRC govern
228、ments significant oversight and discretion over our business operation could result in a material adversechange in our operations and the value of our ADSs and ordinary shares”on page 46 of this annual report.Risks and uncertainties arising from the legal system in the jurisdiction where we operate,
229、including risks and uncertainties regardingthe enforcement of laws and quickly evolving rules and regulations in the jurisdiction where we operate,could result in a materialadverse change in our operations and the value of our ADSs.See“Item 3.Key InformationD.Risk FactorsRisks Related toDoing Busine
230、ss in ChinaUncertainties with respect to the legal system in the jurisdiction where we operate could adverselyaffect us”on page 46 of this annual report.We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financingrequirements we may have,and
231、any limitation on the ability of our PRC subsidiaries to make payments to us could have a materialand adverse effect on our ability to conduct our business.See“Item 3.Key InformationD.Risk FactorsRisks Related toDoing Business in ChinaWe may rely on dividends and other distributions on equity paid b
232、y our PRC subsidiaries to fund anycash and financing requirements we may have,and any limitation on the ability of our PRC subsidiaries to make payments to uscould have a material and adverse effect on our ability to conduct our business”on page 48 of this annual report.The PCAOB had historically be
233、en unable to inspect our auditor in relation to their audit work performed for our financial statementsand the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of suchinspections.See“Item 3.Key InformationD.Risk FactorsRisks Relate
234、d to Doing Business in ChinaThe PCAOB hadhistorically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inabilityof the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspect
235、ions”onpage 57 of this annual report.Table of Contents20Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect orinvestigate completely auditors located in China.The delisting of the ADSs,or the threat of their being delisted,may
236、materially andadversely affect the value of your investment.See“Item 3.Key InformationD.Risk FactorsRisks Related to DoingBusiness in ChinaOur ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOBis unable to inspect or investigate completely auditors lo
237、cated in China.The delisting of the ADSs,or the threat of their beingdelisted,may materially and adversely affect the value of your investment”on page 57 of this annual report.Risks Related to Our Shares and ADSsThe trading prices of our ADSs and Class A ordinary shares have been and are likely to c
238、ontinue to be volatile,which could result insubstantial losses to holders of our Class A ordinary shares and/or ADSs.Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourageothers from pursuing any change of control trans
239、actions that holders of our Class A ordinary shares and ADSs may view asbeneficial.We are a“controlled company”within the meaning of the NYSE Listed Company Manual and,as a result,may rely on exemptionsfrom certain corporate governance requirements that provide protection to shareholders of other co
240、mpanies.RISKS RELATED TO OUR BUSINESS AND INDUSTRYOur business and growth are highly dependent on the development of the e-commerce industry and the emergence of New Retail in China.We generate a significant portion of our parcel volume by serving end customers that conduct business on various e-com
241、merce platformsin China,and our end customers rely on our services to fulfill orders placed by consumers on such platforms.In December 2023,more than 90%ofour total parcel volume was attributable to e-commerce platforms.Our business and growth are therefore highly dependent on the viability andprosp
242、ects of the e-commerce industry in China.Any uncertainties relating to the growth,profitability and regulatory regime of the e-commerce industry in China could have a significantimpact on us.The development of the e-commerce industry in China is affected by a number of factors,most of which are beyo
243、nd our control.These factors include:the growth of broadband and mobile internet penetration and usage in China;the consumption power and disposable income of e-commerce consumers in China,as well as changes in demographics andconsumer tastes and preferences;the availability,reliability and security
244、 of e-commerce platforms;the selection,price and popularity of products offered on e-commerce platforms;the potential impact of health epidemics,such as the COVID-19 pandemic,on our business operations and the economy in China andelsewhere generally;the emergence of alternative channels or business
245、models that better suit the needs of consumers in China;the development of fulfillment,payment and other ancillary services associated with e-commerce;the continued integration of online and offline retail channels by large e-commerce platforms and various retail merchants to reducecustomer acquisit
246、ion costs and enhance customers shopping experience,a phenomenon knows as“New Retail”;andchanges in laws and regulations,as well as government policies,that govern the e-commerce industry in China.Table of Contents21The e-commerce industry is highly sensitive to changes in macroeconomic conditions,a
247、nd e-commerce spending tends to decline duringrecessionary periods.Many factors beyond our control,including inflation and deflation,fluctuations in currency exchange rates,volatility of stockand property markets,interest rates,tax rates and other government policies and changes in unemployment rate
248、s can adversely affect consumerconfidence and spending behavior on e-commerce platforms,which could in turn materially and adversely affect our growth and profitability.Inaddition,unfavorable changes in domestic and international politics,including military conflicts,political turmoil and social ins
249、tability,may alsoadversely affect consumer confidence and spending,which could in turn negatively impact our growth and profitability.Our business operations have relied on,and are likely to continue to be significantly influenced by,certain third-party e-commerce platforms.Our end customers include
250、 many e-commerce merchants who sell products on third-party e-commerce platforms,such as the Alibabaecosystem.Although such third-party e-commerce platforms are not our direct customers or end customers,they have significant influence overhow transactions take place on their e-commerce platforms,inc
251、luding how purchase orders are fulfilled by indicating to consumers the preferredexpress delivery companies for orders placed.As a result,our business operations have been and for the foreseeable future will continue to besignificantly influenced by decisions made by such third-party e-commerce plat
252、forms.For example,in order to maintain and foster our cooperationwith Alibaba,we may have to accommodate the demands and requirements from various players in the Alibaba ecosystem,such as the adoption ofdigital waybills initiated by Cainiao Network,a central logistics information system and solution
253、s provider affiliated with Alibaba.Such demandsand requirements may increase the cost of our business or weaken our connection with our end customers.In May 2018,Alibaba and Cainiao Network entered into a strategic transaction with us.Pursuant to the transaction terms,certain investorsled by Alibaba
254、 and Cainiao Network invested US$1.38 billion in our company in exchange for approximately 10%of our equity interest at thattime and obtained certain shareholder rights in our company.The transaction was completed in June 2018.However,Alibaba has also invested,andmay invest in the future,in our comp
255、etitors.Alibaba may encourage merchants on its platforms to choose other investees services over ours for itsown business reasons.Alibaba has also built an in-house delivery network to serve its e-commerce platforms and may devote more resources todeveloping its in-house delivery network.If Alibaba
256、encourages the use of other delivery networks or its own delivery network over ours,ourbusiness may be negatively impacted,and our results of operations may be materially and adversely affected.We face risks associated with our network partners and their employees and personnel.As of December 31,202
257、3,we had over 31,000 pickup/delivery outlets and over 6,000 direct network partners under our ZTO brand.Werely on these network partners to directly interact with and serve end customers.However,the interests of a network partner may not be entirelyaligned with ours or with those of our other networ
258、k partners at all times.We manage our business relationships with direct network partnersthrough contractual agreements,which provide for performance incentives along with periodic evaluations.Our direct network partners may sub-contract part of their business to their cooperation partners,which we
259、refer to as our indirect network partners.The sub-contracting to indirectnetwork partners is subject to our consent.However,we may not be able to manage the network partners as effectively as if we had full ownershipof them or operated their business directly.In particular,we do not enter into agree
260、ments with our indirect network partners and are thereforeunable to exert a significant degree of influence over them.Our network partners and their employees have a significant number of direct interactions with our end customers,and their performanceis directly associated with our brand.We do not
261、directly supervise the employees of our network partners in providing services to end customers.Our existing network-wide service standards and periodic training to the personnel of our network partners may not be sufficient for us toeffectively monitor,maintain and improve their service quality or
262、their general conduct towards end customers.In the event of any unsatisfactoryperformance or unlawful behavior by our network partners and/or their employees towards end customers,we may experience service disruptionsand our reputation may be materially and adversely affected.We may voluntarily,or u
263、pon the request of applicable authorities,conductinvestigations on such event and adopt remediation/preventive measures.Such efforts may not be limited to the relevant parties,but applicablethroughout our network,which could cause temporary diversion from the ordinary course of our and our network p
264、artners business.Furthermore,our network partners may fail to implement sufficient control over the pickup and delivery personnel who work at the outlets in connection withtheir conduct,such as proper collection and handling of parcels and delivery service fees,adherence to customer privacy standard
265、s and timelydelivery of parcels.As a result,we or our network partners may suffer financial losses,incur liabilities and suffer reputational damage in the eventof theft or late delivery of parcels,embezzlement of delivery service fees,mishandling of customer privacy,misconduct or unlawful behaviorto
266、wards end customers,or any other behavior that reflects adversely on our business and reputation.Table of Contents22Suspension or termination of a network partners services in a particular geographic area may result in a significant interruption or failureto provide services in the corresponding geo
267、graphic area.A network partner may suspend or terminate its services voluntarily or involuntarily dueto various reasons,including a disagreement or dispute with us,failure to make a profit,failure to obtain requisite approvals,failure to maintainlicenses or permits or to comply with other government
268、al regulations,and events beyond our or its control,such as inclement weather,naturaldisasters,transportation interruptions or labor unrest or shortage.See“Item 3.Key InformationD.Risk FactorsRisks Related to Our Businessand IndustryAny service disruptions experienced by our sorting hubs or the outl
269、ets operated by our network partners may adversely affect ourbusiness operations.”Due to the intense competition in Chinas express delivery industry,our existing network partners may also choose todiscontinue their cooperation with us and work with our competitors instead.We may not be able to promp
270、tly replace these network partners orfind alternative ways to provide services in a timely,reliable and cost-effective manner,or at all.As a result of any service disruptions associatedwith our network partners,our customer satisfaction,reputation,operations and financial performance may be material
271、ly and adversely affected.We face intense competition,which could adversely affect our results of operations and market share.We operate in a highly competitive and consolidating industry.We compete primarily with leading domestic express delivery companies,including YTO Express,STO Express,Yunda Ex
272、press,J&T Express,SF Express,JD Logistics,and the express delivery services provided byChina Post,such as EMS.We compete with them based on a number of factors,including network stability,business model,operationalcapabilities,infrastructure capacity,cost control and service quality.We have historic
273、ally experienced a decline in the delivery service marketprices and we may continue to face downward pricing pressure.If we and our network partners cannot effectively control our costs to remaincompetitive,our market share and revenue may decline.Additionally,if we have to subsidize our network par
274、tners to increase our networkpartners competitiveness,our gross margin may decline.Our competitors may attempt to gain market share by lowering their rates,especiallyduring economic slowdowns or in key regional markets.Such rate reductions may limit our ability to maintain or increase our rates and
275、operatingmargins and inhibit our ability to grow our business.In addition,major e-commerce platforms,such as Alibaba,Pinduoduo and JD.com,may choose to build or further develop theirrespective in-house delivery capabilities to serve their logistics needs and compete with us,which may significantly a
276、ffect our market share andtotal parcel volume.Furthermore,as we diversify our service offering and further expand our customer base,we may face competition fromexisting or new players in new sectors we choose to enter.In particular,we or our network partners may face competition from existing or new
277、 last-mile delivery service providers which may expand their service offerings to include express delivery or adopt a business model disruptive to ourbusiness and compete with our network partners for delivery personnel.Similarly,existing players in an adjacent or sub-market may choose toleverage th
278、eir existing infrastructure and expand their services to serve our customers.If these players succeed in doing so,our market share maysuffer and our business and financial performance may be significantly and adversely affected.Certain of our current and potential competitors,as well as internationa
279、l logistics operators with a presence in China,may havesignificantly greater resources,longer operating histories,larger customer bases and greater brand recognition than us.Other current and potentialcompetitors may be acquired by,receive investment from,or enter into strategic relationships with,e
280、stablished and well-financed companies orinvestors which would help enhance their competitiveness.Moreover,competitors may adopt more aggressive pricing policies or devote greaterresources to marketing and promotional campaigns than us.We may not be able to compete successfully against current or fu
281、ture competitors,andcompetitive pressures may have a material and adverse effect on our business,financial condition and results of operations.Table of Contents23Any service disruptions experienced by our sorting hubs or the outlets operated by our network partners may adversely affect our businesso
282、perations.Our daily operations rely heavily on the orderly performance of our sorting hubs and the pickup and delivery outlets operated by ournetwork partners.Any service disruption at our sorting hubs or the pickup and delivery outlets as a result of a failure or disruption of the automatedfaciliti
283、es,under-capacity during peak parcel volume periods,force majeure,third-party sabotage,disputes,employee delinquency or strike,government inspections or regulatory orders mandating service halt or temporary or permanent shutdown would adversely impact our businessoperations.For example,any ad hoc re
284、gulatory inspection by local authorities,such as environmental safety,work safety,equipment safety,firesafety and security checks,on any of our facilities or our network partners service outlets may cause business disruptions and suspensions,delaythe processing and delivery of parcels and penalties.
285、The outbreak of an epidemic,such as the outbreak of COVID-19,may also cause a significantdisruption to our business.For instance,our headquarters,dozens of our sorting hubs and thousands of service outlets across the country suspendedoperations from time to time in 2022 due to COVID-19 resurgences c
286、aused by the Omicron variants,resulting in delays and stoppages of expressdelivery and a lower-than-expected parcel volume in 2022.The heavy rainfalls and floods in Hebei province in July and August 2023 causedtemporary closure of our facilities,sorting hubs and service outlets in Hebei province.If
287、we are required by governmental authorities to implementchanges to our facilities or relocate any of our facilities or our network partners service outlets,our and our network partners operating costs mayincrease as a result.In the event of service disruptions at our sorting hubs or outlets,parcel s
288、orting or parcel pickup and delivery may be delayed,suspended or stopped.Such parcels would need to be redirected to other nearby sorting hubs or outlets,and such rerouting of parcels will likelyincrease risks of delay and delivery errors.At the same time,increased parcel sorting or pickup and deliv
289、ery pressure on nearby sorting hubs oroutlets may negatively impact their performance and result in adverse effects to our entire network.Any of the foregoing events may result insignificant operational interruptions and slowdowns,customer complaints and reputational damage.Our technology systems ar
290、e critical to our business operations and growth prospects,and failure to continue to improve,and effectively utilize,our technology systems or develop new technologies could harm our business operations,reputation and growth prospects.The satisfactory performance,reliability and availability of our
291、 technology systems is critical to our ability to deliver high-qualitycustomer services.We rely on the Zhongtian system,a set of centralized technology systems that we developed,which comprises our operationalmanagement system,our network management system,our settlement system,our finance system an
292、d other systems and mobile apps connectingour network partners to efficiently operate our network.These integrated systems support the smooth performance of certain key functions of ourbusiness,such as order tracking,fleet dispatch and management,route planning,and fee settlement.In addition,the mai
293、ntenance and processing ofvarious operating and financial data is essential to the day-to-day operation of our business and formulation of our strategies.Therefore,ourbusiness operations and growth prospects depend,in part,on our ability to maintain and make timely and cost-effective enhancements an
294、d upgradeto our technology systems and to introduce innovative additions to meet changing operational needs.Continued investment in informationtechnology and equipment to enhance operational efficiency and reliability is part of our growth strategy.While we have significantly increased ourspending o
295、n technology,such investment may not be sufficient to fully support our expanding business needs.Failure to maintain sufficientspending on technology systems could cause economic losses and put us at a disadvantage to our competitors.We can provide no assurance that wewill be able to keep up with te
296、chnological improvements or that technologies developed by others(including our competitors)will not render ourservices less competitive or attractive.Any issues impairing the functionality and effectiveness of our systems could result in unanticipated systemdisruptions,slower response time and impa
297、ired user experiences,as well as delays or inaccuracies in reporting operating and financial information.Any interruptions caused by telecommunications failures,computer viruses,hacking,or other attempts to harm our technologyinfrastructure could result in the unavailability or slowdown of our centr
298、alized system and significantly impact workflows throughout our entirenetwork.We can provide no assurance that our current security mechanisms will be sufficient to protect our technology systems from any third-party intrusions,viruses or hacker attacks,information or data theft or other similar act
299、ivities.Any such occurrences could disrupt our services,damage our reputation and harm our results of operations.Table of Contents24We operate in a labor-intensive industry and an overall contraction in the availability of workers in the labor market or any labor unrest maynegatively affect our busi
300、ness.Our business is labor-intensive.As of December 31,2023,we had a total of 23,554 employees and over 63,000 outsourced personnel.Afailure by us or our network partners to maintain a stable and dedicated workforce may result in disruption or delays in the services provided to endcustomers.We and o
301、ur network partners often need to hire additional or temporary workers to handle the significant increase in parcel volumefollowing special promotional events such as promotional campaigns on June 18,November 11 and December 12 of each year or during other peakseasons throughout the year.During thes
302、e periods we have observed an increasingly competitive and tight labor market.In general,this hasresulted in,and we expect will continue to result in,increased labor costs driven by higher salaries,social benefits and employee headcounts.Further,we and our network partners compete with other compani
303、es in our industry as well as other labor-intensive industries for labor,and such competition may affect the overall stability of our workforce and the performance of our network.For example,emerging disruptivebusiness models like intra-city delivery,which enables senders and recipients within the s
304、ame city to achieve rapid point-to-point delivery;oromni-channel delivery,which fulfills the logistics demands for omni-channel retailers and consumers,are likely to compete for pickup and deliverypersonnel with our network partners and service outlets.Some of our network partners or outlets may be
305、pressured to increase compensation andsocial welfare benefits for their employees,which may result in lower profitability and insufficient cashflow for our network partners or serviceoutlets.If our network partners or service outlets are unable to offer competitive salaries and benefits,or pay their
306、 employees on time or in full,they may lose their personnel,resulting in insufficient delivery resources,disgruntled employees,and lower delivery service quality in certain partsof our network.We and our network partners have been involved in labor disputes and penalties in the past,though none of t
307、hese,whether individually orin the aggregate,has had a material adverse impact on us.We and our network partners expect to continue to be involved in labor disputes fromtime to time,including involvement in various legal or administrative proceedings related to such disputes.Any labor unrest directe
308、d against us orour network partners could directly or indirectly prevent or hinder our normal business operations,and,if not resolved in a timely manner,lead todelays in fulfilling our customer orders and decreases in our revenue.Historically,we have experienced an incident where an employee strike
309、ofone of our network partners caused a prolonged service suspension in a southern city of China,and we cannot assure you that similar incidentswould not happen in the future.We and our network partners cannot always predict or control labor unrest,especially those involving labor notdirectly employe
310、d by us.Further,labor unrest may have a negative effect on general labor market conditions or result in changes to labor laws,which in turn could materially and adversely affect our business,financial condition and results of operations.We engage outsourcing firms to provide personnel for our operat
311、ions.We have limited control over these personnel and may be liable forviolations of applicable PRC labor laws and regulations accordingly.We engage outsourcing firms to provide a large number of personnel to work at our network facilities.As of December 31,2023,over63,000 outsourced personnel were
312、active in our operations.We enter into agreements with outsourcing firms and do not have any direct contractualrelationship with outsourced personnel,resulting in limited control over them.If any outsourced personnel fail to operate in accordance withinstructions,policies and business guidelines set
313、 forth by outsourcing firms based on our requirements,our market reputation,brand image andresults of operations could be materially and adversely affected.Table of Contents25Our agreements with the outsourcing firms may provide that we are not liable to the outsourced personnel.However,if the outso
314、urcingfirms violate any PRC labor laws or regulations or their employment agreements with the personnel,such personnel may file a claim against us asthey provide their services at our network facilities.As a result,we may incur legal liability,and our market reputation and brand image as well asour
315、business,financial condition and results of operations could be materially and adversely affected.We face risks associated with parcels handled and transported through our network and risks associated with transportation.We handle a large volume of parcels across our network,and face challenges with
316、 respect to the protection and inspection of these parcels.Parcels in our network may be stolen,damaged or lost for various reasons,and we and/or our network partners may face actual or alleged liabilityfor such incidents.In addition,we may fail to detect unsafe or prohibited/restricted items.There
317、have been incidents in the past where our networkpartners failed to strictly implement parcel screening procedures and allowed controlled items to be mailed through our network.Further,unsafeitems processed and transported through our network,such as flammables and explosives,toxic or corrosive item
318、s and radioactive materials,maydamage other parcels in our network,injure their recipients,harm our personnel and result in property damage.Failure to prevent prohibited orrestricted items from entering our network may result in administrative or criminal penalties as well as civil liability for per
319、sonal injury andproperty damage.The transportation of parcels involves inherent risks.We have a large number of vehicles and personnel involved in our transportationoperations at all times,who are subject to risks associated with transportation safety,including transportation related injuries and lo
320、sses.Forexample,our vehicles and personnel may be involved in traffic accidents from time to time,resulting in personal injury and loss or damage toparcels carried by them.In addition,frictions or disputes may occasionally arise from the direct interaction of our personnel with parcel sendersand rec
321、ipients,which may result in personal injury or property damage if such incidents escalate.The insurance policies we carry may not fullycover the damages caused by transportation related injuries or losses.Any of the foregoing could disrupt our services,cause us to incur substantial expenses and dive
322、rt the time and attention of ourmanagement.We and our network partners may face claims and incur significant liabilities if found liable or partially liable for any injuries,damages or losses.Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all.
323、Governmentauthorities may also impose significant fines on us or require us to adopt costly preventive measures.Furthermore,if our services are perceived tobe unsafe by our end customers,e-commerce platforms and consumers,our business volume may be significantly reduced,and our business,financial co
324、ndition and results of operations may be materially and adversely affected.Our past growth rates may not be indicative of our future growth,and if we are unable to manage our growth or execute our strategieseffectively,our business and prospects may be materially and adversely affected.Our past grow
325、th rates may not be indicative of our future growth.Our revenue growth in recent years was partly attributable to businessacquisition,such as the acquisition of China Oriental Express Co.,Ltd.The acquired business of China Oriental Express Co.,Ltd.provides freightforwarding services,and our revenue
326、generated from such services amounted to RMB1,529.6 million,RMB1,212.7 million and RMB906.8 million(US$127.7 million)in 2021,2022 and 2023,respectively,accounting for 5.0%,3.4%and 2.4%of our total revenues during the same periods,respectively.We plan to further expand our network in response to incr
327、easing customer and consumer needs,but we may not succeed in doing so.Even if we are able to expand our network as planned,we may not be able to continue to integrate and optimize a larger network.In addition,ascustomer and consumer needs at both the national and regional levels are continuously cha
328、nging,we may not be able to successfully anticipate orrespond to such changes.For example,we may experience shortages in our delivery capacity if our expansion fails to accurately and timely matchincreased customer and consumer demand.Furthermore,our anticipated future growth will likely place signi
329、ficant demands on our managementand operations.Our success in managing our growth will depend,to a significant degree,on the ability of our executive officers and other membersof our senior management to carry out our strategies effectively,our ability to balance the interests between us and our net
330、work partners as well asamong our network partners,and our ability to adapt,improve and develop our financial and management information systems,controls andprocedures.In addition,we will likely have to successfully recruit,train and manage more employees and improve and expand our sales andmarketin
331、g capabilities.If we are not able to manage our growth or execute our strategies effectively due to any of the foregoing reasons,ourexpansion may not be successful,and our business and prospects may be materially and adversely affected.Table of Contents26Our long-term growth and competitiveness are
332、highly dependent on our ability to control costs and maintain or raise prices.To maintain competitive pricing and enhance our profit margins,we must continually control our costs.Effective cost-control measureshave a direct impact on our financial condition and results of operations.We have adopted
333、various cost control measures and will continue to addnew ones as necessary and appropriate.For example,transportation costs can be reduced through the choice of appropriate vehicles andoptimization of transportation routes,and labor costs can be reduced through automation.However,the measures we have adopted or will adopt inthe future may not be as effective as expected in improving our financial