China Dhgate Group Limited 中國敦煌網集團有限公司 (Incorporated in the Cayman Islands with Limited Liability)

The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof. Application Proof

China DHgate Group Limited 中國敦煌網集團有限公司 (Incorporated in the Cayman Islands with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the Securities and Futures Commission (the “Commission”) solely for the purpose of providing information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with China DHgate Group Limited (the “Company”), its sponsor, advisers and members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this document;

(b) the publication of this document or any supplemental, revised or replacement pages on the Stock Exchange’s website does not give rise to any obligation of the Company, its sponsor, advisers or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with any offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual final listing document;

(d) this Application Proof is not the final listing document and may be updated or revised by the Company from time to time in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;

(g) neither the Company nor any of its affiliates, sponsor, advisers or members of its underwriting syndicate is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor would such application be accepted;

(i) the Company has not and will not register the securities referred to in this document under the United States Securities Act of 1933, as amended, or any state securities laws of the United States;

(j) as there may be legal restrictions on the distribution of this document or dissemination of any information contained in this document, you agree to inform yourself about and observe any such restrictions applicable to you; and

(k) the application to which this document relates has not been approved for listing and the Stock Exchange and the Commission may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on the Company’s prospectus registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period. THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

IMPORTANT

IMPORTANT: If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

China DHgate Group Limited 中國敦煌網集團有限公司 (Incorporated in the Cayman Islands with limited liability) [REDACTED] Number of [REDACTED] under the [REDACTED] : [REDACTED] Shares (subject to the [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED]) Number of [REDACTED] : [REDACTED] Shares (subject to [REDACTED] and the [REDACTED]) Maximum [REDACTED] : [REDACTED] per [REDACTED], plus brokerage of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005% (payable in full on application in Hong Kong dollars and subject to refund) Nominal value : US$[REDACTED] per Share Stock code : [REDACTED]

Sole Sponsor, [REDACTED], [REDACTED] and [REDACTED]

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. A copy of this document, having attached thereto the documents specified in “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix V, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility for the contents of this document or any of the other documents referred to above. The [REDACTED] is expected to be determined by agreement between the [REDACTED] (on behalf of the [REDACTED]) and our Company on or about [REDACTED] and, in any event, not later than [REDACTED].The[REDACTED] will be not more than [REDACTED] per [REDACTED] and is currently expected to be not less than [REDACTED] per [REDACTED], unless otherwise announced. Investors applying for the [REDACTED] must pay, on application, the maximum [REDACTED] of [REDACTED] per [REDACTED], together with brokerage of 1.0%, SFC transaction levy of 0.0027% and Stock Exchange trading fee of 0.005%, subject to refund if the [REDACTED] is less than [REDACTED] per [REDACTED]. If, for any reason, the [REDACTED] is not agreed between our Company and the [REDACTED] (on behalf of the [REDACTED]) on or before [REDACTED] (Hong Kong time), the [REDACTED] (including the [REDACTED]) will not proceed and will lapse. The [REDACTED] (on behalf of the [REDACTED]), with the consent of our Company, may reduce the indicative [REDACTED] range stated in this document and/or reduce the number of [REDACTED] being offered pursuant to the [REDACTED] at any time on or prior to the morning of the last day for lodging applications under the [REDACTED]. In such a case, notices of the reduction of the indicative [REDACTED] range and/or the number of [REDACTED] will be published in the [South China Morning Post] (in English) and the [Hong Kong Economic Times] (in Chinese) not later than the morning of the last day for lodging applications under the [REDACTED]. Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this document, including the risk factors set out in “Risk Factors.” The obligations of the [REDACTED] under the [REDACTED] [REDACTED] to subscribe for, and to procure subscribers for, the [REDACTED], are subject to termination by the [REDACTED] (on behalf of the [REDACTED]) if certain events occur prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwriting — [REDACTED] Arrangements and Expenses — [REDACTED] — Grounds for Termination” in this document. It is important that you refer to that section for further details.

The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offered, sold, pledged or transferred within the United States, except that [REDACTED] may be offered, sold or delivered to QIBs in reliance on an exemption from registration under the U.S. Securities Act provided by, and in accordance with the restrictions of, Rule 144A or another exemption from the registration requirements of the U.S. Securities Act. The [REDACTED] may be offered, sold or delivered outside the United States in offshore transactions in accordance with Regulation S.

[REDACTED]

[REDACTED] THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

IMPORTANT

[REDACTED]

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IMPORTANT

[REDACTED]

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EXPECTED TIMETABLE(1)

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EXPECTED TIMETABLE(1)

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EXPECTED TIMETABLE(1)

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EXPECTED TIMETABLE(1)

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CONTENTS

IMPORTANT NOTICE TO INVESTORS

This document is issued by China DHgate Group Limited solely in connection with the [REDACTED] and the [REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buy any security other than the [REDACTED] offered by this document pursuant to the [REDACTED]. This document may not be used for the purpose of, and does not constitute, an offer or invitation in any other jurisdiction or in any other circumstances. No action has been taken to permit a public [REDACTED] of the [REDACTED] in any jurisdiction other than Hong Kong and no action has been taken to permit the distribution of this document in any jurisdiction other than Hong Kong. The distribution of this document and the [REDACTED] of the [REDACTED] in other jurisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of such jurisdictions pursuant to registration with or authorization by the relevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained in this document to make your investment decision. The [REDACTED] is made solely on the basis of the information contained and the representations made in this document. We have not authorized anyone to provide you with information that is different from what is contained in this document. Any information or representation not made in this document must not be relied on by you as having been authorized by us, the Sole Sponsor, the [REDACTED],the[REDACTED],the [REDACTED],the[REDACTED], any of our or their respective directors, officers, representatives, affiliates, employees, agents or any other person or party involved in the [REDACTED]. Information contained in our website, located at www.dhgate.com, does not form part of this document.

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Expected Timetable ...... [•]

Contents...... [•]

Summary ...... [•]

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Glossary of Technical Terms ...... [•]

Forward-looking Statements ...... [•]

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CONTENTS

Risk Factors...... [•]

Waivers from Compliance with The Listing Rules and Exemptions from Compliance with The Companies (Winding Up and Miscellaneous Provisions) Ordinance ..... [•]

Information about This Document and The [REDACTED]...... [•]

Directors and Parties Involved in The [REDACTED] ...... [•]

Corporate Information ...... [•]

Industry Overview...... [•]

Regulatory Overview...... [•]

History, Reorganization and Corporate Structure ...... [•]

Business ...... [•]

Contractual Arrangements ...... [•]

Connected Transactions ...... [•]

Directors and Senior Management ...... [•]

Relationship with our Controlling Shareholders ...... [•]

Substantial Shareholders...... [•]

Share Capital...... [•]

Financial Information ...... [•]

Future Plans and Use of [REDACTED] ...... [•]

Underwriting ...... [•]

Structure of The [REDACTED] ...... [•]

How to Apply for The [REDACTED]...... [•]

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CONTENTS

Appendix I — Accountants’ Report ...... I-1

Appendix II — Unaudited Pro Forma Financial Information...... II-1

Appendix III — Summary of The Constitution of Our Company and Cayman Islands Companies Act ...... III-1

Appendix IV — Statutory and General Information ...... IV-1

Appendix V — Documents Delivered to The Registrar of Companies and Available for Inspection...... V-1

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SUMMARY

OUR MISSION

Facilitate global commerce and realize entrepreneurial dreams. OUR VISION

To become a world leading cross-border e-commerce infrastructure for micro, small and medium enterprises (“MSMEs”). OVERVIEW

Founded in 2004, we were the first one-stop cross-border B2B e-commerce marketplace in China. We provide global buyers from across approximately 223 countries and regions with access to sellers primarily located in China. In 2020, we were the world’s second largest cross-border B2B e-commerce marketplace for procurement of consumer goods from China, and in particular small-order procurement of consumer goods, with market share of approximately 1.4% and 7.2%, respectively, in terms of GMV according to the iResearch Report. We were also the U.S.’s largest cross-border B2B e-commerce marketplace for small-order procurement of consumer goods from China in 2020, with market share of approximately 17.0% in terms of GMV, according to the iResearch Report. Our buyers comprise primarily small and micro resellers and end consumers. Our sellers include brand owners, factories and trade agents. Our reseller buyers and sellers are MSMEs. At the same time, we help further China’s national policy of promoting the transformation and upgrade of foreign trade enterprises, as well as driving export for MSMEs. The global e-commerce market is expected to continue to grow steadily in terms of transaction volume, among which procurement from China is expected to experience particularly strong growth, according to the iResearch Report. To capture the huge market potential, we set up our business as a one-stop cross-border e-commerce marketplace that enables global buyers to procure products from our extended network of sellers primarily located in China, while supporting the transactions with our superior infrastructure and services, covering the entire transaction cycle of MSMEs, from product selection, sourcing, payment, to logistics. Leveraging our first mover advantages, which enabled us to accumulate a large amount of data and strong technology capabilities, we developed and launched our decentralized cloud-based commercial solutions, MyyShop, in August 2020. As a cloud-based SaaS solution designed for simplicity and ease-of-use, MyyShop has been rapidly adopted across the globe. Empowered by our AI technology and big data accumulated for over 17 years, MyyShop offers a cohesive suite of technology-enabled functions and features that empower small and micro merchants throughout their operating cycle, covering quick online store creation or account synchronization with online stores on third-party platforms, supplier selection, AI-based product recommendation, e-commerce and social media accounts synchronization, full-channel logistics service, 24/7 customer support, and worry-free after-sales services. Capitalizing on our strong online presence and network effect, we empower participants in cross-border e-commerce by offering a rich portfolio of value-added services, including logistics service, payment service and marketing service. As we believe timely and reliable delivery of orders is vital to cross-border e-commerce, we leverage our international distribution network to provide (i) Ongate logistics service to DHgate sellers and (ii) Offgate logistics service to corporate customers in China which aggregate demands for international logistics service from their local network of shippers, and non-DHgate sellers, being sellers on third-party platforms. OUR BUSINESS Leveraging our asset-light business model, we have been able to construct an ecosystem, driven by our twin engines of growth, consisting of (i) DHgate, our marketplace that connects buyers worldwide and sellers primarily located in China to provide one-stop wholesale services and (ii) MyyShop, our cloud-based commercial solutions that enable small and micro merchants to build and develop their online business with ease. Our marketplace is designed to be image-rich and intuitive, resembling major online retail marketplaces, affording a hassle-free purchasing experience to buyers from around the world. We further enrich our marketplace with a cohesive portfolio of value-added services including logistics service, overseas warehouse service, payment

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SUMMARY service and marketing service to help sellers navigate through international cross-border trade. In particular, we leverage our broad international distribution network to provide logistics service to sellers and corporate customers, offering digitalized end-to-end logistics services to further facilitate global e-commerce. As one of the pioneers in the industry of global cross-border B2B e-commerce procurement from China, leveraging our global buyer network and strong technology capabilities, we have created a digitalized B2B e-commerce ecosystem where each participant intertwines and mutually benefits. Set forth below is the diagram illustrating the participants in our ecosystem:

Centered upon our e-commerce marketplace, we offer a suite of technology-enabled digital services to broadly serve the needs of each participant in our ecosystem. Our principal business lines include: • Marketplace, which is offered through DHgate and entails a cross-border e-commerce platform that connects buyers around the world with sellers primarily located in China, allowing buyers to source a wide range of products offered by our sellers; • Cloud-based commercial solutions, which are offered through MyyShop and entail SaaS solutions that facilitate our B2B2C business model through helping small and micro merchants, including social media influencers intelligently build and operate their online businesses, who reciprocally support the continuous growth of our ecosystem. MyyShop provides a cohesive suite of technology-enabled functions and features that cover the operating cycle of small and micro merchants, starting from quick online store creation or account synchronization with online stores on third-party platforms, strict supplier selection and AI-based product recommendation to full-channel logistics services and worry-free after-sales services. It provides a one-stop cross-border e-commerce solution to entry-level merchants, including social media influencers who wish to monetize their social media traffic; • Value-added services • Logistics service • Ongate logistics service, which entails end-to-end supply chain solutions and overseas warehouse services that holistically support the logistics and fulfillment needs of sellers on DHgate, digitalizing international supply chains; and

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SUMMARY

• Offgate logistics service, which is offered as an independent service primarily to corporate customers in China which aggregate demands for international logistics service from their local network of shippers, allowing them to tap into our global distribution network; • Payment service, which is offered mainly through DHpay to enable sellers and buyers to complete payment securely and conveniently on our marketplace; and • Marketing service, which is offered through our Yangfan Platform (揚帆平台) primarily to sellers on our marketplace and entails targeted marketing solutions that effectively direct traffic to and increase conversion rate for sellers. KEY OPERATING DATA

The following table sets forth selected key operating metrics of our business:

For the year ended/As of December 31, 2018 2019 2020 Marketplace GMV (USD in million) ...... 1,361.5 1,493.3 1,864.9 App-based GMV ...... 578.8 855.4 1,185.7 Web-based GMV ...... 782.6 638.0 679.1 Number of Registered Buyers ...... 5,728,400 6,917,000 8,326,500 Number of Active Buyers(1) ...... 3,809,300 4,870,200 4,961,300 Cohort Retention Rate (%)(2) Buyers Acquired in 2018 ...... — 20.6 11.7 Buyers Acquired in 2019 ...... — — 19.8 Average GMV Per Active Buyer (USD) Per Active Buyer Acquired in 2018 ..... 229.7 463.8 547.4 Per Active Buyer Acquired in 2019 .... — 206.1 451.0 Per Active Buyer Acquired in 2020 .... — — 273.2 Average Revenue Per Active Buyer (USD)(3) ...... 16.4 21.1 22.9 Number of Average Daily Active Users.... 1,013,500 1,308,100 1,323,500 Number of Registered Sellers ...... 205,600 175,500 171,700 Number of Active Sellers ...... 79,800 92,000 77,700 Average Number of Live Listings (in thousand)(4) ...... 12,255 23,049 25,811 Return on Investment (5) ...... 37.5 43.3 42.4 Customer Acquisition Cost (USD)(6) ...... 9.0 7.0 8.2 Repeat Rate (%)(7)...... 57.5 61.2 65.3 Take Rate (%)(8) ...... 7.8 11.6 11.8 Cloud-based Commercial Solutions Number of Registered Users ...... — — 15,600 Value-added Services Number of Users of DHLink...... 4,900 8,600 16,500 Number of Users of Marketing Service .... 4,300 5,600 6,400 Monetization Rate (%)(9) ...... 14.1 18.5 18.7

Notes: 1. Active buyers refer to buyers who placed at least one order on our marketplace during the year. 2. Cohort retention rate equals to the number of active buyers acquired in a given prior year that remained active in a given subsequent year, as a percentage of the number of active buyers acquired during that prior year. 3. Average revenue per active buyer equals to our commissions divided by the number of active buyers for the same period. 4. The average number of live listings refers to the average of the number of live listings by the end of each month throughout the year. 5. Return on investment equals to GMV in a given year divided by advertising and promotion expenses for the same year.

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SUMMARY

6. Customer acquisition cost refers to selling and marketing expenses spent on acquiring new customers, including expenses spent on pay-per-click advertising, search engine optimization and app-based advertisements, divided by the number of newly acquired customers for the relevant period. 7. Repeat rate equals to the number of buyers who placed more than one order in a given year divided by the number of active buyers for the same year. 8. Take rate equals to our commissions divided by GMV (with respect to orders for which payment had been received) for the same period. 9. Monetization rate equals to our revenue (excluding revenue generated from Offgate logistics and other services) in a given year divided by GMV (with respect to orders for which payment had been received) for the same year. OUR CUSTOMERS, SUPPLIERS AND SERVICE PROVIDERS

We have a vast base of customers who are primarily MSMEs. Customers for our marketplace consist of our buyers from whom we collect commissions upon successful transactions. Customers for our cloud-based commercial solutions primarily consist of dropshippers and eBay or Shopify sellers. Customers for our payment service primarily consist of sellers on our marketplace. Customers for our logistic service consist of sellers on our marketplace and third-party shippers including corporate customers and non-DHgate sellers. Customers for our marketing service consist of sellers.

Our suppliers and service providers primarily include logistics partners, payment service providers and marketing service providers. As of December 31, 2020, we had a network of approximately 180 suppliers and service providers. We maintain close business relationships with our suppliers and service providers to ensure reliable access to services critical to our business operations. Due to the nature of our logistics service, some of our customers were also our suppliers, during the Track Record Period. According to the iResearch Report, cross-border logistics service providers playing dual roles as customers and suppliers is a norm in the industry. Our Directors confirmed that all of our sales to and purchases from each of the overlapping customers and suppliers were conducted in the ordinary course of business under normal commercial terms and on arm’s length basis. For details, see “Business — Our Suppliers and Service Providers — Overlapping Customers and Suppliers.” OUR STRENGTHS

We believe the following competitive strengths have contributed and will continue to contribute to our success: • Leading global cross-border B2B e-commerce marketplace for procurement from China, with large scale and network effects. • Renowned brand for procurement from China. • An ecosystem with a broad range of high-quality and tailor-made merchant solutions that empower MSMEs to achieve success in e-commerce. • Unique business model combining asset light transaction model and cloud-based SaaS subscription model. • Strong technological infrastructure and application of big data to drive business growth. • Experienced and visionary senior management team with proven track record. OUR STRATEGIES

We will pursue the following strategies to reinforce our market position and to further expand our business: • Continue to expand globally by upgrading our supply chain and enlarging our user base. • Enhance the localization of services in each region. • Enhance logistics service for buyers.

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SUMMARY

• Further develop our subscription-based decentralized cloud-based commercial solutions in addition to our transaction-based centralized marketplace. • Research and develop innovative technologies including AI products that serve global trades. RISK FACTORS

There are certain risks involved in the investment in the [REDACTED], among which the relatively material risks include the following: (i) if we fail to effectively retain our existing buyers and sellers, or to acquire new buyers and sellers, or to keep or increase their engagement, our business, financial condition, results of operation and prospects may be materially and adversely affected, (ii) our marketing efforts to help grow our business may not be effective, (iii) if we are unable to manage our growth or execute our growth strategies effectively, our business and prospects may be materially and adversely affected, (iv) we derive a majority of our revenue from commission fees we collect on our marketplace and service fees from our logistics service. Our effort to diversify and expand our service offerings may not succeed, and may reduce our revenue growth, (v) we face risks related to natural disasters, health epidemics and other outbreaks, such as the outbreak of COVID-19, which could significantly disrupt our operations, and (vi) our historical results during the Track Record Period are not necessarily indicative of our future performance. CONTRACTUAL ARRANGEMENTS

Pursuant to the relevant PRC laws and regulations, the operations of our Operating Entity are subject to various foreign ownership restrictions. We therefore do not own any equity interest in our Operating Entity. In order for our Company, as a foreign investor under the current regulatory regime, to maintain its principal business operations while complying with the applicable PRC laws and regulations, our Group conducts a substantial portion of the business through its Operating Entity. Pursuant to the Reorganization, the Contractual Arrangements currently in effect were entered into on September 27, 2018, whereby Digitrading Beijing has acquired effective control over the financial and operational policies of Century Rich Place, our Operating Entity, and has become entitled to all the economic benefits derived from its operations. The Contractual Arrangements allow the results of operations and assets and liabilities of Century Rich Palace to be consolidated into our results of operations and assets and liabilities under HKFRS as if it was a subsidiary of our Group. See “Contractual Arrangements.” The following simplified diagram illustrates the flow of economic benefits from Century Rich Palace to our Group as stipulated under the Contractual Arrangements:

Our Company

Digitrading Registered Beijing(1) Shareholders(2)

Management and Consulting Service Services Fees

Century Rich Palace

Notes:

(1) Digitrading Beijing is an indirect wholly-owned subsidiary of our Company.

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SUMMARY

(2) Ms. Wang and Ms. Liu are collectively referred to as the “Registered Shareholders.”

[REDACTED] INVESTMENTS

Our Group has received six rounds of [REDACTED] Investments since the commencement of business, with the final round fully settled in 2014. TDF China, TDF Advisors, JAFCO Asia Technology Fund III, Atlas Venture Fund VII, L.P., Local Globe III Limited, WP Private Equity X, Inc., and CGC Dunhill are our [REDACTED] Investors. See “History, Reorganization and Corporate Structure — [REDACTED] Investments” for details of our [REDACTED] Investments.

OUR CONTROLLING SHAREHOLDERS

As of the Latest Practicable Date, our Company was owned as to 41.75%, 15.78%, 28.98% and 1.19% by Idea Edge, Heguang International (BVI) (together with Ms. Wang and Idea Edge, collectively as the “Wang Entities”), TDF China and TDF Advisors (together with TDF China, TDF Capital China Management II, LP and TDF Management II, LLC, collectively as the “TDF Entities”), respectively. The Wang Entities and the TDF Entities are independent from each other and there has been no understanding or arrangement (formal or otherwise) that they would vote in any coordinated manner. Each of the Wang Entities and the TDF Entities are controlling shareholders of our Company as defined under the Listing Rules prior to the completion of the [REDACTED].

Immediately following the completion of the Share Subdivision and the [REDACTED] (assuming that the [REDACTED] is not exercised and without taking into account Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme), the Wang Entities and the TDF Entities will be entitled to exercise in general meetings voting rights attached to Shares representing approximately [REDACTED]% and [REDACTED]% of the total issued share capital of our Company, respectively. Since the TDF Entities will hold [REDACTED] our post [REDACTED] enlarged share capital, the TDF Entities will not be our controlling shareholder as defined under the Listing Rules upon Listing, despite the fact that they are referred to as “Controlling Shareholders” in this document. See “Relationship with our Controlling Shareholders.”

CONNECTED TRANSACTIONS

We have entered into certain agreements with our connected persons, which will constitute continuing connected transactions under Chapter 14A of the Listing Rules upon Listing. We have applied to the Stock Exchange for[, and the Stock Exchange has granted,] a waiver from strict compliance with the requirements under Chapter 14A of the Listing Rules. See “Connected Transactions.”

SUMMARY OF FINANCIAL INFORMATION

The summary of historical consolidated financial statements set forth below has been derived from, and should be read in conjunction with our audited consolidated financial statements including the notes thereto, as set out in the Accountants’ Report in Appendix I, as well as the information set forth in “Financial Information.” Our audited consolidated financial statements have been prepared in accordance with HKFRS.

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SUMMARY

Consolidated Statements of Comprehensive Income

The following table sets forth our consolidated statements of comprehensive income in absolute amounts and as percentages of revenue for the years indicated: For the year ended December 31, 2018 2019 2020 USD’000 % USD’000 % USD’000 % Revenue ...... 117,856 100.0 178,678 100.0 230,501 100.0 Cost of sales ...... (66,422) (56.4) (81,508) (45.6) (124,526) (54.0) Gross profit ...... 51,434 43.6 97,170 54.4 105,975 46.0 Other income and gains ...... 200 0.2 1,054 0.6 9,815 4.3 Selling and distribution expenses.. (46,707) (39.6) (44,484) (24.9) (50,845) (22.1) Administrative expenses ...... (28,829) (24.5) (26,853) (15.0) (24,372) (10.6) Fair value losses on Preferred Shares...... (8,562) (7.3) (18,429) (10.3) (26,021) (11.3) Other expenses...... (7,688) (6.5) (3,938) (2.2) (4,401) (1.9) Share-based payment expenses ... (7,189) (6.1) (1,358) (0.8) (1,646) (0.7) Finance costs...... (1,946) (1.7) (8,600) (4.8) (1,804) (0.8) (Loss)/profit before tax ...... (49,287) (41.8) (5,438) (3.0) 6,701 2.9 Income tax expense ...... (1,078) (0.9) (1,285) (0.7) (615) (0.3) (Loss)/profit for the year ...... (50,365) (42.7) (6,723) (3.8) 6,086 2.6 Exchange differences on translation of foreign operations . 7,240 6.1 2,608 1.5 (5,497) (2.4) Reclassification adjustments for foreign operations disposed of during the year ...... — — (614) (0.3) — — Other comprehensive income/(loss) for the year, net of tax ...... 7,240 6.1 1,994 1.1 (5,497) (2.4) Total comprehensive (loss)/income for the year .... (43,125) (36.6) (4,729) (2.6) 589 0.3 Attributable to: Owners of the parent ...... (43,125) (36.6) (4,729) (2.6) 589 0.3 Non-HKFRS measures (unaudited): Adjusted net (loss)/profit...... (28,202) (23.9) 14,105 7.9 26,710 11.6 Adjusted EBITDA...... (21,223) (18.0) 29,123 16.3 34,282 14.9

Non-HKFRS Measures

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SUMMARY

The following table illustrates reconciliations to our adjusted net (loss)/profit from our (loss)/profit for the year for the periods indicated:

For the year ended December 31, 2018 2019 2020 USD’000 USD’000 USD’000 (Loss)/Profit for the year ...... (50,365) (6,723) 6,086 Add: Fair value losses on Preferred Shares ..... 8,562 18,429 26,021 Share-based payment expenses ...... 7,189 1,358 1,646 [REDACTED] expenses ...... 318 374 588 Foreign exchange losses/(gains), net ...... 6,094 667 (7,631) Adjusted net (loss)/profit (unaudited).... (28,202) 14,105 26,710

The following table sets forth the reconciliation of (loss)/profit for the year to adjusted EBITDA for the periods indicated:

For the year ended December 31, 2018 2019 2020 USD’000 USD’000 USD’000 (Loss)/Profit for the year ...... (50,365) (6,723) 6,086 Add: Finance costs...... 1,946 8,600 1,804 Income tax expense...... 1,078 1,285 615 Depreciation of items of property, plant and equipment ...... 1,559 2,125 2,245 Depreciation of right-of-use assets ...... 2,083 2,727 2,761 Amortization of intangible assets ...... 313 281 147 Fair value losses on Preferred Shares ..... 8,562 18,429 26,021 Share-based payment expenses ...... 7,189 1,358 1,646 [REDACTED] expenses ...... 318 374 588 Foreign exchange losses/(gains), net ...... 6,094 667 (7,631) Adjusted EBITDA (unaudited) ...... (21,223) 29,123 34,282

Revenue by Business Line

During the Track Record Period, we generated revenue primarily from (i) commissions, (ii) value-added services and other services, including logistics service, payment service, marketing service and other services, and (iii) online direct sales. The following table sets forth our revenue by business line for the years indicated:

For the year ended December 31 2018 2019 2020 USD’000 % USD’000 % USD’000 % Commissions ...... 62,429 53.0 102,808 57.5 113,714 49.3 Value-added services and other services ...... 30,658 26.0 57,305 32.1 116,787 50.7 Logistics service ...... 6,725 5.7 28,996 16.2 83,553 36.2 • Ongate ...... 3,868 3.3 17,738 9.9 34,014 14.8 • Offgate ...... 2,857 2.4 11,258 6.3 49,539 21.5 Payment service ...... 10,856 9.2 9,864 5.5 10,183 4.4 Marketing service ...... 9,941 8.4 14,859 8.3 21,756 9.4 Other services(1) ...... 3,136 2.7 3,586 2.0 1,295 0.6 Online direct sales(2) ..... 24,769 21.0 18,565 10.4 — — Total Revenue ...... 117,856 100.0 178,678 100.0 230,501 100.0

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SUMMARY

Notes:

1. Other services primarily include our one-off collaborative projects with local governments in the PRC, under which we were engaged to build online transaction platforms. Further, we commenced offering our cloud-based commercial solutions through MyyShop in August 2020 and had provided users with free subscription trial during the initial launch period. MyyShop is still at the stage of trial commercialization and negligible revenue had been generated during the year ended December 31, 2020 by charging users for creating their online stores on MyyShop, which was included in the revenue from other services. See “Business — Our Services — Cloud-based Commercial Solutions.” 2. Our online direct sales ceased operations in December 2019. See “Business — Our Services — Online Direct Sales.” We experienced substantial revenue growth during the Track Record Period. The increase in revenue from commissions was primarily due to the growth of GMV on our marketplace, DHgate, from USD1,361.5 million in 2018 to USD1,493.3 million in 2019 and further to USD1,864.9 million in 2020. Revenue from value-added services and other services increased significantly during the Track Record Period primarily due to (i) the increase in revenue from our logistics service, see “Financial Information — Period-to-period Comparison of Results of Operations — Year Ended December 31, 2020 Compared to Year Ended December 31, 2019” for details, and (ii) the increase in revenue from our marketing service as a result of our growing GMV and the continuous promotional efforts for our marketing service. Gross Profit and Gross Profit Margin

The following table sets forth our gross profit and gross profit margin by business line for the years indicated:

For the year ended December 31, 2018 2019 2020 %of %of %of Gross total Gross total Gross total Gross profit gross Gross profit gross Gross profit gross profit margin profit profit margin profit profit margin profit USD’000 % % USD’000 % % USD’000 % % Commissions ...... 32,073 51.4 62.4 72,726 70.7 74.8 77,327 68.0 73.0 Value-added services and other services ...... 18,312 59.7 35.6 23,003 40.1 23.7 28,648 24.5 27.0 • Logistics service .... 141 2.1 0.3 339 1.2 0.3 1,345 1.6 1.3 • Payment service..... 8,647 79.7 16.8 6,643 67.3 6.8 8,534 83.8 8.1 • Marketing service.... 8,303 83.5 16.1 12,760 85.9 13.1 18,207 83.7 17.2 • Other services ...... 1,221 38.9 2.4 3,261 90.9 3.4 562 43.4 0.5 Online direct sales(1)..... 1,049 4.2 2.0 1,441 7.8 1.5 — — — Total Gross Profit ...... 51,434 43.6 100.0 97,170 54.4 100.0 105,975 46.0 100.0

Note:

1. Our online direct sales ceased operations in December 2019. See “Business — Our Services — Online Direct Sales.” The increase in our gross profit margin from 2018 to 2019 was mainly because of the increase in our gross profit margin from commissions, which was primarily due to the rapid growth of revenue from commissions because of the increase in the overall commission rates of products available on our marketplace in 2019. As for the decrease in our gross profit margin from 2019 to 2020, it was largely because of the decrease in our gross profit margin from value-added services and other services, which was then primarily due to the expansion of our logistics service which has a lower gross profit margin than that of other value-added services.

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SUMMARY

Summary Selected Items of Financial Position

The following table sets forth selected information from our consolidated statements of financial position as of the dates indicated:

As of December 31, 2018 2019 2020 USD’000 USD’000 USD’000 Current assets ...... 89,442 147,608 293,275 Current liabilities ...... 299,454 362,328 470,232 Net current liabilities ...... (210,012) (214,720) (176,957) Non-current assets...... 7,649 15,207 15,832 Non-current liabilities ...... 2,586 8,807 44,960 Net liabilities ...... (204,949) (208,320) (206,085) Share capital ...... 16 16 16 Reserves ...... (204,965) (208,336) (206,101) Total equity ...... (204,949) (208,320) (206,085)

We had net current liabilities amounting USD210.0 million, USD214.7 million, and USD177.0 million as of December 31, 2018, 2019 and 2020, respectively. Our net current liabilities position as of each of these dates was primarily attributable to our large balance of payables to sellers, advance from buyers and the Preferred Shares. As of December 31, 2018, 2019 and 2020, we recorded net liabilities of USD204.9 million, USD208.3 million, and USD206.1 million, respectively, mainly because of the significant balance of Preferred Shares, which are accounted for as liabilities. The Preferred Shares will be re-designated from liabilities to equity as a result of the automatic conversion into ordinary shares upon Listing and the net liabilities position of the Company is expected to be significantly improved after the Listing. Summary of Consolidated Statements of Cash Flows

The following table sets forth a summary of our cash flows for the years indicated:

For the year ended December 31, 2018 2019 2020 USD’000 USD’000 USD’000 Net cash flows generated from operating activities ...... 4,715 71,143 80,382 Net cash flows used in investing activities . (4,183) (3,779) (4,679) Net cash flows (used in)/generated from financing activities...... (11,308) (12,750) 21,658 Net (decrease)/increase in cash and cash equivalents ...... (10,776) 54,614 97,361 Cash and cash equivalents at the beginning of the year...... 33,440 21,752 76,266 Effects of foreign exchange rate changes, net ...... (912) (100) 2,763 Cash and cash equivalents at the end of the year ...... 21,752 76,266 176,390

See “Financial Information — Liquidity and Capital Resources” for a detailed analysis. APPLICATION FOR LISTING ON THE STOCK EXCHANGE

We have applied to the Listing Committee for the listing of, and permission to deal in, the [REDACTED] in issue and to be issued pursuant to the [REDACTED] (including the Shares which may be issued pursuant to the exercise of the [REDACTED]) and the Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme and pursuant to the RSU Scheme. The application has been made on the basis that we satisfy the market

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SUMMARY capitalization/revenue/cash flow test under Rule 8.05(2) of the Listing Rules with reference to (i) our expected market capitalization at the time of Listing, which, based on the low-end of the indicative [REDACTED] range, [REDACTED], (ii) our revenue for the year ended December 31, 2020 being USD230.5 million (equivalent to approximately HK$1,789.2 million), which significantly exceeds HK$500.0 million, and (iii) our aggregate positive cash flow from operating activities for the three years ended December 31, 2020 being USD156.2 million (equivalent to approximately HK$1,212.4 million), which significantly exceeds HK$100.0 million. DIVIDENDS

We are a holding company incorporated under the laws of the Cayman Islands. Any dividends we pay will be at the discretion of our Directors and will depend on our future operations and earnings, capital requirements and surplus, general financial condition, contractual restriction and other factors our Directors consider relevant. Any declaration and payment as well as the amount of dividends will be subject to our Memorandum of Association and our Articles of Association and the Cayman Companies Act. Our Shareholders in a general meeting may approve any declaration of dividends, which must not exceed the amount recommended by our Board. As advised by our Cayman legal advisor, no dividends may be declared or paid other than out of profits and reserves of the Company lawfully available for distribution, including share premium, provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business. As such, a position of net liabilities or accumulated losses may not necessarily restrict us from declaring and paying dividends to our Shareholders. Dividend distribution to our Shareholders is recognized as a liability in the period in which the dividends are approved by our Shareholders or Directors, where appropriate. During the Track Record Period, we did not declare or pay any dividend. We do not have a fixed dividend payout ratio. [REDACTED] STATISTICS

All statistics in the following table are based on the assumptions that (i) the [REDACTED] has been completed and [REDACTED] Shares are newly issued in the [REDACTED]; (ii) the [REDACTED] is not exercised; (iii) no Shares have been issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme; and (iv) [REDACTED] Shares are issued and outstanding following the completion of the [REDACTED].

Based on Based on [REDACTED] of [REDACTED] of [REDACTED] [REDACTED] Market capitalization of our Shares...... [REDACTED] [REDACTED] Unaudited pro forma adjusted net tangible assets/(liabilities) [REDACTED] [REDACTED] per Share ...... For the calculation of the unaudited pro forma adjusted net tangible asset value per Share, see Appendix II. [REDACTED] EXPENSES

The [REDACTED] expenses in connection with the [REDACTED] primarily consist of [REDACTED] commissions and professional fees and, assuming an [REDACTED] of [REDACTED] per Share, being the mid-point of the proposed [REDACTED] range, are estimated to be approximately [REDACTED]. During the Track Record Period, we incurred [REDACTED] expenses of approximately [REDACTED], of which approximately [REDACTED] was recognized in the consolidated statements of comprehensive income for the three years ended December 31, 2020 and approximately USD0.4 million was recognized as prepayments in the consolidated statements of financial position as of December 31, 2020, which will be accounted for as a deduction from equity upon Listing. Subsequent to the Track Record Period, we expect to further incur [REDACTED] expenses of approximately [REDACTED] prior to and upon completion of the [REDACTED], of which (i) approximately [REDACTED] is expected to be recognized as

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SUMMARY expenses in our consolidated statement of comprehensive income; and (ii) approximately [REDACTED] is expected to be accounted for as a deduction from equity upon Listing under the relevant accounting standard. USE OF [REDACTED]

Assuming an [REDACTED] of [REDACTED] per Share, being the mid-point of the [REDACTED] range of [REDACTED] to [REDACTED] per Share, and that the [REDACTED] is not exercised, we estimate that we will receive net [REDACTED] from the [REDACTED] of approximately [REDACTED] (after deducting the [REDACTED] commissions and other estimated expenses paid and payable by us in relation to the [REDACTED] and assuming the full payment of the discretionary incentive fee). We intend to use the net [REDACTED] from the [REDACTED] for the purposes and in the amounts set forth below: • approximately [REDACTED],or[REDACTED], for implementing our global expansion initiatives; • approximately [REDACTED],or[REDACTED], for implementing our global localization initiatives, including establishing overseas centers by recruiting local talents to conduct overseas market analysis and maintain key overseas customers; • approximately [REDACTED],or[REDACTED], for enhancing our logistics service; • approximately [REDACTED],or[REDACTED], for strengthening our research and development capabilities; • approximately [REDACTED],or[REDACTED], for working capital and other general corporate purposes. We will issue an appropriate announcement if there is any material change in the abovementioned use of [REDACTED]. See “Future Plans and Use of [REDACTED].” BUSINESS ACTIVITIES IN SANCTIONED COUNTRIES

During the Track Record Period, certain sellers on our platform took orders from buyers who had IP addresses from Crimea, Cuba and Iran, which are subject to comprehensive sanctions programs administered by OFAC. See “Risk Factors — Risks Relating to Our Business and Industry — We could be adversely affected as a result of any sales we make to certain countries that are, or become subject to, export control and economic or trade sanctions administered by the U.S., the European Union, the United Kingdom, the United Nations, and other relevant sanctions authorities” and “Business — Business Activities in Sanctioned Countries.” RECENT DEVELOPMENTS

Subsequent to the Track Record Period and up to the Latest Practicable Date, our business had remained stable. For the five months ended May 31, 2021, our GMV amounted to approximately USD675.4 million. In furtherance of our efforts to offer a wide selection of products on our marketplace, the average of the number of live listings offered on our marketplace by the end of each month during the same period amounted to approximately 35.9 million. In addition, while the number of our registered buyers grew by approximately 4.2 million, as we continued to develop our value-added services, we recorded approximately 9,700 and 3,900 newly registered users of DHLink and our marketing service, respectively, subsequent to the Track Record Period and up to the Latest Practicable Date. Our Directors confirm that, as of the date of this document, other than the outbreak of the COVID-19 pandemic as described below, there had been no material adverse change in our financial and trading positions or prospects since December 31, 2020, being the end of the period reported on in the Accountants’ Report set out in Appendix I.

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SUMMARY

Impact of the COVID-19 Pandemic on our Operations

The outbreak of COVID-19 has resulted in an adverse impact on the Chinese and global economy. Countries and regions across the world, including China, have imposed widespread lockdowns, closure of work places and restrictions on mobility and travel to contain the spread of COVID-19. We have taken a series of measures in response to the outbreak, including, among others, remote working arrangements for some of our employees. Despite the hit of COVID-19, our GMV still increased from USD1,493.3 million in 2019 to USD1,864.9 million in 2020, representing an increase of 24.9%, whilst our revenue increased from USD178.7 million and further to USD230.5 million, representing a growth rate of 29.0%. Nevertheless, COVID-19 has still inevitably affected our business in different ways. On one hand, growth of revenue from commissions slowed down in 2020 because of the delay in delivery of some products sold on our marketplace as a result of the outbreak of COVID-19. On the other hand, our logistics service, in particular Offgate logistics service, experienced significant growth because of among others, our ability in maintaining stable supply of services to our customers amidst the COVID-19 pandemic as a result of our scale, as well as market consolidation as a result of COVID-19, which drove a considerable amount of less sizable players out of the market because customers tended to choose logistics service providers with stronger fulfilment capabilities. The extent to which COVID-19 may continue to adversely affect the macroeconomic environment as well as our business, results of operations and financial condition remains uncertain, and will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable. See “Risk Factors — Risks Related to Our Business and Industry — We face risks related to natural disasters, health epidemics and other outbreaks, such as the outbreak of COVID-19, which could significantly disrupt our operations.”

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DEFINITIONS

In this document, unless the context otherwise requires, the following terms shall have the meanings set out below.

“affiliate” any other person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person

“Articles” or “Articles of the Articles of Association of our Company (as amended Association” from time to time), adopted by special resolutions passed on [•] effective from the Listing Date, a summary of which is set out in Appendix III

“associate” has the meaning ascribed thereto under the Listing Rules

“Board” the board of directors of our Company

“business day” any day (other than a Saturday, Sunday or public holiday) on which banks in Hong Kong are generally open for business

“BVI” the British Virgin Islands

“CAGR” compound annual growth rate

“Cayman Companies Act” or the Companies Act, Cap. 22 (Law 3 of 1961, as amended or “Companies Act” supplemented or otherwise modified from time to time) of the Cayman Islands

[REDACTED]

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DEFINITIONS

[REDACTED]

“Century Heguang (Beijing)” Century Heguang Technology Development (Beijing) Company Limited* (世紀禾光科技發展(北京)有限公司), a company established under the laws of PRC with limited liability on April 27, 2006, and an indirect wholly-owned subsidiary of our Company

“Century Rich Palace” Century Rich Palace Technology Development (Beijing) Company Limited* (世紀富軒科技發展(北京)有限公司), a company established under the laws of PRC with limited liability on June 29, 2015, which is our Operating Entity

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DEFINITIONS

“China”, “mainland China”, the People’s Republic of China, but for the purpose of this “PRC” or “State” Document and for geographical reference only and except where the context requires otherwise, references in this Document to “China” and the “PRC” do not apply to Hong Kong, Macau Special Administrative Region and Taiwan

“Chongqing Rich Palace” Chongqing Rich Palace Information Technology Company Limited* (重慶富軒信息技術有限公司) (formerly known as Beijing Dunhuang Heguang Information Technology Company Limited* (北京敦煌禾光信息技術有限公司)), a company established in the PRC with limited liability on December 8, 2004, the financial results of which had been consolidated and accounted for as a subsidiary of our Company by virtue of a series of contractual arrangements prior to the Reorganization

“CGC Dunhill” CGC Dunhill Limited, a business company incorporated under the laws of the BVI with limited liability on June 23, 2014, and one of the [REDACTED] Investors

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the laws of Hong Kong), as amended or supplemented or otherwise modified from time to time

“Companies (Winding Up and the Companies (Winding Up and Miscellaneous Provisions) Miscellaneous Provisions) Ordinance (Chapter 32 of the laws of Hong Kong), as Ordinance” amended or supplemented or otherwise modified from time to time

“Company” or “our Company” China DHgate Group Limited (中國敦煌網集團有限公司), an exempted company incorporated in the Cayman Islands with limited liability on April 13, 2018, and, except where the context otherwise requires, all of its subsidiaries, or where the context refers to the time before it became the holding company of its present subsidiaries, its present subsidiaries

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DEFINITIONS

“Contractual Arrangements” a series of contractual arrangements entered into on September 27, 2018 by, among others, Digitrading Beijing, our Operating Entity and the Registered Shareholders, details of which are described in “Contractual Arrangements”

“Controlling Shareholders” has the meaning ascribed thereto in the Listing Rules, and unless the context otherwise requires, refers to, Ms. Wang, Heguang International (BVI), Idea Edge, TDF China, TDF Advisors, TDF Capital China Management II, LP and TDF Management II, LLC

“CSRC” the China Securities Regulatory Commission (中國證券監督管理委員會)

“DHgate Holding” DHgate Holding Limited, an exempted company incorporated under the laws of Cayman Islands with limited liability on July 14, 2017, which held 100% of the interest of our Company prior to the Reorganization

“DHgate Technology” DHgate Technology Development Limited, a business company incorporated under the laws of the BVI with limited liability on October 18, 2018 and a wholly-owned subsidiary of our Company

“Digitrading Beijing” Digitrading Technology (Beijing) Company Limited* (數貿科技(北京)有限公司), a company established under the laws of PRC with limited liability on January 26, 2018 and a wholly-owned subsidiary of our Company

“Digitrading Group” Digitrading Group Limited, a business company incorporated under the laws of the BVI with limited liability on January 4, 2016 and a wholly-owned subsidiary of our Company

“Digitrading Hong Kong” Digitrading Hongkong Limited (數字貿易香港有限公司), a company incorporated under the laws of Hong Kong with limited liability on November 13, 2017 and a wholly-owned subsidiary of our Company

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DEFINITIONS

“Digitrading Technology” Digitrading Technology Hong Kong Limited, a company incorporated under the laws of Hong Kong with limited liability on October 22, 2018 and a wholly-owned subsidiary of our Company

“Director(s)” the director(s) of our Company

“Dunhuang Holdings (HK)” Dunhuang Holdings Limited, a company incorporated under the laws of Hong Kong with limited liability on November 17, 2010 and a wholly-owned subsidiary of our Company

“EIT” enterprise income tax

“EIT Law” the PRC Enterprise Income Tax Law《中華人民共和國企 ( 業所得稅法》)

“Everfine Global” Everfine Global Limited, a business company incorporated under the laws of the BVI with limited liability on March 6, 2018 and wholly owned by Ms. Liu

[REDACTED]

“Group”, “our Group”, “we”, our Company, our subsidiaries and our Operating Entity or, “our” or “us” where the context so requires, in respect of the period before our Company became the holding company of our present subsidiaries, the business operated by such subsidiaries or their predecessors (as the case may be)

“Heguang International (BVI)” Heguang International Limited, a company incorporated under the laws of BVI with limited liability on October 11, 2004 and wholly owned by Ms. Wang

“Heguang International (Cayman)” Heguang International Limited, a company incorporated under the laws of Cayman Islands with limited liability on February 22, 2006 and a wholly-owned subsidiary of the Company

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DEFINITIONS

“HK$”, “Hong Kong dollars”, Hong Kong dollars and cents respectively, the lawful “HK dollars” or “cents” currency of Hong Kong

“HKFRS” Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants

“HKSCC” Hong Kong Securities Clearing Company Limited

“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary of HKSCC

“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC

[REDACTED]

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DEFINITIONS

“independent third party(ies)” person(s) or company(ies) and their respective ultimate beneficial owner(s), who/which, to the best of our Directors’ knowledge, information and belief, having made all reasonable enquiries, is/are not our connected persons or associates of our connected persons as defined under the Listing Rules

“Internal Control Consultant” Protiviti Shanghai Co., Ltd., our internal control consultant

[REDACTED]

“International Sanctions” all applicable laws and regulations related to economic sanctions, export controls, trade embargoes and wider prohibitions and restrictions on international trade and investment related activities, including those adopted, administered and enforced by the U.S. Government, the European Union and its member states, United Nations or the Government of Australia

“International Sanctions Legal Hogan Lovells, our legal advisors as to International Advisors” or “Special Counsels” Sanctions laws and with respect to certain Hong Kong law in connection with the Listing

[REDACTED]

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DEFINITIONS

[REDACTED]

“iResearch” Shanghai iResearch Co., Ltd., China, an industry consultant

“iResearch Report” the market research report on e-commerce market prepared by iResearch and commissioned by us

“Jiahe Holdings (HK)” Jiahe Holdings Limited (佳禾控股有限公司), a company incorporated under the laws of Hong Kong with limited liability on November 26, 2010 and a wholly-owned subsidiary of our Company

“Latest Practicable Date” June 15, 2021, being the latest practicable date prior to the printing of this document for the purpose of ascertaining certain information contained in this document

“Listing” the listing of the Shares on the Main Board of the Stock Exchange

“Listing Committee” the Listing Committee of the Stock Exchange

“Listing Date” the date, expected to be on or about [REDACTED],on which the Shares are listed on the Stock Exchange and from which dealings in the [REDACTED] are permitted to commence on the Stock Exchange

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended or supplemented from time to time

“Main Board” the stock market (excluding the option market) operated by the Stock Exchange which is independent from and operated in parallel with GEM of the Stock Exchange

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DEFINITIONS

“Memorandum” or “Memorandum the memorandum of association of our Company (as of Association” amended from time to time), adopted by special resolutions passed on [•] effective from the Listing Date, a summary of which is set out in Appendix III

“Ms. Liu” Ms. Liu Yunhua, who is a sister-in-law of Ms. Wang

“MSO” Money Service Operator

“Ms. Wang” Ms. Wang Shutong (王樹彤), the chairman of our Board, chief executive officer, an executive Director, our principal founder and one of the Controlling Shareholders

“OFAC” Office of Foreign Assets Control of the U.S. Department of the Treasury

[REDACTED]

“Operating Entity” Century Rich Palace, the financial results of which have been consolidated and accounted for as a subsidiary of our Company by virtue of the Contractual Arrangements

[REDACTED]

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DEFINITIONS

“PRC Government” or “State” the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local government entities) and its organs or, as the context requires, any of them

“PRC Legal Advisor” Commerce & Finance Law Offices, the legal advisor to our Company as to PRC law

“[REDACTED] Incentive Scheme” our [REDACTED] share incentive scheme conditionally adopted pursuant to resolutions passed by our Shareholders at an extraordinary general meeting held on March 20, 2019, the principal terms of which are set out in “Statutory and General Information — D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme” in Appendix IV

“[REDACTED] Investment(s)” the [REDACTED] investment(s) in Heguang International (Cayman) undertaken by the [REDACTED] Investors, details of which are set out in “History, Reorganization and Corporate Structure — [REDACTED] Investments”

“[REDACTED] Investor(s)” TDF China, TDF Advisors and CGC Dunhill, and where the context requires, certain investors as set out in “History, Reorganization and Corporate Structure — [REDACTED] Investments”, who are no longer our Shareholders

“[REDACTED] Shareholders’ the shareholders’ agreement entered into by, among others, Agreement” our Company, certain Group companies, Ms. Wang and the [REDACTED] Investors dated May 24, 2021

“Preferred Share(s) collectively, Series A Preferred Shares, Series B Preferred Shares, Series C-1 Preferred Shares, Series C-2 Preferred Shares, Series C-3 Preferred Shares and Series D Preferred Shares

[REDACTED]

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DEFINITIONS

[REDACTED]

“Primary Sanctioned Activities” any activity in a Sanctioned Country or (i) with; or (ii) directly or indirectly benefiting, or involving the property or interests in property of, a Sanctioned Target by the Company incorporated or located in a Relevant Jurisdiction (if applicable) or which otherwise has a nexus with such jurisdiction with respect to the relevant activity, such that it is subject to the relevant sanctions law or regulation

[REDACTED]

“QIB” a qualified institutional buyer within the meaning of Rule 144A

[REDACTED]

“Registered Shareholders” the registered shareholders of our Operating Entity, namely, Ms. Wang and Ms. Liu, holding 80% and 20% of the equity interest in our Operating Entity, respectively

“Regulation S” Regulation S under the U.S. Securities Act

“Relevant Jurisdiction” any jurisdiction that is relevant to the Company and has sanctions related law or regulation restricting, among other things, its nationals and/or entities which are incorporated or located in that jurisdiction from directly or indirectly making assets or services available to or otherwise dealing in assets of certain countries, governments, persons or entities targeted by such law or regulation. For the purpose of this document, the Relevant Jurisdictions include the U.S., European Union, United Nations, the United Kingdom Overseas Territories and Australia

“Reorganization” the reorganization of the Group in preparation of the Listing, details of which are set out in “History, Reorganization and Corporate Structure”

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DEFINITIONS

“Rich Palace (BVI)” Rich Palace Holdings Limited, a company incorporated under the laws of BVI with limited liability on October 29, 2010 and a wholly-owned subsidiary of our Company

“Rich Palace (HK)” Rich Palace Holdings Limited, a company incorporated under the laws of Hong Kong with limited liability on November 3, 2004 and a wholly-owned subsidiary of our Company

“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC

“RSU” a restricted share unit awarded to a participant under the RSU Scheme

“RSU Scheme” the restricted share unit scheme of the Company approved and adopted by our Board on May 24, 2021, the principal terms of which are set out in “Statutory and General Information — D. Share Incentive Schemes — 2. RSU Scheme” in Appendix IV

“Rule 144A” Rule 144A under the U.S. Securities Act

“SAFE” State Administration of Foreign Exchange of the PRC (中華人民共和國外匯管理局)

“SAIC” State Administration of Industry and Commerce of the PRC (中華人民共和國國家工商行政管理總局), now known as State Administration of Market Regulation (國家市場監督管理總局)

“Sanctioned Country(ies)” any country or territory subject to a general and comprehensive export, import, financial or investment embargo under sanctions related law or regulation of U.S., European Union, United Nations, the United Kingdom Overseas Territories and Australia

“Sanctioned Person” any person(s) and entity(ies) listed on OFAC’s sanctions lists including the Specifically Designated Nationals List or other restricted parties lists maintained by the United States, the European Union, the United Nations or Australia

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DEFINITIONS

“Sanctioned Target” any person or entity (i) designated on any list of targeted persons or entities issued under the sanctions-related law or regulation of a Relevant Jurisdiction; (ii) that is, or is owned or controlled by, a government of a Sanctioned Country; or (iii) that is the target of sanctions under the law or regulation of a Relevant Jurisdiction because of a relationship of ownership, control, or agency with a person or entity described in (i) or (ii)

“SAT” State Administration of Taxation of the PRC (中華人民共和國國家稅務局)

“Series A Investment” the investment made by the Series A Investors in relation to the series A preferred shares in Heguang International (Cayman)

“Series A Investors” TDF China and TDF Advisors

“Series A Preferred Share(s)” the series A preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 24,305,500 shares are in issue as of the Latest Practicable Date and held by the Series A Investors, each having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

“Series B Investment” the investment made by the Series B Investors in relation to the series B preferred shares in Heguang International (Cayman)

“Series B Investors” TDF China, TDF Advisors, JAFCO Asia Technology Fund III, Atlas Venture Fund VII, L.P. and Local Globe III Limited

“Series B Preferred Share(s)” the series B preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 32,175,890 shares are in issue as of the Latest Practicable Date and held by Heguang International (BVI), TDF China and TDF Advisors, each having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

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DEFINITIONS

“Series C-1 Investment” the investment made by the Series C-1 Investors in relation to the series C-1 preferred shares in Heguang International (Cayman)

“Series C-1 Investors” TDF China, TDF Advisors and WP Private Equity X, Inc

“Series C-1 Preferred Share(s)” the series C-1 preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 5,396,380 shares are in issue as of the Latest Practicable Date and held by TDF China and TDF Advisors, each having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

“Series C-2 Investment” the investment made by the Series C-2 Investors in relation to the series C-2 preferred shares in Heguang International (Cayman)

“Series C-2 Investors” TDF China and TDF Advisors, further details of which are set out in “History, Reorganization and Corporate Structure — [REDACTED] Investments — Information about the [REDACTED] Investors”

“Series C-2 Preferred Share(s)” the series C-2 preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 2,997,990 shares are in issue as of the Latest Practicable Date and held by the Series C-2 Investors, each having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

“Series C-3 Investment” the investment made by the Series C-3 Investors in relation to the series C-3 preferred shares in Heguang International (Cayman)

“Series C-3 Investors” TDF China and TDF Advisors

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DEFINITIONS

“Series C-3 Preferred Share(s)” the series C-3 preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 5,396,377 shares are in issue as of the Latest Practicable Date and held by the Series C-3 Investors, having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

“Series C Preferred Share(s)” collectively, the Series C-1 Preferred Shares, the Series C-2 Preferred Shares and the Series C-3 Preferred Shares

“Series D Investment” the investment made by the Series D Investor in relation to the series D preferred shares in Heguang International (Cayman)

“Series D Investor” CGC Dunhill

“Series D Preferred Share(s)” the series D preferred shares of par value of US$0.0001 per share in the authorized share capital of our Company, of which 10,452,982 shares are in issue as of the Latest Practicable Date and held by the Series D Investor, each having the rights and preferences, privileges and restrictions as set forth in the [REDACTED] Shareholders’ Agreement

“SFC” the Securities and Futures Commission of Hong Kong

“SFO” or “Securities and Future the Securities and Futures Ordinance (Chapter 571 of the Ordinance” laws of Hong Kong), as amended or supplemented from time to time

“Share Subdivision” the share subdivision referred to in “Statutory and General Information — A. Further Information about our Group — 3. Resolutions in Writing of the Shareholders of Our Company Passed on [•]” in Appendix IV

“Shareholder(s)” holder(s) of Share(s)

“Share(s)” ordinary share(s) in the capital of our Company with nominal value of US$[REDACTED] each

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DEFINITIONS

[REDACTED]

“Sole Sponsor” China Merchants Securities (HK) Co., Limited

[REDACTED]

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Sunlight (UK)” Sunlight (UK) Trading Limited, a company incorporated under the laws of the England and Wales with limited liability on May 1, 2013 and a wholly-owned subsidiary of our Company

“Takeovers Code” The Codes on Takeovers and Mergers and Share Buy-backs issued by the SFC, as amended, supplemented or otherwise modified from time to time

“TDF Advisors” TDF Capital Advisors, LP, an exempted limited partnership incorporated under the laws of the Cayman Islands on June 21, 2005, and one of the [REDACTED] Investors

“TDF China” TDF Capital China II, LP, an exempted limited partnership incorporated under the laws of the Cayman Islands on June 21, 2005, and one of the [REDACTED] Investors

“Track Record Period” the period comprising the three financial years ended December 31, 2018, 2019 and 2020

[REDACTED]

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DEFINITIONS

“U.S.” or “United States” the United States of America, its territories, its possessions and all areas subject to its jurisdiction

“US$”, “USD” or “U.S. dollars” United State dollars, the lawful currency for the time being of the United States

“U.S. Securities Act” the United States Securities Act of 1933, as amended and supplemented or otherwise modified from time to time, and the rules and regulations promulgated thereunder

“WFOE” Digitrading Beijing

[REDACTED]

In this document, the terms “associate”, “close associate”, “connected person”, “connected transaction”, “core connected person”, “controlling shareholder”, “subsidiary” and “substantial shareholder” shall have the meanings given to such terms in the Listing Rules, unless the context otherwise requires.

If there is any inconsistency between the Chinese names of the entities or enterprises established in the PRC mentioned in this document and their English translations, the Chinese names shall prevail. The English translations of the Chinese names of such PRC entities or enterprises are provided for identification purposes only.

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GLOSSARY OF TECHNICAL TERMS

This glossary of technical terms contains explanations of certain technical terms used in this document. As such, these terms and their meanings may not correspond to standard industry meanings or usage of these terms.

“active buyers” buyers who placed at least one order on our marketplace during the year

“AI” Artificial Intelligence, intelligence exhibited by machines in the area of computer science that emphasizes the creation of intelligent machines that work and react like humans or other natural intelligence

“API” application programming interface, a set of routines, protocols, and tools for building software applications

“app(s)” mobile application(s) and software(s) designed to run on smartphone and other mobile devices

“B2B” business-to-business

“B2B2C” business-to-business-to-customer

“B2C” business-to-customer

“big data analytics” the use of advanced analytic techniques against very large, diverse data sets to uncover hidden patterns, unknown correlations, market trends, customer preferences and other useful information that can help organizations make more informed business decisions

“CAGR” compound annual growth rate

“carrier” the individual or organization who transports passengers or goods for a profit

“cohort retention rate” the number of active buyers acquired in a given prior year that remained active in a given subsequent year, as a percentage of the number of active buyers acquired during that prior year

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GLOSSARY OF TECHNICAL TERMS

“COVID-19” Novel Coronavirus Pneumonia (COVID-19), a respiratory illness caused by a novel virus designated as severe acute respiratory syndrome coronavirus 2

“CPS” cost per sale, a performance-based pricing model where advertising is paid on the basis of increased sale amount as a result of the advertising

“customer acquisition cost” selling and marketing expenses spent on acquiring new customers, including expenses spent on pay-per-click advertising, search engine optimization and app-based advertisements, divided by the number of newly acquired customers for the relevant period

“DHLink” our cross-border logistics business unit through which we provide Ongate and Offgate logistics services

“dropshipper” person or firm (usually the sellers) that sells and arranges for fulfillment of orders directly from manufacturers or wholesalers to end consumers

“D-U-N-S Number” Data Universal Numbering System number, a unique nine-character number used to identify an organization

“GMV” gross merchandise volume

“IT” information technology

“IoT” or “Internet of Things” a type of network that realizes intelligent identification, positioning, tracking, monitoring and management of targeted objects achieved by exchange of information and communication between such targets and internet via intelligent terminal products under pre-determined protocol

“live listings” listings of products available on our marketplace

“O2O” online-to-offline and offline-to-online commerce

“repeat rate” the number of buyers who placed more than one order in a given year divided by the number of active buyers for the same year

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GLOSSARY OF TECHNICAL TERMS

“SaaS” software as a service

“server” a computer system that provides services to other computing systems over a computer network

“shipper” person or firm (usually the sellers) named in the shipping documents as the party responsible for initiating a shipment to a consignee (usually the buyer) named in the shipping documents

“small-order” orders in the amount of USD800 or less

“take rate” our commissions divided by GMV (with respect to orders for which payment had been received) for the same period

“traffic” the flow of audience

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FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements and information relating to our Company and our subsidiaries that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”, “intend”, “may”, “might”, “ought to”, “plan”, “potential”, “predict”, “project”, “seek”, “should”, “will”, “would” and the negative of these words and other similar expressions, as they relate to the Group or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. The risks and uncertainties facing our company which could affect the accuracy of forward-looking statements include, but are not limited to, the following:

• our operations and business prospects;

• future developments, trends and conditions in the industry and markets in which we operate;

• our business strategies and plans to achieve these strategies;

• general economic, political and business conditions in the markets in which we operate;

• changes to the regulatory environment and general outlook in the industry and markets in which we operate;

• the effects of the global financial markets and economic crisis;

• our ability to control or reduce costs;

• our dividend policy;

• the amount and nature of, and potential for, future development of our business;

• capital market developments;

• the actions and developments of our competitors;

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FORWARD-LOOKING STATEMENTS

• certain statements in “Business” and “Financial Information” with respect to trends in prices, operations, margins, overall market trends, and risk management; and

• change or volatility in interest rates, foreign exchange rates, equity prices, volumes, operations, margins, risk management and overall market trends.

Subject to the requirements of applicable laws, rules and regulations, we do not have any and undertake no obligation to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this document might not occur in the way we expect or at all. Accordingly, you should not place undue reliance on any forward-looking information.

In this document, statements of or references to our intentions or those of the Directors are made as of the date of this document. Any such information may change in light of future developments.

All forward-looking statements contained in this document are qualified by reference to the cautionary statements set out in this section.

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RISK FACTORS

Investing in our [REDACTED] involves risks. Before deciding to invest in the [REDACTED], you should carefully consider all of the information in this document, including the following risk factors, before making any investment decision in relation to the [REDACTED]. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks, in which case the trading price of our [REDACTED] could also decline, and you could lose part or all of your investment. You should pay particular attention to the fact that we are an exempted company incorporated in the Cayman Islands and that our principal operations are conducted in multiple countries and regions, including China, and are governed by legal and regulatory environments that may differ significantly.

There are certain risks involved in our operations, and many of these risks are beyond our control. These risks can be characterized as: (i) risks relating to our business and industry; (ii) risks relating to our Contractual Arrangements; (iii) risks relating to doing business in China and (iv) risks relating to the [REDACTED]. Additional risks and uncertainties that are presently not known to us, or not expressed or implied below, or that we currently deem immaterial could also harm our business, financial condition and operating results. You should consider our business and prospects in light of the risks we face, including those discussed in this section.

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

If we fail to effectively retain our existing buyers and sellers, or to acquire new buyers and sellers, or to keep or increase their engagement, our business, financial condition, results of operation and prospects may be materially and adversely affected.

The number of buyers and sellers and their level of engagement are critical to us. To increase our GMV, enhance revenue growth and achieve profitability, we must retain our existing buyers and sellers, attract more buyers and sellers, and keep or increase their level of engagement. To that end, we plan to continuously diversify and expand our services and solutions offerings and deepen our services and solutions penetration. Given that we operate in a rapidly changing industry, we need to anticipate our buyers’ preferences and industry changes and respond to such changes accordingly in a timely and effective manner. If buyers cannot find the products they are looking for on our marketplace, or if our competitors offer more attractive prices or better customer services, or if buyers consider the websites or mobile app of our competitors more convenient, they may visit our websites or mobile app less frequently or even cease using our websites or mobile app. Moreover, our platform’s network effects are critical to the success of our business. Any decrease in the number of buyers will affect our ability to retain and attract sellers on our marketplace, which will in turn attract fewer buyers. Sellers may switch to our competitors if they offer more competitive fees, or more comprehensive or better services and commercial solutions. If

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RISK FACTORS we are unable to retain our existing buyers or sellers or to acquire new buyers and sellers in an efficient way, the revenue we generate may decrease and our results of operations and prospects will be adversely affected.

Our marketing efforts to help grow our business may not be effective.

Promoting public awareness of our brand is essential to our business. We currently promote our marketplace, services and cloud-based commercial solutions offerings through search engines, social media platforms and advertising unions such as Google, Bing and Facebook. If we fail to manage our marketing efforts in a cost-efficient manner, our business prospects may be adversely affected. We cannot assure you that our marketing efforts will always effectively promote public awareness of our brand, enlarge our user base and increase the user engagement level, or that we could manage our marketing expenses cost-effectively.

If we are unable to manage our growth or execute our growth strategies effectively, our business and prospects may be materially and adversely affected.

Our business has grown significantly during the Track Record Period. Our total revenue increased from USD117.9 million for the year ended December 31, 2018 to USD178.7 million and USD230.5 million for the years ended December 31, 2019 and 2020, respectively, representing a CAGR of 39.8%. Our gross profit increased from USD51.4 million for the year ended December 31, 2018 to USD97.2 million and USD106.0 million for the years ended December 31, 2019 and 2020, respectively, representing a CAGR of 43.5%.

We expect continued growth in our scale of business and number of employees. On buyers’ side, we plan to further grow our buyer base and improve user experience. On sellers’ side, we expect to further expand our seller base and further diversify our service and commercial solutions offerings. To support our business expansion, we also expect to upgrade our managerial, operating, financial and human resource systems, procedures and controls. In addition, as we keep growing our business, we will need to continue to expand, train, manage and motivate our growing workforce. All these efforts require substantial financial, managerial, and other resources.

We cannot assure you that our historical growth rate will be sustainable or that we will be able to effectively implement all these managerial, operating, financial and human resource systems, procedures and controls. If we are not able to manage our growth or execute our growth strategies effectively, our expansion may not be successful and our business and prospects may be materially and adversely affected.

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RISK FACTORS

We derive a majority of our revenue from commission fees we collect on our marketplace and service fees from our logistics service. Our effort to diversify and expand our service offerings may not succeed, and may reduce our revenue growth.

We derive a majority of our revenue from commission fees we collect on our marketplace and service fees for logistics service. Revenue from commission fees accounted for 53.0%, 57.5% and 49.3% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively. Revenue from logistics service accounted for 5.7%, 16.2% and 36.2% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively. While we intend to diversify and expand our service offerings, we may not succeed in deriving revenue from them. Any failure to do so may inhibit the growth of our business. Moreover, we may have limited or no experience in our newly expanded service and cloud-based commercial solutions offerings or geographical markets. If we experience service disruptions, failures, or other issues, our reputation and business may be materially and adversely affected. Our newly expanded business operations may not recoup our investments in a timely manner, or at all. If any of these occurs, it may damage our reputation, inhibit our growth, and materially and adversely affect our business, results of operations and financial condition.

We face risks related to natural disasters, health epidemics and other outbreaks, such as the outbreak of COVID-19, which could significantly disrupt our operations.

Our business could be adversely affected by the effects of epidemics, including COVID-19, avian influenza, severe acute respiratory syndrome (SARS), influenza A (H1N1), Ebola or another epidemic. Any such occurrences could cause severe disruption to our daily operations if any of our employees is suspected of having any of the aforementioned diseases or any other contagious disease or condition, since it could cause our employees to be quarantined and/or our offices to be shut down temporarily.

In recent years, there have been outbreaks of epidemics in China and globally. In particular, in early 2020, in connection with the intensifying efforts to contain the spread of COVID-19, the Chinese government took a number of actions, which included extending the Chinese New Year holiday, quarantining individuals infected with or suspected of having COVID-19, prohibiting residents from free travel, encouraging employees of enterprises to work remotely from home and cancelling public activities, among others. The COVID-19 has also resulted in temporary closure of many corporate offices, retail stores, manufacturing facilities and factories across China. We have taken a series of measures in response to the outbreak, including, among others, remote working arrangements for some of our employees. These measures could reduce the capacity and efficiency of our operations and negatively impact the procurement of products as the goods may not be delivered in a timely manner due to delay in the logistics process, which in turn could negatively affect our results of operations. The general consumer spending sentiment may also be

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RISK FACTORS negatively impacted by the outbreak of the pandemic. The extent to which COVID-19 impacts our results of operations will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable. Due to the latest development of the COVID-19 pandemic in China and the globe, we believe it is too early to predict when the epidemic could be contained, and we can neither assure you that the governments in China, the U.S. or other countries and regions that we operate our business in will not take any intensifying measures to contain the COVID-19 pandemic, nor can we ascertain that our business operations will not be interrupted or completely shut down due to these measures in the future. If the current COVID-19 pandemic keeps escalating, our business, financial conditions and results of operation will be materially and adversely affected.

We are also vulnerable to natural disasters and other calamities. Although we have five data centers and over 300 proprietary and cloud-based servers that are hosted in different locations and our backup systems capture data regularly, we cannot assure you that any backup systems will be adequate to protect us from the effects of fires, floods, typhoons, earthquakes, power losses, telecommunications failures, break-ins, wars, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services on our platform.

Our historical results during the Track Record Period are not necessarily indicative of our future performance.

We experienced significant revenue growth during the Track Record Period. Our total revenue increased significantly by 51.6% from USD117.9 million for the year ended December 31, 2018 to USD178.7 million for the year ended December 31, 2019, and further increased by 29.0% to USD230.5 million for the year ended December 31, 2020. Our revenue growth has been primarily driven by the growth of GMV on our marketplace platform, DHgate, as well as the increase in revenue from our logistics service. Our financial conditions, results of operations and prospects are subject to a number of factors which may be beyond our control. See “Financial Information — Major Factors Affecting our Results of Operations.” In addition, during the Track Record Period, we generated revenue from our direct sales platform, DHselect. Revenue from online direct sales amounted to USD24.8 million, USD18.6 million and nil for the years ended December 31, 2018, 2019 and 2020, representing 21.0%, 10.4% and nil of our total revenue, respectively. We ceased to operate DHselect in 2019 due to our strategic focus on wholesale platform and its value-added services. Our historical revenue growth rate may not be indicative of our future financial performance, and our results of operations for any prior periods should not be relied on as an indication of our future performance.

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RISK FACTORS

We rely on the availability and proper functioning of certain third-party service providers. Should there be any disruption to the services provided by them or if any of them fails to meet the required standards, our business and reputation may be adversely affected.

We rely in part on certain third-party service providers in relation to our business operations. To the extent they are unable to provide satisfactory services to our buyers or sellers, which may be the results of events beyond our or their control, we may suffer reputational damage, and our business, financial condition and results of operations may be materially and adversely affected. Further, if we fail to retain existing or attract new quality third-parties to collaborate with us, our ability to retain existing users or engage prospective users may be severely limited, which may have a material and adverse effect on our business, financial condition and results of operations.

In addition, certain of these third-party service providers that we collaborate with have access to our user data to a limited extent in order to provide their services. If they engage in activities that are negligent, illegal or otherwise harmful to the trustworthiness and security of the products or system, including the leak or negligent use of data, or users are otherwise dissatisfied with their service quality, we could suffer reputational harm, even if these activities are not related to, attributable to or caused by us.

We face risks associated with the misconduct or illegal activities of our employees, suppliers, customers and other business partners and their employees, and other related personnel.

Our operational results, reputation and goodwill may be adversely and materially affected by misconducts of our employees, at different operational levels, either individually or in collusion with other employees, suppliers, customers or other third parties. Such misconducts may even subject us to third-party claims and regulatory actions. Even though we have implemented internal control procedures and systems to manage such risks, we cannot assure you that our employees will fully comply with our internal control procedures and systems when discharging their duties. As a result, we face the risks of being blemished by misconducts of our employees.

We may also be subject to misconducts by third parties such as our suppliers, customers and other business partners. As we have no control over these third parties, there can be no guarantee that we will be able to prevent or detect all incidents of their misconducts. Any misconducts committed against us or our interests, which may include undetected past acts or future acts, could subject us to financial losses, reputational damages and may have a material adverse effect on our business and results of operations. See “Business — Legal Proceedings and Non-compliance — Non-compliance.”

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We face risks relating to payment service, which may materially and adversely affect our business, financial condition and results of operations.

We rely on third-party payment service providers for payment services, including MSO licensed services, credit card and debit card transactions and cross-border settlement. If these third-party payment service providers do not perform adequately or if our relationships with these third-party payment service providers were to terminate, our buyers’ ability to place orders, and our sellers’ ability to receive orders or payment could be adversely affected and our business could be harmed. If any of these third-party payment service providers suspends service or has significant outages in the future, we may not be able to locate suitable alternatives, and our business could be harmed. In addition, an increase in the fees charged by our third-party payment providers would result in an increase in our operating expenses, which may adversely affect our financial condition and results of operations.

Moreover, the laws and regulations governing payments are highly complicated and are subject to constant changes and significant variations across different jurisdictions. Any actual or alleged failure to comply by us, or any failure by our third-party payment service providers to comply, with the applicable rules and regulations may materially and adversely affect our business financial condition and results of operations. See “Business — Legal Proceedings and Non-compliance — Non-compliance.”

Changes in international trade or investment policies and barriers to trade or investment, in particular the ongoing trade conflict and tension between the U.S. and China, may adversely impact our business and operating results.

In recent years, international market conditions and national trade or investment policies have been increasingly affected by competition among countries and regions and geopolitical frictions. Changes to trade policies, treaties and tariffs, or the perception that these changes could occur, could adversely affect the financial and economic conditions in the jurisdictions in which we operate, as well as our international and cross-border operations and expansion. The U.S. government has made statements and taken certain actions that may lead to potential changes to the U.S. and international trade policies towards China. In January 2020, the “Phase One” agreement was signed between the U.S. and China, under which both parties made certain concessions and agreed not to proceed with additional tariffs against one another. However, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, or other trade matters, especially with regard to the Trade Facilitation and Trade Enforcement Act of 2015. Since the “Phase One” agreement, the U.S. government has taken various actions, such as issuing executive orders and adding Chinese entities to certain sanctions lists, which may further restrict cross-border commercial activities

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RISK FACTORS between the U.S. and China. In addition, China and other countries and regions have retaliated, and may further retaliate, in response to new trade policies, treaties and tariffs implemented by the U.S. government. Such retaliation measures may further escalate the tensions between the countries and regions or even lead to a trade war. Any escalation in trade tensions or a trade war, or the perception that such escalation or trade war could occur, may have a negative impact on the economies of not merely the U.S. and China, but the global economy, which may in turn affect activity levels on our platform and materially and adversely affect our business, results of operations and financial conditions of our Company.

Any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for the products and services on our marketplace, impact the competitive position of the products on our marketplace, or prevent sellers from selling products in certain countries and regions. If any new tariffs, legislations and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on our business, financial condition and results of operations. Trade tension between China and the U.S. may intensify and both sides may adopt even more drastic measures. Changes in laws and policies could negatively affect our business operations and expansion plans.

We could be adversely affected as a result of any sales we make to certain countries that are, or become subject to, export control and economic or trade sanctions administered by the U.S., the European Union, the United Kingdom, the United Nations, and other relevant sanctions authorities.

The U.S. and other jurisdictions or organizations, including the European Union, the United Kingdom, the United Nations and other relevant countries, have, through executive orders, passing of legislation or other governmental means, implemented measures that impose economic sanctions on certain countries or on targeted industry sectors, groups of companies or persons, and/or organizations within such countries. The U.S. government imposes broad economic and trade restrictions on dealings with certain countries and regions, including Crimea, Cuba and Iran, and numerous individuals and entities, including those designated as having engaged in activities relating to terrorism, drug trafficking, cybercrime, the rough diamond trade, proliferation of weapons of mass destruction or human rights violations. The U.S. government also imposes more targeted sanctions on certain dealings with countries such as Russia and Venezuela, among others. The United Nations, the European Union and other countries also impose economic and trade restrictions on certain countries and persons. We cannot predict with a reasonable degree of certainty on how the export controls and economic or trade sanctions imposed by the U.S., the European Union, the United Nations and other relevant sections authorities may develop.

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During the Track Record Period, certain sellers on our platform took orders from buyers who had IP addresses from Crimea, Cuba and Iran, which are subject to comprehensive sanctions programs administered by the Office of Foreign Assets Control of the US Department of the Treasury (the “OFAC”). We also provided payment services with respect to some of these transactions. During the Track Record Period, our revenue generated from such historical activities represented approximately 0.003%, 0.001% and nil of our total revenue for the three years ended December 31, 2018, 2019 and 2020, respectively.

During the Track Record Period, our Group engaged in Primary Sanctioned Activities, which appear to be potential violations of U.S. sanctions regulations that are applicable to transactions with Crimea, Cuba and Iran. Based on the facts and circumstances and the assessment made by our International Sanctions Legal Advisors, on February 25, 2020, we filed a voluntary self-disclosure (“VSD”) with the OFAC in relation to such historical transactions and cooperated with the U.S. government in resolving the matter. On January 27, 2021, OFAC responded to the VSD with the Cautionary Letter representing a final enforcement response, in which OFAC stated that it would not pursue any civil monetary penalty or take other enforcement action against the matters disclosed in the VSD. Accordingly, both we (as advised by our International Sanctions Legal Advisors) and OFAC consider that the potential legal issues raised through the VSD to be fully closed with the issuance of the Cautionary Letter and without the imposition of any civil monetary penalty.

We have undertaken to the Stock Exchange that we will not use the [REDACTED] from the [REDACTED], as well as any other funds raised through the Stock Exchange, to finance or facilitate, directly or indirectly, activities or business with, or for the benefit of, any Sanctioned Countries or any other government, individual or entity sanctioned by the U.S., the European Union, the United Nations, the United Kingdom, the United Kingdom overseas territories or Australia, including, without limitation, any government, individual or entity that is specifically identified on the SDN List maintained by OFAC or other restricted parties lists maintained by the U.S., the European Union, the United Nations, the United Kingdom, the United Kingdom overseas territories and Australia. Further, we have undertaken not to use the [REDACTED] from the [REDACTED] to pay any damages for terminating or transferring any contract that violates International Sanctions. In addition, we have undertaken not to enter into any future business that would cause us, the Stock Exchange, HKSCC, HKSCC Nominees or our Shareholders and investors to violate or become a target of international sanctions laws by the U.S., the European Union, the United Nations, the United Kingdom, the United Kingdom overseas territories or Australia. We will also disclose on the respective websites of the Stock Exchange and our Group if we believe that the transactions our Group entered into in Sanctioned Countries or with Sanctioned Persons would put our Group or our Shareholders and investors to risks of being sanctioned, and in our annual reports or interim reports (i) details of any new activities in Sanctioned Countries or with Sanctioned Persons; (ii) our efforts on monitoring our business exposure to sanctions risks;

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RISK FACTORS and (iii) the status of, and the anticipated plans for any new activities in Sanctioned Countries and with Sanctioned Persons. If we were in breach of such undertakings to the Stock Exchange, we would be subject to the risk of possible delisting of our Shares on the Stock Exchange.

While we have implemented internal control measures to minimize our risk exposure to international sanctions, the sanction laws and regulations are complex and subject to frequent changes, including with respect to the lists of countries, entities, individuals and technologies subject to sanctions and other export controls. Further, new requirements or restrictions could come into effect which might increase the scrutiny on our business or result in one or more of our business activities being deemed to have violated sanctions laws and regulations. We cannot provide any assurance that our future business will be free of sanctions risk or our business will conform to the expectations and requirements of the authorities of U.S. or any other jurisdictions. Our business could be materially and adversely affected if the authorities of the U.S., the European Union, the United Nations or any other jurisdictions were to determine that any of our future activities violate relevant export controls or economic and trade sanctions, and our buyers, sellers and other participants of our marketplace may avoid business relationships with us. For more details of our business operations in the countries subject to International Sanctions and our undertakings to the Stock Exchange and its related group companies, please refer to “Business — Our Undertakings and Internal Control Procedures” for further details.

Security breaches, attacks against our platform or failure to protect confidential and private information of our users could damage our reputation and adversely affect our business and results of operations.

Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the Internet and mobile platforms are under increased public scrutiny. We collect, store and transmit confidential information of our users, including their names, addresses and contact information, as well as financial and credit information. A significant challenge to our business is the secure storage and transmission of confidential information. We collect private information from and share certain personal information about our users with third-party service providers. We are required to collect and use the private information in accordance with PRC laws and not to disclose or use such information without consent from our users. See “Regulatory Overview — Laws and Regulations in Relation to Information Security and Privacy Protection.” Maintaining complete security for the storage and transmission of confidential information on our technology platform is essential to maintaining our operating efficiency and customer confidence, as well as complying with the applicable laws and standards.

Despite our continuous efforts to implement relevant security measures against breaches, our cybersecurity measures may not detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing

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RISK FACTORS attacks, social engineering, security breaches or other attacks and similar disruptions that may sabotage the security of information stored in and transmitted by our systems or that we otherwise possess. Confidential or private information obtained through such breaches may be further used in various other illegal activities, which may adversely affect our reputation. Any negative publicity on the safety of our websites or mobile apps or our privacy protection mechanisms and policies, or any claims asserted against us or fines imposed upon us as a result of actual or perceived failures, could have a material and adverse effect on our public image, reputation, financial condition and results of operations.

Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online services generally, which may adversely affect our financial condition and results of operations.

Our operations depend on the performance of the Internet and mobile Internet infrastructure and telecommunications networks in China, the U.S. and other parts of the world, which may experience unexpected system failures, interruptions, inadequacies or security breaches.

Our technology and infrastructure depend on the performance and reliability of the Internet and fixed telecommunications infrastructure in China, the U.S. and other countries and regions. In China, access to the Internet is primarily maintained through state-owned telecommunication operators under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology. Moreover, the national networks in China are connected to the Internet through international gateways, which are the only channels through which a domestic user can connect to the Internet and may not sufficiently support the continually growing demand for Internet usage. On the other hand, the Internet infrastructure in the U.S. or other countries and regions in which we operate may not support the growing demands for Internet usage coupled with our business growth. We may be required to upgrade our technology and infrastructure to accommodate increasing traffic on our platform. If we cannot enhance our capacity to provide our services, we may not be able to address the increase in traffic we anticipate from our expanding user base and the provision of our services may be hindered, which could adversely impact our business and profitability. In the event of disruptions, failures or other problems with Internet

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RISK FACTORS infrastructure, we or our users may not have access to alternative networks on a timely basis, if at all. In addition, we have no control over the costs of the services provided by telecommunication service providers. If the prices we pay for telecommunications and internet services rise significantly, our results of operations may be materially and adversely affected.

Our technology infrastructure may encounter disruptions or other outages caused by problems or defects in our technologies and systems, such as malfunctions in software or network overload. Incidents of serious network overload may cause laggings for some of our users for several hours each time, and may negatively affect our user experience. We may encounter issues relating to the upgrades of our systems or services and there may be undetected programming errors, which could adversely affect the performance of our operating systems and user experience. Furthermore, our infrastructure is also vulnerable to damages from fires, floods, earthquakes, power loss and telecommunication failures. Any network interruption or inadequacy that causes interruptions to our platform, or failure to maintain the network and server or solve such problems in a timely manner, could reduce our user satisfaction, which in turn, could adversely affect our reputation, user base and our business, financial condition, results of operations and prospects.

Our results of operations are subject to seasonal fluctuations.

We experience seasonality in our business. As a result, comparing our operating results on a period-to-period basis may not be meaningful. For example, we generally experience the highest level of revenue in the fourth quarter of each year due to a number of factors, including sellers allocating a significant portion of their online marketing budgets to the fourth quarter and the impact of seasonal purchasing patterns in respect of certain product categories such as apparel. We also have experienced lower level of revenue in the first quarter of each year due to sellers’ lower level of operating activities early in the calendar year. Our financial condition and results of operations for future periods may continue to fluctuate due to seasonality.

We face intense competition in our market. We may not be able to maintain or may lose market share and customers if we fail to compete effectively.

At present the global cross-border B2B e-commerce procurement from China market is relatively fragmented with a few leading players in terms of online platform trading volume, according to the iResearch Report. We generally face competition from large online marketplaces, offline distributors and suppliers of consumer goods, or other venues or marketplaces. Many of our current or potential competitors may have longer operating histories, greater brand recognition, better relationships with suppliers, larger customer bases, higher penetration in certain regions or greater financial, technical or marketing resources than we do.

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Moreover, some of our competitors may be acquired by, receive investments from or enter into strategic relationships with well-established and well-financed companies or investors which would help enhance their competitive positions. Some of our competitors may be able to devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to their websites, mobile apps and systems development than us. We cannot assure you that we will be able to compete successfully against current or potential competitors, and competitive pressures may have a material and adverse effect on our business, financial condition and results of operations.

We have incurred net losses in the past and we may not be able to maintain profitability in the future.

We incurred net losses of approximately USD50.4 million and USD6.7 million for the years ended December 31, 2018 and 2019, respectively. We had net profit of approximately USD6.1 million for the year ended December 31, 2020. Our ability to achieve and maintain profitability depends on various factors, including but not limited to, maintaining existing and attracting new buyers and sellers, controlling costs and expenses and increasing our revenues, and the effectiveness of our selling and marketing activities. We cannot assure you that we can maintain profitability in the future. As such, we may not be able to fund our operating expenses and expenditures and may be unable to fulfill our financial obligations as they become due, which may result in voluntary or involuntary dissolution or liquidation proceedings of our Company and a total loss of your investment.

We recorded net current liabilities during the Track Record Period.

As of December 31, 2018, 2019 and 2020, we had net current liabilities of USD210.0 million, USD214.7 million and USD177.0 million, respectively, primarily due to our large balance of the Preferred Shares. Our net current liabilities position exposes us to liquidity risks. Our future liquidity, the payment of trade and other payables and the repayment of our outstanding debt obligations as and when they become due will mainly depend on our ability to maintain adequate cash generated from operating activities and sufficient external financing. We cannot assure you that we will always be able to obtain necessary funding to finance our current liabilities and other debt obligations and we may continue to have net current liabilities in the future. Our ability to arrange financing and the cost of such financing are dependent on the global and the PRC economic conditions, capital and debt market conditions, lending policies of the PRC government and banks, and other factors. In the event we are unable to obtain adequate financing to meet our working capital requirements, we may be forced to delay, adjust, reduce or abandon our planned strategies. Our business, prospects and financial condition may be materially and adversely affected if our cash flow and capital resources are insufficient to finance our debt obligations.

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We had a net liability position during the Track Record Period, which may adversely affect our ability to declare and pay dividends.

As of December 31, 2018, 2019 and 2020, we had net liabilities of USD204.9 million, USD208.3 million and USD206.1 million, respectively, mainly attributable to the significant balance of Preferred Shares, which are accounted for as liabilities. Our balance of Preferred Shares amounted to USD86.6 million, USD105.0 million and USD131.1 million as of December 31, 2018, 2019 and 2020, respectively, as a result of the increase in our valuation. The Preferred Shares are designated as financial liabilities at fair value through profit or loss on the consolidated balance sheets, and the increases in fair value are recognized as fair value loss on the consolidated income statement. We will not incur any fair value loss following the Listing as all our Preferred Shares will be converted into our ordinary shares therefrom, but we may still retain accumulated losses due to the fair value loss of our Preferred Shares prior to the Listing. Under the Cayman Companies Act, we may only declare dividends out of profits or our share premium account, and provided always that in no circumstances may a dividend be paid if this would result in our Company being unable to pay our debts as they fall due in the ordinary course of business. Therefore, such accumulated losses may adversely affect our overall ability to declare and pay dividends after the Listing by reducing our sources for potential dividend declaration and payment.

Failure to adapt to changing industry conditions may have a material and adverse effect on our business, financial condition and results of operations.

The global cross-border B2B e-commerce market is characterized by rapidly changing technologies, industry norms, mobile applications, protocols and policies, products and services, and customer preferences. To keep abreast of the evolving industry conditions, market players keep innovating customized tools and technologies improving user experience. Consequently, we need to invest significant resources in the development of our technologies and infrastructure, which is fundamental for offering new high-quality products and services, in order to maintain our competitive position. However, we cannot assure you that our significant investment in the development of our technologies can enhance our competitive positions or generate revenues in a short period, or at all, and such development plan may be subject to regulations and protectionist policies, for national security or other purposes.

Our rapidly changing industry conditions may also require us to regularly evaluate our products and services offerings and maintain relationships with suppliers who can adapt to fast-changing consumer preferences. If our suppliers fail to catch up with the changing industry and our business strategies, the process of finding new suppliers may be costly and time-consuming, and we may not be able to select suitable suppliers to provide satisfactory products and services. Failure to properly address any of these challenges may materially and adversely affect our business, financial condition and results of operations.

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Risks and challenges resulting from potential strategic alliances or investments may have a material and adverse effect on our business, results of operations and financial condition.

We may enter into strategic alliances or investments, including joint ventures or minority equity investments, with various third parties to further our business purpose from time to time. These alliances and investments could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by third parties and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

In addition, if appropriate opportunities arise, we may acquire additional assets, technologies, services or businesses that are complementary to our existing business. Future acquisitions and the subsequent integration of new assets and businesses would require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the synergic effect or financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating investments may be significant. If our expansion into new businesses or geographical areas is not successful, our business, prospects and growth momentum may be materially and adversely affected. In addition to the requisite corporate approvals, we may also have to obtain approvals and licenses from relevant government authorities for the investments and comply with applicable PRC laws and regulations, which could result in delays in implementing our investments and increased costs.

We may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading.

Our business operations involve Internet advertisements, the content of which may be subject to regulatory scrutiny by the relevant authorities in China, the U.S. and other countries and regions. Under the relevant PRC laws and regulations, companies are prohibited from producing, distributing or publishing any advertisement containing content that violates PRC laws and regulations, impairs the national dignity of China, involves designs of the PRC national flag, national emblem or national anthem or the music of the national anthem, or content that is considered reactionary, obscene, superstitious or absurd, is fraudulent, or disparages similar products. As advised by our PRC Legal Advisor, we are required to verify, record and update the

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RISK FACTORS identity information of those who choose to place their advertisements with us on a regular basis. In addition, for advertisements of certain specific types of products and services, advertisers, advertising operators and advertising distributors must confirm that the relevant advertisers have obtained requisite government approvals, including the advertisers’ operating qualifications, proof of quality inspection of the advertised products and, for some specific industries, government approval of the content of the advertisement. We must also review supporting documents provided by our sellers and verify the content of the advertisements, and may not publish any advertisement that lacks or is inconsistent with supporting documents. While we have a review procedure prior to publishing, we cannot guarantee that we can eliminate all advertisements containing content that would be deemed inappropriate or misleading. If we are deemed to be violating laws or regulations of the PRC, the U.S. or other jurisdictions, we may be subject to penalties, including suspension of publishing, confiscation of the related revenues, imposition of fines and suspension or termination of our advertising services, any of which could materially and adversely affect our business. In addition, we may face increasing public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations, all of which could materially and adversely affect our reputation and business.

Unauthorized use of our intellectual property, unfair competition, or other violation of our rights by our employees, users, or third parties may be detrimental to our reputation and business.

Our trademarks, copyrights, patents, domain names, know-how, proprietary technologies, and similar intellectual property are critical to our success. We rely on a combination of intellectual property laws, such as trademark, fair trade practice, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentiality policies and contractual provisions with our employees and other parties to protect our intellectual property rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition, there can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable.

We face regulatory uncertainties and practical challenges in enforcing our intellectual property rights in the PRC. Preventing unauthorized use of all of our proprietary technologies, trademarks and other intellectual properties in real time is costly and difficult, and litigation may be necessary to enforce our intellectual property rights. Any litigation could result in substantial costs, diversion of our resources and may disrupt our business, as well as materially and adversely affect our business, financial condition, results of operations and prospects.

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Any lack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.

Our business is subject to regulation and supervision by the relevant governmental authorities in the PRC and other countries or regions where we operate. These governmental authorities promulgate and enforce regulations applicable to many aspects of our business operations. They may continue to promulgate new laws and regulations regarding these business operations, enhance enforcement of existing laws and regulations, or require additional approvals, licenses or permits from us or participants on our platform.

We have made great efforts to obtain all the applicable licenses and permits, but due to the large number of different service categories offered on our platform, we cannot assure you that we have obtained or applied for all the permits and licenses required and necessary for conducting our business or will be able to maintain our existing permits and licenses or obtain any new permits and licenses if required by any future laws or regulations. During the Track Record Period, we have had incidents of failing to obtain licenses required for our payment services. See “Business — Legal Proceedings and Non-compliance.”

If we fail to obtain and maintain approvals, licenses or permits applicable for our business, governmental authorities shall have the power to, among other things, levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions may have a material and adverse effect on our business, financial condition and results of operations.

We may be subject to intellectual property infringement claims, which may be costly to defend and subject us to significant damages.

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be other third-party intellectual property that is infringed by our products or services, the products or services provided by sellers on our marketplace, or other aspects of our business. There could also be existing patents of which we are not aware that our products may inadvertently infringe. We cannot assure you that holders of intellectual property rights purportedly relating to some aspects of our technologies, platform or business, if any such holders exist, would not seek to enforce such rights against us in China or any other jurisdictions.

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Further, the application and interpretation of China’s patent laws and the procedures and standards for granting patents in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur significant expenses, and may be forced to divert management’s time and other resources from our business and operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question.

We may also be subject to allegations of listing counterfeit or copyright-infringing products on our marketplace. Third parties harmed by such counterfeit or copyright-infringing consumer products may bring claims or legal proceedings against us. Although we have implemented strict policies on our marketplace to protect third parties’ intellectual property and may have legal claims against sellers of such counterfeit and copyright-infringing products, attempts to enforce our rights may be expensive, time-consuming and ultimately futile, and such allegations may subject us to certain punishments, harm our reputation and dissuade suppliers and buyers from using our marketplace, which would materially and adversely affect our business and prospects. In addition, in April 2019, the U.S. government issued an executive order instructing coordination among federal agencies to combat counterfeit goods, which aims to hold online marketplaces, like us, accountable for transactions of counterfeit goods. The executive order may result in heightened scrutiny, investigations, enforcement actions and litigation relating to intellectual property infringement. We may be subject to claims or disputes regarding counterfeit goods on our marketplace or copyright infringement or additional scrutiny by relevant government authorities in the countries and regions in which we have operations.

We were on the 2018, 2019 and 2020 Review of Notorious Markets for Counterfeiting and Privacy published by the United States Trade Representative (the “USTR”), as we have been reported by relevant right holders as an online marketplace for the sale and distribution of counterfeit and pirated academic textbooks, with deliveries made in small parcels or via third-party suppliers. Although the USTR has recognized our efforts to improve our image recognition system and to increase the number of inspectors who manually review products offered through our marketplace, and right holders have praised our responsiveness to takedown requests, we cannot assure you that we can always keep our marketplace free of counterfeit and pirated products due to the nature of our marketplace. We may be listed on the future Notorious Markets List and it could harm our reputation, incur additional costs and impair our capacities to retain existing buyers, acquires new buyers, and keep or increase their level of engagement, which would materially and adversely affect our business, results of operations and financial condition.

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Further, we use open-source software in connection with our products and services. Companies that incorporate open-source software into their products and services have, from time to time, faced claims challenging the ownership of open-source software and compliance with open-source license terms. As a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software or non-compliance with open-source licensing terms. Some open-source software licenses require users who distribute open-source software as part of their software to publicly disclose all or part of the source code to such software and make available any derivative works of the open-source code on unfavorable terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business, results of operations and financial condition.

Our leased property interests may be defective and our right to lease the properties affected by such defects may be challenged, which could cause significant disruption to our business.

As of the Latest Practicable Date, with respect to four of our leased properties, the relevant lessors had not provided us with valid property ownership certificates or relevant authorization documents evidencing their rights to lease the properties to us. If our lessors are not the owners of the properties and they have not obtained consents from the owners or their lessors or permits from the relevant government authorities, our leases could be invalidated. If this occurs, we may face challenges from the legal owners of the properties or other third parties, and may be forced to vacate the relevant properties and relocate our offices. We may incur additional expenses during the process, and our business, financial condition and results of operations may be negatively affected. In addition, 16 of our leasehold interests in leased properties have not been registered with the relevant PRC government authorities as required by PRC law, which may expose us to potential fines of RMB1,000 to RMB10,000 if we fail to remediate after receiving any notice from the relevant PRC government authorities.

Our success depends on the continuing efforts of our seasoned management team and personnel as well as our ability to preserve our corporate culture and values. If we fail to hire, retain and motivate our staff, our business may suffer.

Our success depends on the continued service of our key management and our employees. In particular, Ms. Wang, our founder and the chairman of our Board, has been our leader in the formulation of our strategic direction and the development our corporate culture and values since the inception of our business. If we lose the services of any member of our key management, we may not be able to find appropriate replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and growth. If any member of our key management joins a competitor or forms a competing business, we may lose customers, know-how and key professionals and employees. Our key management members have entered into employment agreements and confidentiality and non-competition agreements with us. However, if

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RISK FACTORS any dispute arises between any member of our key management and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.

Our rapid growth also requires us to hire and retain talented employees who are well-versed in helping us expand our business operations. As the competition for talents in our industry is intense, we may need to offer more attractive compensation and other remuneration package, including share-based compensation, to attract and retain qualified talents. Even if we were to offer competitive compensation and other benefits, there is no assurance that these individuals will join or continue to work with us. Any failure to attract, retain or motivate key management and experienced and capable personnel could severely disrupt our business and growth.

We have limited insurance coverage, which could expose us to significant costs and business disruption.

We do not maintain product liability insurance or business interruption insurance, nor do we maintain key-man life insurance or insurance covering damages to our network infrastructures, information technology systems or properties. We maintain various insurance policies to safeguard against risks and unexpected events. We also provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees. However, insurance companies in China currently offer limited business-related insurance products as the insurance industry in China is still in an early stage of development. We cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we will be able to successfully claim for our losses under our current insurance policies on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.

Failure to obtain government grants or preferential tax treatments that may be available to us or currently enjoyed by us could materially and adversely affect our business, results of operations and financial condition.

During the Track Record Period, we received certain government grants and preferential tax treatments. Century Heguang Beijing, Digitrading Beijing and Century Rich Palace have been identified as “high and new technology enterprise” (高新技術企業) by the Beijing Municipal Commission of Science and Technology (北京市科學技術委員會), and are entitled to preferential income tax rate of 15.0% for three consecutive years initially from 2018 to 2020, 2020 to 2022 and 2020 to 2022, respectively, as compared to the standard rate of 25.0%.

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RISK FACTORS

However, as the “high and new technology enterprise” certificate must be reapplied every three years, we cannot assure you that Century Heguang Beijing will be able to renew its status as a “high and new technology enterprise” upon each expiry of the certificate. In addition, such preferential tax rates are non-recurring in nature, and government authorities may decide to reduce or cancel such tax preferences at any time. Any discontinuation, reduction or delay of these governmental grants or preferential tax treatment could adversely affect our results of operations and financial condition. In addition, we might not be able to successfully or timely obtain the government grants or preferential tax treatments that may be available to us in the future, which could adversely affect our results of operations and financial condition.

Our business is subject to complex and evolving domestic and international laws and regulations regarding privacy and data protection.

We are subject to laws and regulations in various jurisdictions, including China, the U.S. and other countries and regions where we operate, such as laws regarding data retention, privacy and consumer protection. These laws and regulations are often complex and continuously evolving and developing. The interpretation and application of these laws and regulations in China and elsewhere are often uncertain and in flux. It is possible that existing or newly-introduced laws and regulations, or their interpretation, application or enforcement, could significantly affect our business operations. Further, regulatory authorities in these jurisdictions have implemented and are considering further legislative and regulatory proposals concerning data protection that may be applicable to our business. New laws and regulations that govern new areas of data protection or impose more stringent requirements may be introduced in China and other jurisdictions where we conduct business or may expand into.

As we further expand our operations into international markets, we will be subject to additional laws in other jurisdictions where we operate and where our buyers, sellers and other participants are located. The laws, rules and regulations of other jurisdictions may be more comprehensive, detailed and nuanced in their scope, and may impose requirements and penalties that conflict with, or are more stringent than, those in China. In addition, these laws, rules and regulations may impose additional and substantial operational, administrative and compliance burdens on us, and may also restrict our business activities and expansion plans, as well as impede our business strategies. Complying with laws and regulations for an increasing number of jurisdictions could also require significant resources and costs.

Any failure, or perceived failure, by us to comply with any regulatory requirements or laws, rules and regulations could result in reputational damages or proceedings or actions against us by governmental authorities, buyers or others. These proceedings or actions could subject us to significant penalties and negative publicity, require us to change our business practices, increase our costs and severely disrupt our business, hinder our business expansion or negatively affect the

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RISK FACTORS trading price of our [REDACTED]. On the other hand, compliance with these laws and regulations may require us to expend substantial resources or to discontinue certain business practices. Any costs incurred as a result of such potential liability could harm our business, financial condition and results of operations.

A severe or prolonged downturn in the Chinese, the U.S. or global economy could materially and adversely affect our business and financial condition.

Our revenue and net income are largely affected by the Chinese, the U.S. and global economies, which are influenced by many factors beyond our control. The growth of Chinese economy has slowed down in recent years compared with that in prior years. According to the National Bureau of Statistics of China, China’s real GDP growth rate was 6.7% in 2018, which decreased to 6.1% in 2019 and significantly decrease to 2.3% in 2020 due to the outbreak of COVID-19. There have also been concerns about the relationships between China and the U.S., as well as the relationship among the U.S. and certain countries and regions such as Iran and North Korea, which may result in or escalate potential conflicts to trade, territorial or trade disputes. See “— Risk Relating to Our Business and Industry — Changes in international trade or investment policies and barriers to trade or investment, in particular the ongoing trade conflict and tension between the U.S. and China, may adversely impact our business and operating results.” Any prolonged or continuing economic downturn could result in considerable reduction in cross-border commercial activities and consequently cause material and adverse impacts on our business, financial condition and results of operation.

Our risk management and internal control system may not be sufficient or effective in all respects, which may materially and adversely affect our business and results of operations.

We seek to establish risk management and internal control system comprised of policies and procedures that we consider necessary for our business operations. See “Business — Risk Management and Internal Control.” However, due to the limitations inherent in the design and implementation of risk management and internal control system, we cannot assure you that our risk management and internal control system will be able to identify, prevent and manage all risks in a timely manner, or at all. It is not always possible to timely detect and prevent fraud and other misconduct, and the precautions we take to prevent and detect such activities may not be effective. See “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation.”

Our risk management and internal control also rely on the effective implementation by our employees. However, we cannot assure you that such implementation will not be subject to any manual errors or mistakes. If we fail to timely adapt our risk management and internal control policies and procedures to our changing business, our business, results of operations and financial condition could be materially and adversely affected.

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RISKS RELATING TO OUR CONTRACTUAL ARRANGEMENTS

If the PRC government finds that the agreements that establish the structure for operating certain of our businesses in China do not comply with the applicable PRC laws and regulations, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe consequences, including the nullification of the Contractual Arrangements and the relinquishment of our interests in our Operating Entity.

Current PRC laws and regulations impose certain restrictions on foreign ownership of companies that engage in Internet and other related business.

We are an exempted company incorporated under the laws of Cayman Islands, and Digitrading Beijing, our wholly-owned PRC subsidiary, is considered a foreign-invested enterprise. To comply with PRC laws and regulations, we conduct a portion of our business and hold the requisite licenses or permits and other key assets that are essential to our business operations in China through our Operating Entity based on the Contractual Arrangements which enable us to (i) have the power to direct most significant economic activities of our Operating Entity; (ii) receive substantially all the economic benefits from our Operating Entity in consideration for the services provided by Digitrading Beijing; and (iii) have an exclusive option to purchase all or part of the equity interests in our Operating Entity when and to the extent permitted by PRC laws and regulations, or require any existing shareholder(s) of our Operating Entity to transfer any or part of the equity interests in our Operating Entity to another PRC person or entity designated by us at any time at our sole discretion according to relevant laws and regulations. As we are the primary beneficiary of our Operating Entity due to the Contractual Arrangements, we consolidate its results of operations into ours.

If the PRC government finds that our Contractual Arrangements do not comply with PRC laws and regulations regarding foreign investment in businesses, or the PRC government otherwise finds that we or our Operating Entity violate PRC laws and regulations, or lack the essential licenses or permits to operate our business, PRC regulatory authorities, including the MOFCOM and the MIIT, would have broad discretion in dealing with such violations or non-compliances, including, but not limited to:

• nullifying the Contractual Arrangements;

• revoking our business and operating licenses;

• suspending or restricting our operations;

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• imposing fines or confiscating any part of our income which is deemed to have been generated from illegal operations;

• imposing requirements or conditions with which we or Digitrading Beijing and our Operating Entity cannot comply;

• requiring us to restructure our corporate structure, ownership structure or operations, or to reapply for the necessary licenses, or to relocate our business, employees and assets;

• limiting or prohibiting our use of the [REDACTED] from the [REDACTED] or other of our financing activities to finance the business and operations of our Operating Entity; or

• taking other regulatory or enforcement actions that could be harmful to our business.

Any of these actions could cause significant disruption to our business operations, and may materially and adversely affect our business, financial condition and results of operations. In addition, if the PRC governmental authorities find our legal structure and Contractual Arrangements violate PRC laws and regulations, the impact of the PRC government actions on us and our ability to consolidate the financial results our Operating Entity is still unclear. If any of the actions result in our inability to direct the most significant economic activities of our Operating Entity and/or our failure to receive such economic benefits from our Operating Entity, we may not be able to consolidate our Operating Entity into our consolidated financial statements in accordance with HKFRS.

Our Contractual Arrangements may not be as effective in providing operational control as direct ownership. Our Operating Entity or the Registered Shareholders may fail to fulfill their obligations under our Contractual Arrangements.

Due to the PRC restrictions or prohibitions on foreign ownership of merchant services business and other related businesses in China, we operate a substantial portion of our business in China through our Operating Entity, in which we have no ownership interest. We rely on a series of Contractual Arrangements with our Operating Entity and the Registered Shareholders to control and operate its business. These Contractual Arrangements are intended to provide us with effective control over our Operating Entity and allow us to obtain economic benefits from them.

Although we have been advised by our PRC Legal Advisor that the Contractual Arrangements constitute valid and binding contract on each party thereto, and are enforceable in accordance with the terms thereof, subject to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors’ rights generally, the discretion of relevant government agencies in exercising their authority in connection with the interpretation and implementation thereof and the

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RISK FACTORS application of relevant PRC laws and policies thereto, and general equity principles, the Contractual Arrangements may not be as effective in providing control over our Operating Entity as direct ownership. If our Operating Entity or the Registered Shareholders fail to perform their respective obligations under the Contractual Arrangements, we may incur substantial costs and expend substantial resources to enforce our rights. All of the Contractual Arrangements are governed by, and interpreted in accordance with, PRC laws and disputes arising from the Contractual Arrangements will be resolved through arbitration or litigation in China. However, the legal system in China is still evolving and not as developed as in other jurisdictions. There are very few precedents and little official guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the outcome of arbitration or litigation. These uncertainties could limit our ability to enforce the Contractual Arrangements. In the event we are unable to enforce the Contractual Arrangements or we experience significant delays or other obstacles in the process of enforcing the Contractual Arrangements, we may not be able to exert effective control over our affiliated entities and may lose control over the assets owned by our Operating Entity. As a result, we may be unable to consolidate our Operating Entity in our consolidated financial statements and our ability to conduct our business may be negatively affected.

The Registered Shareholders of our Operating Entity may have potential conflicts of interest with our Company.

The Registered Shareholders may have potential conflicts of interest with us, and they may breach their obligations under the Contractual Arrangements with us, if they believe it would further their personal interests. We cannot assure you that when conflicts of interest arise between us and our Operating Entity, the Registered Shareholders will act in our best interests or that the conflicts of interest will be resolved in favor of us.

In addition, the Registered Shareholders may breach or cause our Operating Entity to breach the Contractual Arrangements. If our Operating Entity or the Registered Shareholders breach their obligations under the Contractual Arrangements or otherwise have disputes with us, we may have to initiate legal proceedings, which involve significant uncertainty. Such disputes and proceedings may significantly disrupt our business operations, adversely affect our effective control over our Operating Entity and otherwise result in negative publicity. We cannot assure you that the outcomes of any such disputes or proceedings will be in favor of us.

Certain terms of the Contractual Arrangements may not be enforceable under PRC laws.

The Contractual Arrangements are governed by PRC laws and provide that all disputes will be submitted to the China International Economic and Trade Arbitration Commission for arbitration, whose ruling will be final and binding.

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The Contractual Arrangements contain provisions to the effect that the arbitral body may award remedies over the shares and/or assets of our Operating Entity, injunctive relief and/or winding up of our Operating Entity. These agreements also contain provisions to the effect that courts of competent jurisdictions are empowered to grant interim remedies in support of the arbitration pending the formation of an arbitral tribunal. However, under PRC laws, these terms may not be enforceable and an arbitral body does not have the power to grant injunctive relief or to issue a provisional or final liquidation order for the purpose of protecting assets of or equity interests in our Operating Entity in case of disputes. In addition, interim remedies or enforcement order granted by overseas courts such as Hong Kong and the Cayman Islands may not be recognizable or enforceable in the PRC. PRC laws do allow the arbitral body to grant an award of transfer of assets of or equity interests in our Operating Entity in favor of an aggrieved party. In the event of non-compliance with such award, enforcement measures may be sought from the court. However, the court may or may not support the award of an arbitral body when deciding whether to take enforcement measures.

Under PRC laws, courts of judicial authorities in the PRC generally would not grant injunctive relief or a winding-up order against our Operating Entity as interim remedies for the purpose of protecting assets or equity interests in favor of any aggrieved party. In case the Contractual Arrangements provide that courts in competent jurisdictions may grant and/or enforce interim remedies or in support of arbitration, such interim remedies (even if granted by courts in competent jurisdictions in favor of an aggrieved party) may still not be recognized, or enforced by PRC courts. As a result, in the event that our Operating Entity or the Registered Shareholders breach any of the Contractual Arrangements, we may not be able to obtain sufficient remedies in a timely manner, and our ability to exert effective control over our Operating Entity and conduct our business could be materially and adversely affected.

Our Contractual Arrangements may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment.

Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the Contractual Arrangements between Digitrading Beijing and our Operating Entity do not represent an arm’s-length price and adjust the income of our Operating Entity in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by our Operating Entity, which could in turn increase their tax liabilities. In

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RISK FACTORS addition, the PRC tax authorities may impose late payment fees and other penalties to our Operating Entity for under-paid taxes. Our results of operations may be materially and adversely affected if our tax liabilities increase or if we are found to be subject to late payment fees or other penalties.

We may lose the ability to use licenses, approvals and assets held by our Operating Entity that are material to our business operations if our Operating Entity declare bankruptcy or become subject to a dissolution or liquidation proceeding.

We do not have priority pledges and liens against the assets of our Operating Entity. If any of our Operating Entity undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets and we may not have priority over such third-party creditors on the assets of our Operating Entity. If any of our Operating Entity liquidates, we may take part in the liquidation procedures as a general creditor under the PRC Enterprise Bankruptcy Law《中華人民共和國企業破產法》 ( ) and claim any outstanding liabilities owed by our Operating Entity to Digitrading Beijing under the exclusive business cooperation agreement, along with other general creditors.

If the Registered Shareholders attempt to voluntarily liquidate our Operating Entity without our prior consent, we could effectively prevent such unauthorized voluntary liquidation by exercising our right to request the Registered Shareholders to transfer all of their respective equity interests to a PRC person or entity designated by us in accordance with the agreement with the Registered Shareholders. In addition, under the Contractual Arrangements signed by, among others, Digitrading Beijing, the Operating Entity and the Registered Shareholders, the Registered Shareholders do not have the right to receive dividends or retained earnings or other distributions from the Operating Entity without our consent. If the Registered Shareholders initiate a voluntary liquidation proceeding without our authorization or attempt to distribute the retained earnings or assets of our Operating Entity without our prior consent, we may need to resort to legal proceedings to enforce the terms of the Contractual Arrangements. Any such legal proceeding may be costly and may divert our management’s time and attention away from the operation of our business, and the outcome of such legal proceeding will be uncertain.

Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

On January 1, 2020, the Foreign Investment Law came into effect. The Foreign Investment Law replaced the Sino-Foreign Equity Joint Venture Enterprise Law《中外合資經營企業法》 ( ), the Sino-Foreign Cooperative Joint Venture Enterprise Law《中外合作經營企業法》 ( ) and the Wholly Foreign-Invested Enterprise Law《外資企業法》 ( ) to become the legal foundation for foreign

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RISK FACTORS investment in the PRC. The Foreign Investment Law defines foreign investment as any investment activity directly or indirectly carried out in the PRC by one or more foreign natural persons, enterprises or other organizations (“Foreign Investor(s)”), and specifically stipulates four forms of investment activities as foreign investment, namely, (a) establishment of a foreign invested enterprise in the PRC by a Foreign Investor, either individually or collectively with any other investor, (b) obtaining shares, equities, assets interests or any other similar rights or interests of an enterprise in the PRC by a Foreign Investor, (c) investment in any new construction project in the PRC by a Foreign Investor, either individually or collectively with any other investor, and (d) investment in any other manners stipulated under laws, administrative regulations or provisions prescribed by the State Council.

Conducting operations through contractual arrangements has been adopted by many PRC-based companies, including us, to obtain and maintain essential licenses and permits in the industries that are currently subject to restrictions or prohibitions regarding foreign investment in China. The Foreign Investment Law stipulates four forms of foreign investment, which does not explicitly stipulate the contractual arrangements as a form of foreign investment. As advised by our PRC Legal Advisor, since contractual arrangements are not specified as a form of foreign investment under the Foreign Investment Law, and if future laws, administrative regulations or provisions prescribed by the State Council do not add contractual arrangements as a form of foreign investment and the operation of the value-added services is still in the Negative List, our Contractual Arrangements as a whole and each of the agreements comprising the Contractual Arrangements will not be affected and continue to be legal, valid and binding on relevant parties.

Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment includes “investment in any other manners stipulated under laws, administrative regulations or provisions prescribed by the State Council.” Therefore, there are possibilities that future laws, administrative regulations or provisions of the State Council may stipulate contractual arrangements as a way of foreign investment, and then whether our Contractual Arrangements will be recognized as foreign investment, whether our Contractual Arrangements will be deemed to be in violation of the foreign investment access requirements and how our Contractual Arrangements will be handled remain uncertain.

In the extreme case-scenario, we may be forced to unwind the Contractual Arrangements and/or dispose of our operating entities, which could have a material and adverse effect on our business, financial condition and result of operations. If our Company no longer has a sustainable business after the aforementioned unwinding of the Contractual Arrangements or disposal, the Stock Exchange may take enforcement actions against us which may have a material and adverse effect on the trading of our [REDACTED] or even result in delisting of our Company. For details of the Foreign Investment Law and the Negative List and its potential impact on our Company, see “Contractual Arrangements — Development in the PRC Legislation on Foreign Investment.”

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RISK FACTORS

Therefore, there is no guarantee that our Contractual Arrangements and the business of our operating entities will not be materially and adversely affected in the future.

If we exercise the option to acquire equity ownership and assets of our Operating Entity, the ownership or asset transfer may subject us to certain limitations and substantial costs.

Pursuant to the Contractual Arrangements, Digitrading Beijing or its designated person(s) has the exclusive right to purchase all or any part of the equity interests in our Operating Entity from its Registered Shareholders at the lowest price permitted by PRC law, and where PRC laws and regulations require valuation of the equity interest, the parties shall re-negotiate in good faith, and make adjustments based on the valuation to comply with the requirements of PRC laws and regulations. Digitrading Beijing also has the exclusive right to purchase all or any part of the assets in our Operating Entity from its Registered Shareholders at the lowest price permitted by PRC law. Where PRC laws and regulations require valuation of the assets, the parties shall re-negotiate in good faith, and make adjustments based on the valuation to comply with the requirements of PRC laws and regulations. In the event of such transfer, the lowest price permitted by PRC law may be substantially higher than the aforesaid actual capital contributions in case of purchasing the equity interests, or the net book value of relevant assets, or the competent tax authority may require Digitrading Beijing to pay enterprise income tax, value-added tax and other applicable taxes with reference to the fair value of such assets instead of the price as stipulated under the Contractual Arrangements, in which case Digitrading Beijing may be subject to a substantial amount of tax and our financial condition may be materially and adversely affected.

RISKS RELATING TO DOING BUSINESS IN CHINA

The legal system of the PRC is not fully developed, and there are inherent uncertainties that may affect the protection afforded to our business and our shareholders.

We conduct our business primarily through our subsidiaries and our Operating Entity in China. The PRC legal system is based on written statutes. Unlike the common law system, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislations over the past four decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiaries and our Operating Entity are subject to various PRC laws and regulations generally applicable to companies in China. However, since these laws and regulations are relatively new, and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform, and the enforcement of these laws, regulations and rules involves uncertainties.

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From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available to us than in more developed legal systems. Furthermore, the PRC legal system is based, in part, on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties include the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

Changes in China’s or global economic, political or social conditions or government policies could have a material and adverse effect on our business and operations.

Since our business is primarily operated in China, our business, financial position, results of operations and prospects are vulnerable to adverse changes in economic, political and social conditions in China. Economic reforms begun in the late 1970s have resulted in significant economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. China’s economy differs from that of most developed countries and regions in many respects, including the extent of government involvement, level of economic development, investment control, resources allocation, growth rate and control over foreign exchange. Before its adoption of reform and open-door policies beginning in 1978, China was primarily a planned economy. Since then, the PRC economy has been transitioning to become a market economy with socialist characteristics.

For approximately four decades, the PRC Government has implemented economic reform measures to utilize market forces in the PRC economy. Many of the reform measures are unprecedented or experimental and are expected to be modified from time to time. Other political, economic and social factors may lead to further readjustment or introduction of other reform measures. This reform process and any changes in laws and regulations or the interpretation or implementation thereof in China may have a material impact on our operations or may adversely affect our financial position and results of operations.

While the PRC economy has grown significantly in recent years, this growth has been geographically uneven among various sectors of the economy and during different periods. We cannot assure you that the PRC economy will continue to grow, or that if there is growth, such growth will be steady and uniform. Any economic slowdown may materially and adversely affect our business. In the past, the PRC Government has periodically implemented a number of

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RISK FACTORS measures intended to slow down certain segments of the economy which the PRC Government believed was overheating. We cannot assure you that the various macroeconomic measures and monetary policies adopted by the PRC Government to guide economic growth and allocate resources will be effective in improving the growth rate of the PRC economy. In addition, such measures, even if they benefit the overall PRC economy in the long term, may adversely affect our business and operating results, lead to reduction in consumer spending, GMV and demand for our services and adversely affect our competitive position.

In addition, the global macroeconomic environment is facing challenges. For example, the COVID-19 pandemic has caused significant downward pressure for the global economy, and many major economies have lowered their expected growth rate for the coming year. In addition, the impact of the decision by the United Kingdom to withdraw from the European Union, commonly referred to as “Brexit”, and the resulting effect on the political and economic future of the U.K. and the European Union is uncertain. Brexit could adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign exchange markets. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term.

PRC rules on mergers and acquisitions and certain other PRC regulations establish complex procedures for acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (《關於外國投資者併購境內企業的規定》) (the “M&A Rules”) adopted by six PRC regulatory agencies in 2006 and amended in 2009, and certain other regulations and rules concerning mergers and acquisitions, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Moreover, the Anti-Monopoly Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In addition, the security review rules issued by the MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defence and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the abovementioned regulations and other relevant rules to complete such transactions could be time consuming, and

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RISK FACTORS any required approval processes, including obtaining approval from the MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Any requirement to obtain prior approval required under the M&A Rules and/or any other regulations promulgated by relevant PRC regulatory agencies in the future could delay the [REDACTED] and failure to obtain such approval, if required, could have a material adverse effect on our business, financial condition and results of operations as well as the trading price of the [REDACTED] and could also create uncertainties for the [REDACTED].

The M&A Rules, among other things, also include provisions that purport to require any offshore special purpose vehicle formed for the purpose of an overseas listing of a PRC company to obtain the approval of the CSRC prior to the listing and [REDACTED] of such special purpose vehicle’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.

The application of the M&A Rules with respect to the [REDACTED] and our corporate structure for the [REDACTED] established under contractual arrangements remains unclear. Our PRC Legal Advisor has advised us that we are not required to apply to the relevant PRC regulatory agencies, including the CSRC and the Ministry of Commerce, for approval of the [REDACTED] or our current corporate structure because:

• the CSRC currently has not issued any definitive rules or interpretations concerning whether [REDACTED] like ours are subject to this regulation;

• we established our PRC subsidiaries by means of direct investments rather than by merger or acquisition of the equity or assets of PRC domestic companies; and

• no provision in this regulation clearly classified contractual arrangements as a type of transaction subject to its regulation.

However, we cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC Legal Advisor. If prior approval is required but not obtained, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the [REDACTED] from the [REDACTED] into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as

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RISK FACTORS the trading price of the [REDACTED]. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt the [REDACTED] before settlement and delivery of the Shares offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for the [REDACTED], we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such approval requirement could have a material adverse effect on the trading price of our [REDACTED].

Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Under our current corporate structure, our company in the Cayman Islands may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. Therefore, our wholly foreign-owned subsidiaries in China are able to pay dividends in foreign currencies to us without prior approval from the SAFE, subject to the condition that the remittance of such dividends out of the PRC complies with certain procedures under the PRC foreign exchange regulations, such as the overseas investment registrations by our Shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. However, approval from or registration with appropriate government authorities or delegated banks is required where RMB is to be converted into foreign currencies and remitted out of China to pay capital expenses such as repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our Shareholders.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The value of RMB against the HK dollar, the U.S. dollar and other currencies fluctuates, is subject to changing PRC Government’s policies, and largely depends on domestic and international economic and political developments, as well as supply and demand in local markets. It is difficult to predict how market forces or government policies may impact the exchange rate between the

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RISK FACTORS

RMB and the HK dollar, the U.S. dollar or other currencies in the future. In addition, the PBOC regularly intervenes the foreign exchange market to limit fluctuations in RMB exchange rates to achieve policy goals.

The [REDACTED] from the [REDACTED] will be received in HK dollars. As a result, any appreciation of the RMB against the HK dollar may result in a decrease in the value of our [REDACTED] from the [REDACTED]. Conversely, any depreciation of the RMB may adversely affect the value of, and any dividends payable on, the Shares in foreign currency terms. In addition, there are limited instruments available for us to reduce our foreign currency risk exposure at reasonable costs. Furthermore, we are also currently required to obtain the SAFE’s approval before converting significant sums of foreign currencies into RMB. All of these factors could materially and adversely affect our business, financial condition, results of operations and prospects, and could reduce the value of, and dividends payable on, the Shares in foreign currency terms.

The heightened scrutiny over indirect transfers of PRC assets by the PRC tax authorities may have a negative impact on our business operations, our acquisition or restructuring strategy or the value of your investment in us.

The SAT have conducted heightened scrutiny over non-resident enterprises’ direct or indirect transfer of equity interests in PRC resident enterprises by promulgating and implementing the tax circulars or notice.

On February 3, 2015, the SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises《關於非居民企業 ( 間接轉讓財產企業所得稅若干問題的公告》)(“SAT Public Notice 7”), which introduced a new tax regime with respect to the Indirect Transfer. The indirect transfer of Chinese taxable property refers to the transaction which produces a result identical or similar substantially to direct transfer of Chinese taxable property by a non-resident enterprise through transfer of equities and other similar interests of foreign enterprises directly or indirectly holding Chinese taxable property (excluding Chinese resident enterprises registered outside China), including the circumstances under which changes in foreign enterprises’ shareholders due to restructuring of the non-resident enterprise occur. Where a non-resident enterprise indirectly transfers equities and other property of a Chinese resident enterprise to evade its obligation of paying enterprise income tax by implementing arrangements that are not for bona fide commercial purpose, such indirect transfer, in accordance with the provisions of Article 47 of the EIT Law shall be re-identified and recognized as a direct transfer of equities and other property of the Chinese resident enterprise which the proceeds from transfers are subject to payment of enterprise income tax in China. SAT Public Notice 7 also clarifies certain criteria on the assessment of reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings and the purchase and sale of equity through a public securities market. However, SAT Public Notice 7 imposes

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RISK FACTORS burden on both the foreign transferor and transferee (or other individual who is obligated to pay for the transfer) of taxable assets for tax reporting. The parties to an indirect transfer of Chinese taxable property and the Chinese resident enterprises whose equity is transferred may report such Indirect Transfer to the relevant tax authority. Where an equity transferor fails to declare for payment timely or in full of the tax due on proceeds from indirect transfer of Chinese taxable property and the withholding agent also fails to withhold such tax, the tax authority shall, in addition to supplementary collection of such tax, also charge for interest on a daily basis from the equity transferor according to provisions of Articles 121 and 122 of the Implementing Regulations of the EIT Law.

On October 17, 2017, SAT issued a Public Notice of SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source《關於非居民企業所得稅源泉扣繳 ( 有關問題的公告》) (the “SAT Public Notice 37”), which effects from December 1, 2017. SAT Public Notice 37 further details and clarifies the tax withholding methods in respect of income at source of non-resident enterprises. Certain rules stipulated in SAT Public Notice 7 are also replaced by SAT Public Notice 37. Where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the EIT, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority; however, if the non-resident enterprise voluntarily declares and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.

The local application of SAT Public Notice 7 and SAT Public Notice 37 remains uncertain. For example, the term “Indirect Transfer” is not clearly defined, and it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with the PRC. Moreover, the relevant authority has not yet promulgated any formal provisions or made any formal declaration as to the process and format for reporting an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise. In addition, there are no formal declarations with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to reduce, avoid or defer PRC tax. Tax authorities may determine that SAT Public Notice 7 and SAT Public Notice 37 are applicable to previous investments by non-resident investors in our Company, if any of such transactions were determined by the tax authorities to lack reasonable commercial purpose. As a result, we and our existing non-resident investors may become at risk of being taxed under SAT Public Notice 7 and SAT Public Notice 37 and may be required to expend significant resources to comply with SAT Public Notice 7 and SAT Public Notice 37 or to establish that we should not be taxed under SAT Public Notice 7 and SAT Public Notice 37, which may have a material adverse effect on our financial condition and results of operations or such non-resident investors’ investments in us. We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing obligations on us or require us to assist the

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RISK FACTORS investigation of PRC tax authorities with respect thereto. Any PRC tax imposed on a transfer of our Shares or any adjustment of such gains would cause us to incur additional costs and may have a negative impact on the value of your investment in us.

We may be subject to penalties, including restriction on our ability to inject capital into our PRC subsidiaries and their ability to distribute profits to us, if our PRC resident Shareholders or beneficial owners fail to comply with relevant PRC foreign exchange regulations.

The SAFE has promulgated several regulations that require PRC residents and PRC corporate entities to register with, and obtain approval from, local branches of the SAFE and/or their designated commercial banks in connection with their direct or indirect offshore investment activities. The Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles《國家外匯管理局關於境 ( 內居民通過特殊目的公司境外投融資及返程外匯管理有關問題的通知》)(“SAFE Circular 37”), was promulgated by the SAFE in July 2014 that requires PRC residents or entities to register with the SAFE or its local branch or designated commercial banks in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. These regulations apply to our Shareholders who are PRC residents and may apply to any offshore acquisitions that we make in the future.

Under these foreign exchange regulations, PRC residents who make, or have previously made, prior to the implementation of these foreign exchange regulations, direct or indirect investments in offshore companies are required to register those investments. In addition, any PRC resident who is a direct or indirect shareholder of an offshore company is required to update the previously filed registration with the local branch or commercial banks of the SAFE, with respect to that offshore company, to reflect any material change involving its round-trip investment, capital variation, such as an increase or decrease in capital, transfer or swap of shares, merger or division. If any PRC shareholder fails to make the required registration or update the previously filed registration, the PRC subsidiary of that offshore parent company may be restricted from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to their offshore parent company, and the offshore parent company may also be restricted from injecting additional capital into its PRC subsidiary. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions, including (i) the requirement by the SAFE to return the foreign exchange remitted overseas or into PRC within a period of time specified by the SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas or into the PRC and deemed to have been evasive or illegal and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount of remitted foreign exchange deemed evasive or illegal.

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We have requested PRC residents holding direct or indirect interest in our Company to our knowledge to make the necessary applications, filings and amendments as required by applicable foreign exchange regulations. However, we may not always be able to compel them to comply with SAFE Circular 37 or other related regulations. Failure by any such Shareholders to comply with SAFE Circular 37 or other related regulations could subject us to fines or legal sanctions, restrict our investment activities in the PRC and overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions, pay dividends or other payments to us or affect our ownership structure, which could adversely affect our business and prospects.

Furthermore, as the interpretation and implementation of these foreign exchange regulations have been constantly evolving and may be unclear under certain circumstances, we cannot predict how these regulations, and any future regulations concerning offshore transactions, will affect our business operations or future strategies. Failure to register or comply with relevant procedures may also restrict our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our Company. These risks may materially and adversely affect our business, financial condition and results of operations.

PRC regulations of loans to and direct investments in PRC entities by offshore holding companies may delay or prevent us from using the [REDACTED] of the [REDACTED] to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, need to be approved by, or registered with, relevant governmental authorities or their designated agencies such as commercial banks in China. According to the relevant PRC laws and regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System (the “FICMIS”), and other relevant registration. In addition, (i) any foreign loans procured by our PRC subsidiaries are required to be registered with the SAFE, or its local branches or designated commercial banks, and (ii) each of our PRC subsidiaries may not procure loans which exceed the difference between its registered capital and its total investment amount as filed with the FICMIS. Any medium or long-term loans to be provided by us to our Operating Entity must be recorded and registered by the NDRC and the SAFE or its local branches. We may not be able to complete such records or registrations on a timely basis, or at all, with respect to future capital contributions or foreign loans by us directly to our PRC subsidiaries. If we fail to complete such records or registrations, our ability to use the [REDACTED] of the [REDACTED] and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to finance and expand our business.

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RISK FACTORS

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》)(“SAFE Circular 19”), which launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of foreign invested enterprises and allows foreign-invested enterprises to settle their foreign exchange capital at their discretion, but continues to prohibit foreign-invested enterprises from using the RMB funds converted from their foreign exchange capital for expenditures beyond their business scope. On June 9, 2016, the SAFE promulgated the Circular on Reforming and Standardizing the Administrative Provisions over Capital Account Foreign Exchange《國家外匯管 ( 理局關於政策和規範資本項目結匯管理政策的通知》)(“SAFE Circular 16”). SAFE Circular 19 and SAFE Circular 16 continue to prohibit foreign-invested enterprises from, among other things, using the RMB fund converted from its foreign exchange capital for expenditure beyond their business scope, investment and financing of securities investment or non-guaranteed bank products, providing loans to non-affiliated enterprises (except for those permitted within the business scope) or constructing or purchasing real estate not for self-use. On October 23, 2019, SAFE issued the Notice of SAFE on Further Facilitating Cross-border Trade and Investment (《國家外匯管理局關於進一步促進跨境貿易投資便利化的通知》), which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise of no violation of prevailing special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations of domestic investment projects. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer to and use in China the net [REDACTED] from the [REDACTED], which may adversely affect our business, financial condition and results of operations.

We may be subject to penalties under relevant PRC laws and regulations due to failure to be in full compliance with social insurance regulations.

Pursuant to PRC laws and regulations, we are required to participate in the employee social welfare plan administered by local governments. Such plan consists of pension insurance, medical insurance, work-related injury insurance, maternity insurance, unemployment insurance and housing provident fund. The amount we are required to contribute for each of our employees under such plan should be calculated based on the employee’s actual salary level of the previous year, and be subject to a minimum and maximum level as from time to time prescribed by local authorities. During the Track Record Period, we did not pay social insurance contribution in full for our employees based on their actual salary level. As a result, we may be required by competent authorities to pay the outstanding amount, and could be subject to late payment penalties of one to three times the outstanding amount or enforcement applications made to courts. We have made provisions for the outstanding balance of relevant social insurance contributions according to

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RISK FACTORS applicable PRC laws and regulations. As of December 31, 2018 2019 and 2020, our balance of provision was approximately USD6.7 million, USD3.3 million and USD0.8 million for social insurance, respectively.

During the Track Record Period, our Company and some of our PRC subsidiaries engaged third-party human resources agencies to pay social insurance premium and housing provident funds for certain of our employees. Pursuant to the agreements entered into between our Company or our relevant PRC subsidiaries and such third-party human resources agencies, the third-party human resources agencies have the obligation to pay social insurance premium and housing provident funds for our relevant employees. However, if such third-party human resource agencies fail to make timely payments of the social insurance premium or housing provident funds for and on behalf of our employees as required, we may be subject to additional contribution, late payment fee and/or penalties imposed by the relevant PRC authorities for failing to discharge our obligations in relation to payment of social insurance and housing provident funds as an employer or be ordered to rectify. This in turn may adversely affect our financial condition and results of operations.

On July 20, 2018, the General Office of the Communist Party of China and the General Office of the State Council of the PRC issued the Reform Plan of the State Tax and Local Tax Collection Administration System《國稅地稅徵管體制改革方案》 ( ) (the “Reform Plan”). Pursuant to the Reform Plan, starting from January 1, 2019, tax authorities shall be responsible for the collection of social insurance contributions in the PRC. However, no specific implementing rules for the Reform Plan have been issued, and the effect of the Reform Plan is uncertain at the current stage. We cannot assure you that the amount of social insurance contributions we would be required to pay will not increase, nor that we would not be required to pay any shortfalls or be subject to any penalties or fines, any of which may have a material adverse effect on our business and results of operations.

We cannot assure you that the competent local government authorities will not require us to pay the outstanding amount within a specified time limit or impose late fees or fines on us, which may materially and adversely affect our financial condition and results of operations.

Failure to comply with PRC regulations regarding the registration requirements for employee share ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, the SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies《國家外匯管理局關於境內個人參與境外上市公司股權激勵 ( 計劃外匯管理有關問題的通知》) (the “SAFE Circular 7”), replacing the previous rules issued by

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RISK FACTORS the SAFE in March 2007. Under SAFE Circular 7 and other relevant rules and regulations, PRC residents who participate in a stock incentive plan in an overseas publicly-listed company are required to register with the SAFE or its local branches or commercial banks and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution selected by a PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend its SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. Also, SAFE Circular 37 stipulates that PRC residents who participate in a share incentive plan of an overseas non-publicly-listed special purpose company may register with the SAFE or its local branches or commercial banks before their share awards are vested. We and our PRC employees who are granted share awards will be subject to these regulations upon the completion of the [REDACTED]. Failure to complete their SAFE registrations may subject these PRC residents to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute dividends to us, or otherwise materially adversely affect our business.

The SAT has also issued relevant rules and regulations concerning employee share incentives. Under these rules and regulations, our employees working in the PRC will be subject to PRC individual income tax upon grant of the share awards. Our PRC subsidiaries have obligations to file documents with respect to the granted share awards with relevant tax authorities and to withhold individual income taxes for their employees upon grant of the share awards. If our employees fail to pay or we fail to withhold their individual income taxes according to relevant rules and regulations, we may face sanctions imposed by the competent governmental authorities.

Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax, which could materially and adversely affect the amount of dividends, if any, we may pay our shareholders.

Under the EIT Law and its implementation regulations issued by the State Council, we may be deemed as a PRC resident enterprise by the PRC tax authorities for tax purposes, and a 10% PRC withholding tax is applicable to dividends payable by a resident enterprise to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have an establishment or place of business but the dividends are not effectively connected with the establishment or place of business, to the extent these dividends are derived from sources within the PRC, subject to any reduction set forth in applicable tax treaties.

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Similarly, any gain realized on the transfer of shares of a resident enterprise by these investors is also subject to PRC tax at a current rate of 10%, subject to any exemption set forth in relevant tax treaties, if the gain is regarded as income derived from sources within the PRC. If the dividends we pay to our shareholders are regarded as income derived from sources within China, we may be required to withhold a 10% PRC withholding tax for the dividends we pay to our investors who are non-PRC enterprise shareholders, or a 20% withholding tax for the dividends we pay to our investors who are non-PRC individual shareholders, including the holders of our Shares. In such cases, the value of your investment in our Shares may be materially and adversely affected.

We may be classified as a PRC resident enterprise for PRC enterprise income tax purposes under the EIT Law, and our income may be subject to PRC withholding tax under the EIT Law.

Under the EIT Law, which was last amended on December 29, 2018, and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within China is considered as a resident enterprise from PRC tax perspective and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over, and overall management of, the business, production, personnel, accounts and properties of an enterprise. The SAT released the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies《關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問 ( 題的通知》)(“Circular 82”) on April 22, 2009, which was last amended on December 29, 2017. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like ourselves, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seal, and board and shareholder resolutions, are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.

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RISK FACTORS

We believe none of our entities outside of the PRC is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities, and uncertainties remain with respect to the interpretation of the term “de facto management body.” As substantially all of our management members are based in China, it remains unclear how the tax residency rule will apply to our case. If the PRC tax authorities determine that our Company or any of our subsidiaries outside of the PRC is a PRC resident enterprise for PRC enterprise income tax purposes, then our Company or such subsidiary could be subject to PRC tax at a rate of 25% on its worldwide taxable income, which could materially reduce our net profit. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our ordinary shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our [REDACTED].

RISKS RELATING TO THE [REDACTED]

There has been no previous public market for our Shares, and the liquidity and market price of our [REDACTED] may be volatile.

Prior to the completion of the [REDACTED], there has been no public market for our Shares. There can be no guarantee that an active trading market for our Shares will develop or be sustained after completion of the [REDACTED]. The [REDACTED] is the result of negotiations among our Company and the [REDACTED] (for itself and on behalf of the [REDACTED]), which may not be indicative of the price at which our [REDACTED] will be traded following completion of the [REDACTED]. The market price of our [REDACTED] may drop below the [REDACTED] at any time after completion of the [REDACTED].

The price of our [REDACTED] may be volatile, which could result in substantial losses to you.

The trading price of our [REDACTED] may be volatile and could fluctuate widely in response to factors beyond our control, including general market conditions of the securities markets in Hong Kong, China, the U.S. and elsewhere in the world. In particular, the performance and fluctuation of the market prices of other companies with business operations located mainly in mainland China that have listed their securities in Hong Kong may affect the volatility in the price of our [REDACTED]. The stock prices of a number of PRC-based companies recently listed in Hong Kong experienced significant volatility, including significant price declines after their initial

–76– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

RISK FACTORS public offerings. The trading performances of the securities of these companies at the time of or after their offerings may affect the overall investor sentiment towards PRC-based companies listed in Hong Kong and consequently may impact the trading performance of our [REDACTED]. These broad market and industry factors may significantly affect the market price and volatility of our [REDACTED], regardless of our actual operating performance. In addition to market and industry factors, the price for our [REDACTED] may be highly volatile for specific business reasons. In particular, factors such as variations in our revenue, earnings and cash flow could cause the market price of our [REDACTED] to change substantially. Any of these factors may result in large and sudden changes in the price of our [REDACTED].

As the [REDACTED] of our Shares is substantially higher than the consolidated net tangible book value per share, purchasers of our Shares in the [REDACTED] may experience immediate dilution upon such purchases.

As the [REDACTED] of our Shares is higher than the consolidated net tangible assets per share immediately prior to the [REDACTED], purchasers of our Shares in the [REDACTED] will experience an immediate dilution in pro forma adjusted consolidated net tangible assets. Our existing Shareholders will receive an increase in the pro forma adjusted consolidated net tangible asset value per share of their shares. In addition, holders of our Shares may experience further dilution of their interest if the [REDACTED] exercise the [REDACTED] or if we issue additional shares in the future to raise additional capital.

The actual or perceived sale or availability for sale of substantial amounts of our Shares, especially by our Directors, executive officers and our Controlling Shareholders, could adversely affect the market price of our [REDACTED].

Future sales of a substantial number of our Shares, especially by our Directors, executive officers and our Controlling Shareholders, or the perception or anticipation of such sales, could negatively impact the market price of our [REDACTED] in Hong Kong and our ability to raise equity capital in the future at a time and price that we deem appropriate.

The Shares held by our Controlling Shareholders are subject to certain lock-up periods. While we currently are not aware of any intention of our Controlling Shareholders to dispose of significant amounts of the Shares after the expiry of the lock-up periods, we cannot assure you that he/she will not dispose of any Shares he may own now or in the future.

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RISK FACTORS

We have adopted the [REDACTED] Incentive Scheme and may grant [REDACTED] Share options, which may result in increased share-based compensation expenses.

We have adopted the [REDACTED] Incentive Scheme for the purpose of granting share-based compensation awards to our Directors and employees to incentivize their performance and align their interests with ours. For further information regarding the options granted under the [REDACTED] Incentive Scheme, see “Appendix IV — Statutory and General Information — D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme.” We will incur additional share-based compensation expenses in the future by granting share incentives using the Shares reserved for this purpose. We believe that granting share-based compensation serves as an important avenue to attract and retain key personnel and employees, and we will continue to grant share-based compensation to key personnel and employees in the future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our financial conditions and results of operations.

We may not declare dividends on our Shares in the near future.

Any declaration of dividends will be proposed by our Board, and the amount of any dividends will depend on various factors, including, without limitation, our results of operations, financial position, capital requirements and surplus, contractual restrictions, future prospects and other factors which our Board may determine are important. See “Financial Information — Dividend” and “Financial Information — Distributable Reserves.” We cannot guarantee when, if and in what form dividends will be paid. Our historical dividend policy should not be taken as indicative of our dividend policy in the future.

Our management has significant discretion as to how to use the net [REDACTED] of the [REDACTED], and you may not necessarily agree on how we use them.

Our management may use the net [REDACTED] from the [REDACTED] in ways that you may not agree with or that do not yield a favorable return to our Shareholders. In addition, in the light of the possible changes in the business environment and development of our Group, we may change the use of the net [REDACTED] from the [REDACTED] in the future. An announcement will be made in compliance with the Listing Rules in the event of any material change in the use of the net [REDACTED] from the [REDACTED]. By investing in our [REDACTED], you are entrusting your funds to our management, upon whose judgment you must depend, for the specific uses we will make of the net [REDACTED] from this [REDACTED]. See “Future Plans and Use of [REDACTED] — Use of [REDACTED].”

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RISK FACTORS

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under the laws of the Cayman Islands than other jurisdictions, you may have difficulties in protecting your shareholder rights.

Our corporate affairs are governed by our Memorandum and Articles and by the Cayman Companies Act and common law of the Cayman Islands. The Shareholders’ rights to take legal actions against our Directors and us, actions by minority Shareholders and the fiduciary responsibilities of our Directors to us under Cayman Islands law are largely governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The laws of the Cayman Islands relating to the protection of the interests of minority shareholders differ in some respects from those established under statutes and judicial precedent in existence in the jurisdictions where minority Shareholders may be located. See “Appendix III — Summary of the Constitution of Our Company and Cayman Islands Companies Act.”

As a result of all of the above, minority Shareholders may have limited means to protect their interests under the laws of the Cayman Islands through actions against our management, Directors or Controlling Shareholders, which may provide different remedies to minority Shareholders when compared to the laws of the jurisdiction in which such shareholders are located.

Certain judgments obtained against us by our Shareholders may not be enforceable.

We are an exempted company incorporated under the laws of the Cayman Islands. We conduct our operations outside Hong Kong and substantially all of our assets are located outside Hong Kong. In addition, substantially all of our Directors and officers are nationals and residents of China and most of their assets are located in China. As a result, it may be difficult or impossible for you to bring an action against us or them in Hong Kong in the event that you believe that your rights have been infringed under applicable securities laws or otherwise. In addition, because there are no specific statutory and judicial interpretations or guidance on a PRC court’s jurisdiction over cases brought under foreign securities laws other than those specified in the Securities Law of the People’s Republic of China, the PRC criminal laws and its corresponding procedural laws or conflicts of laws, you may face difficulties in bringing an original action against us or our PRC resident officers and Directors in a PRC court based on the liability provisions of non-PRC securities laws. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our Directors and officers.

–79– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

RISK FACTORS

Certain facts, forecasts and statistics derived from governmental or third-party sources contained in this document may not be accurate, reliable, complete or up-to-date, and statistics in the document provided by iResearch are subject to assumptions and methodologies set forth in the “Industry Overview” section of this document.

We have derived certain facts and other statistics in this document, particularly the sections headed “Industry Overview”, from information provided by the PRC and other government agencies, industry associations, independent research institutes and other third-party sources. While we have taken reasonable care in the reproduction of the information, it has not been prepared or independently verified by us, the [REDACTED] or any of our or their respective affiliates or advisors, and, therefore, we cannot assure you as to the accuracy and reliability of such facts and statistics, which may not be consistent with other information compiled inside or outside the PRC. Due to possibly flawed or ineffective collection methods or discrepancies between published information and market practice and other problems, the statistics herein may be inaccurate or may not be comparable with statistics produced for other economies, and you should not place undue reliance on them. Furthermore, we cannot assure you that they are stated or compiled on the same basis, or with the same degree of accuracy, as similar statistics presented elsewhere. In all cases, you should consider carefully how much weight or importance you should attach to or place on such information or statistics.

Forward-looking statements contained in this document are subject to risks and uncertainties.

This document contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this document, the words “aim”, “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “going forward”, “intend”, “ought to”, “may”, “might”, “plan”, “potential”, “predict”, “project”, “seek”, “should”, “will”, “would” and similar expressions, as they relate to our Company or our management, are intended to identify forward-looking statements. Such statements reflect the current views of our management with respect to future events, business operations, liquidity and capital resources, some of which may not materialize or may change. These statements are subject to certain risks, uncertainties and assumptions, including the other risk factors as described in this document. Subject to the ongoing disclosure obligations of the Listing Rules or other requirements of the Stock Exchange, we do not intend publicly to update or otherwise revise the forward-looking statements in this document, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on such forward-looking statements and information.

–80– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

RISK FACTORS

You should read the entire document carefully and we strongly caution you not to place any reliance on any information contained in press articles or other media regarding us or the [REDACTED].

We strongly caution you not to rely on any information contained in press articles or other media regarding us and the [REDACTED]. Prior to the publication of this document, there may have been press and media coverage regarding us and the [REDACTED]. Such press and media coverage may include references to certain information that does not appear in this document, including certain operating and financial information and projections, valuations and other information. We have not authorized the disclosure of any such information in the press or media and do not accept any responsibility for any such press or media coverage or the accuracy or completeness of any such information or publication. We make no representation as to the appropriateness, accuracy, completeness or reliability of any such information or publication. To the extent that any such information is inconsistent or conflicts with the information contained in this document, we disclaim responsibility for it and you should not rely on such information.

–81– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

In preparation for the [REDACTED], our Company has sought the following waivers from strict compliance with the relevant provisions of the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

WAIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG

Pursuant to Rule 8.12 of the Listing Rules, we must have sufficient management presence in Hong Kong. This normally means that at least two of the executive Directors must be ordinarily resident in Hong Kong.

Since a substantial portion of our business operations and management are carried out in the PRC, there is no business need to appoint executive Directors based in Hong Kong. As none of our executive Directors or senior management currently reside in Hong Kong, we do not and, in the foreseeable future, will not have sufficient management presence in Hong Kong for the purpose of satisfying the requirement under Rule 8.12 of the Listing Rules.

Accordingly, we have applied to the Stock Exchange for[, and the Stock Exchange has agreed to grant,] a waiver from strict compliance with the requirement under Rule 8.12 of the Listing Rules. In order to maintain effective communication with the Stock Exchange, we will put in place the following measures in order to ensure that regular communication is maintained between the Stock Exchange and us:

(a) we have appointed two authorized representatives pursuant to Rule 3.05 of the Listing Rules. The two authorized representatives are Mr. Liu Sijun, our executive Director, and Ms. Szeto Kar Yee Cynthia (“Ms. Szeto”), our joint company secretary. The authorized representatives will act as the principal channel of communication between the Stock Exchange and our Company. The authorized representatives will be available to meet with the Stock Exchange in Hong Kong within a reasonable period of time upon request and will be readily contactable by the Stock Exchange by telephone, facsimile and/or email to deal promptly with any enquiries which may be made by the Stock Exchange. Each of the authorized representatives is authorized to communicate on behalf of our Company with the Stock Exchange;

–82– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(b) each of the authorized representatives has means to contact all Directors (including the non-executive Director and the independent non-executive Directors) promptly at all times as and when the Stock Exchange wishes to contact the Directors on any matters. We will implement a policy whereby:

(i) each Director will provide his/her mobile phone number, office phone number, residential phone number, email address and facsimile number to the authorized representatives;

(ii) each Director will provide his/her phone numbers or means of communication to the authorized representatives when he/she is traveling; and

(iii) each Director will provide his/her mobile phone number, office phone number, email address and facsimile number to the Stock Exchange;

(c) in compliance with Rule 3A.19 of the Listing Rules, we have retained Messis Capital Limited to act as our compliance advisor, which will act as an additional channel of communication between the Stock Exchange and our Company for the period commencing on the Listing Date and ending on the date that our Company publishes our financial results for the first full financial year after the Listing Date pursuant to Rule 13.46 of the Listing Rules;

(d) our Company will inform the Stock Exchange promptly in respect of any change in our Company’s authorized representatives and compliance advisor;

(e) each Director who is not ordinarily resident in Hong Kong has confirmed that each of them possesses or can apply for valid travel documents to visit Hong Kong and can meet with the Stock Exchange within a reasonable period; and

(f) we will retain a Hong Kong legal advisor to advise us on the application of the Listing Rules and other applicable Hong Kong laws and regulations after our Listing.

–83– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

WAIVER IN RELATION TO JOINT COMPANY SECRETARIES

Pursuant to Rules 3.28 and 8.17 of the Listing Rules, our company secretary must be an individual who, by virtue of his or her academic or professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of discharging the functions of company secretary. The Stock Exchange considers the following academic or professional qualifications to be acceptable:

(a) a member of The Hong Kong Institute of Chartered Secretaries;

(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159 of the laws of Hong Kong); or

(c) a certified public accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the laws of Hong Kong).

Note 2 to Rule 3.28 of the Listing Rules further provides that in assessing “relevant experience”, the Stock Exchange will consider the individual’s:

(a) length of employment with the issuer and other issuers and the roles he/she played;

(b) familiarity with the Listing Rules and other relevant law and regulations including the SFO, Companies Ordinance and the Takeovers Code;

(c) relevant training taken and/or to be taken in addition to the minimum requirement under Rule 3.29 of the Listing Rules (i.e. not less than 15 hours of relevant professional training in each financial year); and

(d) professional qualifications in other jurisdictions.

We have appointed Mr. Xie Yifeng (“Mr. Xie”) as one of the joint company secretaries. Although Mr. Xie does not possess the qualification and sufficient relevant experience as stipulated in the Notes to Rule 3.28 of the Listing Rules, we would like to appoint him as our joint company secretary due to his past management experience within our Group and his thorough understanding of the internal administration and business operations of our Group. In addition, we have appointed Ms. Szeto, who fulfills the requisite qualification as required under Note 1 to Rule 3.28 of the Listing Rules, to act as the other joint company secretary and to assist Mr. Xie to

–84– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE acquire all qualifications and experience as the company secretary of the Company required under Rule 3.28 of the Listing Rules. For further details of the biographies of Mr. Xie and Ms. Szeto, see “Directors and Senior Management.”

Apart from discharging her functions in her role as one of our joint company secretaries, Ms. Szeto will assist Mr. Xie in enabling him to acquire the relevant company secretary experience as required under Rule 3.28 of the Listing Rules and to become with the requirements of the Listing Rules and other applicable Hong Kong laws. In addition, Mr. Xie will also attend relevant professional training during each financial year as required under Rule 3.29 of the Listing Rules.

We have applied for[, and the Stock Exchange has granted,] a waiver from strict compliance of Rules 3.28 and 8.17 of the Listing Rules in respect of the appointment of Mr. Xie as one of our joint company secretaries pursuant to HKEX-GL108-20 on the following conditions:

(a) Mr. Xie must be assisted by Ms. Szeto, who possess the qualifications and experience required under Rule 3.28 of the Listing Rules and is appointed as a joint company secretary of our Company throughout the validity period of the waiver; and

(b) the waiver is valid for an initial period of three years commencing from the Listing Date and will be revoked immediately if Ms. Szeto ceases to provide such assistance or if there are material breaches of the Listing Rules by our Company.

CONTINUING CONNECTED TRANSACTIONS

We have entered into certain transactions which will constitute continuing connected transactions of our Company under the Listing Rules following the completion of the [REDACTED]. We have applied to the Stock Exchange for[, and the Stock Exchange has granted,] a waiver from strict compliance with (where applicable) (i) the announcement and independent shareholders’ approval requirements, (ii) the annual cap requirement, and (iii) the requirement of limiting the term of the continuing connected transactions set out in Chapter 14A of the Listing Rules for such continuing connected transactions. For further details in this respect, see “Connected Transactions.”

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

WAIVER AND EXEMPTION IN RELATION TO [REDACTED] INCENTIVE SCHEME

Rule 17.02(1)(b) of the Listing Rules requires a listing applicant to, inter alia, disclose in the document full details of all outstanding options and their potential dilution effect on the shareholdings upon listing as well as the impact on the earnings per share arising from the exercise of such outstanding options.

Paragraph 27 of Appendix 1A to the Listing Rules requires a listing applicant to disclose, inter alia, particulars of any capital of any member of the Group which is under option, or agreed conditionally or unconditionally to be put under option, including the consideration for which the option was or will be granted and the price and duration of the option, and the name and address of the grantee, or an appropriate negative statement, provided that where options have been granted or agreed to be granted to all the members or debenture holders or to any class thereof, or to employees under a share option scheme, it shall be sufficient, so far as the names and addresses are concerned, to record that fact without giving the names and addresses of the grantees.

Under Section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the document must state the matters specified in Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

Under paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the number, description and amount of any shares in or debentures of the company which any person has, or is entitled to be given, an option to subscribe for, together with the particulars of the option, that is to say, (a) the period during which it is exercisable; (b) the price to be paid for shares or debentures subscribed for under it; (c) the consideration (if any) given or to be given for it or for the right to it; and (d) the names and addresses of the persons to whom it or the right to it was given or, if given to existing shareholders or debenture holders as such, the relevant shares or debentures, must be specified in the document.

As of the Latest Practicable Date, the Company had granted options under the [REDACTED] Incentive Scheme to 189 grantees, including two Directors, four senior management, one connected person of the Company and 182 other grantees to subscribe for an aggregate of 23,504,864 Shares, representing approximately [REDACTED]% of the Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme).

–86– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

The Company has applied to the Stock Exchange and the SFC, respectively, for (i) a waiver from strict compliance with the disclosure requirements under Rule 17.02(1)(b) of, and paragraph 27 of Appendix 1A to, the Listing Rules; and (ii) a certificate of exemption under section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance exempting our Company from strict compliance with the disclosure requirements under paragraph 10(d) of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, on the grounds that strict compliance with the above requirements would be unduly burdensome for our Company for the following reasons:

(a) since the options granted under the [REDACTED] Incentive Scheme were granted to a total of 189 grantees involved, strict compliance with the relevant disclosure requirements to disclose names, addresses and entitlements on an individual basis in the document is unduly burdensome and will require substantial number of pages of additional disclosure that does not provide any material information to the investing public and would significantly increase the cost and timing for information compilation, document preparation and printing;

(b) key information of the options granted under the [REDACTED] Incentive Scheme to the Directors and members of the senior management of the Company has already been disclosed in “Statutory and General Information — D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme” in Appendix IV;

(c) the key information of the [REDACTED] Incentive Scheme as disclosed in “Statutory and General Information — D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme” in Appendix IV is sufficient to provide potential investors with information to make an informed assessment of the potential dilution effect and impact on earnings per share of the options granted under the [REDACTED] Incentive Scheme in their investment decision making process; and

(d) the lack of full compliance with such disclosure requirements will not prevent potential investors from making an informed assessment of the activities, assets and liabilities, financial position, management and prospects of our Group and will not prejudice the interest of the investing public.

In light of the above, our Directors are of the view that the grant of the waiver and exemption sought under this application will not prejudice the interest of the investing public.

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

The Stock Exchange [has granted] us a waiver from strict compliance with the disclosure requirements under Rule 17.02(1)(b) of the Listing Rules and paragraph 27 of Part A of Appendix 1 to the Listing Rules on the conditions that:

(a) on an individual basis, full details of all the options granted by the Company under the [REDACTED] Incentive Scheme to Directors, members of the senior management or connected persons of the Company, including all the particulars required under Rule 17.02(1)(b) of the Listing Rules and paragraph 27 of Appendix 1A to the Listing Rules, be disclosed in the document;

(b) in respect of the options granted by the Company to the grantees under the [REDACTED] Incentive Scheme other than those referred to in sub-paragraph (a), the following details be fully disclosed in the document:

(i) the aggregate number of the grantees;

(ii) the number of Shares subject to such options;

(iii) the consideration paid for the grant of such options;

(iv) the exercise period of each option; and

(v) the exercise price for the options;

(c) the potential dilution effect and impact on earnings per Share upon full exercise of the options granted under the [REDACTED] Incentive Scheme be disclosed in the document;

(d) the aggregate number of Shares subject to the outstanding options granted by the Company under the [REDACTED] Incentive Scheme and the percentage of the Company’s issued share capital of which such number represents be disclosed in the document;

(e) a summary of the major terms of the [REDACTED] Incentive Scheme be disclosed in the document;

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(f) a list of all the grantees (including the persons referred to in paragraph (b) above), containing all details as required under Rule 17.02(1)(b) of, and paragraph 27 of Appendix 1A to, the Listing Rules and paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance be made available for public inspection in accordance with “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix V; and

(g) the grant of certificate of exemption under the Companies (Winding Up and Miscellaneous Provisions) Ordinance from the SFC exempting the Company from the disclosure requirements provided in paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

The SFC [has granted] to the Company the certificate of exemption under Section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, exempting the Company from strict compliance with the disclosure requirements under paragraph 10(d) of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance on conditions that:

(a) on an individual basis, full details of all the options granted under the [REDACTED] Incentive Scheme to each of the Directors, senior management and connected persons of the Company be disclosed in the document, such details include all the particulars required under paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance;

(b) in respect of the options granted by the Company to the grantees other than those referred to in sub-paragraph (a), the following details be disclosed in the document:

(i) the aggregate number of the grantees;

(ii) the number of Shares subject to such options;

(iii) the consideration paid for the grant of such options;

(iv) the exercise period of each option; and

(v) the exercise price for the options;

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WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND EXEMPTIONS FROM COMPLIANCE WITH THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

(c) a list of all the grantees (including the persons referred to in sub-paragraph (b) above) who have been granted options to subscribe for Shares under the [REDACTED] Incentive Scheme, containing all details as required under paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, be made available for public inspection in accordance with “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix V; and

(d) the particulars of the exemption be disclosed in the document.

Further details of the [REDACTED] Incentive Scheme are set forth in “Statutory and General Information — D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme” in Appendix IV.

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

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INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]

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DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

DIRECTORS

Name Residential Address Nationality Executive Directors

Ms. Wang Shutong (王樹彤) No. 22-1-601, Wanquan New Home, Chinese Haidian District Beijing, PRC

Mr. Hou Jianchen (侯建臣) Room 505, Unit A of Building 6 Chinese Shuguang Garden Haidian District Beijing, PRC

Mr. Liu Sijun (劉思軍) Room 608, Building 6 Chinese No.123 Zhongguan Village East Road Beijing, PRC

Non-Executive Director

Mr. Fan Ren Da Anthony Flat B, 8/F, Tower 1 Chinese (范仁達) Tregunter, 14 Tregunter Path Mid-Levels Central Hong Kong

Independent Non-Executive Directors

Mr. Wan Kah Ming (溫嘉明) Unit 3901, 38/F Chinese Convention Plaza Apartments 1 Harbour Road Wanchai, Hong Kong

Ms. Lai Xiaoling (賴曉凌) 5-020, Lijia Garden Villa Chinese Huayuan 3rd Street Shunyi District Beijing, PRC

Mr. Kot Man Tat (葛文達) Flat D, 11/F, Block 6 Chinese Le Point 8 King Ling Road New Territories, Hong Kong

Further information about the Directors and other senior management members are set out in “Directors and Senior Management.”

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DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor, [REDACTED], China Merchants Securities (HK) Co., Limited [REDACTED] and [REDACTED] 48/F One Exchange Square 8 Connaught Place, Central Hong Kong

Legal Advisors to Our Company As to Hong Kong law:

Miao & Co. (in association with Han Kun Law Offices) Rooms 3901-05 39/F., Edinburgh Tower The Landmark 15 Queen’s Road Central Hong Kong

As to PRC law:

Commerce & Finance Law Offices 6/F, NCI Tower A12 Jianguomenwai Avenue Beijing, PRC

As to Cayman Islands law:

Maples and Calder (Hong Kong) LLP 26th Floor, Central Plaza 18 Harbour Road Wanchai, Hong Kong

As Special Counsels to International Sanctions law and with respect to certain Hong Kong law:

Hogan Lovells 11th Floor One Pacific Place 88 Queensway Hong Kong

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DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED]

Legal Advisors to the Sole Sponsor and As to Hong Kong law: the [REDACTED] William Ji & Co. LLP in Association with Tian Yuan Law Firm Hong Kong office Suites 3304-3309, 33/F Jardine House One Connaught Place Central, Hong Kong

As to PRC law:

Jingtian & Gongcheng 34/F, Tower 3 China Central Place, 77 Jianguo Road Beijing 100025, PRC

Auditor and Reporting Accountant Ernst & Young Certified Public Accountants Registered Public Interest Entity Auditor 27/F, One Taikoo Place 979 King’s Road Quarry Bay Hong Kong

Industry Consultant Shanghai iResearch Co., Ltd., China R701 Tower B, Zhongjin International Caoxi North No. 333 Xuhui District Shanghai, PRC

Internal Control Consultant Protiviti Shanghai Co., Ltd. Room 1915-16, Building 2 International Commerce Centre No. 288 South Shaanxi Road Shanghai 200030 PRC

[REDACTED]

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CORPORATE INFORMATION

Registered Office Maples Corporate Services Limited PO Box 309 Ugland House Grand Cayman, KY1−1104 Cayman Islands

Headquarters Floors 7-10, U-center, Tower A Cheng Fu Road No. 28 Haidian District, Beijing

Principal Place of Business in 31/F., Tower Two Hong Kong Times Square, 1 Matheson Street Causeway Bay, Hong Kong

Company’s Website www.dhgate.com (Note: the information on this website does not form part of this document)

Joint Company Secretaries Mr. Xie Yifeng (解一峰) 5-3-401 Guan Lin Park Heiquan Road Haidian District, Beijing

Ms. Szeto Kar Yee Cynthia (司徒嘉怡) (HKICS) 31/F., Tower Two Times Square, 1 Matheson Street Causeway Bay, Hong Kong

Authorized Representatives Mr. Liu Sijun (劉思軍) Room 608, Building 6 No.123 Zhongguan Village East Road Beijing PRC

Ms. Szeto Kar Yee Cynthia (司徒嘉怡) (HKICS) 31/F., Tower Two Times Square, 1 Matheson Street Causeway Bay, Hong Kong

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CORPORATE INFORMATION

Audit Committee Mr. Kot Man Tat (Chairman) Mr. Wan Kah Ming Ms. Lai Xiaoling

Remuneration Committee Ms. Lai Xiaoling (Chairman) Mr. Kot Man Tat Ms. Wang Shutong

Nomination Committee Ms. Wang Shutong (Chairman) Mr. Kot Man Tat Mr. Wan Kah Ming

[REDACTED]

Compliance Advisor Messis Capital Limited Room 1601, 16/F Tower 2 Admiralty Centre 18 Harcourt Road Hong Kong

Principal Banks Barclays Bank PLC Floor 11 1 Churchill Place London E14 5HP

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CORPORATE INFORMATION

Standard Chartered Bank (Hong Kong) Limited (Des Voeux Road Branch) Shop G1, G/F & 1/F Standard Chartered Bank Building 4-4A Des Voeux Road Central Central, Hong Kong

China Merchants Bank (Beijing Chaoyang Park Branch) First Floor Jialong International Tower 19 Chaoyang Park Rd, Chaoyang Beijing, China

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INDUSTRY OVERVIEW

Certain information and statistics set out in this section and elsewhere in this document are derived from the industry report commissioned by us and prepared by iResearch, an independent industry consultant. The information from official government publications, industry sources and the iResearch Report may not be consistent with information available from other sources within or outside China and Hong Kong. We believe that the sources of this information and statistics are appropriate for such information and statistics and have taken reasonable care in extracting and reproducing such information and statistics. We have no reason to believe that such information and statistics are false or misleading or that any fact has been omitted that would render such information and statistics false or misleading in any material respect. The information has not been independently verified by us, the Sole Sponsor, the [REDACTED],the[REDACTED],the[REDACTED],the[REDACTED] or any of our or their respective directors, advisors or affiliates, nor is any representation given as to the accuracy or completeness of such information and statistics. Accordingly, you should not place undue reliance on such information and statistics. For discussions of risks relating to our industries, see “Risk Factors — Risks Relating to Our Business and Industry.”

SOURCES OF INFORMATION

In connection with the [REDACTED], we have engaged iResearch, an independent market research consulting firm, to conduct a detailed analysis and prepare an industry report (the “iResearch Report”) on the industry of global cross-border B2B e-commerce procurement from China. iResearch is an independent market intelligence provider that provides market research, information and advice to companies in various industries, including the industry of global cross-border B2B e-commerce procurement from China. We agreed to pay iResearch a total of RMB800,000 in connection with the preparation of the iResearch Report. The payment of such amount was not contingent on our successful [REDACTED] or on the results of the iResearch Report. Except for the iResearch Report, we did not commission any other industry report in connection with the [REDACTED].

We have extracted certain information from the iResearch Report in this section and elsewhere in this document to provide a comprehensive presentation of the markets in which we operate. We believe such information facilitates potential investors’ understanding of such markets. Our Directors confirm that, after taking reasonable care, there is no material adverse change in the overall market information since the date of the iResearch Report that would materially qualify, contradict or have a material adverse impact on such information.

During the preparation of the iResearch Report, iResearch performed both primary and secondary research, and obtained knowledge, statistics, information, and industry insights on industry trends of the target research markets. Primary research involved interviews with industry

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INDUSTRY OVERVIEW participants. Secondary research utilized the relevant economic data, industry data, information and statistics published by government departments, publications and studies by industry experts, public company annual and quarterly reports, iResearch’s other research reports, online resources and data from iResearch’s research database. iResearch has independently verified the information, but the accuracy of the conclusions of its review largely relies on the accuracy of the information collected. iResearch’s research may be affected by the accuracy of assumptions used and the choice of primary and secondary sources.

The iResearch Report was compiled having taken into account the potential impact of COVID-19 and based on the following assumptions: (i) the social, economic, political and technology environment is expected to remain stable, which ensures a sustainable and steady development of China’s foreign trade and cross-border e-commerce market, (ii) the data quoted from authoritative agencies remain unchanged, (iii) key industry drivers are likely to continue to affect the market over the forecast period, and (iv) there will be no subversive changes to the related industries.

STEADILY GROWING GLOBAL E-COMMERCE MARKET

The global e-commerce market maintained steady growth in recent years. According to the iResearch Report, the market size of global e-commerce reached USD10.3 trillion in 2020 and is expected to grow steadily to USD33.3 trillion in 2028, at a CAGR of 15.8%.

Global E-Commerce Market Size

CAGR CAGR (2016-2020) (2020-2028) Global E-Commerce 19.2% 15.8% (%)

33.3 29.2 25.6 22.4 19.5 16.9 14.2 11.7 10.3 7.5 8.7 5.1 6.2 2016 2017 2018 2019 2020 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e

Global E-Commerce Market Size (USD Trillion)

Note:

1. The global e-commerce market includes domestic and cross-border markets for global B2B and B2C e-commerce, but excludes the market for C2C e-commerce.

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INDUSTRY OVERVIEW

Growth of Global B2B and B2C E-commerce Markets

The dissemination of smartphones and Internet created ample opportunities for the global B2B e-commerce market. Further, social distancing and travel restrictions brought by the COVID-19 pandemic accelerated the digitalization of procurement behavior, with a lasting impact, further supporting growth of the global B2B e-commerce market. The growing popularity of smartphones and social network also facilitated online shopping, fueling growth of the global B2C e-commerce market. According to the iResearch Report, the market size of global B2B e-commerce was approximately USD6.6 trillion in 2020, which is expected to reach USD25.7 trillion in 2028 at a CAGR of 18.5%. The market size of global B2C e-commerce was approximately USD3.7 trillion in 2020, which is expected to reach USD7.6 trillion in 2028 at a CAGR of 9.4%.

Market Size of Global B2B E-Commerce and Global B2C E-Commerce

CAGR CAGR (2016 -2020) (2020 -2028) Global B2B E-Commerce 18.0% 18.5% 25.7 (%) 22.2 Global B2C 19.2 E-Commerce 21.5% 9.4% 16.5 (%) 14.1 11.8 9.7 6.6 7.7 7.0 7.6 5.7 5.4 5.9 6.5 4.1 4.9 4.6 5.1 3.4 3.0 3.7 4.0 1.7 2.1 2.5

2016 2017 2018 2019 2020 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e

Global B2B E-Commerce (USD Trillion) Global B2C E-Commerce (USD Trillion)

Among the global e-commerce markets, China’s cross-border e-commerce is a rapidly growing market incentivized by supportive government policies. In China’s cross-border e-commerce market, the market size of China’s B2B cross-border e-commerce outpaced China’s B2C cross-border e-commerce from 2015 to 2020. With the supportive governmental policies in favor of B2B cross-border e-commerce, improvement of digitalization and continuous construction and enhancement of infrastructure, the market size of China’s B2B cross-border e-commerce is expected to continue to prevail from 2021 to 2025.

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INDUSTRY OVERVIEW

ECOSYSTEM-TYPE CROSS-BORDER B2B E-COMMERCE PLATFORM

While ecosystem-type e-commerce platforms primarily serve to facilitate transactions, building upon products information, advertisement and online transaction services, they bring a wide range of value-added services, including logistics, sales and marketing, supply chain financing services into a wider ecosystem that centers around trade activities. Characteristics of the ecosystem-type platforms include:

Scale-based Growth Potential. During the COVID-19 pandemic, as major communication channels such as offline exhibitions have been disrupted, the market size of global cross-border B2B e-commerce procurement of consumer goods from China saw remarkable growth in 2020. The market size of global cross-border B2B e-commerce procurement of consumer goods from China grew from USD 23.0 billion in 2016 to USD 129.8 billion in 2020, and is expected to reach USD 586.6 billion in 2025, representing a CAGR of 54.1% and 35.2%, respectively.

Market Size of Global Cross-border B2B E-Commerce Procurement of Consumer Goods from China

586.6 CAGR CAGR (2016-2020) (2020-2025) 493.1 Global Cross-border B2B E-Commerce Procurement of 369.8 Consumer Goods from China 54.1% 35.2% (%) 267.2 189.7 129.8 53.4 23.0 33.8 48.1

2016 2017 2018 2019 2020 2021e 2022e 2023e 2024e 2025e

Market Size of Global Cross-border B2B E-Commerce Procurement of Consumer Goods from China (USD billion)

Note: GMV includes the amount paid for order, the unpaid amounts of the orders, and the amounts of refund.

In addition to online transactions, the value-added service market in the ecosystem also recorded rapid growth. In 2020, the market size of service providers derived from global B2B e-commerce procurement of consumer goods from China amounted to USD11.8 billion, among which, the market size of logistics service providers derived from global B2B e-commerce procurement of consumer goods from China amounted to USD6.3 billion. It is estimated that the market size of service providers derived from global B2B e-commerce procurement of consumer goods from China will grow at a CAGR of 48.6% to USD85.6 billion in 2025, while the market size of logistics service providers derived from global B2B e-commerce procurement of consumer goods from China is expected to grow at a CAGR of 47.0% to USD43.2 billion in 2025.

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INDUSTRY OVERVIEW

Synergies. Ecosystem-type platforms bring together external specialists from different industries to optimize cross-border B2B e-commerce procurement service, leading to exponential business growth. In addition, the large transaction volume further enhances these platforms’ bargaining power. Besides, through one-stop cross-border B2B ecommerce procurement platforms, which encompasses a wide range of trade-related value-added services, these platforms are able to derive and process various kind of information including buyer and seller information, transaction behavior, logistics information and payment information. In addition, online platforms serve as centers of the ecosystem and are accessible by both sellers and buyers through automatic payment processing and delivery arrangement. The automated processing of a variety of data and information enables the system to identify problems in time, which improves the comprehensive capability of services and promotes growth of the platforms.

Technology-driven. Ecosystem-type platforms provide abundant use cases for emerging technologies. With the integration of big data, AI, blockchain, cloud computing, Internet of Things/sensors, 5G and other technologies, ecosystem-type platforms accelerate the penetration and iteration of various industrial chains. While testing the feasibility of scenario-based development and verifying the commercial value, ecosystem-type platforms also developed characteristics of the Internet, such as interconnection, diffusion and external stimulation.

Services provided by ecosystem-type cross-border B2B e-commerce platform typically include:

• Logistic services. On one hand, the collaborations between global cross-border B2B e-commerce procurement from China platforms and their logistics partners facilitates end-to-end transactions, providing one-stop solutions to sellers and buyers. Collaborating with a large number of logistics partners greatly diversifies logistics options in terms of, among others, weight bands, timing and routing available for platform sellers. Coupled with their wealth of transaction data assets, global cross-border B2B e-commerce procurement from China platforms can leverage their analytical capabilities to provide insights to sellers to enhance operating efficiency. Global cross-border B2B e-commerce procurement from China platforms may also provide a comprehensive set of value-added services to cater to sellers’ needs. On the other hand, these logistics partners may also need to procure logistics products from global cross-border B2B e-commerce procurement from China platforms to serve their other customers. With vast and diversified bases of sellers and buyers, long-term relationships with third-party carriers and fulfillment service providers, typically have access to a wide range of cost-effective and suitable logistics products. Procuring logistics products from global cross-border B2B e-commerce procurement from China platforms thus helps logistics partners reduce their fulfillment costs. According to the iResearch Report, it is a norm in the industry that global cross-border B2B e-commerce procurement from China platforms also provide logistics products to their logistics partners. Nonetheless, the outbreak of COVID-19 has accelerated market consolidation

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INDUSTRY OVERVIEW

as it drove a considerable amount of less sizable players out of the market because customers tends to choose logistics service providers with stronger fulfillment capabilities.

• Transaction and settlement services. Cash flow and financing have been a known challenge to the cross-border e-commerce sellers, not only because it generally takes longer time to settle payments due to cross-border logistics, custom clearances and other compliance and regulatory processes, but also because traditional banks and financial institutions do not provide financing solutions to these cross-border e-commerce service providers due to the lack of dynamic trading information. As end-to-end trading process is completed on the ecosystem, sufficient trading information and data are available, these platforms facilitate access to financial loans and supports from traditional bank institutions.

• Intelligent product selection and operation. The emergence of cross-border B2B e-commerce platforms has significantly lowered the entry barrier to cross-border trading, hence leading to the influx of smaller sellers from diverse backgrounds, with diversifying needs for support in product selection and operation. With the accumulation of operating data, ecosystem-type e-commerce platforms can predict market’s best-selling products and fashion trends in advance and provide intelligent product selection tools for small business, thus enabling customers to proactively solve product selection problems. At the same time, ecosystem-type e-commerce platforms can provide intelligent store operation services for small business, and improve its ability to operate in e-commerce channels.

Centralized Third-party Platforms and Decentralized Cloud-based Business Services

Centralized third-party platforms refer to platforms that aggregate merchants and traffics to serve as the first point of entry for buyers. Through centralized traffics, centralized platforms provide services including online store transaction services and advertising services in exchange for commissions, advertising fees and value-added service fees. Generally with stringent rules and singular channel, centralized platforms have higher barrier to entrance and are usually dominated by professional distributors and retailers.

Decentralized cloud-based business services refer to the integration of resources in the form of SaaS to help brands and merchants directly reach buyers through diversified channels. Cloud-based business services are typically charged on a subscription basis. Generally with fewer restrictions, subscription business model and diversified channels, decentralized cloud-based business services typically serve a wide range of small-sized sellers, ranging from small and micro merchants to consumer sellers.

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INDUSTRY OVERVIEW

INDUSTRY DRIVERS

Slow Income Growth Stimulated Demand for Cost-effective Goods

According to the iResearch Report, in August 2020, 44% of U.S. households and 85% of European households had an annual income of less than USD75,000, and the average annual household income of emerging economies such as Africa, the Middle East, Latin America and Western Europe was approximately USD18,000. Further, as a result of the COVID-19 pandemic, in 2020, global labor income reduced by 8.3% compared to 2019. As such, cost-effectiveness became a particularly important attribute for consumers with lower incomes in the medium and low-end markets. In particular, consumers in the U.S. demonstrated a clear preference for cost-effective products, which goes hand in hand with online shopping as a result of the perception that they can get lower prices through purchasing online.

Favorable International Trade Environment and Domestic Policies

The “Belt and Road Initiative” aims to actively develop in-depth cooperation between China and its neighboring countries in Central Asia, Eastern Europe, and Southeast Asia in various fields, such as investment and trade. It has boosted the growth of cross-border trade and created a positive and favorable policy environment for China’s cross-border e-commerce export. On November 15, 2020, 15 countries officially signed the Regional Comprehensive Economic Partnership (the “RCEP”), marking it the official conclusion of the largest free trade agreement in the world, further strengthening economic and trade exchanges among RCEP member countries and regions and help speed up intra-regional trade.

In addition, a number of domestic policies have been promulgated by the PRC government to encourage foreign trade including establishment of new cross-border e-commerce pilot zones, lower taxes and VAT exemptions and simplified customs clearance for cross-border e-commerce products in certain customs, which helps support the development of cross-border e-commerce. For example, The “Implementation Opinions on Promoting the Innovative Development of Foreign Trade” was issued by the General Office of the State Council in November 2020, purporting to facilitate cross-border e-commerce and other new business models, including proactive promotion of the construction of comprehensive pilot zones for cross-border e-commerce, continuous exploration of superior experiences and practice and establishment of a comprehensive pilot zone assessment and evaluation mechanism. In addition, relevant measures are to be taken to support the construction of overseas warehouses and applications of cross-border e-commerce applications, thereby boosting B2B e-commerce.

Distinct Advantages of Global E-commerce Procurement from China

Global e-commerce procurement from China has embodied strong resilience despite the impact of the COVID-19 pandemic, attributable to (i) the high integrity and richness of China’s supply chain, demonstrated through manufacturing sector’s capabilities to meet the consumption

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INDUSTRY OVERVIEW demand of cost-effective products from overseas consumers during the COVID-19 pandemic, and (ii) prompt production resumption as compared to other countries and regions as the COVID-19 pandemic is well controlled in China. In addition, with traditional trade channels hampered, enterprises actively tried to connect with overseas customers through cross-border e-commerce platforms. As a result, the number of newly registered cross-border e-commerce companies increased from 3,191 in 2019 to 5,775 in 2020, representing an increase of 81.0%.

More Convenient Logistics and Payment Services

Recently, China’s logistics service providers have actively deployed overseas warehouses. In 2020, the total area of overseas warehouse of China’s leading logistics service providers reached 1.43 million sq.m, with an CAGR of 37.5% from 2016 to 2020. Overseas warehouses help cross-border e-commerce platforms solve their pain points, such as slow delivery speed, difficulty to track, and difficulty to return, and improve the performance and service capabilities of sellers. Oversea warehouses thereby helps satisfy e-commerce’s increasing demand for delivery services and connect retailers and consumers in different geographic locations, facilitating the growth of cross-border e-commerce. In addition, the advent of electronic payments has changed consumer habits and boosted cross-border e-commerce. In comparison, traditional payment methods such as cash and credit cards, are beginning to lag. According to iResearch, cash will be the least used payment method within four years and 52% of online transactions will be made via e-wallets.

Industry Development Facilitated by Increasingly Mature Technologies and Infrastructure

The development of technologies and infrastructure of cross-border e-commerce, payment and logistics enhances the trust in cross-border B2B e-commerce procurement platforms, among which, big data analytics enhances the efficiency of matching, AI technology facilitates smart operation and decision making, Internet of Things raises fulfilment efficiency, 5G technology enhances logistics and after-sale experience, and blockchain technology solves the trust issues in cross-border trade. With global B2B e-commerce growing rapidly, the improvements and digitalization of B2B platform infrastructures will encourage more merchants to go online and in the process, controlling their costs. During the COVID-19 pandemic, many merchants shift to online sales and satisfy the purchasing demands of downstream purchasers without contact. The COVID-19 pandemic helps to form online sales and purchasing habits while introducing more upstream suppliers and downstream users to the B2B e-commerce platforms.

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INDUSTRY OVERVIEW

According to the iResearch Report, in March 2020, over 40% of manufacturers and 41% of distributors worldwide generated over 60% of their income from e-commerce B2B channels.

Global Purchasers’ Sales from B2B E-Commerce Channels as a Percentage of Overall Revenue

Sales of E-Commerce Channel Accounted 0% for 0% 0%

Sales of E-Commerce Channel Accounted 6% for 1-20% 4%

Sales of E-Commerce Channel Accounted 22% for 21-40% 20%

Sales of E-Commerce Channel Accounted 33% for 41-60% 32%

Sales of E-Commerce Channel Accounted 30% for 61-80% 30%

Sales of E-Commerce Channel Accounted 10% for 81-100% 11%

1% No Plans to Use B2B Websites Until 2025 1%

Manufacturers (%) Distributor (%)

The maturing technologies and infrastructures will incentivize even more merchants to migrate online. Further, the COVID-19 had adversely affected offline sales and procurement channels, further accelerating the trend. According to the iResearch Report, each of the U.S., France, Canada and Australia and New Zealand recorded a sharp growth in sales revenue in the second quarter of 2020, among which Australia and New Zealand recorded an increase of 140%. Set out below are the growth rates in retail sales in e-commerce market in the second quarter of 2020 in the U.S., France, Canada, Australia and New Zealand.

Sales Growth of Retail E-Commerce market

140%

120% 111%

80% 73%

60%

40%

0% 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2

US (%) Canada (%) France (%) Australia & New Zealand (%)

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INDUSTRY OVERVIEW

INDUSTRY TREND AND OPPORTUNITIES

The Proliferation of Social Media Platforms

The advent of various social media platforms including Instagram, YouTube and Facebook has facilitated penetration rates of social media worldwide, which further drives up the penetration rate of social media-focused e-commerce. According to the iResearch Report, in 2020, approximately 40% of e-commerce companies had sold directly or planned to sell directly through social media platforms, and approximately 49% of e-commerce companies had cooperated with or planned to cooperate with influencers on social media platforms.

Social Media Influencers’ Increasing Demands for Traffic Monetization

The consumption patterns worldwide have undertaken transformation towards decentralized e-commerce, with more consumers opting to purchase online. During the COVID-19 pandemic, online shopping has been more embraced and new social marketing channels continue to emerge, which brings new online traffic to independent sites and social e-commerce markets. On cross-border B2B e-commerce platforms, the trend of consumers turning to consumer sellers is demonstrated from the diversification of platform participants, ranging from traditional online shop owners to entry-level merchants possessing various characteristics. Entry-level merchants’ demand for traffic monetization has seen continuous increase as online customer acquisition channels are increasingly fragmented, and the capacity of decentralized channels to collect traffic continues to be highlighted.

The Development of Decentralized E-commerce

According to the iResearch Report, as of December 31, 2020, the penetration rates of Internet were significantly higher than that of social media platforms in developed markets. In particular, in 2020, the penetration rate of Internet in Northern America and Northern Europe were over 88.0%, while that of social media were below 70.0%. Its centralized e-commerce is relatively developed due to its comprehensive e-commerce infrastructure while its decentralized e-commerce is experiencing rapid growth. In developing markets, there were no significant difference between the penetration rates of the Internet and social media platforms, and both centralized and decentralized e-commerce are at the rapid-growth stage. Following the development of decentralized e-commerce, demands for B2B e-commerce will increase.

Decentralized Channels’ Capabilities to Satisfy the Needs of Small Retailers

The construction of “private traffic” is conducive to attracting new customers and cultivating their trust. The marketing of “private traffic” facilitates the refinement of user maintenance, thereby enhances repurchase and recommendation by old customers. Actively laying out and digging into decentralized channels allow cross-border e-commerce platforms to seize development opportunities and enhance their industry position.

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INDUSTRY OVERVIEW

COMPETITIVE LANDSCAPE

Competitive Landscape Overview in Global Cross-border B2B E-commerce Procurement of Consumer Goods from China

According to the iResearch Report, in 2020, the market size of global B2B e-commerce procurement of consumer goods from China was USD129.8 billion, and the market share of the top three players accounted for 28.6% of the total GMV. With our deep industry experience and first-mover advantage, we have maintained our leading position in the market of global B2B e-commerce transactions of consumer goods from China, with a market share of 1.4% in 2020 measured by the total GMV. Set out below is a comparison of the market share of top three players in the market of global B2B e-commerce procurement of consumer goods from China based on GMV in 2020.

Market Share of Global Cross-Border B2B E-Commerce Procurement of Consumer Goods from China in 2020

Ranking Company Name Market Share

No. 1 Competitor A 26.2%

No. 2 DHgate 1.4%

No. 3 Competitor B 1.0%

Top 3 28.6%

Others 71.4%

Notes:

1. The market size of global B2B e-commerce procurement of consumer goods from China refers to the market size of online transactions. And online transaction refers to order which are paid online.

2. The GMV includes the amount paid for the order, the unpaid amount of the order, and the amount of the refund.

Competitive Landscape Overview in Global B2B E-commerce Small-Order Procurement of Consumer Goods from China

According to the iResearch Report, the market size of global B2B e-commerce small-order procurement of consumer goods from China amounted to approximately USD16.9 billion in 2020, with the top three players’ market share amounting to approximately 31.8% measure by GMV. Set out below is a comparison of the market share of top three players in the market of global B2B e-commerce small-order procurement of consumer goods from China, based on GMV in 2020:

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INDUSTRY OVERVIEW

Market Share of Global Cross-Border B2B E-Commerce Procurement of Consumer Goods from China (Small-Order) in 2020

Ranking Company Name Market Share

No. 1 Competitor A 23.0%

No. 2 DHgate 7.2%

No. 3 Competitor B 1.6%

Top 3 31.8%

Others 68.2%

Notes:

1. The market size of global B2B e-commerce procurement of consumer goods from China here refers to the market size of online transactions. And online transaction refers to order which are paid online.

2. Small-order e-commerce market means online markets where the orders have a transaction amount of less than USD 800 as defined under the Trade Facilitation and Trade Enforcement Act of 2015 enacted by U.S. Customs and Border Protection on March 10, 2016.

3. GMV includes the amount paid for the order, the unpaid amount of the order, and the amount of the refund.

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INDUSTRY OVERVIEW

Competitive Landscape Overview in U.S. B2B E-commerce Small-Order Procurement of Consumer Goods from China

The market size of U.S. B2B e-commerce small-order procurement of consumer goods from China was USD3.9 billion, with the market size of the top three players accounting for 35.6% of the total GMV in 2020. The B2B e-commerce in the U.S. enjoys its maturity, where we have our distinct advantages. In 2020, we ranked first in the market of U.S. B2B e-commerce small-order procurement of consumer goods from China, with a market share of 17.0%. Set out below is a comparison of the market share of the top three players in the market of U.S. B2B e-commerce small-order procurement of consumer goods from China based on GMV in 2020:

Market Share of US Cross-Border B2B E-Commerce Procurement of Consumer Goods from China (Small-Order) in 2020

Ranking Company Name Market Share

No. 1 DHgate 17.0%

No. 2 Competitor A 14.7%

No. 3 Competitor B 3.9%

Top 3 35.6%

Others 64.4%

Notes:

1. The market size of global B2B e-commerce procurement of consumer goods from China refers to the market size of online transactions. And online transaction refers to order which are paid online.

3. The GMV includes the amount paid for the order, the unpaid amount of the order, and the amount of the refund.

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INDUSTRY OVERVIEW

In 2020, the market size of US full-link B2B e-commerce small-order procurement of consumer goods from China was USD1.9 billion, and the market size of the top three players accounted for 73.7% of the total amount. In 2020, DHgate ranked first in the market of US full-link B2B e-commerce small-order procurement of consumer goods from China, with a market share of 35.2%.

Market Share of US Full-LinkCross-Border B2B E-Commerce Procurement of Consumer Goods from China (Small-Order) in 2020

Ranking Company Name Market Share

No. 1 DHgate 35.2%

No. 2 Competitor A 30.4%

No. 3 Competitor B 8.1%

Top 3 73.7%

Others 26.3%

Notes:

3. The GMV includes the amount paid for the order, the unpaid amount of the order, and the amount of the refund.

4. “Full-link” refers to a platform that can provide logistics services for sellers on the platform while providing online trading services.

BARRIERS TO ENTRY TO CHINA’S CROSS-BORDER B2B E-COMMERCE MARKET

Brand Recognition

Brand recognition becomes increasingly important as platforms well recognized in the cross-border B2B e-commerce market may more efficiently gain the trust of customers, particularly considering the increasing competition within the cross-border B2B e-commerce procurement market as it helps reduce marketing costs during expansion, strengthen customer acquisition capacities, which in turn enhance our capabilities to profit.

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INDUSTRY OVERVIEW

Know-hows in the China Market, Coupled with First-movers’ Advantage and Supply Chain Resources

Deep understanding of local market, broad seller base and buyer network, and supply chain capabilities are instrumental to China’s cross-border B2B e-commerce platforms, as they determine the platforms’ ability to lower overall transaction costs. Early entry into the market allows platforms to accumulate know-hows and seller and buyer network, effectively forming an entry barrier to latter entrants. The aggregation of supply chain resources translates into the capability in relation to goods supply and logistics services. Platforms with abundant supply resources and long-term and stable relationship with upstream suppliers can act as stable source of supply to buyers. Meanwhile, platforms with strong logistics capabilities can ensure the timeliness of delivery to buyers, which elevate their abilities to accumulate and utilize data aggregated in cross-border procurement supply chain, which can be used to help sellers to optimize its operations. In 2020, the average delivery time to door of industry’s leading platforms was 25.8 days in the global cross-border B2B e-commerce procurement from China industry.

Compared with B2C e-commerce transactions, B2B e-commerce transactions require more complicated decision chain and longer decisioning cycle. In addition, the construction of related infrastructure and supporting services required for B2B e-commerce transactions is more difficult. Therefore, B2B E-commerce transactions are more complicated and difficult to construct than B2C e-commerce transactions.

Ecosystem Advantages

Advantages in the ecology of global e-commerce procurement from China improve the platform’s status of being the resource integrator and the hub in the market of global e-commerce procurement from China. Through cooperation with various parties in the industry chain, the platforms organize data in the ecosystem to enhance the operation efficiency and competitiveness of their partners in the ecosystems. These advantages enhance the attractiveness of the ecosystem. By bringing in and integrating new industry chain members, the platforms can continuously expand the value of big data in the ecosystem, thereby further promoting the platforms’ resource aggregation capabilities, and continuously expanding the platform’s barriers to competition in respect of big data within the market of global e-commerce procurement from China.

Strong Research and Development Capabilities

Robust research and development capabilities are the bedrock of cross-border e-commerce procurement service business as it helps enhance the operational efficiency of cross-border B2B e-commerce platforms. Through aggregation and analysis of global trade data, platforms can identify the changes in demand/supply sides more efficiently, and promptly adjust to the changes

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INDUSTRY OVERVIEW accordingly to utilize new business opportunities through consolidating global supply chain resources in a cost-efficient manner. Through AI algorithms, the data from platforms and suppliers are summarized, sorted and analyzed to further facilitate the launch of intelligent customer service, intelligent marketing, intelligent production decision, intelligent order matching and other related products.

KEY CHALLENGES TO CHINA’S CROSS-BORDER B2B E-COMMERCE MARKET

Well-established Supporting Infrastructure

Prompt construction of supporting infrastructure is the prerequisite to completion of transactions on cross-border B2B e-commerce platforms. In addition, supporting infrastructure needs to be continuously improved and upgraded including enhancement of payment system security and stability and improvement of delivery efficiency in order to maintain premium customer experience, which requires strong financial resources and technical capabilities.

Experienced Experts

The successful operations of cross-border B2B e-commerce platforms typically rely on experienced experts possessing deep insights into both cross-border B2B e-commerce and corporate business. To balance the supply and demand of relevant professionals, systematic and time-consuming training for professionals is required to be in place in advance by cross-border B2B e-commerce platforms.

OUR COMPETITIVE ADVANTAGES

For our competitive advantages, see “Business — Our Strengths” for details.

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REGULATORY OVERVIEW

PRC REGULATIONS

This section sets forth a summary of the PRC laws and regulations that may materially affect our business and the industry in which we operate.

LAWS AND REGULATIONS IN RELATION TO TELECOMMUNICATIONS SERVICES AND FOREIGN OWNERSHIP RESTRICTIONS

Laws and Regulations in Relation to Telecommunication Services

The Telecommunications Regulations of the PRC (中華人民共和國電信條例) (the “Telecommunications Regulations”), promulgated on September 25, 2000 and amended on February 6, 2016, provide a regulatory framework for telecommunications services providers in the PRC. The Telecommunications Regulations categorize telecommunications services into basic telecommunications services and value-added telecommunications services. Telecommunication Regulations also set forth guidelines on various aspects of the telecommunications operations in the PRC. The Catalog of Classification of Telecommunications Services (Edition 2015) (電信業務分類目錄(2015年版)), which was promulgated by the MIIT on December 28, 2015 and amended on June 6, 2019, provides that information services provided via public communication networks, such as fixed networks, mobile networks and the Internet, are value-added telecommunications services. According to the Telecommunications Regulations, a commercial telecommunications service provider in the PRC must obtain an operating license from the MIIT or its provincial-level counterparts prior to the commencement of their operations.

The Administrative Measures on Internet Information Services (互聯網信息服務管理辦法) (the “Internet Measures”), which was promulgated by the State Council on September 25, 2000 and amended on January 8, 2011, regulate Internet information services. According to the Internet Measures, “Internet information services” refer to services that provide information to online users via the Internet, and are categorized as either commercial services or non-commercial services. Commercial service providers of Internet information shall obtain the ICP license from the telecommunications administration authorities at the provincial, autonomous regional or municipal level or the MIIT before engaging in any commercial Internet information services in the PRC. Besides, the Internet Measures and other relevant measures also prohibit Internet activities that disseminate any content that, among others, propagates obscenity, pornography, gambling and violence, incites crimes or infringes upon the lawful rights and interests of third parties. If an Internet information service provider detects information transmitted on its system that falls within the specifically prohibited scope, such provider must terminate such transmission, delete such information immediately, keep records and report to the governmental authorities in charge. Any Internet information service provider’s violation of these requirements will lead to the revocation of its ICP license or the closing of its website, when serious violation is committed.

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REGULATORY OVERVIEW

On July 3, 2017, the MIIT promulgated the Administrative Measures for Telecommunications Businesses Operating License (電信業務經營許可管理辦法) (the “Telecom License Measures”), which became effective on September 1, 2017. The Telecom License Measures, which are formulated in accordance with the Telecommunications Regulations, set forth the types of licenses required for providing telecommunications services in the PRC, and the procedures and requirements for obtaining such licenses. According to the Telecom License Measures, telecommunications operators shall report some basic information to the issuing authorities through the Administrative Platform in the first quarter every year.

Laws and Regulations in Relation to Foreign Investments in the Value-added Telecommunications Industry

Special Administrative Measures (Negative List) for Foreign Investment Access (Edition 2020) (外商投資準入特別管理措施(負面清單)(2020年版)) was promulgated by NDRC and MOFCOM on June 23, 2020 and became effective on July 23, 2020. Accordingly, a foreign investor may acquire up to 50% of the equity interests in a PRC entity that provides value-added telecommunications services (excluding e-commerce business, domestic multi-party communication business, information storage and re-transmission business and call center business).

Pursuant to the Administrative Provisions for Foreign Investments in Telecommunications Enterprises (外商投資電信企業管理規定)(“FITE Administrative Provisions”) promulgated by the State Council on December 11, 2001 and amended on September 10, 2008 and February 6, 2016, respectively, foreign investors’ capital contribution to any entity in the PRC providing value-added telecommunications services shall not exceed 50%. Additionally, a foreign investor who invests in value-added telecommunications enterprises operating value-added telecommunications business in the PRC must have a good track record and previous experience in providing value-added telecommunications services overseas (the “Qualification Requirements”). Since no written guidelines have been publicly issued by the MIIT to specify the criteria of the Qualification Requirements, such as what would constitute “a good track record”, the MIIT retains discretion in granting approvals for foreign investors’ commencement of value-added telecommunication business in the PRC. Foreign investors shall obtain approvals both from the MIIT and the competent commerce department of the people’s government.

On July 13, 2006, the Ministry of Information Industry of the PRC (the “MII”, the predecessor of MIIT) issued the Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business (關於加強外商投資經營增值電信業務管理的通知) (the “MII Notice”). The MII Notice prohibits ICP license holders from leasing, transferring or selling their ICP licenses to any foreign investors in any form, or providing any resources, sites, facilities or other assistance to foreign investors for illegal

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REGULATORY OVERVIEW telecommunications businesses in the PRC. The MII Notice requires that ICP license holders or their shareholders must directly and legally own the domain names and registered trademarks used by such license holders in their ICP-related services. The MII Notice further requires that each license holder must have necessary facilities for its approved business operations and maintain such facilities in the regions covered by its ICP license.

On June 19, 2015, MIIT issued the Circular on Loosening the Restrictions on Shareholding by Foreign Investors in Online Data Processing and Transaction Processing Business (Operational E-commerce) (關於放開在線數據處理與交易處理業務(經營類電子商務)外資股比限制的通告) (the “Circular No. 196”). Circular No. 196 allows a foreign investor to hold 100% of the equity interest in a PRC entity that provides online data processing and transaction processing services (“operational-commerce”). In respect of the application for a permit for any FIE engaging in operational e-commerce, the requirements for the proportion of foreign equity are governed by the Circular No.196 while other requirements and approval procedures are subject to the FITE Administrative Provisions.

REGULATIONS IN RELATION TO ONLINE AND MOBILE COMMERCE

The State Administration of Industry and Commerce of the PRC (the “SAIC”, the predecessor of SAMR) adopted the Interim Measures for the Administration of Online Commodities Trading and Relevant Services (網絡商品交易及有關服務行為管理暫行辦法)on May 31, 2010 and replaced those measures with the Administrative Measures for Online Trading (網絡交易管理辦法), which became effective on March 15, 2014, and further replaced with the Supervision and Administration of Online Trading (網絡交易監督管理辦法) (the “Online Trading Measures”), which came into effect on May 1, 2021. The Online Trading Measures made further provisions with regard to consumer rights protection and personal information protection, etc. It also imposes new obligations on the e-commerce platform operators, such as verifying and registering the identity of trading parties on the platform either that are required to registered with SAMR or that are exempted from such registration, regular reporting of prescribed information of trading parties on the platform to the relevant branch of SAMR, establishing a system of inspection and monitoring of information on the goods sold or services provided on the platform.

On August 31, 2018, the Standing Committee of the National People’s Congress promulgated the E-commerce Law of the PRC《中華人民共和國電子商務法》 ( ) (the “E-commerce Law”), which came into effect on January 1, 2019. The E-commerce Law imposes a series of requirements on e-commerce operators including e-commerce platform operators, merchants operating on the platform and the individuals and entities carrying out business online. According to the E-commerce Law, e-commerce operators who provide search results based on consumers’ characteristics such as hobbies and consumption habits shall also provide consumers with options

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REGULATORY OVERVIEW that are not targeted at their personal characteristics at the same time, respect and fairly protect the legitimate interests of the consumers. The E-commerce Law requires the e-commerce platform operators to:

(i) verify and register the identities, addresses, contacts and licenses of merchants who apply to provide goods or services on its platform, establish registration archives and update this information on a regular basis;

(ii) record and retain information of the products and services published on its platform, as well as transaction information, for a no less than three years unless otherwise provided by laws and regulations, and ensure the completeness, confidentiality and availability of this information;

(iii) use noticeable labels to clearly distinguish the products or services provided by the platform operators from those provided by merchants;

(iv) submit the identification information of the merchants on its platform to market regulatory administrative authorities as required and remind the merchants to complete the registration with market regulatory administrative authorities;

(v) submit identification information and tax-related information to tax authorities as required in accordance with the laws and regulations regarding the administration of tax collection and remind the individual merchants to complete the tax registration;

(vi) display the platform service agreement and the transaction rules or links to this information on the homepage of the platform;

(vii) establish a credit evaluation system and publish the credit evaluation rules, and provide consumers with methods to evaluate products sold or services provided on the platform; and

(viii) establish intellectual property rights protection rules, and take necessary measures against infringement of intellectual property rights by merchants on its platform. In addition, e-commerce platform operators are not allowed to impose unreasonable restrictions over or add unjustified conditions to transactions concluded on their platforms by merchants, or charge merchants operating on its platform any unreasonable fees.

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REGULATORY OVERVIEW

According to the E-commerce Law, e-commerce platform operators are required to assume joint liability with the merchants and may be subject to warnings and fines up to RMB2,000,000 where (i) they fail to take necessary actions when they know or should have known that the products or services provided by the merchants on the platform do not meet personal and property security requirements, or otherwise infringe upon consumers’ legitimate rights; or (ii) they fail to take necessary actions, such as deleting and blocking information, disconnecting, terminating transactions and services, when they know or should have known that the merchants on the platform infringe upon the intellectual property rights of others. With respect to products or services affecting consumers’ health and safety, e-commerce platform operators will be held liable if they fail to review the qualifications of merchants or fail to safeguard the interests of consumers, and may be subject to warnings and fines up to RMB2,000,000.

REGULATIONS IN RELATION TO MOBILE INTERNET APPLICATIONS

Mobile internet applications and the internet application store are specifically regulated by the Administrative Provisions on Mobile Internet Applications Information Services (移動互聯網應用程序信息服務管理規定) (the “Mobile Applications Administrative Provisions”), which were promulgated by the Cyberspace Administration of China (the “CAC”) on June 28, 2016 and took effect on August 1, 2016. Pursuant to the Mobile Applications Administrative Provisions, application information service providers shall obtain the relevant qualifications prescribed by laws and regulations, strictly implement their information security management responsibilities and carry out certain duties, including establishing and completing user information security protection mechanism and information content inspection and management mechanisms, protecting users’ right to know and right to choose in the process of usage, and to record users’ daily information and preserve it for 60 days. Application store services providers shall, within 30 days of the business going online and starting operations, conduct filing procedures with the local cybersecurity and information department. Furthermore, internet application store service providers and internet application information service providers shall sign service agreements to determinate both sides’ rights and obligations.

Furthermore, on December 16, 2016, the MIIT promulgated the Interim Measures on the Administration of Pre-Installation and Distribution of Applications for Mobile Smart Terminals (移動智能終端應用軟件預置和分發管理暫行規定) (the “Mobile Application Interim Measures”), which took effect on July 1, 2017. The Mobile Application Interim Measures requires, among others, that internet information service providers must ensure that a mobile application, as well as its ancillary resource files, configuration files and user data can be uninstalled by a user on a convenient basis, unless it is a basic function software, which refers to a software that supports the normal functioning of hardware and operating system of a mobile smart device.

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REGULATORY OVERVIEW

LAWS AND REGULATIONS IN RELATION TO INFORMATION SECURITY AND PRIVACY PROTECTION

On November 7, 2016, SCNPC promulgated the Cyber Security Law of the PRC (中華人民共和國網絡安全法) (the “Cyber Security Law”), which became effective on June 1, 2017. Pursuant to the Cyber Security Law, Internet operators shall comply with laws and regulations and fulfill their obligations to safeguard security of the Internet when conducting business and providing services. Those who provide services through the Internet shall take technical measures and other necessary measures pursuant to laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the Internet, respond to Internet security incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of Internet data, and the Internet operator shall not collect personal information irrelevant to its services, or collect or use the personal information in violation of the provisions of laws or agreements between both parties, and Internet operators of key information infrastructure shall store within the territory of the PRC all the personal information and important data collected and produced within the territory of PRC.

In December 2012, the SCNPC promulgated the Decision on Strengthening Network Information Protection (關於加強網絡信息保護的決定) to enhance the legal protection of information security and privacy on the Internet. In July 2013, the MIIT promulgated the Provisions on Protection of Personal Information of Telecommunication and Internet Users (電信和互聯網用戶個人信息保護規定) to regulate the collection and use of users’ personal information in the provision of telecommunication services and Internet information services in China. Pursuant to these regulations, personal information includes a user’s name, birth date, identification card number, address, phone number, account name, password and other information that can be used for identifying a user.

On December 29, 2011, the MIIT promulgated the Several Provisions on Regulation of the Order of Internet Information Service Market《規範互聯網信息服務市場秩序若干規定》 ( ) (the “Internet Information Service Market Provisions”), which became effective on March 15, 2012. The Internet Information Service Market Provisions stipulate that without the consent of users, Internet information service providers shall not collect information relevant to the users that can lead to the recognition of the identity of the users independently or in combination with other information (hereinafter referred to as “personal information of users”), nor shall they provide personal information of users to others, unless otherwise provided by laws and administrative regulations. The Internet Information Service Market Provisions also require that Internet information service providers shall properly preserve the personal information of users.

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REGULATORY OVERVIEW

LAWS AND REGULATIONS IN RELATION TO OUTBOUND INVESTMENT

On July 4, 2014, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Control for Overseas Investment and Financing and Round-tripping by Chinese Residents through Special Purpose Vehicles (國家外匯管理局關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知) (the “SAFE Circular 37”). Pursuant to SAFE Circular No. 37, the SAFE and its branches regulate the establishment of Special Purpose Vehicles (“SPV”) by domestic residents. “Domestic residents” include domestic institutions and domestic individual residents, which include, Chinese citizens holding the ID cards for Chinese domestic residents, military ID certificates or ID certificates for armed police force, and overseas individuals that do not hold any domestic legitimate ID certificates but have habitual residences within the territory of the PRC due to relationships of economic interests). Prior to contributing domestic and overseas legitimate assets or interests to a SPV, a domestic resident shall apply to the SAFE for foreign exchange registration of overseas investment. Where a registered overseas SPV undergoes changes of its domestic resident individual shareholders, name, operating period or other basic information, or experiences substantial changes, including but not limited to, the increase or reduction of registered capital by domestic resident individuals, transfer or replacement of equity and merger or split, the SPV shall go through modification registration of foreign exchange for overseas investment with the SAFE. Where a non-listed SPV uses its own equity interests or options to grant equity incentives to the directors, supervisors and senior management of a domestic enterprise under its direct or indirect control, as well as other employees in employment or labor relationships with the aforesaid company, relevant domestic resident individuals may, before exercising their rights, apply to the SAFE for foreign exchange registration of the SPV. Failure to comply with the registration procedures set forth in the SAFE Circular No. 37 may result in penalties under PRC foreign exchange administration regulations.

Pursuant to Notice of the SAFE on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (關於進一步簡化和改進直接投資外匯管理政策的通知), which was promulgated on February 13, 2015 and implemented on June 1, 2015, the initial foreign exchange registration for establishing or taking control of a SPV by domestic residents can be conducted with a qualified bank, instead of the local foreign exchange bureau.

On December 26, 2017, the NDRC promulgated the Administrative Measures for the Outbound Investment of Enterprises (企業境外投資管理辦法), which became effective on March 1, 2018. Pursuant to the Administrative Measures for the Outbound Investment of Enterprises, outbound investment refers to the investment activities conducted by an enterprise located within the territory of the PRC either directly or via an overseas enterprise under its control. Such control of an overseas enterprise can be obtained through making investment with assets and equities or providing financing or a guarantee to obtain overseas ownership, control rights, business management rights and other related equities. To make outbound investment, investors shall go

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REGULATORY OVERVIEW through the formalities to have a proposed overseas investment project approved or filed on the record, report relevant information, and cooperate with relevant governmental authorities’ supervision and inspection. Governmental approval is required for sensitive projects carried out by investors either directly or through overseas enterprises under their control. Governmental registration is required for non-sensitive projects carried out directly by investors. In addition, where natural persons within the territory of China make investments abroad through overseas enterprises under their control or through enterprises located in Hong Kong, Macao and Taiwan region, the Administrative Measures for the Outbound Investment of Enterprises shall apply mutatis mutandis. Pursuant to the Administrative Measures for Outbound Investment (境外投資管理辦法) promulgated by the MOFCOM on September 6, 2014 and implemented on October 6, 2014, the MOFCOM and the provincial departments in charge of commerce shall conduct archive filing and verification management according to different circumstances of outbound investment of an enterprise through “outbound investment management system”, and issue the Certificate of Outbound Investment by Enterprises for enterprises filed or verified.

REGULATIONS RELATED TO FOREIGN TRADE AND CUSTOMS

The Foreign Trade Law of the PRC (中華人民共和國對外貿易法), promulgated by SCNPC in 1994 and most recently amended on November 7, 2016, and the Measures for the Filing and Registration of Foreign Trade Business Operators (對外貿易經營者備案登記辦法), promulgated by MOFCOM in 2004 and amended on August 18, 2016 and November 30, 2019, require the foreign trade operators who engage in the import or export of goods or technologies to register in accordance with the rules and obtain the Registration Form of Foreign Trade Business Operators, otherwise, customs shall not handle the customs declaration and clearance for import and export of such foreign trade business operator. As we engage in the import or export of goods, we have already obtained the relevant Registration Form of Foreign Trade Business Operators.

Pursuant to the Customs Law of the PRC (中華人民共和國海關法, the “Customs Law”), promulgated by the SCNPC on January 22, 1987 and respectively amended on July 8, 2000, June 29, 2013, December 28, 2013, November 7, 2016, November 4, 2017 and April 29, 2021, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers that have registered with the customs. In addition, the consignor or consignee of the goods exported or imported (“進出口貨物收發貨人”) and the customs broker must register themselves for declaration activities at the customs office.

Pursuant to the Administrative Provisions of the Customs on the Registration of Customs Declaration Entities of the PRC (中華人民共和國海關報關單位註冊登記管理規定) issued by the General Administration of Customs on March 13, 2014, amended on December 20, 2017 and May 29, 2018, customs declaration entities shall go through the applicable registration procedures with

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REGULATORY OVERVIEW the customs, and the consignor or consignee of imported and exported goods may complete the registration procedure with their local Customs. For declaration of import and export goods, we have already obtained the relevant Registration Certificate of Customs Declaration Entities as of the Latest Practicable Date.

According to the Law of the PRC on Import and Export Commodity Inspection (中華人民共和國進出口商品檢驗法) promulgated by the SCNPC in 1989 and amended on April 28, 2002, June 29, 2013, April 27, 2018 and December 29, 2018 and its detailed rules promulgated on October 23, 1992 and most recently amended on July 18, 2013, February 6, 2016, March 1, 2017 and March 2, 2019, the import and export commodities that are subject to compulsory inspection listed in the catalog compiled by the competent authorities shall be inspected by the commodity inspection authorities, and the import and export goods which are not subject to statutory inspection shall be inspected randomly. The aforesaid catalog will be renewed annually by State Administration for Market Regulation and General Administration of Customs and as of the Latest Practicable Date, the effective catalog is the List of Import and Export Commodities under Inspection and Quarantine of Entry & Exit Inspection and Quarantine Authority (2018 Version) (出入境檢驗檢疫機構實施檢驗檢疫的進出口商品目錄(2018年)). Consignees and consignors themselves or their entrusted agent shall apply for inspection to the commodity inspection authorities.

In addition, according to Measures for the Administration of Entry-Exit Inspection and Quarantine Enterprises (出入境檢驗檢疫報檢企業管理辦法) issued by the General Administration of Quality Supervision, Inspection and Quarantine on February 15, 2015 and latest most recently amended on May 29, 2018, declaration enterprises shall make a filing with the inspection and quarantine authority for the purpose of conducting declaration business. For a qualified declaration enterprise, the competent inspection and quarantine authority will issue the filing form to such enterprise. As we engage in declaration business, we have already obtained the relevant Entry-Exit Inspection and Quarantine Declaration Enterprises Filing Form. Pursuant to the Institutional Reform Plan for the State Council adopted at the First Session of the 13th National People’s Congress, the General Administration of Quality Supervision, Inspection and Quarantine was no longer retained, duties of which in the aspect of entry-exit inspection and quarantine had been transferred to the General Administration of Customs.

CONVERSION OF FOREIGN CURRENCIES

Foreign currency conversion is mainly subject to the Administrative Regulations on Foreign Exchange of the PRC (中華人民共和國外匯管理條例) (the “Foreign Exchange Administrative Regulations”) promulgated by the State Council on January 29, 1996 and amended on January 14, 1997, August 5, 2008 and the Administrative Provisions on the Settlement, Sales and Payment of Foreign Exchange (結匯、售匯及付匯管理規定) (the “Settlement Provisions”) promulgated by the PBOC on June 20, 1996. Under such regulations, RMB is generally freely convertible to

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REGULATORY OVERVIEW foreign currencies for current account transactions (such as trade and service-related foreign exchange transactions and dividend payments), but not for capital account transactions (such as capital transfer, direct investment, securities investment, derivative products or loans), except where a prior approval from the SAFE and/or its competent local counterparts is obtained. Foreign-invested enterprises (“FIEs”) in the PRC may, without any approval from the SAFE and/or its competent local counterparts, purchase foreign exchange for dividend distribution, trade or services by providing certain documentary evidence (such as resolutions of the board of directors and certificates of tax payments).

Pursuant to the Circular on Printing and Issuing the Provisions on the Foreign Exchange Administration of Direct Investment in China Made by Foreign Investors and the Supporting Documents (關於印發外國投資者境內直接投資外匯管理規定及配套文件的通知) promulgated by the SAFE on May 10, 2013 and effective from May 13, 2013, foreign-invested enterprises shall register with the SAFE and/or its competent local counterparts after being established in accordance with the law. When a foreign investor makes capital contributions to an FIE in the form of monetary funds, equity, tangible assets, intangible assets, etc. (including lawful income obtained within the PRC), or when the foreign investor pays consideration for the acquired equity from the domestic side of a Chinese enterprise, the FIE shall register the capital contributions and the rights and interests of the foreign investor with the SAFE and/or its competent local counterparts. When the FIE subsequently increases or reduces its registered capital, transfers its equity or undergoes other capital changes, it shall go through modification registration with the SAFE and/or its competent local counterparts. When the FIE is subsequently deregistered or converted to a non-FIE, it shall go through deregistration with the SAFE and/or its competent local counterparts. A FIE that needs to remit funds abroad due to capital reduction, liquidation, advance recovery of investment, profit distribution, etc. may purchase foreign exchange and make external payment with the relevant bank after going through corresponding registration. A domestic equity transferee who needs to remit funds abroad due to the transfer of the equity held by a foreign investor in a FIE may purchase foreign exchange and make external payment with the bank after the FIE has gone through corresponding registration.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知) (the “SAFE Circular No.19”), which came into effect from June 1, 2015. According to SAFE Circular No. 19, the foreign exchange capital of FIEs shall be subject to the Discretional Foreign Exchange Settlement (the “Discretional Foreign Exchange Settlement”). The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account of a FIE for which the rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the FIE. The proportion of Discretional Foreign

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REGULATORY OVERVIEW

Exchange Settlement of the foreign exchange capital of a FIE is temporarily determined as 100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account and if a FIE needs to make further payment from such account, it still needs to provide supporting documents and go through the review process with the banks. Furthermore, SAFE Circular No.19 stipulates that the use of capital by FIEs shall follow the principles of authenticity and self-use within the business scope of enterprises. The capital of a FIE and capital in Renminbi obtained by the FIE from foreign exchange settlement is prohibited from:

1. being directly or indirectly used for the payment beyond the business scope of the enterprises or otherwise prohibited by relevant laws and regulations;

2. being directly or indirectly used for investment in securities unless otherwise provided by relevant laws and regulations;

3. being directly or indirectly used for granting the entrust loans in Renminbi (unless permitted by the scope of business), repaying the inter-enterprise borrowings (including advances by the third party) or repaying the bank loans in Renminbi that have been sub-lent to the third party; and

4. paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

Furthermore, the Notice of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (國家外匯管理局關於改革和規範資本項目結匯管理政策的通知) (the “SAFE Notice No. 16”) was promulgated and became effective on June 9, 2016. According to the SAFE Notice No. 16, enterprises registered in PRC may also convert their foreign debts from foreign currency into Renminbi on a self-discretionary basis. The SAFE Notice No. 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered in the PRC. The SAFE Notice No. 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope and may not be used for investments in securities or other investments (with the exception of bank financial products that can guarantee the principal within the PRC unless otherwise specifically provided). Besides, the converted Renminbi shall not be used to make loans for related enterprises unless it is within the business scope or to build or to purchase any real estate that is not for the enterprise’s own use with the exception for the real estate enterprise. On October 23, 2019, SAFE issued the Notice of SAFE on Further Facilitating Cross-border Trade and Investment 《國家外匯( 管理局關於進一步促進跨境貿易投資便利化的通知》), which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded

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REGULATORY OVERVIEW enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise of no violation of prevailing special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations of domestic investment projects.

LAWS AND REGULATIONS IN RELATION TO WHOLLY FOREIGN-OWNED ENTERPRISE

The establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC (中華人民共和國公司法)(“Company Law”), which was adopted by the SCNPC on December 29, 1993 and became effective on July 1, 1994. It was last amended on October 26, 2018 and became effective on the same day. Under the Company Law, Companies are generally classified into two categories, limited liability companies and companies limited by shares. The Company Law also applies to foreign-invested limited liability companies. According to the Company Law, where laws on foreign investment have other stipulations, such stipulations shall prevail.

On January 1, 2020, the Foreign Investment Law (中華人民共和國外商投資法) and the Regulations for Implementation of the Foreign Investment Law (中華人民共和國外商投資法實施條例) (the “Implementation Regulations”) came into effect and became the principal laws and regulations governing foreign investment in the PRC, replacing the trio of prior laws regulating foreign investment in the PRC, namely, the Sino-foreign Equity Joint Venture Enterprise Law《中 ( 華人民共和國中外合資經營企業法》), the Sino-foreign Cooperative Joint Venture Enterprise Law (《中華人民共和國中外合作經營企業法》) and the Wholly Foreign-invested Enterprise Law《中 ( 華人民共和國外資企業法》), together with their implementation rules and ancillary regulations. The establishment procedures, approval procedures, registered capital requirements, foreign exchange, accounting practices, taxation and labor matters of a wholly foreign-owned enterprise are regulated by the Foreign Investment Law and the Implementation Regulations.

On December 31, 2019, the MOFCOM and the SAMR jointly promulgated the Measures for Information Reporting on Foreign Investment《外商投資信息報告辦法》 ( ), which became effective on January 1, 2020. Pursuant to the measures, where a foreign investor directly or indirectly carries out investment activities in China, the foreign investor or the foreign-invested enterprise must submit the investment information to the competent commerce department for further handling.

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REGULATORY OVERVIEW

REGULATIONS RELATING TO DIVIDEND DISTRIBUTION

Wholly foreign-owned enterprises and Sino-foreign equity joint ventures in the PRC may pay dividends only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, these foreign-invested enterprises may not pay dividends unless they set aside at least 10% of their respective accumulated profits after tax each year, if any, to fund certain reserve funds, until such time as the accumulative amount of such fund reaches 50% of the enterprise’s registered capital. In addition, these companies may also allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.

Regulations governing abovementioned dividend distribution arrangements have been replaced by the Foreign Investment Law and its implantation rules, which do not provide specific dividend distribution rules for foreign invested enterprises. However, the Foreign Investment Law and its implementation rules provide that after the conversion from a wholly foreign-owned enterprise or sino-foreign equity joint venture to a foreign invested enterprise under the Foreign Investment Law, distribution method of gains agreed in the joint venture agreements may continue to apply.

LAWS AND REGULATIONS IN RELATION TO M&A RULES

The Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (關於外國投資者並購境內企業的規定) (the “M&A Rules”), which were jointly promulgated by MOFCOM, CSRC, SASAC, SAT, SAMR and SAFE on August 8, 2006 and amended on June 22, 2009, govern, among other things, the purchase and subscription by foreign investors of equity interests in a domestic enterprise, and the purchase and operation by foreign investors of the assets and businesses of a domestic enterprise.

In addition, the M&A Rules also require an offshore SPV formed for listing purposes and controlled directly or indirectly by PRC companies or individuals to obtain the CSRC’s approval prior to the listing and trading of the SPV’s securities on an overseas stock exchange.

LEGAL REGULATIONS OVER INTELLECTUAL PROPERTY IN THE PRC

Pursuant to the Copyright Law of the PRC (中華人民共和國著作權法) (the “Copyright Law”), which was amended on February 26, 2010 and November 11, 2020, and became effective on June 1, 2021. Copyrights include personal rights such as the right of publication and that of attribution as well as property rights such as the right of production and that of distribution.

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REGULATORY OVERVIEW

Reproducing, distributing, performing, projecting, broadcasting or compiling a work or communicating the same to the public via an information network without permission from the owner of the copyright therein, unless otherwise provided in the Copyright Law, shall constitute infringements of copyrights. The infringer shall, according to the circumstances of the case, undertake to cease the infringement, take remedial action, and offer an apology, pay damages, etc.

Trademark

Pursuant to the Trademark Law of the PRC (中華人民共和國商標法) (the “Trademark Law”), which was revised on April 23, 2019 and became effective on November 1, 2019, the right to exclusive use of a registered trademark shall be limited to trademarks which have been approved for registration and to goods for which the use of trademark has been approved. The period of validity of a registered trademark shall be ten years, counted from the day the registration is approved. According to the Trademark Law, using a trademark that is identical with or similar to a registered trademark in connection with the same or similar goods without the authorization of the owner of the registered trademark constitutes an infringement of the exclusive right to use a registered trademark. The infringer shall, in accordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages, etc.

Patent

Pursuant to the Patent Law of the PRC (中華人民共和國專利法) (the “Patent Law”), which was revised on December 27, 2008 and October 17, 2020, and became effective on June 1, 2021, after the grant of the patent right for an invention or utility model, except where otherwise provided for in the Patent Law, no entity or individual may, without the authorization of the patent owner, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, or use, offer to sell, sell or import any product which is a direct result of the use of the patented process, for production or business purposes. And after a patent right is granted for a design, no entity or individual shall, without the permission of the patent owner, exploit the patent, that is, for production or business purposes, manufacture, offer to sell, sell, or import any product containing the patented design. Where the infringement of patent is decided, the infringer shall, in accordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages, etc.

Domain Name

The Administrative Measures for Internet Domain Names (互聯網域名管理辦法) were promulgated by the MIIT on August 24, 2017 and became effective on November 1, 2017 (“Domain Name Measures”). The Domain Name Measures replaced the Administrative Measures on China Internet Domain Names (中國互聯網域名管理辦法) promulgated by the MII on

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REGULATORY OVERVIEW

November 5, 2004. The principle of “first come, first file” applies to domain name registration service in accordance with the Domain Name Measures. In the event that there is any change to the contact information of a domain name holder, the holder shall file such change with the respective domain name registrar within 30 days after such change arises.

LEGAL REGULATIONS OVER LABOR PROTECTION IN THE PRC

According to the Labor Law of the PRC (中華人民共和國勞動法) (the “Labor Law”), which was promulgated by the Standing Committee of the National People’s Congress on July 5, 1994, came into effect on January 1, 1995 and was amended on August 27, 2009 and December 29, 2018, an employer shall develop and improve its rules and regulations to safeguard the rights of its workers. An employer shall develop and improve its labor safety and health system, stringently implement national protocols and standards on labor safety and health, conduct labor safety and health education for workers, guard against labor accidents and reduce occupational hazards. Labor safety and health facilities must comply with relevant national standards. An employer must provide workers with the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations, as well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special operations shall have received specialized training and obtained the pertinent qualifications. An employer shall develop a vocational training system. Vocational training funds shall be set aside and used in accordance with national regulations and vocational training for workers shall be carried out systematically based on the actual conditions of the company.

The Labor Contract Law of the PRC (中華人民共和國勞動合同法), which was promulgated by the SCNPC on June 29, 2007, became effective on January 1, 2008, and was subsequently amended on December 28, 2012 and came into effect on July 1, 2013, and the Implementation Regulations on Labor Contract Law (勞動合同法實施條例) (Order No. 535 of the State Council) (the “Labor Contract Law”), which was promulgated on September 18, 2008 and became effective on the same day, regulate both parties through a labor contract, namely the employer and the employee, and contain specific provisions involving the terms of the labor contract. It is stipulated under the Labor Contract Law and the Implementation Regulations on Labor Contract Law that a labor contract must be made in writing. An employer and an employee may enter into a fixed-term labor contract, an un-fixed term labor contract, or a labor contract that concludes upon the completion of certain work assignments, after reaching agreement upon due negotiations. An employer may legally terminate a labor contract and dismiss its employees after reaching agreement upon due negotiations with the employee or by fulfilling the statutory conditions. Labor contracts concluded prior to the enactment of the Labor Law and subsisting within the validity

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REGULATORY OVERVIEW period thereof shall continue to be honored. With respect to a circumstance where a labor relationship has already been established but no formal contract has been made, a written labor contracts shall be entered into within one month from the effective date of the Labor Contract Law.

According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums (社會保險費徵繳暫行條例), the Regulations on Work Injury Insurance (工傷保險條例), the Regulations on Unemployment Insurance (失業保險條例) and the Trial Measures on Employee Maternity Insurance of Enterprises (企業職工生育保險試行辦法), enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance. An enterprise must provide social insurance by processing social insurance registration with local social insurance agencies and shall pay or withhold relevant social insurance premiums for or on behalf of employees. The Law on Social Insurance of the PRC (中華人民共和國社會保險法), which was promulgated on October 28, 2010 and amended on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance.

According to the Interim Measures for Participation in the Social Insurance System by Foreigners Working within the Territory of China (在中國境內就業的外國人參加社會保險暫行辦法), which was promulgated by the Ministry of Human Resources and Social Security on September 6, 2011 and became effective on October 15, 2011, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance with the relevant law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required. In accordance with such interim measures, the social insurance administrative agencies shall exercise their right to supervise and exam the legal compliance of foreign employees and employers and the employers who do not pay social insurance premium in conformity with the laws shall be subject to the administrative provisions provided in the Social Insurance Law and the relevant regulations and rules mentioned above.

According to the Regulations on the Administration of Housing Provident Fund《住房公積 ( 金管理條例》(Order No. 262 of the State Council), which was promulgated and became effective on April 3, 1999, and was amended respectively on March 24, 2002 and March 24, 2019, housing provident fund contributions by an individual employee and housing provident fund contributions by his or her employer shall belong to the individual employee.

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REGULATORY OVERVIEW

The employer shall timely pay up and deposit housing provident fund contributions in full amount and late or insufficient payments shall be prohibited. The employer shall process housing provident fund payment and deposit registrations with the housing provident fund administration center. With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period. Those who fail to process their registrations within the designated period shall be subject to a fine ranging from RMB10,000 to RMB50,000. When companies breach the regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such companies to pay up within a designated period and may further apply to the People’s Court for mandatory enforcement against those who still fail to comply after the expiry of such period.

LEGAL REGULATIONS OVER TAX IN THE PRC

Income Tax

According to the Enterprise Income Tax Law of the PRC (中華人民共和國企業所得稅法) (the “EIT Law”), which was promulgated on March 16, 2007 and became effective on January 1, 2008, and was respectively amended on February 24, 2017 and December 29, 2018 and the Implementation Rules to the EIT Law (中華人民共和國企業所得稅法實施條例), which was promulgated on December 6, 2007 and amended on April 23, 2019 and became effective on the same day as the EIT Law by the State Council, enterprises are divided into resident enterprises and non-resident enterprises. A resident enterprise shall pay enterprise income tax on its taxable income deriving from both inside and outside China at the standard rate of enterprise income tax of 25%. A non-resident enterprise that has an establishment or place of business in the PRC shall pay enterprise income tax on its income deriving from inside China attributable to such establishment or place of business, and on its income, which derives from outside China but has actual relationship with such establishment or place of business, at the standard rate of enterprise income tax of 25%. A non-resident enterprise that does not have an establishment or place of business in China or has an establishment or place of business in China but the income has no actual relationship with such establishment or place of business, shall pay enterprise income tax on its income deriving from inside China at the reduced rate of enterprise income tax of 10%.

According to Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies (關於境外註冊中資控股企業依據實際管理機構標準認定為居民企業有關問題的通知) promulgated on April 22, 2009, enterprises registered overseas in accordance with laws of foreign countries (regions) by enterprises or enterprises groups within the territory of China as major holding investors may be treated as “Overseas Chinese-funded enterprises” for PRC enterprise income tax purpose. Where

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REGULATORY OVERVIEW any overseas Chinese-funded enterprise meets all of the following conditions, be identified as a resident enterprise of the actual organizational management (referred to as “Non-domestic Registered Resident Enterprise”) within the territory of China, and shall be subject to relevant taxation management and collection of enterprise income tax on its incomes derived from within and out of the territory of China. (1) The places where its senior officers and senior management departments in charge of routine production and operation management perform their duties are mainly located within the territory of China; (2) the financial decisions (such as borrowing, loan, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary/wages) are made or need to be approved by the organizations or persons located within the territory of China; (3) the principal properties, accounting books, corporate seals, meeting minutes and files of the board meetings and the shareholders’ meetings are placed or kept within the territory of China; and (4) 1/2 or more than 1/2 of its directors or officers with voting rights customarily reside within the territory of China.

Income Tax in Relation to Dividend Distribution

The PRC and the government of Hong Kong entered into the Agreement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes (內地和香港特別行政區關於對所得稅避免雙重徵收和防止偷漏稅的安排) (the “Arrangement”) on August 21, 2006 which was implemented from January 1, 2007. According to the Arrangement, the withholding tax rate of 5% applies to the gross amount of the dividends paid by a PRC company to a Hong Kong resident company which is identified as the “beneficial owner”, provided that such Hong Kong resident company holds directly at least 25% of the equity interests in the PRC Company paying the dividends. In all other cases, 10% withholding tax rate would be applied.

Pursuant to the Circular of the State Administration of Taxation on Relevant Issues relating to the Implementation of Dividend Clauses in Tax Agreements) (國家稅務總局關於執行稅收協定股息條款有關問題的通知), which was promulgated by the SAT and became effective on February 20, 2009, all of the following requirements shall be satisfied where a fiscal resident of the other party to a tax agreement, and such a fiscal resident (or dividend recipient) is the beneficiary owner of the dividends, needs to be entitled to such tax agreement treatment as being taxed at a tax rate specified in the tax agreement for the dividends paid to it by a Chinese resident company: (i) The taxpayer who may be entitled to the tax agreement treatment should be a fiscal resident of the other party to the tax agreement; (ii) The taxpayer who may be entitled to the tax agreement treatment should be the beneficiary owner of the dividends in question; (iii) Dividends to which the tax agreement treatment may be applicable should be dividends, bonuses and other equity investment income determined in accordance with the domestic tax laws of China; and (v) Other requirements specified by the State Administration of Taxation.

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REGULATORY OVERVIEW

Moreover, as provided in dividend clauses in the relevant tax agreement, where a fiscal resident of the other party to the tax agreement directly owns a certain percentage or more (generally 25% or 10%) of the capital of a Chinese resident company which pays dividends to such a fiscal resident, dividends obtained by such a fiscal resident may be taxed at a tax rate specified in the tax agreement. Where such a fiscal resident needs to be entitled to such tax agreement treatment, all of the following requirements should be satisfied: (i) such a fiscal resident who obtains dividends should be a company as provided in the tax agreement; (ii) owner’s equity interests and voting shares of the Chinese resident company directly owned by such a fiscal resident reaches a specified percentage; and (iii) the equity interests of the Chinese resident company directly owned by such a fiscal resident, at any time during the twelve months prior to the obtainment of the dividends, reach a percentage specified in the tax agreement.

Value-added Tax

According to the Temporary Regulations on Value-added Tax (增值稅暫行條例) (Order No. 538 of the State Council), which was promulgated by the State Council on December 13, 1993, came into effect on January 1, 1994, and was amended on November 10, 2008 and February 6, 2016, and was subsequently amended on November 9, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax (增值稅暫行條例實施細則) (Order No. 65 of the MOF), which was promulgated by the MOF and came into effect on December 25, 1993, and was amended on December 15, 2008 and October 28, 2011 thereafter, all taxpayers selling goods, providing processing, repairing or replacement services or importing goods within the PRC shall pay value-added tax. The standard tax rate is 17% for VAT general taxpayers who sell or import goods; the applicable rate for the export of goods by taxpayers shall be nil, unless otherwise stipulated.

Furthermore, according to the Trial Scheme for the Conversion of Business Tax to Value-added Tax (營業稅改徵增值稅試點方案) (Cai Shui 2011 No. 110), which was promulgated by the MOF and the SAT, the State began to launch taxation reforms in a gradual manner with effect from January 1, 2012, whereby the collection of value-added tax in lieu of business tax items was implemented on a trial basis in regions showing significant radiating effects in economic development and providing outstanding reform examples, beginning with production service industries such as transportation and certain modern service industries.

On March 23, 2016, the MOF and the SAT jointly issued the Circular on the Pilot Program for Overall Implementation of the Collection of Value Added Tax Instead of Business Tax (關於全面推開營業稅改徵增值稅試點的通知), (“Circular 36”), which took effect on May 1, 2016. Pursuant to the Circular 36, all of the companies operating in construction, real estate, finance, modern service or other sectors which were required to pay business tax are required to pay VAT, in lieu of business tax. The VAT rate is 6%, except for rate of 11% for real estate sale, land use

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REGULATORY OVERVIEW right transferring and providing service of transportation, postal sector, basic telecommunications, construction, real estate lease; rate of 17% for providing lease service of tangible property; and rate of zero for specific cross-bond activities.

Further, on March 20, 2019, the MOF, the SAT and the General Administration of Customs jointly issued the Announcement on Policies for Deepening the VAT Reform (關於深化增值稅改革有關政策的公告), or Announcement 39, to further slash value-added tax rates. According to the Announcement 39, (i) with respect to VAT taxable sales or imported goods of a VAT general taxpayer, where the VAT rate of 16% or 10% applies currently, the applicable VAT rate is adjusted to 13% or 9% respectively; (ii) for the agricultural products purchased by taxpayers which an existing 10% deduction rate is applicable, the deduction rate was adjusted to 9%; (iii) for the agricultural products purchased by taxpayers for production or commissioned processing subject to VAT at 13%, the input VAT shall be calculated at a 10% deduction rate; (iv) for the exportation of goods or labor services that are subject to VAT at 16%, with the applicable export refund at the same rate, the export refund rate was adjusted to 13%; and (v) for the exportation of goods or cross-border taxable activities that are subject to VAT at 10%, with the export refund at the same rate, the export refund rate was adjusted to 9%. The Announcement 39 came into effect on April 1, 2019 and shall be prevail in case of any conflict with existing provisions.

HONG KONG REGULATIONS

This section sets forth a summary of the Hong Kong laws and regulations that may materially affect our business and the industry in which we operate. Information contained in this section should not be construed as a comprehensive summary of laws and regulations applicable to the Issuer and the Group.

LAWS AND REGULATIONS IN RELATION TO PAYMENT SERVICES

Laws and Regulations in Relation to Money Service Operators

The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615 of the Laws of Hong Kong) (“AMLO”), came into effect on 1 April 2012 and underwent a major amendment on 1 March 2018. The AMLO provides a licensing regime for persons operating a money service, who is required to be licensed with the Hong Kong Customs and Excise Department (“HKCE”).

Under Section 29 of the AMLO, a person commits an offense if the person operates a money service without a license. Money service means either a money changing service or a remittance service, which is operated in Hong Kong as a business. A money changing service means a service for the exchanging of currencies that is operated in Hong Kong as a business, but does not include

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REGULATORY OVERVIEW such a service that is operated by a person who manages a hotel. A remittance service means a service of one or more of the following that is operated in Hong Kong as a business: (a) sending, or arranging for the sending of, money to a place outside Hong Kong; (b) receiving, or arranging for the receipt of, money from a place outside Hong Kong; or (c) arranging for the receipt of money in a place outside Hong Kong. A person who commits an offense under Section 29 is liable on conviction to a fine of up to HK$100,000 and to imprisonment for up to 6 months.

Pursuant to Section 30 of the AMLO, the HKCE will only grant a MSO license to a corporation if each director and each ultimate owner of the corporation is a fit and proper person to be associated with the business of operating a money service. Once the corporation is duly licensed, the MSO licensee must also comply with ongoing anti-money laundering requirements and reporting obligations.

Laws and Regulations in Relation to Stored Value Facility

The Payment Systems and Stored Value Facilities Ordinance (Cap. 584 of the Laws of Hong Kong) (“PSSVFO”) came into effect on 13 November 2015. The PSSVFO introduces a licensing regime for stored value facilities (“SVFs”) (including e-wallets and precard cards) and a designated regime for Retail Payment Systems (“RPSs”).

An SVF is defined in the PSSVFO as: (1) a facility that may be used for storing the value of an amount of money; (2) that is paid into the facility from time to time; (3) which may be stored on the facility under the rules of the facility; (4) and may be used for either, or both of, a means of making payments for goods or services and/or a means of making payments to another person; and (5) in the case of payments made for goods or services, payments are made from the facility to the issuer or to another person whom the issuer has procured will accept the payment; and in the case of payments made to other persons, payments are made from the facility by the issuer or another person whom the issuer has procured will make the payment to the other person. Pursuant to Section 8B of the PSSVFO, no person shall issue any SVF in Hong Kong unless an SVF License is granted by the Hong Kong Monetary Authority. A person who contravenes the section commits an offense and is liable to a fine of up to HK$1,000,000 and to imprisonment for up to 5 years. In addition, Section 8ZZZJ of the PSSVFO provides that a person without an SVF License must not publish in Hong Kong or elsewhere an advertisement, invitation or document which is, or contains, an invitation to the public relating (whether in whole or in part) to the issue of an SVF.

LAWS AND REGULATIONS IN RELATION TO DATA PRIVACY

The Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) (“PDPO”) came into effect in December 1996 and underwent major amendments in 2012. Pursuant to the PDPO, any person who, either jointly or in common with other persons, controls the collection,

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REGULATORY OVERVIEW holding, processing or use of personal data, are considered “data users” and subject to the six data protection principles (“DPPs”) as specified in Schedule 1 of the PDPO. In addition, under Part 6A of the PDPO, a data user must not use a data subject’s personal data, or disclose it to another person for gain or otherwise, for the purposes of direct marketing unless the data user has obtained the data subject’s consent to the intended use.

Contravention of a data protection principle is not an offense. However, contravention of certain provisions of PDPO (for example, Section 26 regarding erasure of personal data that is no longer required and Section 64 regarding disclosure of personal data obtained from a data user without the data user’s consent and the direct marketing provisions), is an offense and offenders are subject to criminal fines and imprisonment. If there are breaches of the data protection principles, data subjects may lodge a complaint to the Office of the Privacy Commissioner for Personal Data (“PCPD”). Depending on the facts and circumstances, the PCPD may carry out investigation of the complaint and if it is found that the relevant dat users has contravened the PDPO, the PCPD may issue an enforcement notice to the data user directing remedial actions and/or preventive steps to be taken. The contravention of an enforcement notice is an offense, and the data users may be liable to a fine of up to HK$50,000 and imprisonment of up to 2 years.

LAWS AND REGULATIONS IN RELATION TO EMPLOYMENT

Employment

The Employment Ordinance (Cap. 57 of the Laws of Hong Kong) (the “EO”) regulates employment relationships and employment-related matters in Hong Kong. It stipulates, among other things, provisions relating to the payment of wages, restriction on deductions from wages, statutory holidays, and the termination of employment contracts. In addition, employees under a continuous contract are entitled to certain benefits such as maternity leave, sickness allowance, paid annual leave, rest days, severance and long service payment.

Under Section 25 of the EO, where a contract of employment is terminated any sum due to the employee shall be paid to him as soon as is practicable and in any case not later than 7 days after the day of termination. Any employer who willfully and without reasonable excuse contravenes this section commits an offense and is liable to a fine of up to HK$350,000 and to imprisonment for up to 3 years. Further, pursuant to Section 25A, if any wages, payment in lieu of notice and/or any long service payments are not paid within 7 days from the day on which they become due, the employer shall pay interest at a specified rate on the outstanding amount of wages or sum from the date on which such wages or sum become due up to the date of actual payment. Any employer who wilfully and without reasonable excuse contravenes section 25A commits an offense and is liable to a fine of up to HK$10,000.

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Minimum Wage

The Minimum Wage Ordinance (Cap. 608 of the Laws of Hong Kong) (the “MWO”) provides that an employee is entitled to be paid wages in respect of any wage period of not less than the prescribed minimum wage. Currently, the prescribed minimum hourly wage rate is HK$37.50. Pursuant to Section 15 of the MWO, a provision of a contract of employment that purports to extinguish or reduce any right, benefit or protection conferred on the employee by the MWO is void.

Mandatory Provident Fund

The Mandatory Provident Fund Schemes Ordinance (Cap. 485 of the Laws of Hong Kong) (the “MPFSO”) requires every employer of a relevant employee to take all practicable steps to ensure that the employee becomes a member of a registered scheme and make contributions to that relevant registered scheme within the permitted period. The MPFSO provides that an employer shall participate in the Mandatory Provident Fund Scheme and make contributions for its employees aged between 18 and 65, and an employer and its employee are both required to contribute at least 5% of the employee’s monthly relevant income as mandatory contribution for and in respect of the employee, subject to the minimum and maximum relevant income levels for contribution purposes. At present, the maximum level of relevant income for contribution purposes is at HK$30,000 per month or HK$360,000 per year, while the minimum level of relevant income for contribution purposes is HK$7,100 per month or HK$85,200 per year.

ENGLISH LAW REGULATIONS

This section sets forth a summary of the English laws and regulations that may materially affect the business of Sunlight Trading (UK) Limited (the “Company”) and the industry in which it operates.

LAWS AND REGULATIONS RELATING TO PAYMENT SERVICES

Firms providing payment services in the UK by way of business must be authorized by the Financial Conduct Authority (FCA) and comply with the rules set out in the Payment Services Regulations 2017 (“PSR 2017”) unless those services fall within an exclusion.

The payment services that fall within the scope of the PSR 2017 are:

(a) services enabling cash to be placed on a payment account and all of the operations required for operating a payment account;

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(b) services enabling cash withdrawals from a payment account and all of the operations required for operating a payment account;

(i) direct debits, including one-off direct debits;

(ii) payment transactions executed through a payment card or a similar device;

(iii) credit transfers, including standing orders;

(d) the execution of the following types of payment transaction where the funds are covered by a credit line for the payment service user—

(i) direct debits, including one-off direct debits;

(ii) payment transactions executed through a payment card or a similar device;

(iii) credit transfers, including standing orders;

(e) issuing payment instruments or acquiring payment transactions;

(f) money remittance;

(g) payment initiation services; and

(h) account information services.

Firms are, as a general rule, only likely to be carrying on one of these payment services if they come into contact with the funds, either by holding them in an account they operate or by entering into the flow of funds between payer and recipient in some way (although acquiring payment transactions doesn’t necessarily have to involve either of these elements).

Carrying on regulated payment and financial services activity without authorization is a criminal offense. Sanctions under the applicable law and regulation can include a fine (the level of which is now unlimited but was until recently set at a maximum of £5,000) and/or imprisonment (up to a maximum of 2 years). We would usually expect fairly minor breaches to be dealt with by the regulator through a fine or the imposition of additional requirements on the firm if it is already authorized/seeking authorization.

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When determining the level of any sanction for breach of the PSR 2017, the FCA is likely to take factors like the length of time the activity had been carried on for, the value of transactions involved and any detriment to customers into account.

LAWS AND REGULATIONS RELATING TO EMPLOYMENT

Under the Employment Rights Act 1996, employees and workers must be provided with written particulars of certain terms of their employment by no later than the start date of their employment. This requirement can be complied with by the inclusion of these terms in an employment contract.

There are several other requirements that the Company will need to comply with as an employer. For example:

— the Company is required to pay employees at least the national minimum wage in accordance with the rules set out in the National Minimum Wage Regulations 2015;

— the Company must comply with the requirements of the Working Time Regulations 1998 in relation to holiday pay (we note that recent case law has confirmed that regular overtime pay needs to be taken into account when calculating holiday pay);

— the Company must comply with the requirements of the Working Time Regulations 1998 in relation to working time, rest breaks and periods, and paid holiday for employees;

— the Company must comply the requirements of the Employment Rights Act 1996 in relation to statutory minimum notice periods when terminating employment; and

— the Company must comply with its obligations as an employer under the Health and Safety at Work Act 1974.

Under the Employment Rights Act 1996, employees with two or more years’ continuous service are:

— protected against unfair dismissal (note that there is no minimum service requirement for claims of automatic unfair dismissal — for example, where an employee is dismissed for whistleblowing or pregnancy); and

— entitled to receive statutory redundancy pay if they are dismissed by reason of redundancy.

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REGULATORY OVERVIEW

All UK employees are protected against discrimination on the basis of a ‘protected characteristic’ under the Equality Act 2010. Protected characteristics include age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.

We also note that in addition to UK employment laws, the Company has obligations under other laws as an employer. For example, the Company will need to process employees’ personal data during the course of their employment and will be a data controller for the purposes of the UK GDPR. The Company will therefore need to comply with certain obligations under the UK GDPR when processing employee personal data.

Under the Pensions Act 2014, employers are required to automatically enroll employees in a pension arrangement which meets certain requirements (in particular in relation to contribution levels). Failure to comply with the Pensions Act would mean that the UK Pensions Regulator could:

— impose a penalty, which could escalate up to a maximum of £10,000 per day until compliance was achieved; and

— require the payment of past contributions which should have been made to a compliant arrangement.

CORPORATE FILING REQUIREMENTS

The Companies Act 2006 (“CA 2006”) sets out the filing requirements for a UK company. Under the CA 2006, the Company is required to file and maintain various filings including the (i) confirmation statement (section 853A of the CA 2006), (ii) annual accounts (section 441 of the CA 2006) (iii) articles of association (section 36 of the CA 2006) (iv) changes to particulars (e.g. changes in directors (section 167 of the CA 2006), changes in company secretary (section 276 of the CA 2006), resolutions and agreements affecting the Company’s constitution (section 30 of the CA 2006)) and (v) allotment of shares (section 555 of the CA 2006).

If the Company fails to file statutory information within the relevant timescales to Companies House, there are specific offenses under the CA 2006 for each filing requirement, including failing to file:

— Confirmation statement. The Company, every director of the Company (including shadow directors), and in the case of a private company with a secretary or a public company, every secretary of the Company, and every other officer of the Company who is in default is liable, on summary conviction, to a fine (section 853L of the CA 2006).

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— Accounts and reports. Every person who immediately before the end of the period for filing the accounts and reports was a director of the Company is liable, on summary conviction, to a fine (section 451 of the CA 2006).

— Articles of association. The Company and every officer of the Company who is in default is liable, on summary conviction to a fine (section 26(3) to (4) of the CA 2006).

— Notice of appointments of changes in directors. The Company and every officer (including shadow directors) of the Company who is in default is liable, on summary conviction, to a fine (section 167(4) to (5) of the CA 2006).

— Notice of appointments or changes in company secretary. Every officer (including shadow directors) of the Company who is in default is liable, on summary conviction, to a fine (section 276(3) to (4) of the CA 2006).

— Resolutions or agreements. The Company and every officer of it who is in default is liable, on summary conviction, to a fine (section 30(2) to (3) of the CA 2006).

— Return of allotment of shares. Every officer of the Company who is in default is liable, on conviction on indictment or on summary conviction, to a fine (section 557 of the CA 2006).

Pursuant to section 1112 of the CA 2006, it is an offense for a person to knowingly or recklessly deliver or cause to be delivered to Companies House for any purpose of the CA 2006 a document that is misleading, false or deceptive in a material particular.

A person guilty of an offense under this provision is liable to: (i) on conviction on indictment, imprisonment for a term not exceeding two years or a fine or both; and (ii) on summary conviction, imprisonment for a term not exceeding 12 months or an unlimited fine or both.

Pursuant to section 463(1) and (2) of the CA 2006, directors will not be liable to any person except the Company for any loss suffered by it as a result of:

— any untrue or misleading statement in a report or corporate governance statement; or

— the omission from a report or corporate governance statement of anything required to be included in it.

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However, section 463 of the CA 2006 requires there to have been fraud or deceit rather than negligence.

In addition, the directors are subject to general duties of care under the CA 2006. Pursuant to section 174 of the CA 2006, a director has a duty to exercise reasonable care, skill and diligence in supervising the business and affairs of the Company. This duty of care is owed to the Company so in practice it would be the Company that would pursue action against the directors.

MARKETING AND ADVERTISING

Regulatory framework CPUT and BPRs

In the UK, the key piece of legislation for advertising and marketing is the Consumer Protection from Unfair Trading Regulations 2008 (“CPUT”) for marketing targeted at consumers and Business Protection from Misleading Marketing Regulations 2008 (the “BPRs”) for comparative business marketing.

Under CPUT, advertising will be deemed to be misleading if it causes or is likely to cause an “average” consumer to take a transactional decision he/she would not have otherwise taken (e.g. to buy a product) if accurate information had been provided. This can include a misleading omission of information, or information that is presented in an unclear or ambiguous way. CPUT also includes 31 specific practices which are always considered to be unfair, regardless of whether they affect the average consumer’s transactional decision.

The BPRs prohibit misleading B2B advertising and impose restrictions on how businesses compare their products to competitor products.

Breaching CPUT or the BPRs is a criminal offense, which may result in enforcement action from UK Trading Standards authorities or the Competition and Markets Authority. If successfully prosecuted, a company may be subject to an unlimited fine and/or imprisonment (although the latter is very unlikely in this context).

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Self-regulatory framework CAP Code and BCAP Code

Notwithstanding the regulatory framework, in the UK, advertising and marketing is principally self-regulated by two main industry codes of practice, both of which are enforced by the Advertising Standards Authority (“ASA”):

(a) the British Code of Advertising, Sales Promotion and Direct Marketing (the “CAP Code”), which applies to advertising appearing online and in other non-broadcast media (e.g. newspapers, magazines, posters, leaflets and brochures); and

(b) the Code on Broadcast Advertising (the “BCAP Code”), which applies to advertisements in broadcast media (e.g. television and radio).

The key principles under the Codes are that all marketing communications should:

(a) be identifiable as marketing communications;

(b) be legal, decent, honest and truthful;

(d) be prepared with a sense of responsibility to consumers;

(e) not exploit the credulity, lack of knowledge or inexperience of consumer;

(f) not condone or encourage unsafe practices; and

(g) be capable of objective substantiation using documentary evidence.

In addition, marketing materials that quote prices (i.e. an “invitation to purchase”) must be accompanied by material information including (where applicable): the main characteristics of product; the identity of advertiser; the price including any applicable taxes and delivery charges; arrangements for delivery and complaints handling (if different from what would be reasonably expected); and that consumers have the right to withdraw or cancel.

There are also certain restrictions on describing products or services as ‘free’ and on making comparative claims against identifiable competing products or against comparable products generally.

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Whilst compliance with the CAP Code and the BCAP Code is voluntary, nearly all UK advertisers choose to comply with the rules since the sanctions available to the ASA can be serious.

Members of the public, competitors or other interested parties can lodge complaints with the ASA. A competitor would be required to provide evidence that they have tried to resolve the issue with the advertiser informally before the ASA will investigate the complaint.

If the ASA rules that advertising material breaches the BCAP Code or the CAP Code, the ASA will require amendment or withdrawal of materials featuring the claim and will also publish their ruling (so possibly attracting negative publicity). The ASA cannot levy fines, but further sanctions may also be available to the regulator, including requiring pre-approval of all materials, publishing corrective statements and issuing media alerts encouraging media owners not to grant the advertiser further space. These will only usually be imposed where the company in question is regularly in breach of the relevant code of practice, or ignores a ruling (i.e. continues to use a claim which the ASA has determined is unsubstantiated or misleading).

Ultimately, the ASA can also refer advertisers who persistently breach the Codes to Trading Standards who can seek an injunction through the courts to prevent the same or similar claims being made in future advertisements.

E-marketing and Direct Marketing

Direct marketing (i.e. marketing or advertising directed at particular individuals) is governed by the Privacy and Electronic Communications (EC Directive) Regulations 2003 (the “Privacy Regulations”). The Privacy Regulations prohibit unsolicited electronic direct marketing communications (e.g. by email or text) without first having obtained the recipient’s consent. The Regulations also prohibit advertisers from encouraging someone else to send direct marketing without prior permission from the recipient. There are no restrictions on sending solicited marketing i.e. for materials that have specifically been requested.

Previously, the ASA Codes included provisions that applied specifically to marketing communications in the context of distance selling. The CAP Code now refers to the Data & Marketing Association (“DMA”) Code of Practice for direct marketing which is enforceable against all DMA members. The UK’s Information Commissioner’s Office (ICO) encourages all those involved in direct marketing to comply with the DMA Code. The key principals of the DMA Code are:

(a) Marketing communications must be honest, fair, transparent and not misleading, whether through omission, exaggeration or other means;

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(b) Use of targeted emails/SMS communications must be legal and not intrusive or excessive;

(c) Use of customer personal data must be compliant with data protection and privacy legislation, and use of ‘sensitive’ personal data for marketing purposes must only be used in accordance with the explicit consent of the consumer concerned; and

(d) Companies must carry out their contractual obligations decently, fairly and reasonably and (in respect of obligations under the Code) take responsibility for any actions taken on their behalf including by one-to-one marketing suppliers .

Breach of the Privacy Regulations can be enforced by the following:

(a) Via a private action for compensation by a consumer for any harm suffered as a result of unlawful direct marketing; and

(b) Public enforcement by the ICO. The ICO has the power to issue a penalty notice of up to £500,000 on organizations in serious breach of the Privacy Regulations. In practice, if the ICO receives a complaint or otherwise suspects that the company is in breach of the Privacy Regulations, it will normally first consult with the company concerned on an informal basis. In this case we would expect the ICO to require the company to present evidence of its compliance with the Regulations, and in the event that it determines any non-compliance, request that the company take action to remedy this. In the event that the company did not comply with the ICO’s required action(s), the regulator can take formal action. The ICO also has powers to require communications providers to provide information in relation to a suspected breach, and apply for a warrant to enter and search the premises of such providers and inspect or seize any materials on their premises.

To defend against a private claim or action by the ICO, the company would need to prove that it had taken reasonable steps to comply with the relevant requirement or prevent the breach. It is therefore important for companies to record their compliance with the Privacy Regulations in the event that such a claim is made.

SANCTIONS LAWS AND REGULATIONS

Hogan Lovells, our International Sanctions Legal Advisors, have provided the following summary of the sanctions regimes imposed by their respective jurisdictions. This summary does not intend to set out the laws and regulations relating to the U.S., the European Union, the United Nations and Australian sanctions in their entirety.

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U.S.

Treasury regulations

OFAC is the primary agency responsible for administering U.S. sanctions programs against targeted countries, entities, and individuals. “Primary” U.S. sanctions apply to “U.S. persons” or activities involving a U.S. nexus (e.g., funds transfers in U.S. currency or activities involving U.S.-origin goods, software, technology or services even if performed by non-U.S. persons), and “secondary” U.S. sanctions apply extraterritorially to the activities of non-U.S. persons even when the transaction has no U.S. nexus. Generally, U.S. persons are defined as entities organized under U.S. law (such as companies and their U.S. subsidiaries); any U.S. entity’s domestic and foreign branches (sanctions against Iran and Cuba also apply to U.S. companies’ foreign subsidiaries or other non-U.S. entities owned or controlled by U.S. persons); U.S. citizens or permanent resident aliens (“green card” holders), regardless of their location in the world; individuals physically present in the United States; and U.S. branches or U.S. subsidiaries of non-U.S. companies.

Depending on the sanctions program and/or parties involved, U.S. law also may require a U.S. company or a U.S. person to “block” (freeze) any assets/property interests owned, controlled or held for the benefit of a sanctioned country, entity, or individual when such assets/property interests are in the United States or within the possession or control of a U.S. person. Upon such blocking, no transaction may be undertaken or effected with respect to the asset/property interest — no payments, benefits, provision of services or other dealings or other type of performance (in case of contracts/agreements) — except pursuant to an authorization or license from OFAC.

OFAC’s comprehensive sanctions programs currently apply to Cuba, Iran, North Korea, Syria, and the Crimea region of Russia/Ukraine (the comprehensive OFAC sanctions programme against Sudan was terminated on October 12, 2017). OFAC also prohibits virtually all business dealings with persons and entities identified in the SDN List. Entities that a party on the SDN List owns (defined as a direct or indirect ownership interest of 50% or more, individually or in the aggregate) are also blocked, regardless of whether that entity is expressly named on the SDN List. Additionally, U.S. persons, wherever located, are prohibited from approving, financing, facilitating, or guaranteeing any transaction by a non-U.S. person where the transaction by that non-U.S. person would be prohibited if performed by a U.S. person or within the United States.

United Nations

The United Nations Security Council (the “UNSC”) can take action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures encompass a broad range of enforcement options that do not involve the use of armed force. Since 1966, the UNSC has established 30 sanctions regimes.

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REGULATORY OVERVIEW

The UNSC sanctions have taken a number of different forms, in pursuit of a variety of goals. The measures have ranged from comprehensive economic and trade sanctions to more targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions. The UNSC has applied sanctions to support peaceful transitions, deter non-constitutional changes, constrain terrorism, protect human rights and promote non-proliferation.

There are 14 ongoing sanctions regimes which focus on supporting political settlement of conflicts, nuclear non-proliferation, and counter-terrorism. Each regime is administered by a sanctions committee chaired by a non-permanent member of the UNSC. There are ten monitoring groups, teams and panels that support the work of the sanctions committees.

United Nations sanctions are imposed by the UNSC, usually acting under Chapter VII of the United Nations Charter. Decisions of the UNSC bind members of the United Nations and override other obligations of United Nations member states.

European Union

Under European Union sanction measures, there is no “blanket” ban on doing business in or with a jurisdiction targeted by sanctions measures. It is not generally prohibited or otherwise restricted for a person or entity to do business (involving non-controlled or unrestricted items) with a counterparty in a country subject to European Union sanctions where that counterparty is not a Sanctioned Person or not engaged in prohibited activities, such as exporting, selling, transferring or making certain controlled or restricted products available (either directly or indirectly) to, or for use in a jurisdiction subject to sanctions measures.

United Kingdom and United Kingdom overseas territories

Although the United Kingdom departed from the EU on January 31, 2020 and is no longer an EU member state, EU law including EU sanctions measures will continue to apply to and in the United Kingdom until December 31, 2020, unless further extended. EU sanctions measures have also been extended by the United Kingdom on a regime by regime basis to apply in the United Kingdom overseas territories, including the Cayman Islands.

Australia

The Australian restrictions and prohibitions arising from the sanctions laws apply broadly to any person in Australia, any Australian anywhere in the world, companies incorporated overseas that are owned or controlled by Australians or persons in Australia, and/or any person using an Australian flag vessel or aircraft to transport goods or transact services subject to United Nations sanctions.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

OVERVIEW

We are a leading cross-border B2B e-commerce marketplace, connecting buyers from around the world with sellers primarily located in China. Since our inception in 2004, we have strived to leverage our comprehensive supply chain services to construct a self-sustaining ecosystem. Our business is driven by our twin engines of growth, namely DHgate and MyyShop. DHgate offers a marketplace which connects buyers worldwide and sellers primarily located in China to provide one-stop wholesale services. MyyShop, our cloud-based commercial solutions, enables small and micro merchants to build and develop their online business with ease.

Ms. Wang is the principal founder of our Group. She has extensive management and marketing experience in the e-commerce industry. Prior to founding our Group, Ms. Wang served as the chief executive officer of Joyo.com (卓越網, now known as Amazon.cn (亞馬遜中國)) and accumulated abundant management experience in the e-commerce industry. See “Directors and Senior Management — Directors — Executive Directors” for details of Ms. Wang’s credentials and experience.

BUSINESS MILESTONES

The following is a summary of the key business development milestones of our Group:

Year Event 2005 • We launched DHgate, the first platform to achieve online transaction in the industry of global cross-border B2B e-commerce procurement from China 2007 • We recorded an accumulated GMV of more than USD10 million 2009 • We were awarded by Deloitte as one of the top 50 “High-Tech and High Growth” enterprises and by BizReview as a future star in China in terms of business model 2010 • We launched DHpay to provide payment solutions to buyers worldwide and sellers primarily located in China

• We were awarded “Top 100 E-commerce Companies” in the PRC by the China Electronic Commerce Association (中國電子商務協會) (CECA)

• We recorded an accumulated GMV of more than USD100 million 2011 • We launched DHgate mobile application, the first cross border e-commerce mobile application in China • We were recognized by the MOFCOM as a highly recommended third-party e-commerce platform on foreign trades • Ms. Wang was appointed to serve on the Asia-Pacific Economic Cooperation (APEC) Business Advisory Council 2013 • We were recognized by the NDRC as a “National Engineering Laboratory for Cross-border E-commerce Technology” (電子商務交易技術國家工程實驗室) • We became a non-exclusive partner of Google’s AdWords platform and commenced our strategic cooperation 2014 • We launched DHLink to provide logistics solutions and the facilitate shipment process for customers

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Year Event 2015 • Facilitated the signing of the first bilateral agreement on cross-border e-commerce between China and Turkey 2016 • The number of accumulated registered buyers reached 10 million

• Facilitated the signing of the memorandum of cooperation on cross-border e-commerce between China and Peru

• Ms. Wang was appointed to serve as the chairlady of APEC women leadership forum 2017 • We established the first digital trade center in Hungary • The number of accumulated registered buyers reached 15 million and our accumulated GMV reached USD1 billion • We were granted the “Innovative Cross-border E-commerce Business Model” award by the CECA 2018 • We launched DHgate Turkey and a digital trade center in Turkey, which marked a leap of accomplishing our mission of “Selling Globally” • The number of accumulated registered buyers reached 20 million

• We launched the Yangfan Platform to provide marketing service 2019 • We launched the DHgate Korean and DHgate Arabic, enabling multilingual sales in English, French, Spanish, Italian, German, Portuguese, Russian, Arabic, Korean and Turkish

• We launched our strategy of “Glocalization” in an effort to connect PRC sellers with the world’s leading e-commerce platforms 2020 • We launched MyyShop, enabling the creation of a shop with one click

INFORMATION ON MEMBERS OF OUR GROUP

We set forth below information about the principal subsidiaries of our Company that made a material contribution to our results of operations during the Track Record Period:

Ownership as of Date of Place of the Latest Principal business Name establishment establishment Practicable Date activities Heguang International February 22, Cayman 100% Platform revenue and (Cayman)...... 2006 Islands operation management Rich Palace (HK)...... November 3, Hong Kong 100% Collection and 2004 payment services Sunlight (UK) ...... May 1, 2013 England and 100% Collection and Wales payment services Dunhuang Holdings (HK) .... November 17, Hong Kong 100% Collection and 2010 payment services

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Ownership as of Date of Place of the Latest Principal business Name establishment establishment Practicable Date activities Jiahe Holdings (HK)...... November 26, Hong Kong 100% Collection and 2010 payment services Century Heguang (Beijing) ... April 27, 2006 PRC 100% Network technology development, technology transfer and technology services Digitrading Hong Kong...... November 13, Hong Kong 100% Platform operation and 2017 management Digitrading Beijing...... January 26, 2018 PRC 100% Technology development, consultation, transfer, service and promotion Century Rich Palace ...... June 29, 2015 PRC Controlled Provision of through the telecommunication Contractual and information Arrangements services through websites Fuyue Technology September 11, PRC 95% Offgate logistics Development (Shanghai) 2020 services Company Limited (富越科技發展(上海)有限公司) (“Fuyue Technology”).....

We have adopted a complex group structure with a number of subsidiaries as our Group sets up a company for (i) each of the principal geographical distribution of our sellers in China; and (ii) each business segment. The geographical distribution of our sellers mainly includes Henan, Hunan, Zhejiang, Fujian and Guangdong provinces in China. Establishing a company for each principal geographical distribution of our sellers in China and each business segment enables our Group to better manage and monitor the operations of our businesses, and also allows flexibility in providing timely customer support when our Group is conducting business. For further details of the principal activities of our Group’s subsidiaries, please refer to Note 1 in Appendix I.

MAJOR CORPORATE DEVELOPMENT AND SHAREHOLDING CHANGES OF OUR GROUP

We describe below the major changes in the shareholding of our Company and our material operating subsidiaries up to the date of this document.

Our Company

Our Company is the holding company of our Group. As part of the Reorganization, our Company was incorporated as an exempted company with limited liability in the Cayman Islands on April 13, 2018. At the time of incorporation, our Company had an authorized share capital of USD50,000 divided into 50,000 Shares of par value of USD1 each. Immediately after incorporation, one Share of our Company was issued and allotted to an initial subscriber, who on the same day transferred the same to DHgate Holding.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

For details of the shareholding changes of our Company during the Track Record Period, see “— Reorganization.”

Heguang International (Cayman)

Heguang International (Cayman) was incorporated in the Cayman Islands as an exempted company with limited liability on February 22, 2006. At the time of incorporation, Heguang International (Cayman) allotted and issued one ordinary share at the subscription price of USD0.001 per share to an initial subscriber, who on the same day transferred the same to Mr. Goh Yin Long, an Independent Third Party, at a nominal consideration of USD0.001. On April 3, 2006, Mr. Goh Yin Long transferred the one ordinary share to Globe Vision Holdings Limited (“Globe Vision”), an Independent Third Party, at a nominal consideration of USD0.001. On April 6, 2006, Heguang International (Cayman) further issued 722,221 ordinary shares to Globe Vision at nominal consideration.

Subsequently, on June 5, 2007, Heguang International (Cayman) subdivided each of its ordinary shares into a par value of USD0.0001 each, such that Globe Vision held 7,222,220 ordinary shares in Heguang International (Cayman). On the same date, Globe Vision transferred 7,222,220 ordinary shares to Heguang International (BVI) at nominal consideration.

Prior to the incorporation of our Company on April 13, 2018, Heguang International (Cayman) had received six rounds of [REDACTED] Investments. For details of the [REDACTED] Investments, see “— [REDACTED] Investments” in this section. As part of the Reorganization, Heguang International (Cayman) issued shares to our Company and repurchased all the shares held by its then existing shareholders, such that upon completion of the share repurchase, Heguang International (Cayman) became a wholly owned subsidiary of our Company. See “— Reorganization” for further details.

Rich Palace (HK)

Rich Palace (HK) is a limited liability company incorporated in Hong Kong on November 3, 2004 with an initial issued share capital of HK$10,000 divided by 10,000 shares held by Ms. Wang. On June 14, 2006, Ms. Wang transferred 10,000 shares to Heguang International (Cayman) at nominal consideration. As of the Latest Practicable Date, Rich Palace (HK) remained to be wholly owned by Heguang International (Cayman).

Sunlight (UK)

Sunlight (UK) is a limited liability company incorporated under the laws of England and Wales on May 1, 2013 with an initial issued share capital of £100 divided by 100 shares held by Rich Palace (HK). As of the Latest Practicable Date, Sunlight (UK) remained to be wholly owned by Rich Palace (HK).

Dunhuang Holdings (HK)

Dunhuang Holdings (HK) is a limited liability company incorporated in Hong Kong on November 17, 2010 with an initial issued share capital of HK$10,000 divided by 10,000 shares held by Rich Palace (BVI). As of the Latest Practicable Date, Dunhuang Holdings (HK) remained to be wholly owned by Rich Palace (BVI).

Jiahe Holdings (HK)

Jiahe Holdings (HK) is a limited liability company incorporated in Hong Kong on November 26, 2010 with an initial issued share capital of HK$10,000 divided by 10,000 shares held by Rich Palace (BVI). As of the Latest Practicable Date, Jiahe Holdings (HK) remained to be wholly owned by Rich Palace (BVI).

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Century Heguang (Beijing)

Century Heguang (Beijing) was established in the PRC on April 27, 2006 as a wholly foreign-owned enterprise with a registered capital of USD4,600,000, which was wholly-owned by Heguang International (Cayman). As of the Latest Practicable Date, Century Heguang (Beijing) remained to be wholly owned by Heguang International (Cayman), a direct wholly-owned subsidiary of our Company.

Digitrading Hong Kong

Digitrading Hong Kong is a limited liability company incorporated in Hong Kong on November 13, 2017 with an initial issued share capital of HK$10,000 divided by 10,000 shares held by Digitrading Group. As of the Latest Practicable Date, Digitrading Hong Kong remained to be wholly owned by Digitrading Group, a direct wholly-owned subsidiary of our Company.

Digitrading Beijing

As part of the Reorganization, Digitrading Beijing was established in the PRC on January 26, 2018 as a wholly foreign-owned enterprise with a registered capital of USD50,000,000, which was wholly-owned by Digitrading Hong Kong. As of the Latest Practicable Date, Digitrading Beijing remained wholly owned by Digitrading Hong Kong.

Century Rich Palace

Century Rich Palace was established in the PRC on June 29, 2015 as a limited liability company with a registered capital of RMB5,000,000, which was wholly owned by Dunhuang Holdings (HK). On July 25, 2016, Dunhuang Holdings (HK) transferred all of its equity interests in Century Rich Palace to Chongqing Rich Palace, a company owned as to 80% and 20% by Ms. Wang and Ms. Liu, respectively, at a consideration of RMB5,000, which had been settled. On May 23, 2018, as part of the Reorganization, Chongqing Rich Palace transferred 79.55%, 20.0% and 0.45% of the equity interests in Century Rich Palace to Ms. Wang, Ms. Liu and Mr. Liu Shengfei (“Mr. Liu”), an Independent Third Party, respectively, at nil consideration. Subsequently, on August 28, 2018, Mr. Liu Shengfei, transferred 0.45% of the equity interests in Century Rich Palace to Ms. Wang at nil consideration. Each of the foregoing equity transfers was made for the purposes of transferring equity interests in Century Rich Palace to Ms. Liu in consideration of her then contribution to the Group. After completion of the foregoing equity transfers, Century Rich Palace was owned as to 80% and 20% by Ms. Wang and Ms. Liu, respectively.

In order to comply with the relevant PRC laws and regulations and to maintain effective control over all of its operations, Century Heguang (Beijing), a wholly-owned subsidiary of Heguang International (Cayman), entered into a series of contractual arrangements with Chongqing Rich Palace and its shareholders, Ms. Wang and Ms. Liu in 2006 and 2010 (the “Previous Contractual Arrangements”), to gain management control over, and enjoy all economic benefits of, Chongqing Rich Palace and its subsidiaries. In 2018, since the Group intended to delineate its businesses and transfer all operations of Chongqing Rich Palace to Century Rich Palace as part of the Reorganization, Digitrading Beijing was established in the PRC and entered into a series of contractual arrangements with Century Rich Palace and its registered shareholders, Ms. Wang and Ms. Liu, to gain management control over, and enjoy all economic benefits of, Century Rich Palace. As Chongqing Rich Palace no longer engaged in value-added telecommunication services, the Previous Contractual Arrangements were no longer necessary and were terminated in July 2019 as part of the Reorganization. As a result of such contractual arrangements, our Group regards each of Chongqing Rich Palace and Century Rich Palace as a controlled structure entity and consolidated the financial position and results of operations of Century Rich Palace in the historical financial information of our Group during the Track Record Period.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

As of the Latest Practicable Date, Century Rich Palace was controlled by Digitrading Beijing through the Contractual Arrangements. See “— Major Corporate Development and Shareholding Changes of Our Group — Digitrading Beijing” and “Contractual Arrangements.”

Fuyue Technology

Fuyue Technology was established in the PRC on September 11, 2020 as a limited liability with a registered capital of RMB5,000,000, and was wholly owned by Century Rich Palace. On April 7, 2021, Century Rich Palace transferred 5% of the equity interests in Fuyue Technology to Mr. Bai Peng, an Independent Third Party, at a consideration of RMB212,500. Subsequently, on April 28, 2021, Century Rich Palace transferred 95% of the equity interests in Fuyue Technology to Digitrading Yunyou (Shanghai) Technology Development Company Limited (數貿運優(上海)科技發展有限公司)(“Digitrading Yunyou”), a wholly-owned subsidiary of our Company, at a consideration of RMB4,057,500. The consideration of each of the foregoing equity transfers was determined with reference to the registered capital of Fuyue Technology and had been fully settled.

As of the Latest Practicable Date, Fuyue Technology was owned as to 95% and 5% by Digitrading Yunyou and Mr. Bai Peng, respectively.

CAPITALIZATION OF OUR COMPANY

The following table sets out our shareholding structure upon completion of the Reorganization and immediately upon completion of the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised and no additional Shares are issued pursuant to the [REDACTED] Incentive Scheme and the RSU Scheme):

Number of Shares held Number of Ownership Ownership in our Shares held percentage percentage Company in our in our in our upon Company Company Company completion upon upon upon Series A Series B Series C-1 Series C-2 Series C-3 Series D of the completion completion completion Ordinary Preferred Preferred Preferred Preferred Preferred Preferred Reorganization of the Share of the Share of the Shareholder Shares Shares Shares Shares Shares Shares Shares (5) Subdivision Subdivision [REDACTED]

Heguang International (BVI) (1) .... — — 24,131,920 ————24,131,920 [REDACTED] [REDACTED] [REDACTED] Idea Edge (2) ... 63,859,814 ——————63,859,814 [REDACTED] [REDACTED] [REDACTED] TDF China (3) ... — 23,347,800 7,727,040 5,183,760 2,879,870 5,183,761 — 44,322,231 [REDACTED] [REDACTED] [REDACTED] TDF Advisors (3) . — 957,700 316,930 212,620 118,120 212,616 — 1,817,986 [REDACTED] [REDACTED] [REDACTED] CGC Dunhill (3) .. ——————10,452,982 10,452,982 [REDACTED] [REDACTED] [REDACTED] Everfine Global (4) . 8,362,386 ——————8,362,386 [REDACTED] [REDACTED] [REDACTED] Public Shareholders . ————————[REDACTED] [REDACTED] [REDACTED] Total ...... 72,222,200 24,305,500 32,175,890 5,396,380 2,997,990 5,396,377 10,452,982 152,947,319 [REDACTED] 100% 100%

Notes:

(1) Heguang International (BVI) is wholly owned by Ms. Wang.

(2) Idea Edge is a BVI company wholly owned by New Element Holdings Limited, which is in turn wholly owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, which is a discretionary trust established by Ms. Wang.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

(3) For details of TDF China, TDF Advisors and CGC Dunhill, see “— [REDACTED] Investments” below for more information.

(4) Everfine Global is wholly owned by Ms. Liu.

(5) Based on the assumption that each Preferred Share will be converted into one ordinary Share upon the [REDACTED] becoming unconditional.

[REDACTED] INVESTMENTS

Our Group has received six rounds of the [REDACTED] Investments since the commencement of business. In connection with the [REDACTED] Investments, the [REDACTED] Investors entered into relevant share subscription agreements at the time of their respective investments, the principal terms of which are summarized in the table below:

Series A Investment Series B Investment Series C-1 Investment Series C-2 Investment Series C-3 Investment Series D Investment Identity of the investors..... (i) TDF China (i) TDF China (i) TDF China (i) TDF China (i) TDF China (i) CGC Dunhill (ii) TDF Advisors (ii) TDF Advisors (ii) TDF Advisors (ii) TDF Advisors (ii) TDF Advisors (iii) JAFCO Asia (iii) WP Private Equity Technology Fund X, Inc. (“WP III (“JAFCO”) Private Equity (iv) Atlas Venture Fund X”) VII, L.P. (“Atlas Venture”) (v) Local Globe III Limited (“Local Globe”)

Date of agreement ...... April 7, 2006 June 5, 2007 February 10, 2010 February 10, 2010 May 14, 2014 August 20, 2014

Date on which the investment was June 9, 2007 June 9, 2007 March 1, 2010 September 15, 2009(4) June 23, 2014 September 11, 2014 fully settled......

Cost per Preferred Shares paid by USD0.0360 USD0.0932 USD0.1853(4) (5) USD0.1668(4) USD0.1853(5) USD0.4783 each [REDACTED] Investor .. [REDACTED] to the [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] (1) ......

Approximate amount of USD1.7 million USD6.0 million USD22.0 million USD1.0 million USD2.0 million USD10.0 million consideration paid ......

Basis of consideration ..... The amount of consideration was determined based on arm’s length negotiations between each of the [REDACTED] Investors and Heguang International (Cayman) after taking into consideration of the timing of the investments and the operating results and prospects of our business and operating entities.

Total number of shares under the 243,055 series A 3,217,589 series B 59,360,150 series C-1 2,997,990 series C-2 5,396,377 series C-3 10,452,982 series D investment agreement ..... preferred shares of preferred shares of preferred shares of preferred shares of preferred shares of preferred shares of Heguang International Heguang International Heguang International Heguang International Heguang International Heguang International (Cayman), as to (Cayman), as to (Cayman), as to (Cayman), as to (Cayman), as to (Cayman) 233,478 and 9,577 1,608,795, 772,704, 53,963,770, 5,183,760 2,879,870 and 118,120 5,183,761 and 212,616 series A preferred 31,693, 777,584 and and 212,620 series series C-2 preferred series C-3 preferred shares to TDF China 26,813 series B C-1 preferred shares shares to TDF China shares to TDF China and TDF Advisors, preferred shares to to WP Private Equity and TDF Advisors, and TDF Advisors, respectively (adjusted JAFCO, TDF China, X, TDF China and respectively respectively to 24,305,500 series A TDF Advisors, Atlas TDF Advisors, preferred shares after Venture and Local respectively (3) two share subdivision Globe, respectively of Heguang (adjusted to International 32,175,890 series B (Cayman)), on June 5, preferred shares after 2007 and February 25, two share subdivision 2010 of Heguang International (Cayman)), on June 5, 2007 and February 25, 2010 (2)

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Series A Investment Series B Investment Series C-1 Investment Series C-2 Investment Series C-3 Investment Series D Investment Total equivalent number of shares [REDACTED] Series A [REDACTED] Series B [REDACTED] Series [REDACTED] Series [REDACTED] Series [REDACTED] Series D under the investment agreement Preferred Shares Preferred Shares C-1 Preferred Shares C-2 Preferred Shares C-3 Preferred Shares Preferred Shares after the Share Subdivision (6) .

Post-money valuation of our Approximately USD6.95 Approximately Approximately Approximately Approximately Approximately Group (7) ...... million USD24.00 million USD69.70 million USD63.73 million USD52.81 million USD160.00 million Use of proceeds ...... The proceeds have been fully utilized for business expansion, marketing, research and development and general working capital purposes. Strategic benefits ...... At the time of the [REDACTED] Investments, our Directors were of the view that our Company could benefit from the additional capital that would be provided by the [REDACTED] Investors’ investments and the [REDACTED] Investors’ knowledge and experience. In addition, the [REDACTED] Investors are professional investors which can provide us with professional advice on our Group’s development.

Notes:

1. The [REDACTED] to the [REDACTED] is calculated based on the [REDACTED] of [REDACTED] per Share, being the mid-point of the [REDACTED] range.

2. On November 4, 2015, JAFCO, one of the Series B Investors, entered into a share purchase agreement with Heguang International (BVI), pursuant to which Heguang International (BVI) purchased 16,087,950 series B preferred shares of Heguang International (Cayman) from JAFCO for a consideration of USD4.5 million. On November 11, 2015, Atlas Venture and Local Globe entered into a share purchase agreement with Heguang International (BVI), respectively, pursuant to which Heguang International (BVI) purchased 7,775,840 and 268,130 series B preferred shares of Heguang International (Cayman) from Atlas Venture and Local Globe for a consideration of USD2.175 million and USD75,000, respectively. The above-mentioned share purchases were made as the investors wanted to realize their respective returns and the considerations were determined after arm’s length negotiations between the parties and based on the price per series B preferred shares of Heguang International (Cayman), which is 150% of the original issue price of the said series B preferred shares, plus all declared or accrued but unpaid dividends thereon up until the date of actual payment of the purchase price. Upon completion of the share purchases, each of JAFCO, Atlas Venture and Local Globe ceased to be a shareholder of Heguang International (Cayman).

3. On August 22, 2013, WP Private Equity X, one of the Series C-1 Investors, entered into a share repurchase agreement with Heguang International (Cayman), pursuant to which Heguang International (Cayman) repurchased an aggregate of 53,963,770 series C-1 preferred shares of Heguang International (Cayman) from WP Private Equity X for a total consideration of USD12.0 million. The said share repurchase was made as WP Private Equity X wanted to realize its returns and the consideration was determined based on arm’s length negotiations among the investors and our Group after taking into consideration of the remaining balance of an escrow account of Heguang International (Cayman) as of the date of the said share repurchase, which was set up pursuant to the initial share purchase agreement for WP Private Equity X and our Group to manage the investment proceeds of the Series C-1 Investment from WP Private Equity X. Upon completion of the share repurchase, WP Private Equity X ceased to be a shareholder of Heguang International (Cayman),

4. The costs per preferred share in relation to the Series C-1 Investment and the Series C-2 Investment are different despite entering into each investment on the same day because the basis of consideration for the Series C-2 Investment also considered a convertible note purchase agreement dated September 14, 2009 entered into after arm’s length negotiations between, among others, Heguang International (Cayman) and the Series C-2 Investors, pursuant to which Heguang International (Cayman) issued two promissory notes on September 14, 2009 in the principal amount of USD960,600 and USD39,400 to TDF China and TDF Advisors, respectively, which were convertible into series C-2 preferred shares of Heguang International (Cayman).

5. The costs per preferred share in relation to the Series C-3 Investment is the same as the Series C-1 Investment despite being entered into on a later date because subsequent to the share repurchase as disclosed in note 3 above, the Group required new proceeds and therefore the then [REDACTED] Investors were offered to subscribe for the series C-3 preferred shares of Heguang International (Cayman) at the same cost as the Series C-1 Investment. Accordingly, the Series C-3 Investors subscribed for these preferred shares based on the cost of the Series C-1 Investment.

6. These figures have been provided solely for illustration purposes in order to calculate the costs per preferred shares paid by each [REDACTED] Investor under the investment agreements.

7. Post-money valuation is calculated by dividing the total consideration of each relevant [REDACTED] Investment by the total percentage allotted to the [REDACTED] Investors.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Information about the [REDACTED] Investors

TDF China and TDF Advisors

Each of TDF China and TDF Advisors is an exempted limited partnership incorporated under the laws of the Cayman Islands on June 21, 2005, respectively, and managed by TDF Capital China Management II, LP, the general partner, which is in turn managed by its general partner, TDF Management II, LLC. Each of TDF China and TDF Advisors primarily focuses on investments in high-tech and fast-growing companies in the Greater China region. The director of TDF Management II, LLC learned about our Group through her personal acquaintance with Ms. Wang.

CGC Dunhill

CGC Dunhill is an investment company incorporated in the BVI on June 23, 2014, with a focus on new ventures, frontier tech, life science, marketplace and consumer sectors in the PRC. CGC Dunhill is wholly owned by CGC Asia Growth Fund I, L.P., an exempted liability partnership incorporated in the Cayman Islands. CGC Asia Growth Fund I, L.P. is controlled by its general partner, CGC Management Limited, a limited company incorporated in the Cayman Islands, which is wholly owned by CGC Great Warrants Limited, a limited company incorporated in the BVI. CGC Great Warrants Limited is solely owned by Mr. Rui Chen, an Independent Third Party. Its investments are primarily focused on enterprise, frontier tech, life science, marketplace and consumer sectors. Mr. Rui Chen learned about our Group through his personal acquaintance with Ms. Wang.

Special Rights of the [REDACTED] Investors

The [REDACTED] Investors are bound by the [REDACTED] Shareholders’ Agreement which superseded all previous agreements among the contracting parties in respect of the shareholders’ rights in our Company.

Some of the [REDACTED] Investors were granted certain special rights, including, among others, customary rights of first refusal, redemption rights, co-sale rights, drag-along rights and information and inspection rights. The redemption rights will be terminated immediately before the date of submission of the listing application of our Company, and all other special rights will be terminated upon completion of the [REDACTED] in accordance with the terms of the [REDACTED] Shareholders’ Agreement.

Lock up

Each of TDF China, TDF Advisors and CGC Dunhill is, among others, subject to a lock-up of [six months] for the Shares they hold from the Listing Date. As such, immediately following the completion of the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised and without taking into account any Shares which may be issued pursuant to the exercise of any options which may be granted pursuant to the [REDACTED] Incentive Scheme and Shares which may be issued under the RSU Scheme), [REDACTED] Shares, being an aggregate of [REDACTED] Shares, [REDACTED] Shares and [REDACTED] Shares held by the [REDACTED] Investors, representing approximately [REDACTED]% of the issued share capital of our Company, will be subject to a lock-up period of [six months] from the Listing Date.

Public Float

Upon completion of the Reorganization, TDF China and TDF Advisors will respectively hold 44,322,231 and 1,817,986 Shares, representing 28.98% and 1.19% of the total issued share capital in our Company. The general partner of both TDF China and TDF Advisors is TDF Capital China

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Management II. L.P, which is in turn controlled by its general partner, TDF Management II, LLC. Each of TDF Capital China Management II L.P. and TDF Management II, LLC is deemed to be interested in the 46,140,217 Shares to be held by TDF China and TDF Advisors upon completion of the Reorganization. Accordingly, TDF China and TDF Advisors, two of our [REDACTED] Investors, are core connected persons of our Company and the Shares they held in our Company will not be counted as part of the public float.

CGC Dunhill is not a core connected person of our Company and its subscription of the shares in Heguang International (Cayman) was not financed directly or indirectly by a connected person of our Company. Accordingly, the equivalent percentage of Shares held in our Company by CGC Dunhill will be counted as part of the public float.

Compliance with Interim Guidance and Guidance Letters

Based on the documents provided by our Company relating to the [REDACTED] Investments, the Sole Sponsor confirms that the [REDACTED] Investments are in compliance with (i) the Interim Guidance on [REDACTED] Investments issued by the Stock Exchange on October 13, 2010 and the Guidance Letter HKEx-GL29-12 reproducing the same issued by the Stock Exchange in January 2012 and updated in March 2017; (ii) the Guidance Letter HKEx-G43-12 issued by the Stock Exchange in October 2012 and updated in July 2013 and March 2017; and (iii) the Guidance Letter HKEx-GL44-12 issued by the Stock Exchange in October 2012 and updated in March 2017.

REORGANIZATION

In preparation for the [REDACTED] and to rationalize our corporate structure, we have effected the Reorganization as described below. The following diagram illustrates our simplified corporate and shareholding structure prior to the Reorganization:

Ms. Wang

100% Heguang International TDF China TDF Advisors CGC Dunhill (BVI)

63.00% 28.98% 1.19% 6.83%

Heguang International (Cayman)

100% 100% Rich Palace Rich Palace (HK) (BVI)

100% 100%

Overseas Hong Kong subsidiary subsidiaries

Offshore Onshore 100% Ms. Wang Ms. Liu Equity ownership 80% 20% Century Heguang Contractual arrangements (Beijing) Chongqing Rich Palace 100% 100% 100% Onshore subsidiaries Century Rich Other onshore Palace subsidiaries

(i) Incorporation of a new listing vehicle and transfer of certain businesses and subsidiaries to the new listing vehicle

For the purposes of setting up our Company as the listing vehicle of the Group and allowing different businesses within the Group to be held through separate investment holding entities, a series of steps have been taken such that the shareholding structure would in substance reflect and

– 160 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

HISTORY, REORGANIZATION AND CORPORATE STRUCTURE align with the shareholding structure of Heguang International (Cayman) and certain businesses and subsidiaries then held by Heguang International (Cayman) would be transferred to various investment holding entities formed under the new listing vehicle, with the principal steps being implemented set forth below:

• DHgate Holding was initially incorporated to facilitate the reorganization steps to be undertaken below, and Digitrading Group and Digitrading Hong Kong were incorporated to serve as offshore investment holding entities within the Group. After subsequent share transfers in 2017, Digitrading Group and Digitrading Hong Kong became wholly-owned subsidiaries of DHgate Holding.

• On April 13, 2018, our Company was incorporated in the Cayman Islands and became a wholly-owned subsidiary of DHgate Holding.

• On May 1, 2018, Heguang International (Cayman) transferred its offshore business agreements, including, among others, servers, computer devices, software rights, online solutions, digital trade center services in relation to digital trade B2B marketplace business to Digitrading Hong Kong.

• On May 31, 2018, DHgate Holding and, among others, the [REDACTED] Investors entered into a share subscription agreement in order to mirror the shareholding structure of DHgate Holding with that of Heguang International (Cayman).

• On June 22, 2018, our Company and DHgate Holding entered into a share transfer agreement, pursuant to which our Company acquired all the issued shares of Digitrading Group from DHgate Holding.

• On December 21, 2018, Heguang International (BVI) transferred 8,362,386 ordinary shares in DHgate Holding to Everfine Global, a company wholly owned by Ms. Liu, at a cash consideration of USD836.2386, which was intended to align Ms. Liu’s shareholding interests in DHgate Holding with the economic interests received from her shareholding interests in Century Rich Palace. For further details, see “— Major Corporate Development and Shareholding Changes of our Group — Century Rich Palace” above.

• On May 27, 2019, Heguang International (Cayman) issued 152,947,319 ordinary shares of par value of USD0.00001 each to our Company. On the same date, using the proceeds from the issue of shares by Heguang International (Cayman) to our Company, Heguang International (Cayman) repurchased an aggregate of 152,947,319 shares from TDF China, TDF Advisors, CGC Dunhill and Heguang International (BVI). Upon completion of the share repurchase, Heguang International (Cayman) became a wholly owned subsidiary of our Company.

(ii) Establishment of family trust

Idea Edge Limited is a BVI company wholly owned by New Element Holdings Limited, which is in turn wholly owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, which is a discretionary trust established by Ms. Wang on April 15, 2020.

Accordingly, on August 19, 2020, Heguang International (BVI) transferred 63,859,814 ordinary shares in DHgate Holding to Idea Edge by way of gift, which was intended for succession planning.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

(iii) Elimination of duplicate holding structure

To eliminate the duplicate holding structure of our Company, we undertook the following steps:

• On May 24, 2021, an aggregate of 80,725,119 ordinary Shares held by DHgate Holding were redesignated into Preferred Shares. For further details, see “A. Further Information about Our Group - 2. Changes in the Share Capital of Our Company” in Appendix IV.

• On May 24, 2021, DHgate Holding repurchased an aggregate of 152,947,319 shares from TDF China, TDF Advisors, CGC Dunhill, Heguang International (BVI), Everfine Global and Idea Edge, in consideration of which an aggregate of 152,947,319 Shares (including Preferred Shares) were transferred from DHgate Holding to TDF China, TDF Advisors, CGC Dunhill, Heguang International (BVI), Everfine Global and Idea Edge.

• On May 24, 2021, our Company repurchased an aggregate of 4,784,623 Shares from DHgate Holding, at a nominal consideration of USD478.4623.

Upon the above-mentioned steps, DHgate Holding ceased to be a shareholder of our Company.

(iv) Onshore Reorganization for the adoption of the Contractual Arrangements

In 2006 and 2010, the Previous Contractual Arrangements were entered into by and among Chongqing Rich Palace, Century Heguang (Beijing) and the then registered shareholders of Chongqing Rich Palace, pursuant to which Century Heguang (Beijing) gained management control over the operations of our business conducted through Chongqing Rich Palace and its subsidiaries, and enjoys all economic benefits of Chongqing Rich Palace and its subsidiaries.

For the purposes of adopting the Contractual Arrangements, the following principal onshore steps had been implemented:

• On January 26, 2018, Digitrading Beijing was established by Digitrading Hong Kong as a wholly foreign-owned enterprise and remained to be wholly owned by Digitrading Hong Kong as at the Latest Practicable Date.

• On May 23, 2018, Chongqing Rich Palace transferred 79.55% equity interest in Century Rich Palace to Ms. Wang, 20% to Ms. Liu and 0.45% to Mr. Liu Shengfei, who in turn transferred the same to Ms. Wang on August 28, 2018. Immediately following the equity transfers, Century Rich Palace was held as to 80% by Ms. Wang and 20% by Ms. Liu.

• On September 27, 2018, a series of contractual arrangements were entered into by and among Digitrading Beijing, Century Rich Palace and its registered shareholders, Ms. Wang and Ms. Liu, including but not limited to the exclusive business cooperation agreement, exclusive option agreement, equity interest pledge agreement, loan agreement, spousal consent letter and power of attorney, pursuant to which Digitrading Beijing is able to gain effective control over, and receive all economic benefits generated by Century Rich Palace. In July 2019, the Previous Contractual Arrangements were terminated. See “Contractual Arrangements” for further details.

Further, Century Heguang (Beijing) and Chongqing Rich Palace transferred onshore assets, employees, contracts and intellectual properties in relation to cross border B2B e-commerce marketplace business to Digitrading Beijing and Century Rich Palace.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

(v) Deregistration and Disposal of Non-Operating Subsidiaries

In anticipation and after the termination of the Previous Contractual Arrangements and the transfer of onshore assets, employees, contracts and intellectual properties in relation to cross border B2B e-commerce market place business to Digitrading Beijing and Century Rich Palace, we disposed or deregistered entities, most of which no longer had business operations or were incorporated as a result of the Previous Contractual Arrangements.

Subsidiaries deregistered

PRC subsidiary deregistered Reason for deregistration Deregistration date Dunhuang Heguang (Suzhou) Information Technology The company had no business January 4, 2021 Company Limited* operation immediately prior to the (敦煌禾光(蘇州)信息技術有限公司) ...... deregistration Dunhuang Heguang (Ningxia) Information Technology The company had no business November 20, Company Limited* operation immediately prior to the 2020 (敦煌禾光(寧夏)信息技術有限公司) ...... deregistration Digitrading Rich Palace Technology (Zhuhai) Company The company was originally December 18, 2020 Limited* incorporated for tax incentive (數貿富軒科技(珠海)有限公司) ...... purposes and did not serve its purpose anymore Century Weiye Limited* The company had no business July 19, 2019 (世紀偉業有限公司) ...... operation immediately prior to the deregistration

– 163 – Subsidiaries disposed BE MUST INFORMATION THE THAT DOCUMENT. AND THIS CHANGE OF COVER TO THE SUBJECT ON AND “WARNING” SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IN READ IS DOCUMENT THIS

PRC subsidiary ITR,ROGNZTO N OPRT STRUCTURE CORPORATE AND REORGANIZATION HISTORY, disposed(1) of (2) (3) (4) Consideration Date of agreement Transferee Interest disposed of Reason for disposal Consideration Basis of consideration settlement date

Shenzhen Dunhuang Heguang August 1, 2018 Beijing Infinity Chuangshi 100% The company had no business RMB1 Equity attributable to owners of May 26, 2021 Information Technology Company Information Technology operation immediately prior to the subsidiary as at May 31, Limited* (深圳敦煌禾光信息技術有 Company Limited* (北京無 the disposal 2018 限公司) ...... 限創世信息技術有限公司) (“Beijing Infinity”) Zhejiang Century Heguang Information August 16, 2018 Beijing Infinity 100% The company had no business Nil Equity attributable to owners of N/A Technology Company Limited* (浙江 operation immediately prior to the subsidiary as at May 31, 世紀禾光信息技術有限公司)..... the disposal 2018 Dunhuang Heguang (Hangzhou) January 16, 2019 Beijing Infinity 100% The company had no business Nil Equity attributable to owners of N/A Information Technology Company operation immediately prior to the subsidiary as at May 31, Limited* (敦煌禾光(杭州)信息技術有 the disposal 2018 限公司) ...... Shanghai Heguang International September 26, 2018 Beijing Infinity 100% The company had no business RMB1 Equity attributable to owners of May 26, 2021 Logistics Company Limited* (上海禾 operation immediately prior to the subsidiary as at May 31, 光國際物流有限公司) ...... the disposal 2018 Ningbo Dunhuang Heguang Information August 20, 2018 Beijing Infinity 100% The company had no business Nil Equity attributable to owners of N/A Technology Company Limited* (寧波 operation immediately prior to the subsidiary as at July 31, 敦煌禾光信息技術有限公司)..... the disposal 2018 Harbin Dunhuang Heguang Information September 15, 2018 Beijing Infinity 100% The company had no business RMB2,276,215.68 Equity attributable to owners of By December 31,

6 – 164 – Technology Company Limited* (哈爾 operation immediately prior to the subsidiary as at August 31, 2023 濱敦煌禾光信息技術有限公司) the disposal 2018 and a loan between the (“Harbin Dunhuang”) ...... parties Dongguan Dunhuang Heguang April 20, 2019 Beijing Infinity 100% The company had no business RMB297,683.41 Equity attributable to owners of May 28, 2021 Information Technology Company operation immediately prior to the subsidiary as at March 31, Limited* (東莞敦煌禾光信息技術有 the disposal 2019 and a loan between the 限公司) ...... parties Chongqing Dunhuang Heguang January 24, 2019 Beijing Infinity 100% The company had no business Information Technology Company operation immediately prior to Limited* (重慶敦煌禾光信息技術有限公司) ......

Nil Equity attributable to owners of N/A the subsidiary as at December the disposal 31, 2018 HSDCMN SI RF OM NOPEEADSBETT HNEADTA H NOMTO UTBE MUST INFORMATION THE THAT DOCUMENT. AND THIS CHANGE OF COVER TO THE SUBJECT ON AND “WARNING” SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IN READ IS DOCUMENT THIS Notes:

(1) Each of the PRC subsidiaries disposed was a subsidiary of Chongqing Rich Palace. ITR,ROGNZTO N OPRT STRUCTURE CORPORATE AND REORGANIZATION HISTORY,

(2) Each of these equity transfers had been deemed to be completed after the termination of the Previous Contractual Arrangements, being July 31, 2019, from an accounting perspective. For details, see notes 1 and 37 of the Accountants’ Report as set out in Appendix I.

(3) The transferee(s) and its ultimate beneficial owners are all Independent Third Parties.

(4) The consideration settlement date is not relevant to our Group, as such consideration would be received by Chongqing Rich Palace, which is no longer a subsidiary of our Group upon the termination of the Previous Contractual Arrangements. Nonetheless, our Group had already taken into account of such assets when Chongqing Rich Palace ceased to be our subsidiary upon the termination of the Previous Contractual Arrangements. For details, please refer to “— Reorganization — Onshore Reorganization for the adoption of the Contractual Arrangements.”

As confirmed by our Directors, save for the disposal of Harbin Dunhuang, each of the share transfer or equity transfer made in the Reorganization was properly and legally completed and settled. 6 – 165 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

The following diagram illustrates our simplified corporate and shareholding structure upon completion of the Reorganization.

Ms. Wang Ms. Liu 100% 100%

Heguang International (BVI) Idea Edge TDF China TDF Advisors CGC Dunhill Everfine Global 15.78% 41.75% 28.98% 1.19% 6.83% 5.47%

The Company 100% 100% 100% 100% Heguang International (Cayman) DHgate Technology Digitrading Group DHgate Investment Limited 100% 100% 100% 100% 100% Digitrading Digitrading Hong Kong Digitrading Technology Rich Palace (HK) Rich Palace (BVI) Technology Investment Limited 100% 100% Overseas Hong Kong subsidiaries subsidiaries

Offshore Onshore 100% Ms. Wang Ms. Liu 80% 20% 100%

Digitrading Century Heguang (Beijing) Century Rich Palace Beijing 100% Other onshore 100% subsidiaries 100%

Onshore subsidiaries Onshore subsidiaries

Equity ownership Contractual arrangements

[REDACTED] INCENTIVE SCHEME AND RSU SCHEME

We adopted the [REDACTED] Incentive Scheme on March 20, 2019 to attract and retain the best available personnel, provide additional incentives to employees, Directors, senior managements and consultants and to promote the success of our Company’s business. The principal terms of the [REDACTED] Incentive Scheme are set out in “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document. Pursuant to the [REDACTED] Incentive Scheme, the maximum number of Shares in respect of which share options may be granted shall not exceed 28,237,956 Shares, representing approximately [REDACTED]% of the Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme). As of the Latest Practicable Date, the Company had granted share options to subscribe for an aggregate of 23,504,864 Shares under the [REDACTED] Incentive Scheme, representing approximately [REDACTED]% of the Company’s issued share capital immediately after the [REDACTED] and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme). None of the share options were exercised. For further information regarding the grantees under the [REDACTED] Incentive Scheme, see “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document.

We further adopted the RSU Scheme on May 24, 2021 to grant awards of restricted share units as incentives to directors, senior management and other selected personnel to our Company and its subsidiaries. The principal terms of the RSU Scheme are set out in “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document. Pursuant to the RSU Scheme, the maximum number of Shares in respect of which awards may be granted shall not exceed 9,569,246 Shares, representing approximately [REDACTED]% of the Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme). As the RSU Scheme will become effective from the Listing Date, no RSUs have been granted under the RSU Scheme as of the Latest Practicable Date.

CORPORATE STRUCTURE

Corporate structure as at the Latest Practicable Date

The following diagram illustrates the corporate and shareholding structure of our Company as at the Latest Practicable Date:

Ms. Wang Ms. Liu 100% 100%

Heguang International (BVI) Idea Edge (1) TDF China (2) TDF Advisors (2) CGC Dunhill (3) Everfine Global 15.78% 41.75% 28.98% 1.19% 6.83% 5.47%

Digitrading Dunhuang Jiahe Sunlight SAS Holdings Holdings (UK) (France) (HK) (HK) Offshore

Ms. Wang Ms. Liu Onshore 100% 80% 20% 100% 100% 100% Digitrading Century Heguang (Beijing) Century Rich Palace 㔎䃴㔠屧䥹㈨䘤⯽ 㔠屧䥹㈨ĩᶲ㴟Ī Beijing ĩ㶙⛛Ī㚱旸℔⎠ 㚱旸℔⎠

100% 100% 100% 100% 100% 100% 100% ⎰偍㔎䃴䥦⃱ᾉ ㆸ悥㔎䃴䥦⃱ᾉ 㻛ⶆ㔎䃴䥦⃱ᾉ 〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 100% 100% 100% 100% 100% 100% Digitrading Yunyou 大⬱㔎䃴䥦⃱ᾉ 䄁⎘㔎䃴䥦⃱ᾉ 䵧春䥦⃱ᾉ〗㈨㕘悱㔠屧ᾉ〗㈨㔠屧䥹㈨炷怤⮏䚩㰰 ⊿㴟䥦⃱㔠屧ᾉ〗㈨〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 埻㚱旸℔⎠ 埻㚱旸℔⎠ 㑓㕘⋨炸㚱旸℔⎠ 埻㚱旸℔⎠ ⒸⰙ㔠屧ᾉ〗䥹㈨ Equity ownership 嘴➈㔠屧䥹㈨㚱㔠屧⭴幺䥹㈨炷㶙⛛炸 95% Fuyue Technology(4) 旸℔⎠ 㚱旸℔⎠ 㚱旸℔⎠ Contractual arrangements

Notes:

(1) Idea Edge is a BVI company wholly owned by New Element Holdings Limited, which is in turn wholly owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, which is a discretionary trust established by Ms. Wang.

(2) Each of TDF China and TDF Advisors is an exempted limited partnership incorporated under the laws of the Cayman Islands and managed by TDF Capital China Management II, LP, the general partner, which is in turn managed by its general partner, TDF Management II, LLC.

(3) CGC Dunhill is wholly owned by CGC Asia Growth Fund I, L.P., an exempted liability partnership incorporated in the Cayman Islands. CGC Asia Growth Fund I, L.P. is controlled by its general partner, CGC Management Limited, a limited company incorporated in the Cayman Islands, which is wholly owned by CGC Great Warrants Limited, a limited company incorporated in the BVI. CGC Great Warrants Limited is solely owned by Mr. Rui Chen, an Independent Third Party.

(4) Fuyue Technology is a company established in the PRC and owned as to 95% and 5% by Digitrading Yunyou and Mr. Bai Peng, an Independent Third Party.

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

Corporate Structure Immediately Following the [REDACTED]

The following diagram illustrates the corporate and [REDACTED] structure of our Company immediately following the completion of the [REDACTED] (assuming the [REDACTED] is not exercised and no additional Shares are issued pursuant to the [REDACTED] Incentive Scheme and the RSU Scheme):

Ms. Wang Ms. Liu 100% 100%

Heguang International (BVI) Idea Edge (1) TDF China (2) TDF Advisors (2) CGC Dunhill (3) Everfine Global Public Shareholders [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]% [REDACTED]%

The Company 100% 100% 100% 100% Heguang International (Cayman) DHgate Technology Digitrading Group DHgate Investment Limited 100% 100% 100% 100% 100% Digitrading Digitrading Hong Kong DigitradingTechnology Rich Palace (HK) Rich Palace (BVI) Technology Investment Limited 100% 100% 100% 100%

Digitrading Dunhuang Jiahe Sunlight SAS Holdings Holdings (UK) (France) (HK) (HK) Offshore

100% 100% 100% 100% 100% 100% 100% ⎰偍㔎䃴䥦⃱ᾉ ㆸ悥㔎䃴䥦⃱ᾉ 㻛ⶆ㔎䃴䥦⃱ᾉ 〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 100% 100% 100% 100% 100% 100% Digitrading Yunyou 大⬱㔎䃴䥦⃱ᾉ 䄁⎘㔎䃴䥦⃱ᾉ 䵧春䥦⃱ᾉ〗㈨㕘悱㔠屧ᾉ〗㈨㔠屧䥹㈨炷怤⮏䚩㰰 ⊿㴟䥦⃱㔠屧ᾉ〗㈨〗㈨埻㚱旸℔⎠ 〗㈨埻㚱旸℔⎠ 埻㚱旸℔⎠ 埻㚱旸℔⎠ 㑓㕘⋨炸㚱旸℔⎠ 埻㚱旸℔⎠ Equity ownership 嘴➈㔠屧䥹㈨㔠屧⭴幺䥹㈨ ⒸⰙ㔠屧ᾉ〗 95% Fuyue Technology(4) Contractual arrangements 㚱旸℔⎠ ĩ㶙⛛Ī㚱旸℔⎠ 䥹㈨㚱旸℔⎠

Notes:

(4) Fuyue Technology is a company established in the PRC and owned as to 95% and 5% by Digitrading Yunyou and Mr. Bai Peng, an Independent Third Party.

– 168 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

HISTORY, REORGANIZATION AND CORPORATE STRUCTURE

PRC REGULATORY REQUIREMENTS

M&A Rules

According to the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors《關於外國投資者併購境內企業的規定》 ( ) (the “M&A Rules”) jointly issued by MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the SAT, the CSRC, the SAIC and the SAFE on August 8, 2006, effective as of September 8, 2006 and amended on June 22, 2009, a foreign investor is required to obtain necessary approvals when it (i) acquires the equity of a domestic enterprise so as to convert the domestic enterprise into a foreign-invested enterprise; (ii) subscribes the increased capital of a domestic enterprise so as to convert the domestic enterprise into a foreign-invested enterprise; (iii) establishes a foreign-invested enterprise through which it purchases the assets of a domestic enterprise and operates these assets; or (iv) purchases the assets of a domestic enterprise, and then invests such assets to establish a foreign-invested enterprise. The M&A Rules, among other things, further purport to require that an offshore special vehicle, or a special purpose vehicle, formed for listing purposes and controlled directly or indirectly by the PRC companies or individuals, shall obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange, especially in the event that the special purpose vehicle acquires shares of or equity interests in the PRC companies in exchange for the shares of offshore companies.

Our PRC Legal Advisor is of the opinion that, based on its understanding of the current PRC laws and regulations, prior CSRC approval for this [REDACTED] is not required because (i) our wholly foreign-owned PRC subsidiaries were not established through a merger or acquisition of equity interest or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules that are the beneficial owners of our Company, and (ii) no provision in the M&A Rules clearly classifies contractual arrangements as a type of transaction subject to the M&A Rules.

Our PRC Legal Advisor has confirmed that all necessary relevant approvals, permits and filings under PRC laws regarding the Reorganization set out above had been obtained and the procedures involved had been carried out in accordance with PRC laws and regulations.

SAFE Registration in the PRC

Pursuant to the Circular of the SAFE on Foreign Exchange Administration of Overseas Investment, Financing and Round-trip Investments Conducted by Domestic Residents through Special Purpose Vehicles《關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關 ( 問題的通知》) (the “Circular No. 37”), promulgated by SAFE and which became effective on July 14, 2014 and replaced the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles《關於境內居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通 ( 知》) (the “SAFE Circular 75”), (i) a PRC resident must register with the local SAFE branch in connection with their contribution of offshore assets or domestic enterprises’ equity interests in an overseas special purpose vehicle (the “Overseas SPV”) that is directly established or indirectly controlled by the PRC resident for the purpose of conducting overseas investment or financing, and (ii) following the initial registration, the PRC resident is also required to register with the local SAFE branch for any major change in respect of the Overseas SPV, including, among other things, a change of Overseas SPV’s PRC resident shareholder(s), the name of the Overseas SPV, terms of operation, or any increase or reduction of the Overseas SPV’s capital, share transfer or swap, and merger or division. Pursuant to Circular No. 37, failure to comply with these registration procedures may result in penalties. In addition, the PRC subsidiaries of that Overseas SPV may be prohibited from distributing their profits and dividends to their offshore parent

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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE company or from carrying out other subsequent cross-border foreign exchange activities, and the Overseas SPV and its offshore subsidiary may be restricted in their ability to contribute additional capital to their PRC subsidiaries.

Pursuant to the Notice on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment《關於進一步簡化和改進直接投資外匯管理政策的通 ( 知》) (the “Circular No. 13”) promulgated by the SAFE and came into effect on June 1, 2015, the local banks would review and carry out foreign exchange registration under overseas direct investment directly, and SAFE and its local branches shall implement individual supervision over foreign exchange registration of overseas direct investment via the banks.

Our PRC Legal Advisor has confirmed that, being PRC residents, Ms. Wang and Ms. Liu have duly completed registration in respect of their investments in our Group in accordance with Circular No. 37 on July 20, 2018.

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BUSINESS

OUR MISSION

Facilitate global commerce and realize entrepreneurial dreams.

OUR VISION

To become a world leading cross-border e-commerce infrastructure for micro, small and medium enterprises (“MSMEs”).

OVERVIEW

The global e-commerce market is expected to continue to grow steadily in terms of transaction volume, among which procurement from China is expected to experience particularly strong growth, according to the iResearch Report. Service scope of traditional cross-border B2B e-commerce platforms which lack the ability to provide the full range of services required for cross-border e-commerce are typically confined to their core services. In contrast, one-stop marketplaces equipped with big data technologies and algorithms can consolidate various types of services from a wide array of service providers to streamline cross-border trading. To capture the huge market potential, we set up our business as a one-stop cross-border B2B e-commerce marketplace that enables global buyers to procure products from our extended network of sellers primarily located in China, while supporting the transactions with our superior infrastructure and services, covering the entire transaction cycle of MSMEs, from product selection, sourcing, payment, to logistics.

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Our deep insight in the global cross-border B2B e-commerce industry enables us to understand the dilemma faced by small and micro merchants as well as social media influencers when they start their businesses online. Leveraging our first mover advantages, which enabled us to accumulate a large amount of data and strong technology capabilities, we developed and launched our decentralized cloud-based commercial solutions, MyyShop, in August 2020. As a cloud-based SaaS solution designed for simplicity and ease-of-use, MyyShop has been rapidly adopted across the globe. Empowered by our AI technology and big data accumulated for over 17 years, MyyShop offers a cohesive suite of technology-enabled functions and features that empower small and micro merchants throughout their operating cycle, covering quick online store creation or account synchronization with online stores on third-party platforms, supplier selection, AI-based product recommendation, e-commerce and social media accounts synchronization, full-channel logistics service, 24/7 customer support, and worry-free after-sales services.

We have been a pioneer in the industry of global cross-border B2B e-commerce procurement from China. In 2011, we were the first platform among the companies that engaged in global cross-border B2B e-commerce procurement from China to allow order placing via mobile app. Our first mover advantage and deep industry insight have allowed us to build up a competitive edge that paves way for our success. We recorded significant growth in terms of both business operations and financial results during the Track Record Period. Our total GMV increased from USD1,361.5 million in 2018 to USD1,864.9 million in 2020. Our total revenue increased from USD117.9 million in 2018 to USD230.5 million in 2020. Our adjusted net (loss)/profit increased from USD(28.2) million in 2018 to USD26.7 million in 2020.

Capitalizing on our strong online presence and network effect, we empower participants in cross-border B2B e-commerce by offering a rich portfolio of value-added services. As we believe timely and reliable delivery of orders is vital to cross-border B2B e-commerce, we leverage our international distribution network to provide (i) Ongate logistics service to DHgate sellers and (ii) Offgate logistics service to corporate customers in China which aggregate demands for international logistics service from their local network of shippers, and non-DHgate sellers, being sellers on third-party platforms. Revenue generated from our logistics service amounted to approximately USD6.7 million, USD29.0 million and USD83.6 million for the years ended December 31, 2018, 2019 and 2020, respectively.

The number of registered buyers on our marketplace increased from approximately 5.7 million for the year ended December 31, 2018 to approximately 8.3 million for the year ended December 31, 2020.

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BUSINESS

OUR STRENGTHS

Leading global cross-border B2B e-commerce marketplace for procurement from China, with large scale and network effects

DHgate is an established leader in the world’s cross-border B2B e-commerce marketplace for procurement from China. In 2020, we were the world’s second largest cross-border B2B e-commerce marketplace for procurement of consumer goods from China, and in particular small-order procurement of consumer goods, with market share of approximately 1.4% and 7.2%, respectively, in terms of GMV according to the iResearch Report. We were also the U.S.’s largest cross-border B2B e-commerce marketplace for small-order procurement of consumer goods from China in 2020, with market share of approximately 17.0% in terms of GMV, according to the iResearch Report. We have participated in reshaping the landscape of the industry of global cross-border B2B e-commerce procurement from China, from relying on yellow pages directories for matching of demand and supply to one-stop marketplaces for seamless transactions. Since our inception in 2004, we had processed over 97.9 million orders for over 36.4 million users with GMV of approximately USD9,025.4 million across approximately 223 countries and regions as of December 31, 2020. In 2020, over 22.7 million orders were placed on our marketplace, totaling GMV of approximately USD1.9 billion. We also operate a leading fulfillment network that consists of approximately 40 distributed local warehouses and 11 overseas warehouses, and local sales and operation teams. Our fulfilment network facilitated approximately 0.4 million, 2.1 million and 3.3 million orders of our Ongate logistics service in 2018, 2019 and 2020, respectively.

Our platform enjoys network effect, which increases the stickiness and loyalty of sellers, buyers, logistics partners and payment service providers and other participants. The more sellers on our marketplace, the more live listings1 available to our buyers, thereby leading to higher transaction volume on our marketplace. Besides, our vast network of buyers and sellers generate voluminous feedbacks and data, which in turn help buyers improve their procurement decisions, and sellers improve their products and services. Our tremendous scale, together with the network effect, enable us to acquire buyers and sellers more effectively and create entry barriers. During the Track Record Period, we significantly enlarged our base of buyers and sellers. For the year ended December 31, 2020, we had over 5.0 million active buyers from around the world, among which, approximately 48.0% were located in the U.S., 9.0% were located in the United Kingdom, 9.5% were located in France, and 33.5% were located in the rest of the world. As of the same date, we had approximately 171,700 registered sellers in China.

Note:

(1) The average number of live listings refers to the average of the number of live listings by the end of each month throughout the year.

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BUSINESS

Renowned brand for procurement from China

We operate DHgate, which can be accessed via mobile app and website, and is one of the most renowned brands for procurement from China, according to the iResearch Report. According to the iResearch Report, in 2020, 45.4% of our total platform traffic was generated from free search engines such as Google, the percentage contribution of which being the highest among cross-border B2B e-commerce platforms for procurement from China, and significantly higher than the platform with the second highest search engine traffic contribution of 33.5%.

We offer a wide selection of products on our marketplace. The average number of live listings offered on DHgate was approximately 12.3 million, 23.0 million and 25.8 million for the years ended December 31, 2018, 2019 and 2020, respectively. We focus on global procurement of consumer goods from China, including shoes and accessories, cell phones and accessories, and sports and outdoor equipment, for which China has a stable supply chain and is able to provide high-quality products at competitive prices in an efficient and worry-free manner. The global cross-border B2B e-commerce procurement of consumer goods from China market, where our leading position is well established, presents huge market opportunities. Leveraging our comprehensive product offerings and data insight in procurement behaviors, we were able to utilize cross-selling techniques to increase the number of live listings among buyers. This strategy not only enhances buyers’ experience, but also greatly increases our sales volume and enhances our monetization. For the years ended December 31, 2018, 2019 and 2020, we were able to cross-sell to 26.5%, 32.3% and 33.5% of our buyer, respectively.

With our leading position and strong presence in the global cross-border B2B e-commerce procurement of consumer goods from China market, we managed to enhance our customer stickiness and rapidly grew the number of active buyers at a CAGR of 14.1% from approximately 3.8 million for the year ended December 31, 2018 to approximately 5.0 million for the year ended December 31, 2020. The average number of orders per active buyer was 4.6, 4.8 and 4.6 for the years ended December 31, 2018, 2019 and 2020, respectively. Each active buyer contributed approximately USD357, USD307, and USD376 of GMV on average for the years ended December 31, 2018, 2019 and 2020, respectively. Each of the top 10% and 20% of our active buyers placed an average of 19 and 13 orders in 2020, respectively. Further, in testament to our customer stickiness, 11.7% of our buyers acquired in 2018 remained active in 2020.

An ecosystem with a broad range of high-quality and tailor-made merchant solutions that empower MSMEs to achieve success in e-commerce

As one of the pioneers in the industry of global cross-border B2B e-commerce procurement from China, leveraging our global buyer network and strong technology capabilities, we created a digitalized B2B e-commerce ecosystem where each participant intertwines and mutually benefits.

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BUSINESS

We gathered third-party service partners and consolidated their services to offer MSMEs with one-stop e-commerce solutions. Through these solutions, we (i) substantially expanded our base of buyers and sellers, and cultivated long-term loyalty from them, (ii) enhanced our bargaining power by providing one-stop services, and (iii) accumulated multi-dimensional data covering information flow, goods flow and funds flow, effectively forming entry barriers against other single-or limited-service providers. Meanwhile, by cooperating with us, third-party service partners are granted access to our vast buyer and seller network, huge transaction volume, and thereby obtain business opportunities and valuable feedback for refining their operations.

We equip our MSMEs with a broad range of high-quality and tailor-made merchant solutions provided by these services partners, with the aim to empower our global MSMEs to achieve success in e-commerce. We help MSMEs set up online stores to engage consumers in real time. We provide MSMEs with precision marketing solutions to facilitate sales. We provide cost-effective logistics and warehousing services, spanning from the first mile to the last mile, to improve the overall purchasing experience. We provide integrated payment systems to enhance the completion ratio, as well as cloud-based enterprise resource planning (ERP) systems to streamline MSMEs’ operations. We believe supply side upgrade enhances our capability in optimizing our MSMEs’ e-commerce operations.

We cooperated with approximately 40, 80 and 180 suppliers and service partners for the years ended December 31, 2018, 2019 and 2020, respectively. We work with best-in-class third-party service partners to provide merchant services, such as marketing and advertising, logistics and payment services. We adopt a comprehensive and strict process in selecting service partners. We choose our partners based on a range of factors including the quality and price of their services. Our marketing and advertising service partners include some of the major multi-national technology companies and social media platforms. Our fulfilment service partners include global delivery services corporations. Our payment services partners include worldwide payment and financial services companies. Our deep collaboration with service partners also allows us to secure more favorable terms.

In particular, as of December 31, 2020, we consolidated logistics products of over 90 domestic and approximately ten international logistics partners to provide Ongate logistics service to DHgate sellers, as well as Offgate logistics service primarily to corporate customers that aggregate demands for international logistics service from their local network of shippers. Among others, as of December 31, 2020, we collaborated with companies under three of the top five international logistics brands in providing Offgate logistics service, through which we had established a collection network that spanned over ten provinces in China. During the Track Record Period, Offgate logistics service contributed significant additional volume of parcels and freights for our logistics service, with approximately 3.5 million orders having been placed. Our ability to aggregate a huge volume of parcels and freights allows us to secure better terms with

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BUSINESS international logistics service providers. For instance, in 2020, we were able to secure discounts of approximately 3% to 4% off the industry average prices of the vast majority of logistics products we procured for the provision of our logistics service. We also offered weekly and monthly settlement to corporate customers during the Track Record Period. Our diversified range of cost effective logistics products brought by our rich logistics resources contributed to our customer stickiness, among others, 80.0% and 78.3% of our corporate customers in 2018 and 2019, respectively, remained customers of our Offgate logistics service in 2020. During the Track Record Period, our Offgate logistics service experienced significant growth, primarily as a result of (i) the overall growth in the logistics service market as well as our heightened efforts in developing Offgate logistics service during the Track Record Period; (ii) our ability in maintaining stable supply of services to our customers amidst the COVID-19 pandemic as a result of our scale; and (iii) market consolidation as a result of the COVID-19 pandemic, which drove a considerable amount of less sizable players out of the market because customers tended to choose logistics service providers with stronger fulfilment capabilities. Revenue from our Offgate logistics service grew rapidly during the Track Record Period, increasing from approximately USD2.9 million in 2018 to USD49.5 million in 2020, representing a CAGR of 316.4%.

Not only does our scale advantage benefit our Offgate logistics service customers, but it also creates synergies with our Ongate logistics service by securing more favorable terms for sellers on DHgate, thereby increasing the penetration of our logistics service on DHgate. For the year ended December 31, 2020, eight of our logistics partners which provided us with a range of logistics products were also our corporate customers which procured Offgate logistics service from us. Such close collaborations with our logistics partners allow DHLink to provide a rich variety of logistics options to Ongate logistics service customers. In testament to the continuously increasing penetration of DHLink, for the years ended December 31, 2018, 2019 and 2020, approximately 6.1%, 9.4% and 21.3% of the total active sellers on DHgate used logistics services on DHLink, respectively.

As time is of the essence in cross-border e-commerce, we strategically engaged overseas warehousing service providers in the U.S., Mexico, Spain, Belgium and Poland to store and promote products for our sellers, expanding our global footprints. Our sellers can utilize these overseas warehouses to store their inventories in targeted markets in advance, aggregate and separate orders, and fix packaging issues before dispatching. Our localized value-added services afford sellers with more flexibility as to logistics options, enhancing the efficiency of global logistics while also allowing us to launch services in new markets. Besides, our fulfilment network provides services for shippers on and outside of DHgate. Serving shippers outside DHgate substantially increases our logistics volume, which in turn elevates our bargaining power over logistics and warehouse service providers. Since we started to consolidate fulfilment demands from shippers on and outside of DHgate, we managed to decrease fulfilment cost per kilogram from USD20 in 2018 to USD17 in 2020. Further, in testament to our ability to streamline logistics

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BUSINESS workflows, DHLink’s average time to door was 25.0 days in 2020, as compared with an average of 25.8 days of leading platforms in the industry of global cross-border B2B e-commerce procurement from China, according to the iResearch Report.

Unique business model combining asset light transaction model and cloud-based SaaS subscription model

Adopting both transaction model and subscription model enhances our resilience to economic cycles. DHgate, our marketplace, adopts a transaction model and charges certain percentage of the transaction amount. Transaction model tends to flourish in expanding economy. MyyShop, our cloud-based commercial solution adopting SaaS subscription model, is less susceptible to economic downturns. While MyyShop allows us to continuously enlarge our user base, its subscription model provides stable cash flows due to the recurring nature of subscription revenue.

Further, our asset-light model benefits us in a number of ways. It allows us to selectively engage a wide array of service providers based on our MSMEs’ needs in a timely manner, thereby enhancing our adaptability and timeliness. Also, as we do not develop and provide these services on our own, we are free from large-scale upfront capital investments, thus reducing the liquidity risks. Further, with numerous ecosystem participants, our marketplace model enjoys network effects and is highly scalable. It is also able to offer a wide selection of live listings without creating inventory risks.

In order to enlarge our global buyer base and penetrate into the global B2C e-commerce market, which possesses huge growth opportunity, we developed and launched our cloud-based commercial solutions, MyyShop, by leveraging our strong technology capabilities and our deep insight into the global cross-border B2B e-commerce industry. MyyShop is a decentralized e-commerce solution providing comprehensive infrastructure and services for small and micro merchants to digitalize their operations, especially helping entry level-merchants and social media influencers operate their online stores as dropship resellers. MyyShop offers comprehensive solutions throughout users’ operating cycle, covering quick online store creation or account synchronization with online stores on third-party platforms, strict supplier selection, AI-based product recommendation, full-channel logistics services, 24/7 customer support, and worry-free after-sales services. Apart from creating their online stores on MyyShop, users can also synchronize their MyyShop accounts to their accounts on other social media and e-commerce platforms, such as eBay and Shopify to monetize their private traffic. Since its launch in August 2020, MyyShop had experienced significant growth, with its number of registered users reaching approximately 15,600 as of December 31, 2020.

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BUSINESS

Strong technological infrastructure and application of big data to drive business growth

As a pioneer with over 17 years of practical experience in the industry of global cross-border B2B e-commerce procurement from China, we have been able to leverage our wealth of data and algorithms to facilitate and optimize the operation of our marketplace, as well as our value-added services.

We leverage online marketing and adopt multiple marketing channels to acquire new buyers. With over 17 years of experience in operating online wholesale marketplace, we are able to effectively utilize search engine optimization, a free yet effective form of marketing that significantly contributes to our buyer acquisition. We take pride in our ability to generate a rich keyword database and have established a powerful site structure to enhance our rankings on search engines. According to the iResearch Report, in 2020, 45.4% of our total platform traffic was generated from free search engines such as Google, the percentage contribution of which being the highest among cross-border B2B e-commerce platforms, and significantly higher than the platform with the second highest search engine traffic contribution of 33.5%. Besides, we had also maintained high efficiency in social media and affiliate marketing during the Track Record Period. By virtue of our dedicated marketing efforts, we achieved return on investment of 42.4, as compared with a range of 5 to 20 among other leading platforms in the industry of global cross-border B2B e-commerce procurement from China in 2020, according to the iResearch Report.

We are able to precisely recommend products to buyers according their needs by analyzing transaction data accumulated within our platform. For the years ended December 31, 2018, 2019 and 2020, 11.7%, 11.4% and 12.6% of our total GMV were acquired through intelligent product recommendations on our platforms, respectively. During the same periods, our AI chatbot addressed 68.4%, 70.8% and 63.4% of our buyers’ queries.

Once an order is generated from a buyer, order information will immediately be transmitted to the seller, and the payment and logistics service providers selected by our system’s algorithms. DHpay’s smart routing system automatically selects the optimal payment route and currency based on multi-dimensional data analytics, which enabled us to maintain a low payment chargeback rate of less than 0.5% during the Track Record Period, whereas other leading platforms in the global cross-border B2B e-commerce procurement from China industry recorded chargeback rates ranging from approximately 1.5% to 4%, according to the iResearch Report. DHLink’s logistics routing system intelligently matches buyers’ orders with a pool of logistics products and services, and provides routing recommendations based on multi-dimensional data analytics. By enhancing efficiency through facilitating the process from placing order to delivery, DHLink achieved an average time to door of 25.0 days, as compared to an average of 25.8 days among the leading platforms in the industry of global cross-border B2B e-commerce procurement from China in 2020, according to the iResearch Report. Further, DHLink system offers digitalized logistics services to sellers, streamlining their operation.

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By leveraging our data and algorithms, we achieved high cohort retention during the Track Record Period. Approximately 20.6% and 11.7% of buyers we acquired in 2018 remained active buyers in 2019 and 2020, respectively. Approximately 19.8% of the buyers we acquired in 2019 remained active buyers in 2020. Our average GMV per active buyer acquired in 2018 amounted to approximately USD230, USD464 and USD547 in 2018, 2019 and 2020, respectively. Average GMV per active buyer acquired in 2019 amounted to approximately USD206 and USD451 in 2019 and 2020, respectively. Average GMV per active buyer acquired in 2020 amounted to approximately USD273 in 2020.

Experienced and visionary senior management team with proven track record

Our Company is the crystallization of our founding team’s over 17 years of experience in the cross-border B2B e-commerce industry. Prior to founding our Company, Ms. Wang, our chairman of the Board, chief executive officer and executive Director, founded Joyo.com, a pioneer Chinese e-commerce marketplace that was acquired by Amazon in 2004. She also held senior leadership positions at global conglomerates including Microsoft (NASDAQ: MSFT) and Cisco (NASDAQ: CSCO).

Ms. Wang also served as China’s official representative on the APEC Business Advisory Council, the co-chairman of its Micro, Small and Medium Sized Enterprises Working Group as well as the chairman of the APEC Women Leadership Forum. Her expertise, insights and rich experience in the e-commerce, software, and the Internet industry laid the foundation for our business. Her industry know-hows enable us to design the effective trading solutions and services that satisfy the needs of our buyers and sellers.

Further, we have a team of experienced senior management. Among others, Mr. Liu Sijun, our executive Director and vice president, has more than 17 years of experience in the cross-border e-commerce industry and has led us in building DHgate. Mr. Hou Jianchen, our executive Director, joined our Group in 2006 and has accumulated rich experience in various aspects of our business operations.

With their vision and experience, we believe our senior management team have driven our rapid growth since our inception and will continue to play a vital role in our success and further development.

OUR STRATEGIES

We will pursue the following strategies to reinforce our market position and to further expand our business.

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Continue to expand globally by upgrading our supply chain and enlarging our user base

We will continue to upgrade our supply chain by diversifying the categories of live listings available on our platform, with a view to providing a wider span of product choices. We will also monitor and seek to improve the quality of products and services provided through our platform, thereby enhancing users’ trust and our brand recognition.

As user base is the core building block of our business, we will continue to expand our network of users by improving the efficiency of our efforts in user acquisition. We will improve the advertisement of contents and products, which was the major paid marketing channel contributor to our platform traffic. In terms of geographical coverage, we will continue to focus on consolidating our market position in the U.S. and Europe. Further, the increasingly prevalent access to the Internet in the emerging markets, such as Latin America, the Middle East and ASEAN countries, presents huge growth opportunities. Therefore, we also plan to prudently and compliantly explore opportunities of expanding into emerging markets to grow our overseas user base.

Enhance the localization of services in each region

As a global cross-border B2B e-commerce marketplace, we will seek to accelerate the localization of our services in the overseas markets. With a view to penetrating target markets and elevating the reach of our services, we will seek to increase our local presence in overseas markets. Further, customers in different countries tend to have distinct demands and usage patterns of our services. With stronger local presence, we will develop a deeper understanding of the needs and demands of the users in our current markets and target markets, and expand the breadth and depth of our services accordingly to better serve our customers’ needs.

Enhance logistics service for buyers

As logistics service constitutes a vital component of our ecosystem, we aspire to continuously refine and enhance our logistic service offerings. In particular, we plan to optimize and integrate each part of the logistics service value chain, from collection, fulfillment, shipping to delivery, with the aim of creating a seamless and frictionless product flow, thereby improving buyers’ procurement experience.

We also plan to utilize our data insights and technology capabilities to further digitalize and automate various parts of the logistics system, such as packaging and scanning, in order to improve our overall logistics efficiencies and reduce operating costs. Leveraging data accumulated across various stages of the logistics process and our logistics technologies, we will strengthen DHLink system’s ability to intelligently allocate orders and logistics resources based on factors including capacities, seasons, destinations, and modes of transport, thereby further improving logistics efficiency, elevating buyers’ and sellers’ experience, while enhancing logistics service providers’ resilience to seasonality.

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In addition, by continuing to consolidate outbound fulfillment demands from shippers on and outside of DHgate, we will be able to secure better terms and pricing with our logistics partners, thereby further reducing buyers’ logistics costs.

Further develop our subscription-based decentralized cloud-based commercial solutions in addition to our transaction-based centralized marketplace

Premising on MyyShop, our decentralized cloud-based commercial solutions, we plan to increase the penetration of our SaaS solution offerings among MSMEs, which will in turn benefit our customer acquisition and retention. Leveraging our strong technology capabilities and big data accumulation, we also plan to refine and roll out more SaaS solutions for MSMEs on MyyShop, thereby further enhancing its ability to optimize MSMEs’ e-commerce operations.

In particular, we plan to deploy Enlitence, our proprietary AI-based product selection tool, to empower MSMEs by streamlining their procurement workflows. Enlitence monitors a range of attributes including historical prices, reviews, sales numbers as well as other information of products available on other marketplaces. Based on users’ selected variables, Enlitence would generate recommendations on which listing category to include by analyzing our proprietary data of trending products. Currently, we have internally deployed Enlitence to help our marketplace products selection managers to make choices in respect of product offering. We plan to commercialize Enlitence by integrating it into DHgate and MyyShop.

Research and develop innovative technologies including AI products that serve global trades

We will maintain our current investment intensity in research and development in spectrums including big data analytics and AI algorithms. We plan to further develop proprietary products and services by leveraging our data analytics and AI capabilities, thereby providing our users with more comprehensive functions and features on our marketplace, such as smart product selection, automatic translation of product description, search by image, precision marketing, and website design. We also plan to optimize our search engines, risk management system and payment system to further streamline transactions on our platform.

In addition, we also plan to cooperate with leading technology companies to accelerate our growth. By tapping into their cutting-edge technologies and reach, we will strengthen our technology capabilities, enhance the compatibility of our platforms with third-party platforms in order to optimize and elevate the scalability of our IT infrastructures and extend our reach to customers. We have collaborated with Amazon Web Services in our early attempts in launching products including “Socialshops” and utilized the public cloud services provided by Amazon Web Services. Furthermore, for instance, in 2019, we partnered with Facebook and integrated its marketing application programming interface with our AI solutions to scale up and automate our marketing efforts on Facebook, which increased our app installs by automating advertisement creation, thereby lowering our cost per install by 18% and increasing our return on advertising spending by 7.2%.

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OUR BUSINESS

Overview

We are a leading global cross-border B2B e-commerce marketplace for procurement from China, connecting buyers from around the world with sellers primarily located in China. In 2020, we were the world’s second largest global cross-border B2B e-commerce marketplace for procurement of both consumer products from China, and in particular small-order procurement of consumer products, with market share of approximately 1.4% and 7.2%, respectively, in terms of GMV according to the iResearch Report. We were also the U.S.’s largest global cross-border B2B e-commerce marketplace for small-order procurement of consumer products from China in 2020, with market share of approximately 17.0% in terms of GMV, according to the iResearch Report. Leveraging our asset-light business model, we have been able to construct an ecosystem, driven by our twin engines of growth, consisting of (i) DHgate, our marketplace that connects buyers worldwide and sellers primarily located in China to provide one-stop wholesale services and (ii) MyyShop, our cloud-based commercial solutions that enable small and micro merchants to build and develop their online business with ease. Our marketplace is designed to be image-rich and intuitive, resembling major online retail marketplaces, affording a hassle-free purchasing experience to buyers from around the world. We further enrich our marketplace with a cohesive portfolio of value-added services including logistics service, overseas warehouse service, payment service and marketing service to help sellers navigate through international cross-border trade. In particular, we leverage our broad international distribution network to provide logistics service to sellers and corporate customers, offering end-to-end logistics services to further facilitate global e-commerce. In 2020, DHLink, our logistics business unit, achieved an average time to door of 25.0 days, as compared to an average of 25.8 days among the leading platforms in the global cross-border B2B e-commerce procurement from China industry.

As one of the pioneers in the global cross-border B2B e-commerce procurement from China industry, leveraging our global buyer network and strong technology capabilities, we have created a digitalized B2B e-commerce ecosystem where each participant intertwines and mutually benefits. Set forth below is the diagram illustrating the participants in our ecosystem:

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• Marketplace, which is offered through DHgate and entails a cross-border e-commerce platform that connects buyers around the world with sellers primarily located in China, allowing buyers to source a wide range of products offered by our sellers;

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• Cloud-based commercial solutions, which are offered through MyyShop and entail SaaS solutions that facilitate our business-to-business-to-consumer (B2B2C) business model through helping small and micro merchants, including social media influencers, intelligently build and operate their online businesses, who reciprocally support the continuous growth of our ecosystem. MyyShop provides a cohesive suite of technology-enabled functions and features that cover the operating cycle of small and micro merchants, starting from quick online store creation or account synchronization with online stores on third-party platforms, strict supplier selection and AI-based product recommendation to full-channel logistics services and worry-free after-sales services. It provides a one-stop cross-border e-commerce solution to entry-level merchants, including influencers who wish to monetize their social media traffic;

• Value-added services

• Logistics service

• Ongate logistics service, which entails end-to-end supply chain solutions and overseas warehouse services that holistically support the logistics and fulfillment needs of sellers on DHgate, digitalizing international supply chains; and

• Payment service, which is offered mainly through DHpay to enable sellers and buyers to complete payment securely and conveniently on our marketplace; and

• Marketing service, which is offered through our Yangfan Platform (揚帆平台) primarily to sellers on our marketplace and entails targeted marketing solutions that effectively direct traffic to and increase conversion rate for sellers.

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The following table sets forth our revenue in absolute amount and as a percentage of our total revenue by business lines during the Track Record Period:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Commissions ...... 62,429 53.0 102,808 57.5 113,714 49.3 Value-added services and other services ...... 30,658 26.0 57,305 32.1 116,787 50.7 Logistics service ...... 6,725 5.7 28,996 16.2 83,553 36.2 Ongate...... 3,868 3.3 17,738 9.9 34,014 14.8 Offgate ...... 2,857 2.4 11,258 6.3 49,539 21.5 Payment service ...... 10,856 9.2 9,864 5.5 10,183 4.4 Marketing service ...... 9,941 8.4 14,859 8.3 21,756 9.4 Other services(1) ...... 3,136 2.7 3,586 2.0 1,295 0.6 Online direct sales(2) ..... 24,769 21.0 18,565 10.4 — — Total Revenue ...... 117,856 100.0 178,678 100.0 230,501 100.0

Notes:

2. Our online direct sales ceased operations in 2019. See “— Our Services — Online Direct Sales.”

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The following table sets forth our gross profit and gross profit margin by business lines during the Track Record Period:

For the year ended December 31,

2018 2019 2020

%of %of %of Gross total Gross total Gross total Gross profit gross Gross profit gross Gross profit gross profit margin profit profit margin profit profit margin profit

USD’000 % % USD’000 % % USD’000 % % Commissions ...... 32,073 51.4 62.4 72,726 70.7 74.8 77,327 68.0 73.0 Value-added services and other services ...... 18,312 59.7 35.6 23,003 40.1 23.7 28,648 24.5 27.0 Logistics service ...... 141 2.1 0.3 339 1.2 0.3 1,345 1.6 1.3 Payment service ...... 8,647 79.7 16.8 6,643 67.3 6.8 8,534 83.8 8.1 Marketing service ..... 8,303 83.5 16.1 12,760 85.9 13.1 18,207 83.7 17.2 Other services ...... 1,221 38.9 2.4 3,261 90.9 3.4 562 43.4 0.5 Online direct sales(1)..... 1,049 4.2 2.0 1,441 7.8 1.5 — — — Total Gross Profit ...... 51,434 43.6 100.0 97,170 54.4 100.0 105,975 46.0 100.0

Note:

1. Our online direct sales ceased operations in December 2019. See “— Our Services — Online Direct Sales.”

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The following table sets forth selected key operating metrics of our business:

For the year ended/As of December 31,

2018 2019 2020 Marketplace GMV (USD in million) ...... 1,361.5 1,493.3 1,864.9 App-based GMV ...... 578.8 855.4 1,185.7 Web-based GMV ...... 782.6 638.0 679.1 Number of Registered Buyers ...... 5,728,400 6,917,000 8,326,500 Number of Active Buyers(1) ...... 3,809,300 4,870,200 4,961,300 Cohort Retention Rate (%)(2) Buyers Acquired in 2018 ...... — 20.6 11.7 Buyers Acquired in 2019 ...... — — 19.8 Average GMV Per Active Buyer (USD) Per Active Buyer Acquired in 2018 ..... 229.7 463.8 547.4 Per Active Buyer Acquired in 2019 .... — 206.1 451.0 Per Active Buyer Acquired in 2020 .... — — 273.2 Average Revenue Per Active Buyer (USD)(3) ...... 16.4 21.1 22.9 Number of Average Daily Active Users.... 1,013,500 1,308,100 1,323,500 Number of Registered Sellers ...... 205,600 175,500 171,700 Number of Active Sellers ...... 79,800 92,000 77,700 Average Number of Live Listings (in thousand)(4) ...... 12,255 23,049 25,811 Return on Investment (5) ...... 37.5 43.3 42.4 Customer Acquisition Cost (USD)(6) ...... 9.0 7.0 8.2 Repeat Rate (%)(7)...... 57.5 61.2 65.3 Take Rate (%)(8) ...... 7.8 11.6 11.8 Cloud-based Commercial Solutions Number of Registered Users ...... — — 15,600 Value-added Services Number of Users of DHLink...... 4,900 8,600 16,500 Number of Users of Marketing Service .... 4,300 5,600 6,400 Monetization Rate (%)(9) ...... 14.1 18.5 18.7

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Notes:

1. Active buyers refer to buyers who placed at least one order on our marketplace during the year.

2. Cohort retention rate equals to the number of active buyers acquired in a given prior year that remained active in a given subsequent year as a percentage of the number of active buyers acquired during that prior year.

3. Average revenue per active buyer equals to our commissions divided by the number of active buyers for the same period.

4. The average number of live listings refers to the average of the number of live listings by the end of each month throughout the year.

5. Return on investment equals to GMV in a given year divided by advertising and promotion expenses for the same year.

7. Repeat rate equals to the number of buyers who placed more than one order in a given year divided by the number of active buyers for the same year.

8. Take rate equals to our commissions divided by GMV (with respect to orders for which payment had been received) for the same period.

9. Monetization rate equals to our revenue (excluding revenue generated from Offgate logistics and other services) in a given year divided by GMV (with respect to orders for which payment had been received) for the same year.

We experienced significant growth during the Track Record Period. Our revenue was USD117.9 million, USD178.7 million and USD230.5 million for the years ended December 31, 2018, 2019 and 2020, respectively, representing a CAGR of 39.8%. Our GMV grew from USD1,361.5 million in 2018 to USD1,493.3 million in 2019, and to USD1,864.9 million in 2020, representing a CAGR of 17.0%. The number of active buyers on our marketplace amounted to over 3.8 million, 4.9 million and 5.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. As all buyers on our marketplace transact through our payment services, the number of our payment service users largely corresponds to the number of active buyers on our marketplace. The rapid growth in our GMV and number of active buyers was mainly due to more effective customer conversion and deeper penetration in our existing markets. As a result, our return on investment increased from 37.5 in 2018 to 43.3 in 2019. It however slightly dropped to 42.4 in 2020, primarily due to an increase in our advertising and promotion expenses for the year in furtherance of our marketing efforts. In testament to our customer stickiness, our repeat rate increased from 57.5% in 2018 to 61.2% in 2019, and further to 65.3% in 2020. Further, GMV per active buyer acquired in 2018 increased by 101.9% in the subsequent year and further by 18.0% in the year after. GMV per active buyer acquired in 2019 increased by 118.8% in the subsequent year.

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Our take rate increased from 7.8% in 2018 to 11.6% in 2019, and remained stable at 11.8% in 2020, primarily because we increased our commission rates for products available on our marketplace in 2019.

During the Track Record Period, as part of our efforts to improve the quality of sellers and product listings on our platform, we streamlined our seller base by removing sellers that violated rules of our platform. See “ — Our Global Buyer Network and Broad Merchant Base.” As a result, the number of registered sellers on our marketplace decreased from 205,600 as of December 31, 2018 to 175,500 as of December 31, 2019 and further to 171,700 as of December 31, 2020. Further, the number of active sellers on our marketplace increased from 79,800 as of December 31, 2018 to 92,000 as of December 31, 2019, but dropped to 77,700 as of December 31, 2020. Despite the decrease in the number of sellers, the average numbers of live listings on DHgate increased from approximately 12.3 million in 2018 to approximately 23.0 million in 2019 and further to approximately 25.8 million in 2020. As of the Latest Practicable Date, all the payments arising from transactions on DHgate are completed through DHpay.

Our value-added services also grew rapidly during the Track Record Period, attributable to the improvement in our service offerings and our growing user base. The number of users of DHLink, our logistics business unit, grew from approximately 4,900 in 2018 to 8,600 in 2019, and to 16,500 in 2020, primarily as a result of increased penetration of DHLink among sellers on DHgate, which was in line with the growth of our logistics service. The number of users of marketing service grew from approximately 4,300 in 2018 to 5,600 in 2019, and to 6,400 in 2020. Our monetization rate rapidly increased from 14.1% in 2018 to 18.5% in 2019 primarily as a result of the growth of our value-added services, coupled with its increasing penetration among our sellers, and remained stable at 18.7% in 2020.

Our Business Model

We gather and connect global buyers with sellers primarily located in China through DHgate, our marketplace and MyyShop, our SaaS platform, where information flow, goods flow, and funds flow coalesce. From the side of our buyers, we offer digitalized procurement solutions, affording access to a diversified selection of products. From the sellers’ side, we offer a one-stop distribution solution through the supply chain in cross-border wholesale. Premising upon our ecosystem, we provide a range of value-added services, including logistics service, payment service and marketing service to holistically facilitate cross-border trade. In particular, we leverage our broad

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BUSINESS international distribution network to provide logistics service to sellers and corporate customers, offering end-to-end logistics services to further facilitate global e-commerce. Set forth below is the diagram showing the components of our business model:

Value Propositions to Buyers

We deliver our procurement solutions by providing the following value propositions:

• Easy access to stable supply chain. Our buyers comprise mostly small and micro merchants without access to stable supply chain. Also, they generally lack the resources to bargain for favorable procurement terms, placing them in a relatively vulnerable position when competing against sizable resellers and retailers. Through DHgate, we offer buyers immediate and easy access to a diversified selection of high-quality products at competitive prices in an efficient and worry-free manner.

• Hassle-free online store management solution. Our buyers, such as social media influencers, may lack e-commerce experience to monetize their private traffic. They also generally lack the resources to conduct extensive market research and analysis before making procurement decisions and may not be able to precisely predict the preferences of their customers. Through our large cache of data accumulated from the vast volume of transactions on our marketplace and analytics capabilities, we deploy SaaS solutions to help buyers intelligently make procurement decisions, optimizing their product choices, inventory flows and operational efficiency.

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Value Propositions to Sellers

We are dedicated to empowering our sellers through the global wholesale supply chain by providing the following value propositions:

• One-stop, cross-channel sales service. We offer our sellers tools and services from targeted marketing to after-sale services to streamline the whole cross-border wholesale process and improve the conversion rate by providing superior experience.

• Global buyer base. We enable our sellers to reach active buyers across approximately 223 countries and regions, with a significant presence in the U.S. and Europe. Instead of hoping our buyers can find the goods offered by our sellers, we strive to let the goods “find” our buyers through our comprehensive services set.

• Business intelligence. Utilizing our large cache of operating data, we allow our sellers to get insights into the preferences of our buyers. They can therefore monitor and manage their inventory and adjust their operating strategies accordingly to achieve greater operational efficiency.

Value Propositions to Logistics Service Customers

• Broad international distribution network. Leveraging our position as a leading cross-border e-commerce platform which brings along significant and stable demand for logistics service, we have built an international distribution network by working with a broad range of logistics partners. By aggregating orders from sellers and corporate customers, we have been able to secure lower costs and better terms for international logistics service, in terms of, for instance, obtaining priority in securing cargo space and processing of our parcels and freights during peak seasons, as well as discounts on fees for the vast majority of logistics products we procured for the provision of our logistics service.

• Technology empowerment. Taking advantage of our growth and understanding of sellers, we have made use of big data algorithms to optimize and improve automation of our DHLink system, with a view to empowering sellers with improved user experience. Further, our DHLink system can intelligently recommend logistics options based on delivery time, destinations, transportation mode and seasonality, thereby enhancing efficiency for customers.

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Value Propositions to Logistics and Other Service Providers

We consider our relationship with our service providers mutually beneficial and complementary as illustrated by the following value propositions:

• Efficient allocation of logistics resources. Leveraging the voluminous orders from sellers and corporate customers, coupled with our logistics technologies, our system intelligently matches orders with our pool of logistics partners, making optimal recommendations based on a range of factors. It enhances the logistics efficiency and our logistics partners’ resilience to seasonality by facilitating efficient allocation of resources.

• Sharing business success. With the continuous growth of our business, our service providers can also share our success as we offer them profitable and growing business opportunities brought about by our high-quality user base across the world.

• Continuous optimization of service quality. We accumulate voluminous data in our course of business, from which we can generate operational insights. We constantly provide feedback to our service providers, which allow them to dynamically optimize their business operations based on our feedback to achieve better performance.

OUR SERVICES

Marketplace

Our e-commerce marketplace, DHgate, is the bedrock of our ecosystem, from which our other services radiate. We primarily offer our marketplace service through DHgate. Tapping into our extensive seller network, we offer a wide range of products on our marketplace, and we continually strive to diversify our offering to include categories that appeal to our buyers who are primarily small and micro resellers and end consumers. The numbers of live listings on DHgate as of December 31, 2018, 2019 and 2020 were approximately 21.7 million, 23.3 million and 18.5 million, respectively. For the years ended December 31, 2018, 2019 and 2020, revenue from DHgate accounted for 53.0%, 57.5% and 49.3% of our total revenue, respectively. The decrease in percentage contribution of commissions to our total revenue during the Track Record Period was primarily due to (i) the delay in delivery of some products sold on our marketplace as a result of COVID-19, causing revenue from orders placed on our marketplace in the last two months of 2020 to be generally recognized in 2021 upon delivery of products; (ii) the fact that the commission rate remained steady from 2019 to 2020 as compared with the significant increase from 2018 to 2019; and (iii) the relatively rapid growth in revenue from our logistics service for the year ended December 31, 2020.

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Our buyers and sellers can access our marketplace through DHgate mobile applications and DHgate.com, which are powered by the same back-end infrastructure. Our mobile applications and website both feature an intuitive and image-rich interface designed to attract buyers and allow them to make procurement with ease. We launched DHgate mobile applications in 2011 to enable our users to access our marketplace on the go. Set forth below are the layouts of DHgate’s mobile portal:

Set forth below is the layout of the Buyers’ portal on DHgate.com:

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Leveraging our data assets and analytics capabilities, DHgate intelligently analyzes consumer preferences and makes recommendations, facilitating the procurement process. On DHgate, buyers can easily find systematically organized information and features such as product listings, sales and promotions and personalized recommendations. DHgate allows buyers to filter products by categories, prices, countries or regions, brands and a range of other specifications, tailored to the preferences of their targeted markets.

Upon finishing selecting goods, the buyer may add them to the shopping cart or check out directly. The buyer will be required to provide delivery address and other relevant information if the buyer has not placed an order on DHgate before. The buyer will then have to confirm the accuracy of the order, and submit it through our mobile portal or website. Afterwards, the buyer will receive an electronic order confirmation. We also offer the buyer the option to purchase goods with one click, which eliminates the hassle of filling and confirming addresses as well as other relevant information, significantly increasing the conversion rate. After an order is submitted, a buyer can track their order status in the buyers’ center. The transaction is deemed completed upon proper delivery of the goods purchased. See “ — Our Global Buyer Network and Broad Merchant Base — Customer Services” for details of our return and refund policy. The procurement process is similar to major online retail marketplaces, affording familiar and hassle-free purchasing experience to buyers around the world. Set forth below is the diagram illustrating the process of procuring goods from DHgate:

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The following screenshots demonstrate the steps for procuring goods from DHgate.com and DHgate’s mobile portal, respectively:

DHgate.com

DHgate’s mobile portal

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On the seller side, DHgate offers a digitalized one-stop distribution solution, by allowing sellers to tap into our global buyer base and supply chain network. Set forth below is the layout of the sellers’ portal on DHgate.com:

DHgate provides a simple and streamlined seller onboarding process, which can typically be completed within three to five working days. Sellers can complete registration with us by providing information such as identification card number, address, phone number, email address. Prior to listing their products on our website, sellers are required to complete verification by submitting an electronic form of business license, D-U-N-S Number and other relevant documents. DHgate offers simple and clear templates for sellers to furnish product images and information. It features multi-lingual layouts which enable sellers to reach their target buyers in their native languages. In addition, on sellers’ portal, sellers may access an array of sales management functions and features, including order status monitoring, real-time data analysis, as well as value-added services provided by us or third parties.

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The following screenshots show the top five categories of products on DHgate in terms of number of live listings as of December 31, 2020:

Apparel Home & Garden

Jewelry Sports & Outdoors

Shoes & Accessories

Pricing. We collect commission fees from buyers upon successful transactions. We have sole discretion to decide the fee rates, which generally range from 5.5% to 21.5% of the sale price, based on factors including transaction volume and product category. Among others, we generally charge lower commission rates for bulk purchases and standardized products, such as branded goods.

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Cloud-based Commercial Solutions

Our deep industry insight into the cross-border e-commerce industry enables us to understand the dilemma faced by small and micro merchants when they want to start their businesses online. Leveraging our strong technology capabilities, we developed and launched MyyShop, an AI-powered SaaS solution, aimed at helping small and micro merchants to build and operate their businesses, be it an Instagram influencer who intends to capitalize her private traffic, a craftsman who seeks to sell his artisan goods but without a hint of how to run a business online, or an eBay seller who needs help to optimize his business operations, especially in terms of supply chain management. Since its launch in August 2020, MyyShop has been rapidly adopted across the globe, with the number of its registered users reaching 15,600 as of December 31, 2020.

MyyShop offers a cohesive suite of technology-enabled functions and features that cater to users’ needs from front-end operation to back-end management, ranging from precision marketing to after-sale services management that help users navigate their online businesses. On the front-end, MyyShop allows users to monetize their personal traffic, such as followers on their social media accounts by channeling them to users’ online stores. On the back-end, MyyShop enables users to set up online stores that operate independently from centralized e-commerce marketplaces, supporting a range of operating functions including supply chain management, fulfilment, order management and payment.

MyyShop represents our decentralized approach to digital cross-border e-commerce, which instead of gathering sellers and buyers through a centralized marketplace, connects them directly to facilitate the whole process of B2B2C. Myyshop allows us to strengthen and grow our buyer network, which in turn fuels the growth of our ecosystem. Myyshop empowers users by (i) enabling online store creation, as well as account synchronization with online stores on third-party platforms, thereby facilitating operation and management of users’ online businesses, and (ii) providing users with advanced functions, including AI-powered product recommendation and drop shipping service for the operation of their stores with MyyShop or third-party platforms. Below is a diagram illustrating the MyyShop platform:

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MyyShop allows its users to open their online stores with minimal efforts or link to their eBay or Shopify store and manage them with ease. Through MyyShop, their registered online stores seamlessly synchronize product information including product listings, inventory level, shipping time and pricing information. MyyShop also offers a suite of business management tools to help users optimize their procurement and distribution chain. Among others, MyyShop offers AI-powered smart product recommendation service to help identify products with potential for high profit margin and better sales results.

MyyShop also offers end-to-end dropshipping service, placing end customers’ orders directly with sellers, who then arrange for delivery of their products directly to the end customers via our distribution network. Connecting directly with sellers, MyyShop ensures stable supply of a wide range of high-quality products at competitive prices, while saving MyyShop users costs of maintaining inventories and arranging for order logistics. MyyShop also provides a worry-free return, refund and exchange policy for users. We will facilitate an exchange or refund if there is any product quality issue.

MyyShop can currently be accessed through MyyShop.com, which comes in a standard desktop version and a mobile version. Set forth below is the layout of MyyShop.com:

Case Study

User A is located in Israel, and has started operating his eBay store selling electronic products since February 2011. He published listings of electronic products, such as smart camera selected from MyyShop’s products pool on his eBay store for sale. He made use of MyyShop’s dropshipping service, which eliminates costs of maintaining inventories and arranging for order logistics. Further, with MyyShop’s real-time update of information including products particulars, prices, inventory, orders, and logistics status, he was able to devote more resources to store operation and customer management.

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Pricing. We launched MyyShop in August 2020, and with a view to attracting more users, we had provided users with free trial during the initial launch period. MyyShop is currently at the stage of trial commercialization and is expected to be fully commercialized by the end of 2021. We will charge our users tiered subscription fees based on the type of service plan on an annual, a quarterly or a monthly basis. Each plan offers a service package that targets at specific group of users. We had generated negligible revenue during the year ended December 31, 2020 by charging users for creating their online stores on MyyShop, which was recorded in the revenue from other services.

Logistics Service

Cost-efficiency and timely delivery of orders are essential to cross-border e-commerce business. Therefore, we have developed and integrated our logistics service into DHLink, our cross-border logistics business unit, to address the high-cost and inefficiency prevalent in cross-border e-commerce business. We do not engage in the actual logistics work, but instead leverage our wealth of logistics resources to secure a diversified range of cost-effective logistics products from our logistics partners through DHLink to enable one-stop logistics and supply chain solutions. For the year ended December 31, 2020, DHLink processed an average of approximately 26,800 orders per PRC working day, covering approximately 223 countries and regions around the globe.

Through DHLink, we provide (i) Ongate logistics service to DHgate sellers, and (ii) Offgate logistics service primarily to corporate customers in China which aggregate local demands for international logistics service, allowing them to tap into our global distribution network. On one hand, our provision of Ongate logistics service rides on our data analytics capabilities, with our DHLink system intelligently matching Ongate logistics service customers’ orders with a pool of resources from logistics partners, and making recommendations according to, among others, products types, package weight and size, distance and time requirement, thereby enhancing efficiency and facilitating the process from placing order to delivery through door-to-door delivery service. On the other hand, our Offgate logistics service addresses logistics needs of corporate customers by allowing them access to our pool of diversified and cost effective logistics products.

Our ability to aggregate a huge volume of parcels and freights from our Ongate and Offgate logistics service customers allows us to secure better terms with logistics partners. For instance, in 2020, we were able to secure discounts of approximately 3% to 4% off the industry average prices of the vast majority of logistics products we procured for the provision of our logistics service. As we have been able to secure more favorable terms, our scale advantage allows us to offer cost-efficient logistics service to both our Ongate and Offgate logistics service customers, thereby creating synergies among our two lines of logistics service. Further, for the year ended December 31, 2020, eight of our logistics partners which provided us with a diversified range of

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BUSINESS cost-effective logistics products were also corporate customers which procured Offgate logistics service from us. Such close collaborations with our logistics partners allow us to provide a rich variety of cost-effective logistics options to our logistics service customers.

The table below sets forth comparison of the types of logistics service we offer:

Ongate Logistics Service Offgate Logistics Service Target Customers ... DHgate sellers Corporate customers (1)

Major Services We We combine a variety of logistics resources and We collaborate with logistics partners to provide Provided ...... products to provide (i) DH speed parcel, (ii) (i) postal parcel service and (ii) commercial DH standard parcel, (iii) DH economical parcel service. See“—Offgate Logistics parcel, (iv) fulfilment by DHgate, and (v) Service.” overseas warehouse service. See “ — Ongate Logistics Service.”

Business Model ..... We handle the delivery and fulfillment of orders We allow corporate customers which aggregate for DHgate sellers based on the types, value, demands for international logistics service from and destinations of the orders local shippers in China to tap into our global distribution network

Order Placement .... Orders are placed via DHLink system Orders are placed on DHLink’s assigned accounts with logistics partners

Rights and obligations. We, among others, (i) advise Ongate sellers as to We, among others, (i) advise corporate customers optimal logistics options; (ii) arrange as to optimal logistics options; (ii) assign to international logistics services provided by our them accounts with our logistics partners on logistics partners to deliver orders from which they may place orders, and (iii) are DHgate sellers to international destinations; responsible for losses incurred in the course of and (iii) are responsible for losses incurred in transit and storage. Corporate customers are to the course of transit and storage. DHgate provide us with, and be responsible for the sellers are to provide us with, and be truthfulness and accuracy of details of the responsible for the truthfulness and accuracy of senders, recipients and goods to be delivered. details of the senders, recipients and goods to be delivered.

Pricing ...... Price-plus pricing

Contractual We enter into the standard DHLink user We enter into separate agreements with corporate Arrangement ..... agreement with Ongate logistics service customers customers

Note:

1. During the Track Record Period, apart from corporate customers, Offgate logistics service had also been provided to non-DHgate sellers, being sellers on third-party platforms, which contributed 36.1%, 7.0% and 1.0% of our revenue from logistics service for the years ended December 31, 2018, 2019 and 2020, respectively. Logistics service and the terms thereof provided to non-DHgate sellers, being sellers on third-party platforms, are substantially the same as those offered to DHgate sellers.

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The following table sets forth a breakdown of our revenue from logistics service during the Track Record Period:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Ongate logistics service.... 3,868 57.5 17,738 61.2 34,014 40.7 Offgate logistics service(1) . 2,857 42.5 11,258 38.8 49,539 59.3 Total Revenue from Logistics Service...... 6,725 100.0 28,996 100.0 83,553 100.0

Note:

1. During the Track Record Period, apart from corporate customers, Offgate logistics service had also been provided to non-DHgate sellers, being sellers on third-party platforms. Revenue from providing Offgate logistics service to non-DHgate sellers accounted for 36.1%, 7.0% and 1.0% of our revenue from logistics service for the years ended December 31, 2018, 2019 and 2020, respectively.

Ongate Logistics Service

Our Ongate logistics service primarily serves to enhance transaction experience of sellers and buyers on DHgate, offering them a seamless and efficient flow of goods with reduced costs and time spent on fulfilment of orders. Customers of our Ongate service are DHgate sellers which are primarily small and micro merchants, including brand owners, factories and trade agents in China.

We have adopted an asset-light model to maximize the scalability of our distribution network. As of December 31, 2020, we cooperated with over 90 domestic and approximately ten international logistics partners to offer Ongate logistics service, collectively covering approximately 223 countries and regions. Logistics services and products vary in terms of size, weight, nature, timing and routing of the parcels and freights. To satisfy the diversifying needs of DHgate sellers, we procure a wide variety of logistics products at favorable terms from our logistics partners. Our logistics partners typically offer us a discounted fee rate as compared to that offered to individual sellers in light of our larger and stabler transaction volume. We carefully screen and continuously monitor our logistics partners to ensure they continuously provide high-quality service. We also cooperate with over 40 domestic fulfillment service providers to provide service including packaging, sorting and processing, aimed at further expediting the delivery process. As of December 31, 2020, all of our Ongate logistics partners were Independent Third Parties.

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For the years ended December 31, 2018, 2019 and 2020, approximately 6.1%, 9.4% and 21.3% of the total active sellers on DHgate used logistics services on DHLink, respectively. Currently, DHgate sellers are allowed to opt for using DHLink or logistics service provided by third-party service providers. We believe the penetration will continue to rise as DHLink increasingly matures, and with the ability to offer even more favorable terms as a result of the increase in volume of parcels and freights. For the years ended December 31, 2018, 2019 and 2020, revenue from Ongate logistics service accounted for 3.3%, 9.9% and 14.8% of our total revenue, respectively. During the same periods, 3.2%, 12.1% and 20.8% of the orders on DHgate were delivered via DHLink, respectively, demonstrating increasing penetration of our Ongate logistics service on DHgate.

Set forth below is the illustration of our Ongate logistics service in terms of its (i) information flow, (ii) goods flow, and (iii) fund flow:

• Information flow. Our Ongate logistics service customers select logistics services and place orders on DHLink system. They receive shipping information and print labels with unique tracking numbers and barcodes which, together with API connections with third-party tracking data providers available on our DHLink system, enable tracking of the status of each individual parcel throughout the entire collection, sorting and delivery process. By allowing our Ongate logistics service customers to tap into our data-driven logistics service network, DHLink system improves their operational efficiency by enhancing the speed of order processing and reducing errors.

• Goods flow. When placing orders on our DHLink system, our Ongate logistics service customers may use collection services provided by our logistics partners which will arrange for a courier to collect the parcels and freights. Upon arrival of parcels and freights from various locations in China at warehouses operated by our logistics partners, our logistics partners are then responsible for inspecting, measuring, weighing, storing, and preparing for customs clearance for, and sorting such incoming parcels and freights. Where procedures including inspection and measurement are completed, our logistics partners pack and dispatch parcels to different international locations using their international distribution networks. Where our Ongate logistics service customers use our Fulfilment by DHgate and overseas warehouse services, their products will be sent to the warehouses operated by our logistics partners in advance, and will be sorted, packed and delivered to the end customers upon receiving orders from buyers. Once the recipients acknowledge receipt of the parcels and freights, the logistics process is completed.

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Below is a diagram illustrating the goods flow of Ongate logistics service:

• Fund flow. Ongate logistics service customers are required to maintain pre-paid accounts from which we deduct logistics service fees on a per order basis, or on a monthly basis. As for payments to our logistics partners, we are typically charged according to the weight and measurements of the parcels and freights assessed by our logistics partners and the fees are calculated based on the agreed fees scale. Based on our agreements with logistics partners, we typically pay on credit term of up to 30 days, and if otherwise agreed, we also pay on other terms, including on credit terms of over 30 days and upon placing of orders.

Set forth below is a screenshot of the layout for Ongate logistics service customers of our DHLink system:

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Leveraging our global network of logistics partners, DHLink combines a variety of logistics resources and products to provide our Ongate logistics service customers with full-link logistics service, comprising (i) DH speed parcel, (ii) DH standard parcel, (iii) DH economical parcel, (iv) fulfilment by DHgate, and (v) overseas warehouse service.

DH speed parcel (極速寶)

We work with our logistics partners to provide express logistics service to our Ongate logistics service customers, offering direct end-to-end single order shipment from sellers’ warehouses in China to overseas end-receivers. Orders of DH speed parcel are typically delivered within approximately ten working days. As it provides timely delivery and compelling customer experience, sellers usually use DH speed parcel for delivering products of higher value.

Set forth below is the layout of DH speed parcel:

DH standard parcel (準時寶)

We work with our logistics partners to provide standard logistics service to our Ongate logistics service customers, offering direct end-to-end single order shipment from sellers’ warehouses in China to overseas end-receivers. Orders of DH standard parcel are typically delivered within approximately 20 working days. DH standard parcel is designed to provide a standardized logistics service. Whilst offering affordable and reliable one-stop logistics service, fees charged for DH standard parcel are approximately 20% lower than that for DH speed parcel.

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Set forth below is the layout of DH standard parcel:

DH economical parcel (特惠寶)

We work with our logistics partners, particularly postal companies, to provide economical logistics service to our Ongate logistics service customers, offering direct end-to-end single order delivery from sellers’ warehouses in China to overseas end-receivers. Orders of DH economical parcel are typically delivered within approximately 30 working days. DH economical parcel is a cost-saving option for our customers, as its fee is generally approximately 16% lower than that for DH standard parcel.

Set forth below is the layout of DH economical parcel:

Fulfilment by DHgate

We work with our logistics partners to provide fulfilment service to our Ongate logistics service customers, who may deploy and store their inventories in our partners’ domestic warehouses in advance. Our logistics partners will then fulfill the orders upon receiving

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BUSINESS confirmation by completing the steps including collecting, sorting, packing and shipping, thereby providing our customers with operational efficiency and improved user experience in terms of reduced delivery times for buyers and hassle-free delivery for sellers.

Set forth below is the layout of fulfilment by DHgate:

Overseas Warehouse Service

We provide overseas warehouse service to our Ongate logistics service customers in order to offer buyers more efficient and faster delivery at a lower cost. By allowing Ongate logistics service customers to display and store their inventories in our partners’ overseas warehouses in advance, we afford them the flexibility to deliver the purchased products directly from overseas warehouses. With the added flexibility, Ongate logistics customers have access to a wider range of logistics options in terms of speed and mode of delivery, while consumers’ orders can be timely fulfilled. As of the Latest Practicable Date, we cooperated with 11 overseas warehouses located in the U.S. and Europe.

Set forth below is a diagram illustrating the process of using our overseas warehouse service:

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We do not own or lease any property for operating our overseas warehouse service as we believe our asset-light business model allows us to be more flexibly expandable during the rapid-growing stage. We choose warehouse service providers we cooperate with after taking into consideration factors including among others, industry reputation and service quality.

Set forth below are pictures of an overseas warehouse in Poland:

We enter into the standard DHLink user agreements with our Ongate logistics service customers which cover, among other things, registration of DHLink accounts and users’ code of conduct. For registering DHLink accounts, Ongate logistics service customers have to provide us with information including their identification document numbers and contact details.

Our agreements with Ongate logistics partners typically have a term of one year, with an automatic extension of one year where there is no disagreement from either party. We are typically charged according to the weight and measurements of the parcels and freights assessed by our logistics partners and the fees are calculated based on the agreed fees scale. We commit to a minimum monthly or yearly purchase amount to certain logistics partners, failure of which would require us to compensate our logistics partners for their losses. During the Track Record Period, we had not breached any of such minimum purchase commitments. Besides, our logistics partners are typically required to compensate us for damages to, delays in delivery and losses of parcels and freights in the course of their possession.

Pricing. We use price-plus pricing to determine the fees we charge to DHgate sellers for Ongate logistics service with a mark-up that generally ranged from 1% to 4% during the Track Record Period. We charge sellers logistics service fees when they choose to deliver their goods through our logistics partners based on factors including but not limited to the specifications of the packages (such as weight, size and packaging), time requirements and distance.

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Offgate Logistics Service

During the Track Record Period, we provided Offgate logistics service primarily to corporate customers which aggregate demands for international logistics service from local shippers in China. We also provided Offgate logistics service to non-DHgates sellers, being sellers from third-party platforms. Our Offgate logistics service allows corporate customers and non-DHgate sellers to tap into our global distribution network, offering them an efficient logistics experience. Revenue from Offgate logistics service accounted for 2.4%, 6.3% and 21.5% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively. The increase in percentage contribution of revenue from our Offgate logistics service to our total revenue in 2020 was primarily attributable to (i) the overall growth in the logistics service market as well as our heightened efforts in developing Offgate logistics service during the Track Record Period; (ii) our ability in maintaining stable supply of services to our customers amidst the COVID-19 pandemic as a result of our scale; and (iii) market consolidation as a result of COVID-19, which drove a considerable amount of less sizable players out of the market because customers tended to choose logistics service providers with stronger fulfilment capabilities.

While corporate customers aggregate demands for international logistics service from local shippers in China, they typically only possess limited logistics resources and thus are only able to secure a confined variety of logistics products. Our capabilities in providing a wide variety of logistics service options in terms of different weight bands, speed, and routing complement corporate customers in serving the cross-border logistics needs from local shippers in China. We collaborated with approximately 30 of our logistics partners to provide Offgate logistics service during the Track Record Period. Further, the added volume of parcels and freights contributed by Offgate logistics service allows us to secure better terms with international logistics partners, thereby creating synergies with Ongate logistics service and in turn benefitting sellers on our marketplace.

We collaborate with logistics partners to provide postal parcel service and commercial parcel service to corporate customers. By allowing corporate customers to place orders at our assigned accounts with logistics partners, we make available to our corporate customers a wide selection of international logistics service, thereby allowing our corporate customers to tap into our international distribution network. We enter into separate agreements with corporate customers and logistics partners, and are primarily responsible for, among others, the provision of logistics service and the procurement of logistics products. We, among others, determine the pricing of logistics services, advise corporate customers as to the optimal logistics options and are responsible for claims arising from, among others, delay, change and loss of goods in transit and storage. Revenue from providing Offgate logistics services to corporate customers accounted for 0.4%, 5.2% and 21.1% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively.

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By collaborating with our logistics partners, we primarily provide the following services to our corporate customers:

• Postal parcel service, which primarily comprises international small-packet postal service from our logistics partners, particularly postal companies, mainly for delivering parcels and freights that weigh 0.1 to 2 kg from different origins in China to international destinations within 20 days or 30 days. It uses postal clearance, a mode of clearance for individuals, at the port of origin and the port of destination.

• Commercial parcel service, which primarily comprises international small-packet commercial services from our logistics partners for delivering parcels and freights that weigh 0.5 to 100 kg from different origins in China to international destinations within five days or ten days. It uses commercial clearance, a faster but more stringent mode of clearance, at the port of origin and the port of destination.

In contrast to our Ongate logistics service, which targets at a vast base of sellers, our Offgate logistics service targets at corporate customers with extensive local reach. Started in 2018, we were at a relatively early stage of developing our Offgate logistics service, the number of corporate customers increased rapidly from approximately ten in 2018 to approximately 23 in 2019 and further to approximately 47 in 2020, alongside the surge in our revenue from Offgate logistics service.

Some of our corporate customers possess niche local logistics resources which allow them to secure logistics products with specific weight ranges, timing and routing. During the Track Record Period, we procured these logistics products to satisfy the diversifying needs of our Ongate logistics service customers. See “— Our Suppliers and Services Providers — Overlapping Customers and Suppliers” for details of the dual roles played by our corporate customers in the logistics service value chain and our relationship with them.

Set forth below is the illustration of our Offgate logistics service in terms of its (i) information flow, (ii) goods flow, and (iii) fund flow:

• Information flow. The provision of our Offgate logistics service starts with our corporate customers’ communications with our dedicated business development teams and selection of the relevant logistics service. We then assign accounts with the relevant logistics partners to the corporate customers, who may then place orders on such accounts. Upon receiving shipping information including details of recipients, our corporate customers receive and print shipping labels with unique tracking numbers and barcodes created directly by our logistics partners.

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• Goods flow. Our corporate customers consolidate parcels and freights at collection stations. When parcels and freights from various locations in China arrive at warehouses operated by our logistics partners, our logistics partners are then responsible for inspecting, measuring, weighing, storing, and preparing for customs clearance for, and sorting such incoming parcels and freights. Our logistics partners then pack and dispatch parcels to different international locations by utilizing their international distribution networks. Once the recipients acknowledge receipt of the parcels and freights, the logistics process is completed.

The diagram below illustrates the goods flow of our Offgate logistics service:

• Fund flow. We typically provide corporate customers with credit terms of up to 30 days. Other typical payment mechanisms include (i) transfer of payment from corporate customers to us based on the quantity of parcels and freights dispatched on a weekly basis and (ii) corporate customers’ maintaining pre-paid accounts with us from which we deduct logistics service fees based on the quantity of parcels and freights dispatched on a daily basis. As for payments to our logistics partners, we are typically charged on a weekly basis according to the weight and measurements of the parcels and freights assessed by our logistics partners and the fees are calculated based on the agreed fees scale. Based on our agreements with logistics partners, we typically pay on credit term of up to 30 days, and if otherwise agreed, we also pay on other terms, including on credit terms of over 30 days and upon placing of orders.

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The agreements we enter into with corporate customers with respect to our Offgate logistics service typically have a term of one year to two years, with an automatic extension of one year where there is no disagreement from either party. The agreements generally provide that our corporate customers are responsible for, among other things, providing us with information including details of the senders and recipients, whereas we are responsible for arranging, among other things, dispatch of parcels and freights from the warehouses to international destinations. We are also responsible for damages to, delays in delivery and losses of parcels and freights in the course of logistics partners’ possession. Certain corporate customers are committed to a minimum daily or monthly purchase amount or quantity of orders. During the Track Record Period, there were no instances where our corporate customers failed to fulfill such minimum purchase amounts or quantity of orders.

We procure logistics products for Offgate logistics service from some of our Ongate logistics partners. We only enter into one set of agreements with each logistics partner for the procurement of logistics products for both Ongate and Offgate logistics service. The key terms of our agreements with these logistics partners were largely similar to those with our other logistics partners. As of December 31, 2020, all of our Offgate logistics partners were Independent Third Parties.

Pricing. Similar to our Ongate logistics services, we use price-plus pricing, with mark-ups that typically range from 0.01% to 1.5%, to determine the fees we charge to corporate customers for our Offgate logistics service. We charge corporate customers logistics service fees when they choose to deliver their goods through our logistics partners based on factors including but not limited to the specifications of the packages (such as weight, size and packaging), time requirements and distance.

Offgate Logistics Service to non-DHgate Sellers

During the Track Record period, we also offered logistics service to non-DHgate sellers, who are sellers on third-party platforms. Revenue from providing Offgate logistics service to non-DHgate sellers accounted for 2.1%, 1.1% and 0.4% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively. For the years ended December 31, 2018, 2019 and 2020, we had provided Offgate logistics service to approximately 700, 610, and 990 non-DHgate sellers, respectively.

Logistics service provided to them is substantially the same as that offered to DHgate sellers, comprising DH speed parcel, DH standard parcel, and DH economical parcel. Non-DHgate sellers also place their order on DHLink system. Non-DHgate sellers use the same service interface, and enter into the same set of agreement as DHgate sellers. They are also charged on a price-plus pricing basis.

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Payment Service

To enable buyers and sellers to transact securely and conveniently on our platforms, we launched DHpay, a cross-border payment solution that is neatly integrated into our marketplace. We collaborate with licensed payment service providers and banks to provide cross-border payment settlement and money changing services. As of the Latest Practicable Date, according to the Special Counsels and the PRC Legal Advisor, on the basis that we have engaged properly licensed third party payment service providers and banks to provide relevant fund settlement, money changing and distribution services, we are not required to possess any licenses and permits for the operation of our payment business. DHpay aggregates a wide array of payment channels and facilitates the channel of funds from buyers to sellers. By collaborating with banks that provide money changing services, we also allow buyers to pay in currencies other than USD. As of December 31, 2020, we were able to offer our buyers and sellers from approximately 223 countries and regions 29 payment methods including credit cards, e-wallet and online direct transfer, covering all major currencies. For the years ended December 31, 2018, 2019 and 2020, revenue from our payment service accounted for 9.2%, 5.5% and 4.4% of our total revenue, respectively.

Set forth below is a diagram illustrating the flow of funds:

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Pricing. We typically charge sellers a service fee of 1.0% of the transaction amount when sellers withdraw their funds to their onshore or offshore bank accounts. Further, with respect to transactions in currencies other than USD on our marketplace and withdrawal of funds by sellers in their local currencies, we typically generate currency exchange income, being the difference between the exchange rate charged by the bank that provide money changing service to buyers and that to us.

We engage third party payment service providers and banks for services including payment aggregation, money changing, and fund remittance services. In particular, for the remittance of transaction funds from our overseas account with settlement bank to sellers, we engage MSO licensed service providers in Hong Kong to (i) receive the transaction funds from our overseas account with settlement bank, and (ii) remit the transaction funds to sellers’ accounts in the PRC. During the Track Record Period, we arranged for the transfer of transaction funds directly from our overseas bank account to our Hong Kong bank account. During the same period, we also directed transaction funds to sellers’ accounts in the PRC through service providers that did not possess the required license. We have since engaged licensed service providers for the relevant services. See “— Legal Proceedings and Non-Compliance — Non-Compliance — Hong Kong.”

We cooperate with internet security service providers to achieve high stability of payment systems in complex environments. We also work with transaction risk management providers to enhance transaction security and reduce fraud risks. DHpay meets PCI DSS standard, a high international standard for payment security, which is mandated by the Payment Card Industry Security Standards Council.

Offgate Payment Service

During the Track Record Period, we also provided Offgate payment service to third-party payment aggregators that aggregate cross-border payment needs from local sellers. We allow non-DHgate sellers referred by these payment aggregators to tap into the payment channels of DHpay, facilitating cross-border payment transactions. The flow of funds under Offgate service is largely similar to that offered to buyers and sellers on our marketplace. We typically charge payment aggregators 1.4% to 3.2% of the transaction amounts. For the years ended December 31, 2018, 2019 and 2020, the transaction amounts processed through Offgate service were approximately USD180.8 million, USD19.8 million and USD0.8 million, respectively.

Whilst we adopt stringent onboarding verification procedures against aggregators and require them to apply the same against their sellers, as our Offgate payment service is provided to payment aggregators, we have limited control over their verification procedures and transactions processed. Considering the risks associated therewith, we have ceased our Offgate payment service operations since April 2020. Revenue from Offgate payment service amounted to approximately

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USD4.5 million, USD0.6 million and USD31,000 for the years ended December 31, 2018, 2019 and 2020, accounting for 3.8%, 0.3% and 0.0% of our total revenue during the same periods, respectively.

Marketing Service

We offer our sellers various marketing options via our Yangfan Platform (揚帆平台), which enable them to effectively promote their stores as well as their products and increase their conversion rate. For the years ended December 31, 2018, 2019 and 2020, approximately 4,300, 5,600 and 6,400 sellers used our marketing service, respectively, representing 5.3%, 6.1% and 8.3% of the active sellers on our market place. Capitalizing on our large buyer base and big data analytics capacities, we are able to provide our sellers with technology-enabled marketing service on our marketplace and third-party channels including, among others:

• Display marketing service. By purchasing display marketing service, sellers can display their products on the right side of the category list, which significantly enables more exposure for the products displayed. We charge sellers based on the period of time the products have been displayed.

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• Search results optimization service. Our search results optimization service places products in specific positions in certain high-traffic search results. We charge sellers for the number of clicks of such optimized search results.

• CPS-based promotion service. Through CPS-based promotion service, we precisely and efficiently direct traffic to our sellers as we charge sellers 3% to 60% of the purchase amount through third-party advertising unions as commission fees. Sellers who pay a higher rate will receive more traffic and be able to use exclusive ad spaces.

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• Offsite advertising management. Through cooperation with marketing service providers, such as search engines and social media platforms, we help our sellers place advertisement in their affiliated websites or apps to extend their online presence beyond DHgate and reach more buyers. This service is currently at the stage of optimization and we plan to start charging our sellers through cost-plus pricing in the second half of 2022.

Pricing. We charge sellers fixed annual subscription fees for access to our marketing service based on the tier of subscription — Gold Camel, Silver Camel, and Bronze Camel, each of which comprises different package of services, with fixed annual subscription fees that range from approximately RMB10,000 to RMB30,000. Sellers may then select add-on services based on their needs, for which sellers are charged on the basis as stated above on top of the annual subscription fees.

“Glocalization” (全球本土化)

We have introduced the “Glocalization” initiative, enabling our buyers from diverse markets to benefit from our global supply chain network. We have a dedicated Glocalization team to spearhead and coordinate internal resources to expand and develop our foreign presence. In our target markets, we capitalize on digital trading centers (“DTCs”) to allow buyers to enjoy all-around local procurement services including inspecting product samples, local express delivery and access to timely customer support.

As part of our overseas warehouse service offering, we also provide DTC services in selected overseas warehouses. DTCs mainly provide three types of value-added services to our buyers, namely (i) allowing MSMEs to hold webinars or live-streaming sessions to showcase and sell products directly from the DTCs and arrange delivery immediately upon receiving orders, (ii) providing buyers with after-sales and miscellaneous repair services, and (iii) providing display of products for buyers’ physical inspection. See “— Logistics Service — Ongate Logistics Service — Overseas Warehouse Service.”

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Set forth below are pictures of our first DTC, which was set up in the San Francisco Bay Area in July 2020:

As of the Latest Practicable Date, we had set up three DTCs in the U.S.. Our Glocalization initiative provides local buyers with an easy, risk-free process and highly optimized experience compared to traditional cross-border trade. Furthermore, as we expand our overseas reach through continuously improving infrastructure, we are able to facilitate the global promulgation of our solutions and services, catering to the needs of small and medium buyers, and social commerce influencers.

Other Services

During the Track Record Period, we were engaged by local governments in the PRC to participate in one-off collaborative projects, where we constructed e-commerce platforms for local MSMEs to facilitate cross-border trading. These platforms can be connected to databases of international cross-border e-commerce platforms, and provide MSMEs with access to our wealth of value-added services, including logistics service and payment service. For the years ended December 31, 2018, 2019 and 2020, we obtained three, seven and two collaborative projects with local governments in the PRC, respectively, the duration of which generally spanned from a few months to one year. Revenue generated from other services contributed to 2.7%, 2.0% and 0.6% of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively. We have ceased to take on new projects and all of our existing projects are expected to finish by the end of 2021.

Pursuant to our agreements with local governments in the PRC, we are required to, among others, (i) build e-commerce platforms to agreed specifications, and (ii) recruit and provide trainings to local MSMEs. We price our service on a case-by-case basis, taking into account factors including (i) costs and complexity of each project, (ii) targeted products type and its export market, and (iii) local circumstances including financial conditions of the local governments.

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Online Direct Sales

Leveraging our broad seller network and supply chain capabilities, we launched DHselect, our direct sales platform. We source quality products from suppliers and sell them directly to our buyers on DHselect. For the years ended December 31, 2018 and 2019, revenue generated from DHselect accounted for 21.0% and 10.4% of our total revenue, respectively. We ceased operation of DHselect in 2019 due to our strategic focus on wholesale platform and its value-added services, which are more in line with our asset-light business model.

OUR GLOBAL BUYER NETWORK AND BROAD MERCHANT BASE

Our extensive global buyer network and broad merchant base are the core building blocks of our business, which enable us to provide one-stop distribution solutions through the supply chain in cross-border wholesale.

Our buyer network

Our buyers comprise primarily small and micro resellers and end consumers. Resellers include online and offline retailers, wholesalers, and consumer-turned resellers. We primarily focus on resellers, who tend to have higher stickiness and repeated purchases. Resellers also typically have higher concerns over product quality and safety, and demand for value-added services including product selection, and sampling, which provides us with more opportunities to offer one-stop solutions and enhance procurement experience. We consider our ability to attract and retain a global buyer base the foundation of our business operations. As of December 31, 2020, buyers making purchases on our marketplace covered approximately 223 countries and regions, with main footprints in the U.S. and Europe.

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The following table sets forth the geographical distribution of our active buyers for the years ended December 31, 2018, 2019 and 2020:

For the year ended December 31,

2018 2019 2020

%%% The U.S...... 52.5 46.0 48.0 United Kingdom ...... 6.4 7.8 9.0 France ...... 8.1 12.0 9.5 Canada ...... 4.3 4.2 4.3 Spain...... 5.0 5.6 5.2 Others ...... 23.6 24.5 24.0 Total ...... 100.0 100.0 100.0

The number of our registered buyers increased from over 5.7 million to 6.9 million and to 8.3 million for the years ended December 31, 2018, 2019 and 2020, respectively. The number of active buyers on our marketplace was approximately 3.8 million, 4.9 million and 5.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. Orders placed by repeat buyers accounted for approximately 90.8%, 90.6% and 90.9% of our total GMV for 2018, 2019 and 2020, respectively. Further, by leveraging our data and algorithms, we achieved a high cohort retention rate during the Track Record Period. Approximately 20.6% and 11.7% of buyers we acquired in 2018 remained active buyers in 2019 and 2020, respectively. Approximately 19.8% of the buyers we acquired in 2019 remained active buyers in 2020. For the years ended December 31, 2018, 2019 and 2020, the average GMV per order on our marketplace amounted to approximately USD77.0, USD63.6 and USD82.1, respectively.

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The diagram below illustrates the geographical distribution of our global buyer network:

During the Track Record Period, buyers in the Americas and Europe contributed the majority of our GMV. The table below sets forth our GMV by geographical locations of buyers for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Americas ...... 888,542.5 65.3 923,882.4 61.9 1,244,543.6 66.7 Europe ...... 357,988.3 26.3 471,887.7 31.6 509,040.4 27.3 Other countries/regions(1) .... 114,929.2 8.4 97,595.1 6.5 111,266.7 6.0 Total GMV...... 1,361,459.9 100.0 1,493,365.2 100.0 1,864,850.6 100.0

Note:

(1) Other countries/regions include Asia, Oceania and Africa.

Our seller base

Our sellers consist primarily of brand owners, factories and trade agents mainly located in the eastern and southern parts of China. The number of registered sellers was over 205,600, 175,500 and 171,700 for the years ended December 31, 2018, 2019, 2020, respectively. The number of active sellers on our marketplace was over 79,800, 92,000 and 77,700 for the years ended

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December 31, 2018, 2019 and 2020, respectively. We adopt a set of stringent rules with respect to conducts of sellers on our platform and continuously monitor their compliance to such rules. Among others, sellers on our platform need to abide by rules with respect to products sold, protection of third-party intellectual property rights, and usage of accounts. During the Track Record Period, as part of our efforts to improve the quality of sellers and product listings on our platform, we streamlined our seller base by removing sellers who violated the rules of our platform.

We are still at a relative early stage of providing value-added services to sellers and had been able to convert over 4,900, 8,600 and 16,500 sellers, and 4,300, 5,600 and 6,400 sellers, who had free access to our marketplace to paid users of our logistics service and marketing service, for the years ended December 31, 2018, 2019, 2020, respectively. The diagram below illustrates the geographical distribution of our sellers in China:

Customer Services

We strive to optimize our buyers’ and sellers’ experience by offering high-quality customer services. We have invested significant management, financial and human resources to offer our customers personalized and technically intelligent services across all stages of sales through our customer relationship management system. Powered by our AI capabilities, we have constructed a multi-lingual customer relationship management system that allows us to provide timely customer support including inquiries and complaints handling, product returns and dispute resolution. Our customer relationship management system is able to handle a wide range of requests with minimal

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BUSINESS human involvement. Further, our committed in-house team of customer service representatives contacts our buyers and sellers through online inquiries system, email, and telephone hotline. We provide comprehensive training programs to our customer service representatives to ensure consistent and high-quality service. To provide localized customer support, as of December 31, 2020, we have also engaged four third-party service providers to provide customer services, including chatbot services and online customer service support. Payment mechanisms under our agreements with these customer service providers include (i) paying annual subscription fee before the commencement of the services and (ii) paying based on the number of customer service officers with payments made in installments or in a lump sum. Such customer service providers also provide us with maintenance and technological support services during the contractual term. During the Track Record Period, we did not receive any material complaint from our customers.

Certain sellers on DHgate provide “Returns & Refund Guarantee” which allows buyers to return the purchased products and receive refunds unconditionally within a specific timeframe starting from the day of receipt of the products as pre-determined by the sellers and shown on the products’ pages. Sellers on DHgate are solely held accountable for the merchantability of their products. For products with quality problems, buyers may choose to return such products to sellers for repair within 30 days subsequent to the release of payments to the sellers, unless the buyers and sellers agree otherwise. In addition, buyers may apply for a partial refund from the sellers, or request for returning the products for a full refund within 90 days since the dispatch of the products.

OUR CUSTOMERS

In contrast to customers of our marketplace and other value-added services, which are primarily MSMEs that individually tend to made smaller purchases, customers of Offgate logistics service comprise corporate customers that individually tend to make larger purchases. See “— Our Suppliers and Services Providers — Overlapping Customers and Suppliers” for details of role corporate customers play in our logistics service business. As a result, a considerable number of our major customers during the Track Record Period were corporate customers.

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The table below sets forth the details of our top five customers for the Track Record Period:

For the Year ended December 31, 2018

Commencement Revenue Products/services of business Derived from Percentage of Ranking Customer provided Principal business relationship Customer total revenue

USD’000 % 1 Company A ...... Building online Development and 2016 754 0.6 transaction reform committee platforms and of a local cross-border government in payment services Southwest China

2 Company B ...... Building online Management 2016 754 0.6 transaction committee of a platforms local government in Shaanxi Province, China

3 Buyer A ...... Marketplace Overseas platform 2015 556 0.5 buyer engaging in products reselling

4 Company C ...... Building online Management 2016 461 0.4 transaction committee of a platforms local government in Jiangsu Province, China

5 Buyer B ...... Marketplace Overseas platform 2018 398 0.3 buyer engaging in products reselling

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For the Year ended December 31, 2019

Commencement Revenue Products/services of business Derived from Percentage of Ranking Customer provided Principal business relationship Customer total revenue

USD’000 % 1 Company D ...... Logistics service Provision of logistics 2018 2,366 1.3 service, primarily international express service and air and ocean special line service

2 Company E ...... Logistics services Provision of logistics 2018 1,973 1.1 services, primarily international express service

3 Company F ...... Logistics services Provision of logistics 2019 1,288 0.7 services, primarily international express service

4 Company G ...... Logistics services Provision of logistics 2018 886 0.5 services, primarily international express service

5 Buyer C ...... Marketplace Overseas platform 2009 843 0.5 buyer engaging in products reselling

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For the Year ended December 31, 2020

Commencement Revenue Products/services of business Derived from Percentage of Ranking Customer provided Principal business relationship Customer total revenue

USD’000 % 1 Company H ...... Logistics service Provision of logistics 2020 10,356 4.5 service, primarily postal service

2 Company I ...... Logistics services Provision of logistics 2018 8,304 3.6 service, primarily international express service and special line service

3 Company J...... Logistics services Provision of logistics 2020 4,544 2.0 services, primarily postal service

4 Company K ...... Logistics services Provision of logistics 2018 3,307 1.4 services, primarily international express service

5 Company E ...... Logistics services Provision of logistics 2018 2,770 1.2 services, primarily international express service

For the years ended December 31, 2018, 2019 and 2020, revenue from our five largest customers accounted for approximately 2.5%, 4.1% and 12.7%, respectively, of our total revenue. As of the Latest Practicable Date, none of our Directors, their close associates or any of our shareholders (who to the knowledge of the Directors owns more than 5% of our issued share capital) had any interest in any of our five largest customers.

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SALES AND MARKETING

With over ten years of investment and accumulation of data, we have constructed an omni-channel low-cost global distribution network. Besides benefitting from word-of-mouth referrals and our leading industry position, we implemented different sales and marketing strategies and measures to promote our service offerings, attract more active buyers and sellers to our platform and increase our user retention.

We acquire our buyers mainly through search engine optimization, a free channel to global buyer acquisition. We have established a rich keyword data base and website structure that are friendly to search engines, such as Google and Bing. It enhances the ranking of sellers’ products on search engines and thereby increases traffic to our platform. We leverage search engine marketing to increase the exposure of our advertisements. We also utilize social media platforms such as Facebook to ride on the opportunity brought about by mobile internet industry, allowing our advertisements to effectively reach our global network of buyers. Further, we collaborate with a range of advertising unions such as cash-back and price comparison websites to increase our advertisement exposure.

From time to time, we launch special promotional campaigns such as “Black Friday” and “Cyber Monday” in line with buyers’ purchasing patterns to boost sales. For sellers that participate in those special promotional campaigns, they may offer discounted prices for their products or give out coupons to buyers. In addition, we offer various marketing services to our sellers to help them effectively promote their stores as well as their products and increase their conversion rate. See “— Our Services — Marketing Service.” We have developed an internal system to track and monitor the traffic through our advertisements and adjust our advertising budget accordingly to control the total cost of advertising and ensure the effectiveness of our advertising.

We build relationships with sellers through various channels including telemarketing and online channels similar to those we use to acquire our buyers. We have dedicated business development teams to serve merchants located in industry clusters areas in China, including Zhejiang, Shanghai and Guangdong, as we believe this allows us to feel the pulse of the industry and act promptly. Our business development teams are responsible for contacting and maintaining relationships with local sellers, especially industry-leading companies. They also regularly organize and participate in industry events such as conferences, and liaise with media or relevant associations to acquire sellers.

In 2009, we initiated our “DHgate College” as a training program for sellers on our marketplace as well as other platforms to equip them with essential skills relating to operating an online e-commerce business while simultaneously improving our brand recognition among sellers.

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We acquire customers for our logistics service primarily via (i) increasing the penetration of DHLink on our marketplace by providing a seamless logistics experience and (ii) attracting corporate customers and non-DHgate sellers. With respect to our Offgate logistics service in particular, we have a designated team of personnel responsible for approaching potential corporate customers and maintaining relationships with our existing corporate customers directly through regular dialog.

OUR SUPPLIERS AND SERVICE PROVIDERS

The table below sets forth the details of our top five suppliers for the Track Record Period:

For the Year ended December 31, 2018

Commencement Products/services of business Purchase Percentage of Ranking Supplier purchased Principal business relationship amount total purchase

USD’000 % 1 Company L ...... Payment gateway Provision of payment 2018 4,333 7.7 services services

2 Company M ...... Payment gateway Provision of payment 2014 3,245 5.8 services services

3 Company N ...... Payment gateway Provision of payment 2016 3,083 5.5 services services

4 Company O ...... Payment gateway Provision of payment 2013 2,988 5.3 services services

5 Company P ...... Logistics service Provision of logistics 2017 2,900 5.2 services, primarily postal products

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For the Year ended December 31, 2019

Commencement Products/services of business Purchase Percentage of Ranking Supplier purchased Principal business relationship amount total purchase

USD’000 % 1 Company P ...... Logistics service Provision of logistics 2017 14,439 19.7 services, primarily postal products

2 Company Q ...... Logistics services Provision of logistics 2017 9,056 12.4 products, primarily international express products

3 Company N ...... Payment gateway Provision of payment 2016 4,729 6.5 services services

4 Company M ...... Payment gateway Provision of payment 2014 4,125 5.6 services services

5 Company L ...... Payment gateway Provision of payment 2018 3,599 4.9 services services

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For the Year ended December 31, 2020

Commencement Products/services of business Purchase Percentage of Ranking Supplier purchased Principal business relationship amount total purchase

USD’000 % 1 Company R ...... Logistics services Provision of logistics 2016 27,827 23.6 services, primarily postal products

2 Company Q ...... Logistics services Provision of logistics 2017 19,994 17.0 services, primarily international express products

3 Company P ...... Logistics services Provision of logistics 2017 13,283 11.3 services, primarily postal products

4 Company S ...... Logistics services Provision of logistics 2017 10,803 9.2 products, primarily postal products

5 Company N ...... Payment gateway Provision of payment 2016 8,489 7.2 services services

We uphold strict and methodical selection standards for our suppliers and service providers based on service quality, industry reputation and price. We conduct background checks on suppliers and service providers by examining their business licenses and other licenses, permits, or certificates as applicable. We constantly monitor and evaluate the status of performance of contract by our suppliers and service providers, ensuring that we are able to take timely steps to address relevant issues.

For the years ended December 31, 2018, 2019 and 2020, our five largest suppliers accounted for approximately 29.4%, 49.1% and 68.3%, respectively, of our total cost of sales. As of the Latest Practicable Date, none of our Directors, their close associates or any of our shareholders (who to the knowledge of the Directors owns more than 5% of our issued share capital) had any interest in any of our five largest suppliers.

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Overlapping Customers and Suppliers

The international cross-border logistics service value-chain is long and complex. Based on their logistics resources, players in the logistics service industry provide a wide variety of logistics products. Logistics products are characterized by attributes including size, weight, nature, timing and routing. As a result, each logistics service provider typically only has the resources for supplying a limited number of logistics products, each of which is only able to satisfy a specific set of logistics needs.

Cross-border e-commerce platforms such as us typically cooperate with various logistics partners to gather a network of diversified logistics resources, which grants us advantages in securing logistics products of certain weight bands, delivery time, and routing. By integrating our wealth of diversified and cost-effective logistics products, we provide customers with a rich array of cross-border logistics service, spanning from one-stop end-to-end logistics service to sectional logistics service for delivery of goods from warehouses in China to overseas destinations.

Our corporate customers typically focus on aggregating demand for international logistics service, including collection service from local shippers in China. Generally lacking comprehensive fulfilment capabilities and with limited access to certain logistics products, however, our corporate customers typically need to engage third-party carriers and fulfilment service providers for onward handling of their aggregated orders. In order to secure better prices and terms, our corporate customers typically collaborate with sizable cross-border e-commerce platforms, such as us, who have a huge volume of online orders, by combining their logistics products with ours.

On the other hand, some of our corporate customers possess niche local logistics resources which enable them to secure specific logistics products that, we lack in our network. For instance, some of our logistics partners have the ability to secure logistics products from certain local ports of gateway at favorable terms, as a result of their local operations. We procured these logistics products to satisfy the diversifying needs of our Ongate logistics service customers during the Track Record Period.

As a result, while our corporate customers need to tap into our international distribution networks, we procured logistics products from them to extend our local reach and servicing capabilities, and some of our customers were also our suppliers during the Track Record Period. According to the iResearch Report, cross-border logistics service providers playing dual roles as customers and suppliers is a norm in the industry.

Further, as we provide these corporate customers with Offgate logistics services, we are also able to secure better terms and prices for services we procure from them as our logistics partners. During the Track Record Period, prices for services we purchased from such logistics partners were approximately 2% to 3% lower than those offered to other customers, thereby bringing together the complementary capabilities of ourselves and our logistics partners.

– 231 – As a result, some of our major customers during the Track Record Period were also our suppliers. The table below sets forth our BE MUST INFORMATION THE THAT DOCUMENT. AND THIS CHANGE OF COVER TO THE SUBJECT ON AND “WARNING” SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IN READ IS DOCUMENT THIS major overlapping customers and suppliers during the Track Record Period:

Commencement of business relationship as our Products/services Revenue/Purchases customer/ procured/provided Parcel weight (kg) Destination(s) Timing (Days) Year ended December 31, supplier Background 2018 2019 2020 %ofour % of our %ofour total total total revenue/ revenue/ revenue/ USD’000 purchases USD’000 purchases USD’000 purchases

Company H Service procured from us as our customer: Postal parcel 0.1 to 2 The U.S. 20 — — — — 10,355.7 4.5 2020 A logistics service company service located in Ningbo, Zhejiang Province which Service provided to us as our supplier: primarily provides postal services Parcel delivery 0.1 to 2 Europe 30 — — — —BUSINESS 116.1 0.1 2020 service

3 – 232 – Company I Service procured from us as our customer: Postal parcel 0.1 to 2 kg for The U.S. 20 for postal 2.9 0.0 2.0 0.0 8,303.6 3.6 2018 A logistics service company service postal service service and 5 to located in Hangzhou, and above 100 10 for Zhejiang Province which kg for international primarily provides international express service special line and postal express service services Service provided to us as our supplier: Parcel delivery 0.1 to 2 Europe 30 — — — — 258.2 0.2 2020 service HSDCMN SI RF OM NOPEEADSBETT HNEADTA H NOMTO UTBE MUST INFORMATION THE THAT DOCUMENT. AND THIS CHANGE OF COVER TO THE SUBJECT ON AND “WARNING” SECTION INCOMPLETE THE FORM, WITH DRAFT CONJUNCTION IN IN READ IS DOCUMENT THIS

Company T Service procured from us as our customer: Postal parcel 0.1 to 2 The U.S. 20 — — — — 2,767.3 1.2 2020 A logistics service company service located in Shenzhen, Guangdong Province Service provided to us as our supplier: which primarily provides Parcel delivery 0.1 to 2 Europe 30 — — — — 8.9 0.0 2020 postal and special line service services Company D Service procured from us as our customer: Commercial 3 to 20 The U.S. and 5 65.0 0.1 2,365.9 1.3 1,744.9 0.8 2018 A logistics service company

parcel service Europe BUSINESS located in Jiaxing, Zhejiang Province which Service provided to us as our supplier: primarily provides

3 – 233 – Parcel delivery 0.1 to 3 The U.S. 10 5.2 0.0 10.3 0.0 1.6 0.0 2018 international express service services Company U Service procured from us as our customer: Commercial 0.1 to 2 The U.S. 10-20 — — — — 300.4 0.1 2020 A logistics service company parcel service located in Xiamen, Fujian Province which Service provided to us as our supplier: primarily provides Parcel delivery 0.5 to 2 Europe 15-30 — — — — 4,489.4 3.6 2020 international express service services THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

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Our Directors confirmed that all of our sales to and purchases from each of the overlapping customers and suppliers were conducted in the ordinary course of business under normal commercial terms and on arm’s length basis. Other than Company D, Company H, and Company I, none of the overlapping customers and suppliers were among our top five customers and suppliers during the Track Record Period. Save for the above, our Directors confirmed that none of our major customers was our supplier, and vice versa during the Track Record Period. For the years ended December 31, 2018, 2019 and 2020, there were two, three and eight customers that were also our suppliers, which contributed to 0.1%, 1.7% and 10.5% of our total revenue and 4.2%, 2.2% and 2.6% of our total purchases, respectively.

SEASONALITY

We experience seasonality in our business, and our overall operating results fluctuate from quarter to quarter as a result of a variety of factors, including seasonal factors.

We generally experience the highest level of revenue in the fourth quarter of each year due to a number of factors, including sellers allocating a significant portion of their online marketing budgets to the fourth quarter of a year and the impact of seasonal purchasing patterns in respect of certain product categories such as apparel. We also have experienced lower level of revenue in the first quarter of each year due to sellers’ lower level of operating activities early in the calendar year. See “Risk Factors — Risks Relating to Our Business and Industry — Our results of operations are subject to seasonal fluctuations.”

RESEARCH AND DEVELOPMENT

Led by Dr. Tan Enhua, we have a team of experienced engineers dedicated to research and development. As of December 31, 2020, we had a total of 140 research and development staff members, focusing on product and technology development and product maintenance, representing approximately 25.2% of our total number of employees. Our research and development expenses amounted to USD12.0 million, USD10.9 million, and USD12.8 million for the years ended December 31, 2018, 2019 and 2020, respectively.

Currently, our research focuses include (i) the development of proprietary technologies using big data analytics and AI algorithms, including smart product selection, automatic translation of product description, search by image, precision marketing, and website design, and (ii) the collaboration with leading technology companies to explore wider applications of cutting-edge technologies. We will also enhance the compatibility of our platforms with third-party platforms to elevate the scalability of our IT infrastructures.

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TECHNOLOGY AND IT INFRASTRUCTURE

We consider technology and IT infrastructure the backbone of our business operations and a critical part to accommodate our fast-growing user base.

Our Technologies

Big Data Analytics and AI

We have invested heavily in big data analytics and AI technology. Due to the nature of the services we provide, we process and accumulate voluminous transaction data on our platform on a daily basis. We are thus able to develop sorting algorithms that greatly improve the search results on DHgate and algorithms that help us easily identify possible frauds. In addition, premised on our strong AI technology capacities, we offer our sellers a wide array of tools, such as advertising banner generator, and precision marketing tool to provide more enjoyable user experience and strengthen their marketing capabilities.

We have also developed and currently internally deployed an AI-based tool, “Enlitence”, to help our marketplace products selection managers to make choices in respect of product offering. Enlitence monitors historical prices, reviews, sales numbers as well as other information of products available on other marketplaces. By selecting regions and other variables, Enlitence would generate recommendations on which product category to include based on proprietary data of trending products we have collected over the years. We plan to deploy Enlitence to DHgate and MyyShop to empower buyers and users to streamline their procurement workflows. See “— Our Strategies — Further develop our subscription-based decentralized cloud-based commercial solutions in addition to our transaction-based centralized marketplace.”

Furthermore, for our logistics service, with the accumulation of a massive volume of data on our marketplace and empowered by our big data analytics capabilities, DHLink uses algorithms to intelligently match customers’ orders with available logistics products. DHLink recommends optimal route according to factors including products types, costs, package weight and size, distance and time requirements, facilitating users’ logistics decisioning. Also, we deploy a range of other technologies including APIs on DHLink, which allow more intuitive management and tracking of the orders.

Apart from our proprietary capabilities, we are also empowered by AI-based products and services provided by leading technology companies. For instance, we have deployed solutions developed by Tencent, including mobile application security, product development, and instant communications services. Pursuant to our agreement with Tencent, we were allowed to use Tencent’s technology services at a favorable fee rate. We plan to further our collaboration with

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BUSINESS leading technology companies for developing innovative technological products and services. See “— Our Strategies — Research and develop innovative technologies including AI products that serve global trades.”

AI-powered Multi-lingual Platform

Currently, DHgate hosts buyers from across approximately 223 countries and regions. To help sellers overcome the language barriers and effectively reach their target buyers, our marketplace is supported by the localized sites in 10 languages, including Arabic, English, French, German, Italian, Korean, Portuguese, Russian, Spanish and Turkish. It is also embedded with Google translation tools to cater to the needs of buyers from other parts of the world. Further, our AI-powered online conversation tool has a built-in automated Chinese-English translation feature, enabling sellers who lack the resources to build a multi-lingual customer service team to effectively serve global buyers.

Cloud Computing

Our cloud computing technology is the foundation of our computing network and system infrastructure. We use both our proprietary private cloud infrastructure, as well as public cloud services maintained by a leading international cloud service provider. We employ distributed computing technique to enhance the efficiency and performance of our computing resources. We are thus able to construct a computing network that meets the needs of our business operation, which is characterized by irregular traffic volume. See “— Technology and IT Infrastructure — IT Infrastructure.”

IT Infrastructure

Servers and Cloud Computing Network

Our data and network infrastructure are built for scalability and stability to support the rapid growth in our user base and to handle the irregular surge in traffic due to the nature of our business operations. As of December 31, 2020, we had more than 5,000 hybrid cloud-based servers and five data centers in both Hong Kong and mainland China, to ensure reliable connection for users within mainland China or overseas. Through our cooperation with a leading international cloud service provider, we can easily scale up our bandwidth and computing resources to support sudden traffic. We have benchmarked our platform to handle at least 100,000 requests per second according to the results of our prior tests.

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Order Processing System

Our order processing system is at the heart of all transactions on our marketplace. Backed by our data processing capability and infrastructure, it is capable of processing over 100 orders per second. Our order processing system is primarily built upon the interconnected transaction middle platform and the ordering middle platform. Each of which is connected to various sub-platforms, including the logistics middle platform, payment middle platform, and risk management middle platform to enable a range of functionalities. Built in an open-source environment with modular architecture, it affords the stability and scalability to support our operation and future expansion.

DATA PRIVACY

We are dedicated to safeguarding the privacy and personal information of our users. We have in place a robust data protection policy addressing the collection, transmission, storage, sharing, destruction, backup and recovery of data, to ensure our compliance with the applicable laws and regulations, including the China Personal Data Protection Law and the General Data Protection Regulation. We only collect information as necessary for our operation and only with our users’ prior consent. We accumulate a diverse set of user and transaction data in our course of operation, which include, (i) personal data, such as user’s address, phone number, email address, and business license, and (ii) non-personal data, such as transaction data and behavioral data. We obtain consent for collection of data and only use such data for authorized purposes.

We have implemented extensive measures to protect our users’ data and personal information. All of our users’ data are stored on our proprietary and cloud-based servers protected by firewall subject to stringent encryption and decryption procedures. We also back-up such data using a secured back-up and restoration system to minimize the risk of data loss or leakage. We have implemented internal policies which set out, among other things, the implementation of passwords, to safeguard against any unauthorized access to data. Only employees holding specific positions at specific levels are authorized to access user’s data on a need-to-know basis. We have adopted relevant policies and provided training relating to administration of users’ data and personal information for employees with such access to comply with and conduct regular reviews to ensure compliance. We continuously review and update our privacy policies to ensure our compliance with the applicable laws and regulations.

During the Track Record Period, we did not experience any material information leakage or loss of user data in the PRC or any overseas market. Our Directors, having considered the views of our legal advisors as to PRC data privacy laws, are of the view that during the Track Record Period and up to the Latest Practicable Date, we had complied with all PRC laws and regulations on personal information collection and usage in all material respects.

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INTELLECTUAL PROPERTY

We regard our patents, trademarks, domain names, software copyrights, proprietary know-how, and other intellectual property critical to our business operation. We rely on a combination of patents, copyrights, trademarks and trade secret protection laws in the PRC and other jurisdictions, and restrictions on disclosure subject to relevant contractual provisions to protect our intellectual property.

As of the Latest Practicable Date, we had registered:

• 16 patents in the PRC

• 207 trademarks in the PRC and other countries or regions

• 30 domain names in the PRC

• 88 software copyrights in the PRC

For detailed information about our material intellectual property, see “Appendix IV — Statutory and General Information — B. Further Information about our Business — 2. Our Material Intellectual Property Rights.”

As of the Latest Practicable Date, we had not been subject to any material disputes or claims for infringement upon third parties’ intellectual property rights in the PRC and other jurisdictions.

COMPETITION

At present, the global cross-border B2B e-commerce procurement from China market is relatively fragmented with a few leading players in terms of online platform trading volume, according to the iResearch Report. We primarily compete against other players in the cross-border e-commerce industry. See “Industry Overview — Competitive Landscape.” We believe the key factors for our success in the industry include our brand recognition, our deep understanding of the China market, coupled with first movers’ advantage and supply chain resources, our ability to consolidate service partners and our strong research and development capabilities. Some of the market players may have more financial resources and larger buyer base. We may not be able to continue to compete effectively. See “Risk Factors — Risks Relating to Our Business and Industry — We face intense competition in our market. We may not be able to maintain or may lose market share and customers if we fail to compete effectively.”

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Further, with our logistics service offering, we are a fourth-party logistics service provider which entrusts third-party service providers with the actual delivery of goods and is responsible for supervising the logistics process of such third-party service providers, according to the iResearch Report. We primarily compete against other major cross-border e-commerce platforms that provide logistics service. As online shopping becomes more prevalent, consumers have higher expectations on their user experience when doing cross-border shopping and thus also on services provided by cross-border logistics service providers, according to the iResearch Report. We believe our ability to compete effectively hinges on factors including the breadth and depth of our service offerings, our technology capabilities, quality of our services, and our brand recognition.

EMPLOYEES

As of the Latest Practicable Date, we had 604 full-time employees. Our employees are primarily located in the PRC. The following table sets forth the number of our employees by function:

Number of Employee Function Employees % of Total Business and operation ...... 249 41.2 Research and development ...... 160 26.5 Customer relationship management ...... 58 9.6 Sales and marketing ...... 53 8.8 Finance and administration ...... 84 13.9 Total ...... 604 100.0

As of the Latest Practicable Date, approximately 65.4% of our employees hold a bachelor’s degree, and approximately 10.8% of our employees hold a master’s degree or above.

Our success depends on our ability to attract, retain, and motivate qualified employees. As part of our human resources strategy, we provide our employees with competitive salaries, performance-based cash bonuses as well as other incentives. We primarily recruit our employees through recruitment agencies, online channels including our corporate website and third-party employment websites. As part of our human resources policy, we provide regular training and reviews tailored to accommodate the needs of different departments. In addition, we provide a training program specifically for new hires in order to equip them with professional skills and ethics necessary for their positions.

As required by PRC laws and regulations, we participate in housing fund and various employee social security plans that are organized by applicable local municipal and provincial governments, including housing, pension, medical, work-related injury and unemployment benefit

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BUSINESS plans. We are required under PRC laws and regulations to contribute to employee social insurance plans at specified percentages of the salaries, bonuses, and certain allowances of our employees. During the Track Record Period, certain PRC entities of our Group did not make full social insurance contributions for certain employees. Also, one of the PRC entities of our Group had engaged a third-party human resources agent to pay social insurance fund and housing provident fund contributions for some of its employees. See “— Legal Proceedings and Non-compliance — Non-compliance.”

Our employees are not currently represented by any labor union. We believe that we maintain good working relationship with our employees and we have not experienced any material labor disputes or any difficulty in recruiting staff for our operations during the Track Record Period and up to the Latest Practicable Date.

AWARDS AND RECOGNITION

During the Track Record Period, we received awards and recognition in respect of our contribution to the cross-border e-commerce industry, significant ones of which are set forth below:

Award/Recognition Award Date Issuing Institution/Authority Corporate Social Responsibility Award 2020 2020 World Cross-Border (企業社會責任獎) ...... E-Commerce Conference (2020世界跨境電子商務大會)

Global Cross-border e-Commerce New 2020 ebrun (億邦動力) Power Digital Empowerment Elite TOP50 (全球跨境電商新勢力數字化賦能精英TOP50) ......

Cross-border Leading Enterprise in Ten 2020 cifnews (雨果網) Years (跨境拾年領軍企業2010−2020) .

China Cross-border E-commerce 2019 China Association of Trade in 50-Person Forum Presidium Member Services (中國服務貿易協會) (中國跨境電商50人論壇主席團單位) ..

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Award/Recognition Award Date Issuing Institution/Authority 2018 Asia-Pacific Digital Economy — 2018 China Industrial Cooperation Best Contribution Award (2018亞太數 Association (中國工業合作協會), 字經濟最佳貢獻獎) ...... Institute of Internet Industry, Tsinghua University (清華大學互聯網產業研究院), APEC SME Information Technology Promotion Center (亞太經合組織中小企業信息化促進中心), Committee of APEC Enterprise Digital Economy Development Conference 2018 (2018亞太企業數字經濟發展年會組委會)

Top 30 Competitive B2B Chinese 2018 Committee of China B2B+ Supply Enterprises (中國B2B企業競爭力30 Chain Financial Innovation and 強)...... Development Forums (中國B2B+ 供應鏈金融創新與發展論壇組委會)

Top 100 Case for Supply Chain 2018 E-Commerce Business Innovation E-commerce (供應鏈電子商務百佳案 Association (EBIA) (電子商務創例)...... 新推進聯盟)

INSURANCE

We do not maintain any business interruption insurance or product liability insurance. We also do not maintain key man life insurance, insurance policies covering damages to our network infrastructures or information technology systems or any insurance policies for our properties. We believe our insurance policy as a whole is in line with the general market practice and complies with the relevant rules and regulations in China. See “Risks Factors — Risks Relating to Our Business and Industry — We have limited insurance coverage, which could expose us to significant costs and business disruption.”

PROPERTIES

As of the Latest Practicable Date, we operated our businesses through 17 leased properties in the PRC and Hong Kong, and a licensed property in the United Kingdom. Our leased properties had a total gross floor area of 14,355.7 square meters, which are primarily used for the purpose of office space.

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As of the Latest Practicable Date, 16, being all lease agreements of our leased properties in the PRC had not been registered and filed with the competent PRC government authorities as required by applicable PRC laws and regulations, which was primarily due to the difficulties in procuring the relevant lessors’ cooperation to register such leases. Our PRC Legal Advisor has advised us that failure to complete the registration and filing of lease agreements will not affect the validity of such leases or impede our use of the relevant properties but could result in fines of up to RMB10,000 per leased property that is unregistered if we fail to rectify such non-compliance within the timeframe prescribed by the relevant authorities. As of the Latest Practicable Date, we were not subject to any penalties arising from the non-registration of lease agreements. We are in the process of further liaising with the relevant lessors and will take all practicable and reasonable steps to ensure that the unregistered leases are registered.

As of the Latest Practicable Date, lessors of four of our leased properties in the PRC had not provided us with valid title certificates or relevant authorization documents evidencing their rights to lease the properties to us. As a result, such leases may not be valid, and we may face challenges from third parties regarding our rights, such that there are risks that we may not be able to continue to use such properties. Our Directors confirmed that such title defects would not materially and adversely affect our business operations because (i) in the event that we are to terminate the leases or to cease to use such leased properties with title defects, we will be able to locate alternative comparable premises within a short period of time without incurring substantial additional costs; (ii) such leased properties are primarily used for offices and not crucial to our core business; and (iii) as of the Latest Practicable Date, there were no dispute, claim or administrative penalties with respect to the title defects.

Apart from the above, as of the Latest Practicable Date, we had been granted the right to use four properties on a gratuitous basis by local governments in the PRC in relation to our one-off collaborative projects with the local governments in the PRC, under which we were engaged to build online transaction platforms. On the basis that we had not been provided with valid title certificates or relevant authorization documents in respect of such properties, our PRC Legal Advisor has advised us that our right to use such properties on a gratuitous basis is uncertain and there are risks that we may not be able to continue to use such properties. Our Directors confirmed that such uncertainties and risks would not materially and adversely affect our business operations, given that (i) such properties are primarily used for offices and (ii) in the event that we are to cease to use such properties, we will be able to locate alternative comparable premises within a short period of time.

As of the Latest Practicable Date, no single property accounted for 15% or above of our consolidated total assets by book value. Therefore, this document is exempt from the requirements under Chapter 5 of Hong Kong Listing Rules and Paragraph 34(2) of the Third Schedule to the

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Companies (Winding Up and Miscellaneous Provisions) Ordinance that the interests in the lands and buildings shall be included in the valuation report according to section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

LEGAL PROCEEDINGS AND NON-COMPLIANCE

Material Dispute and Litigation

During the Track Record Period, we were involved in the following material litigations:

Contractual dispute with Xinguang Holding Co. Ltd. In 2019, Ms. Wang, Heguang International (Cayman) and Century Heguang (Beijing) were involved in a contractual dispute in relation to their purported obligations under a series of agreements with Xinguang Holding Co. Ltd. (新光控股集團有限公司)(“Xinguang Holding”) in respect of restructuring of our Group which involved, among others, terminating the Previous Contractual Arrangements under which Heguang International (Cayman) and Ms. Wang exercised control over Chongqing Rich Palace (the “Restructuring Agreements”). See “History, Reorganization and Corporate Structure — Major Corporate Development and Shareholding Changes of Our Group — Century Rich Palace.” Xinguang Holding, an Independent Third Party, was a company incorporated in the PRC in March 2004 and was engaged in diversified business activities in relation to, among others, real property, investments, energy and trade. Pursuant to the Restructuring Agreements, among other things, Heguang International (Cayman) and Ms. Wang shall commence the restructuring procedures of Chongqing Rich Palace, while Xinguang Holding shall lend Chongqing Rich Palace the necessary funds in connection therewith, in return for shares in Chongqing Rich Palace upon the completion of the restructuring. In December 2016, Xinguang Holding transferred RMB200 million (representing the sum for the purpose of the reorganization) to Chongqing Rich Palace. In October 2017, Ms. Wang, Heguang International (Cayman) and Century Heguang (Beijing) entered into a series of release agreements for terminating the Restructuring Agreements and the arrangements thereunder (the “Release Agreements”). The Release Agreements stipulated that, among other things, Chongqing Rich Palace shall repay the said sum together with other ancillary fees, including interests, in installments to Xinguang Holding. From October 2017 to August 2018, Chongqing Rich Palace made a series of payments amounting to approximately RMB162 million to Xinguang Holding, in accordance with the Release Agreements.

However, in April 2019, Xinguang Holding was declared bankrupt by the Intermediate People’s Court of Jinhua City, Zhejiang Province, and Chongqing Rich Palace did not repay the remaining sum because it could not confirm the outstanding amount and repayment schedule with the administrators of Xinguang Holding. In November 2019, Xinguang Holding filed a lawsuit in the Intermediate People’s Court of Jinhua City, Zhejiang Province, requesting the court to enforce the fulfillment of payment obligations by Ms. Wang, Heguang International (Cayman), Century

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Heguang (Beijing) and Chongqing Rich Palace under the Release Agreements. The court decided that Ms. Wang, Heguang International (Cayman), Century Heguang (Beijing) and Chongqing Rich Palace shall pay Xinguang Holding a sum of approximately RMB111,090,000. Upon negotiations with Xinguang Holding, the parties signed a settlement agreement on November 9, 2020, under which it was agreed that a sum of approximately RMB105,390,000 (reflecting a deduction of RMB5.7 million as agreed by Xinguang Holding and its administrators) shall be payable to Xinguang Holding in full and final settlement of the dispute.

On November 25, 2020, Century Heguang (Beijing) duly paid Xinguang Holding the agreed sum. As advised by our PRC Legal Advisor, the debt owed to Xinguang Holding pursuant to the settlement agreement had been fully satisfied and the debtor-creditor relationship between Ms. Wang, Heguang International (Cayman), Century Heguang (Beijing), Chongqing Rich Palace and Xinguang Holding had completely extinguished.

Contractual dispute with payment service provider A. In June 2018, Century Heguang (Beijing) entered into a cooperation agreement with payment aggregator B, a payment aggregator that aggregates cross-border payment needs from local sellers and an Independent Third Party, pursuant to which it shall refer sellers to Century Heguang (Beijing) to register accounts on DHpay and use payment services provided on DHpay. In November 2018, payment service provider A, an Independent Third Party, purported that, among other things, transactions processed through our account with it for goods and services did not exactly accord with the monthly records indicating merchandises subject to the transactions we submitted, among others, transactions processed with the merchant category code of hardware, equipment and supplies were suspected of being associated with sports betting. Pursuant to its payment service agreement with us, payment service provider A withheld funds amounting to approximately EUR 28.7 million from the sellers referred by payment aggregator B. Payment service provider A had, upon investigation to its satisfaction, entered into a settlement agreement with Century Heguang (Beijing) in December 2020, pursuant to which, it released a sum of approximately USD30,686,000 (being the withheld sum as converted to USD) in January 2021 while retaining a guarantee in the sum of USD237,000, which shall be released upon the expiry of the agreed retention period after deducting the agreed processing fees. By a repayment agreement in January 2021, Century Heguang (Beijing) agreed to repay the released sum to payment aggregator B and sellers referred by it, and payment aggregator B agreed to, among others, waive any right to claim or initiate any legal proceedings against Century Heguang (Beijing) with respect to the said matter. Our Directors confirmed that the repayment of the released sum to payment aggregator B and sellers referred by it is expected to be settled by the end of 2021. As advised by our PRC Legal Advisor, they were not aware that Century Heguang (Beijing) had violated any applicable rules and regulations in the PRC in respect of this contractual dispute with payment service provider A. Further, payment service provider A

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BUSINESS had ceased to be our payment service provider since December 2018. Our Directors confirmed that during the Track Record Period and up to the Latest Practicable Date, we had not received any complaint or been subject to any claim initiated by any seller referred by payment aggregator B.

With a view to avoiding recurrence of similar incidents in the future, we had implemented certain internal control measures, including (i) adopting the policies on financial management and financial payment, setting out the internal approval requirements, and the manners in conducting fund payment business; (ii) deploying system administrators to manage and maintain financial information systems, (iii) establishing the policy on emergency responses, and (iv) forming an emergency response team to follow up and dispose of the event involving significant economic losses. Our Directors, based on the review results of our Internal Control Consultant, are of the view that such internal control measures are adequate and effective to prevent occurrence of similar incidents.

Having considered (i) the facts and circumstances leading to the disputes as disclosed above; (ii) the disputes with Xinguang Holding and payment service provider A have been fully resolved, and (iii) the aforementioned disputes did not result in a material impact on our Group’s operations, financials and reputation, in addition to the enhanced internal control measures implemented by the Company, the Sole Sponsor is of the view that the disputes have no implication on the suitability of Ms. Wang, our executive Director, pursuant to Rules 3.08 and 3.09 under the Listing Rules.

Save as disclosed above, during the Track Record Period and up to the Latest Practicable Date, no member of our Group had been engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance is known to our Directors to be pending or threatened by or against our Company that would have a material adverse effect on our Company’s results of operations or financial condition.

Non-Compliance

Save as disclosed below, our Directors confirm that, we have complied with the laws and regulations applicable to us in all material aspects during the Track Record Period and up to the Latest Practicable Date. Set out below is a summary of the non-compliance incidents of our Group during the Track Record Period:

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Hong Kong

Legal Consequences, Potential Maximum Penalties Matters of Non-compliance and Reasons for Non-compliance and Other Financial Losses Rectification Measures 1. During the Track Record Period, certain Hong Kong Section 29 of the AMLO provides that a Upon our Group having acquired knowledge subsidiaries of our Group, namely Rich Palace (HK), person commits an offense if the person of the non-compliance, we have taken the Dunhuang Holdings (HK) and Jiahe Holdings (HK) (the operates a money service without a license following steps to resolve the “Hong Kong Companies”) facilitated cross-border and that a person who commits such offense non-compliance: payment aggregation, money changing and remittance is liable on conviction to a maximum fine of services as follows: HK$100,000 and imprisonment up to six (i) whilst the DHpay remains in months. Further, section 29 of the AMLO operation, our Group has ceased to (i) entered into agreements with payment service provides that the magistrate may order that receive transaction funds utilizing providers and banks for the purpose of receipt the person is to be disqualified from holding the Hong Kong bank accounts of of transaction funds in different currencies a license for a specified period. the Hong Kong Companies in from online buyers in relation to transactions October 2019, and has resolved to conducted on DHgate and the keeping of funds As confirmed by our Special Counsels: engage the service of a MSO in their respective Hong Kong bank accounts; licensed service provider, which is (a) imprisonment is not applicable as a an Independent Third Party, for the (ii) exchanged transaction funds from other penalty under the AMLO to the inbound transfer of transaction currencies into USD and further consolidated Hong Kong Companies who are funds into Hong Kong and conduct and transferred the funds to a bank account legal persons and as such, there is currency exchange of the held by Rich Palace (HK) or Jiahe Holdings no provision in the law providing transaction funds; and (HK) for the purpose of centralized onward for cessation of business as a distribution and settlement to online sellers; possible penalty that is applicable (ii) our Group has further engaged to a corporation operating a money MSO licensed service providers, (iii) facilitated the sending of transaction funds service without an MSO license. including an Independent Third from Hong Kong for settlement and Hence, the potential maximum Party and Camel Supply China distribution of fund to the sellers (including penalty involves monetary terms Management (Asia) Limited, a small and medium enterprises); only; connected person, for the outbound transfer of transaction funds from (iv) directed the transfer of transaction funds in (b) the Special Counsels have reviewed Hong Kong either directly to the USD from Jiahe Holdings (HK) to sellers based the enforcement news published by sellers based in the PRC or to the in the PRC and the transfer of funds by Jiahe the Hong Kong Customs and Excise payment service provider for Holdings (HK) to a payment service provider Department and have located conversion of funds to RMB and in the PRC without first passing through a instances whereby companies and/or distribution to sellers based in the licensed service provider in Hong Kong, individuals were fined for operating PRC. See “Connected Transactions whereby the payment service provider a money service without a license; — 1. Payment Services Framework exchanges the funds to RMB and distributes to Agreement.” sellers based in the PRC; and

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Legal Consequences, Potential Maximum Penalties Matters of Non-compliance and Reasons for Non-compliance and Other Financial Losses Rectification Measures (v) arranged the receipt of transaction funds from (c) whilst a person operating money the U.S. and transfer of such funds to the Hong service without an MSO license Kong bank accounts. faces potential maximum penalties of fine, imprisonment and The above arrangements made by the Hong Kong disqualification order, the Special Companies constitute money changing service and Counsels have not located any remittance service that is operated in Hong Kong as a instances whereby a director of a business and the arrangements were made by the Hong company was sentenced to a Kong Companies without a money service operator custodial sentence as a result of a (“MSO”) license, in contravention of section 29 of the company operating a money service Anti-Money Laundering and Counter-Terrorist without a license. On this basis, the Financing Ordinance (Chapter 615 of the Laws of Hong Special Counsels are of the view Kong) (“AMLO”). that it is unlikely that, in the case of a corporation operating a money The relevant staff (a then vice-president), who was service without an MSO license, responsible for the operation of our payment service directors of such corporation will be business, believed that the arrangements were internal personally liable; and transfers and arrangements of funds within our Group and was unaware of any licensing requirement for such (d) the AMLO itself does not expressly arrangements. The incident was unintentional and provide for any powers of inadvertent and was due to insufficient knowledge of confiscation of proceeds or revenue the relevant staff on the relevant payment laws and obtained in contravention of section regulations in Hong Kong. 29 of the AMLO. Although the Organized and Serious Crimes Ordinance (Cap. 455) (“OSCO”) provides for certain confiscation powers for dealing with proceeds from an indictable offense, from review of case law, the Special Counsels have not identified any cases in which the confiscation power under the OSCO was exercised with respect of contraventions of section 29 of the AMLO.

Based on the above, our Directors are of the view that since (i) the maximum fine imposable on our Group is HK$100,000; and (ii) the payment service business was merely a value-added service and the absence of the MSO license would not affect our Group’s business operations, the non-compliance would not have a material financial and operational impact to our Group.

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Legal Consequences, Potential Maximum Penalties Matters of Non-compliance and Reasons for Non-compliance and Other Financial Losses Rectification Measures 2. During the Track Record Period, we allowed online Section 8B of the of the PSSVFO provides The non-compliance has ceased from June buyers on DHgate who have registered with DHpay to that a person commits and offense if the 2019 onwards as our Group had ceased the top-up certain monetary value in a virtual account, the person issues a SVF without a license and a operation of the DHpay account function to DHpay account. The monetary value stored in the person who commits such offense is liable ensure compliance with section 8B of the DHpay account could be used to purchase goods that on conviction on indictment, to a fine of PSSVFO. were listed on DHgate by the sellers. HK$1,000,000 and to imprisonment for 5 years, or, on summary conviction, to a fine The DHpay account is considered a stored value facility of HK$100,000 and to imprisonment for 6 (“SVF”) under section 2 of the Payment Systems and months. Stored Value Facilities Ordinance (Chapter 584 of the Laws of Hong Kong) (“PSSVFO”) and our Group had As confirmed by our Special Counsels: launched the DHpay account without obtaining a SVF license in contravention of section 8B of the PSSVFO. (a) imprisonment is not applicable as penalty to the Hong Kong Our Group launched the DHpay account in October Companies as legal persons; hence 2017 as an initiative to online buyers overall to the potential maximum penalty purchase goods on DHgate by utilizing stored value on involves monetary terms only; and the DHpay account as an alternative payment method. Further, the purpose of DHpay account was not (b) as there was a total of 180 buyers specifically targeting the Hong Kong market or buyers from Hong Kong (who registered from Hong Kong. their location as Hong Kong and their registered address being a Accordingly, the relevant staff (a then vice-president) Hong Kong address) with a positive genuinely believed that the SVF license was not balance of funds, which accounted required for our Group’s DHpay account service. The for only 0.3% of the total number incident was unintentional and inadvertent and was due of buyers who held positive balance to insufficient knowledge of the relevant staff on the of funds in the DHpay account, the relevant laws and regulations regarding SVF under the likelihood of retrospective laws of Hong Kong. enforcement actions is low.

Based on the above, our Directors are of the view the maximum penalty being HK$1,000,000 would not have a material financial and operational impact to our Group.

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China

Legal Consequences, Potential Maximum Penalties and Matters of Non-compliance and Reasons for Non-compliance Other Financial Losses Rectification Measures 1. During the Track Record Period, certain According to the Social Insurance Law of the PRC Since July 2019, Digitrading Beijing, Century Rich PRC entities of our Group, namely (1) (中華人民共和國社會保險法), if the employers fail Palace, and Century Heguang (Beijing) have been Digitrading Beijing, (2) Century Rich to fully contribute to social insurance on time, the making full contributions to the social insurance Palace, and (3) Century Heguang (Beijing) social insurance administration department may plans for their employees with reference to the did not make adequate social insurance demand the employer to make full contributions or calculation basis in compliance with the applicable contributions for certain employees as to pay the shortfall within a prescribed time period PRC laws and regulations. required by the applicable laws and and impose a late fee of 0.05% of the total regulations. outstanding balance per day. If we fail to do so We had implemented the following measures to within the prescribed period as requested by the prevent the recurrence of similar non-compliance The balance of provision for social relevant social insurance authorities, we may be incidents: insurance contribution was approximately subject to a fine ranging from one to three times USD6.7 million, USD3.3 million and the amount of the total outstanding balance. (i) our finance and accounting department USD0.8 million as of December 31, 2018, calculates the amount of social insurance 2019 and 2020, respectively. Our In accordance with the Regulations on the and housing provident fund contributions Directors, taking into account the opinion Administration of Housing Provident Fund《住房 ( payable with reference to the list of of our PRC Legal Advisor, believe that 公積金管理條例》), employers are required to employees which is prepared and updated sufficient provisions have been made. contribute, on behalf of their employees, to on a monthly basis by our human housing provident funds on time and in full. Any resources department; The non-compliance incident occurred employer who fails to fully contribute on time may primarily because (i) our employees in the be ordered to make up the difference within a (ii) our human resources department and human resources department handling the stipulated time limit, and the provident fund finance and accounting department are social insurance did not have a administration center may apply to the People’s responsible for updating the information of comprehensive understanding of the Court for mandatory enforcement against those our eligible employees on the social relevant legal requirements in relation to who still fail to comply after the expiry of such insurance and housing provident fund social insurance contributions, (ii) certain period. websites respectively; employees chose not to be enrolled in social insurance as they did not want to As such, in respect of the arrangement of engaging (iii) our legal and compliance department is bear their portion of the contributions, and the third-party human resources agent, our PRC responsible for regularly updating (iii) certain employees had made the social Legal Advisor advised us that we may be regarded information of our PRC entities and insurance contribution in their hometown by the relevant PRC authorities as not having made arrange for registration for social and did not want to make additional full contributions of social insurance and housing insurance and housing provident fund; and contribution. provident funds in a timely manner and may thus run the risk of being ordered to pay the shortfall (iv) we have established internal procedures to and the late fee within a prescribed time period. ensure that we will comply with the relevant laws and regulations in relation to As of the Latest Practicable Date, we had not social insurance and housing provident received any notice or demand from any competent fund in the future, which include authorities ordering us to make retrospective providing training to relevant managers payments or any differences of the payments for and staff members to handle relevant the social insurance fund and housing provident matters. fund contributions.

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Legal Consequences, Potential Maximum Penalties and Matters of Non-compliance and Reasons for Non-compliance Other Financial Losses Rectification Measures In addition, during the Track Record The Human Resources and Social Protection Period, Digitrading Beijing engaged a Bureau of Haidian District, Beijing (北京市海淀區 third-party human resources agent to pay 人力資源和社會保障局), the competent authority social insurance and housing provident in respect of social insurance related matters of fund contributions for twelve of its Digitrading Beijing, Century Rich Palace and employees, as those employees would like Century Heguang (Beijing) in the opinion of our to make social insurance and housing PRC Legal Advisor, confirmed in writing that there provident fund contributions in the city in was no record of administrative penalties against which they base. Pursuant to the such companies in relation to any violation of agreement entered into between labor protection laws and regulations during the Digitrading Beijing and the third-party Track Record Period. human resources agent, the latter was required to pay social insurance and As advised by our PRC Legal Advisor, the housing provident fund contributions for likelihood of a penalty being imposed on our the relevant employees of Digitrading Group for not making full contributions for social Beijing. Rectification of such arrangement insurance and housing provident fund is low if we is in part subject to the cooperation of our duly make full contributions or pay the shortfall employees, who may not necessarily be and the late fee within the prescribed time period receptive to our rectification plans, as they upon receiving demands or notifications from the will be required to co-contribute. As we competent authorities. are dedicated to be fully compliant with the PRC laws and regulations relating to In addition, Ms. Wang has agreed to indemnify our social insurance and housing provident Group for all incidents of non-compliance, funds, we will consult our PRC Legal violation or breach related to the making of the Advisor and proactively liaise with the social insurance and housing provident fund local social insurance and housing contribution. provident fund authorities for confirmation when assessing and adjusting the contribution arrangement from time to time.

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Legal Consequences, Potential Maximum Penalties and Matters of Non-compliance and Reasons for Non-compliance Other Financial Losses Rectification Measures 2. During the Track Record Period, Century According to the Settlement Method of Payment Century Heguang (Beijing) had voluntarily ceased Heguang (Beijing) had engaged in the (《支付結算辦法》) issued by the People’s Bank of its onshore payment and settlement business since following business, which may be China in 1997, non-bank financial institutions and July 2018 and had returned the previously recognized as the third-party payment other units shall not operate payment and deposited funds to all merchants, upon discovering business due to its nature, in China settlement business as intermediaries without the the non-compliance. without the approval of relevant approval of the People’s Bank of China, except as authorities: otherwise provided by laws and administrative regulations. (i) Overseas financial institutions, such as Bank of China Cash or The Administrative Measures for the Payment Cybersource, paid a total of Services Provided by Non-financial Institutions approximately RMB941.2 million (《非金融機構支付服務管理辦法》) promulgated in to Century Heguang (Beijing)’s 2010 provides that where non-financial institutions domestic bank account at the and individuals are engaged in payment services in China Merchants Bank through any form without prior approval of the People’s the relevant settlement bank (the Bank of China, the People’s Bank of China and its Bank of China/Agricultural Bank branches may order the termination of such of China); and business, and that where such institutions or individuals are suspected of committing crimes, the (ii) Century Heguang (Beijing) public security institution may commence transferred a total of investigations according to the applicable laws. approximately RMB990.7 million in its domestic bank account at In accordance with the Circular of the General the China Merchants Bank to Office of the People’s Bank of China on Further DHgate sellers’ RMB accounts Strengthening the Rectify of Unlicensed Operations from January to July 2018. of Payment Business (Yinbanfa [2017] 217, “Circular 217”)《中國人民銀行辦公廳關於進一步 ( 加強無證經營支付業務整治工作的通知》銀辦發 [2017]217號文), in order to rectify the operation of payment business without licenses, the relevant authorities would take the license-holder institutions (including banking financial institutions, non-bank payment institutions, etc.) as the starting point, comprehensively examine the non-compliance behaviors of the license-holder institutions providing payment and settlement services for the institutions without licenses. For the institutions without licenses found by repeated investigations, the payment business will be ordered to terminate, and if the circumstances cause serious losses, they will be subject to punishment by the relevant departments in accordance with the regulations. Circular 217 also makes it clear that unlicensed payment business includes activities to access licensed institutions through platform or merchants mode, retain merchants’ settlement funds and complete capital settlement by unlicensed entities, namely the activities of “Twice Settlement” (“二清”).

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Legal Consequences, Potential Maximum Penalties and Matters of Non-compliance and Reasons for Non-compliance Other Financial Losses Rectification Measures In December 2018, our PRC Legal Advisor had consulted with the People’s Bank of China, the competent authority in respect of payment business in the PRC in the opinion of our PRC Legal Advisor, which confirmed that they would not actively punish the companies which engaged in payment business without license, if the companies had taken the initiative to rectify and terminate such business.

As advised by our PRC Legal Advisor, the risk of Century Heguang (Beijing) being subject to administrative penalty as a result of the non-compliance is remote, on the following grounds:

(i) Century Heguang (Beijing) had voluntarily ceased its onshore payment and settlement business since July 2018 and had returned the previously deposited funds to all merchants, upon discovering the non-compliance in June 2018;

(ii) the payment and settlement business had not caused losses to merchants; and

(iii) as at the Latest Practicable Date, no competent authorities had initiated regulatory actions over Century Heguang (Beijing) in relation to the non-compliance.

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Internal control measures

In order to prevent future non-compliance of our Group, we had engaged our Internal Control Consultant to review the internal control effectiveness of our Group covering major business process.

(1) our Board will continuously monitor, evaluate and review our internal control system to ensure compliance with the applicable legal and regulatory requirements and will adjust, refine and enhance our internal control system as appropriate;

(2) we have adopted the measures on the management of new business development, which provides for procedures to be undertaken in developing new businesses. Such procedures include, among others, researching on the applicable regulations, obtaining the requisite licenses, and seeking external legal advice if necessary;

(3) we will provide legal compliance training to our personnel, including engaging our external legal advisors to provide advice to our personnel on the relevant laws and regulations; and

(4) if necessary, we will appoint external legal advisors to advise us on matters relating to compliance with the applicable laws and regulations.

Our Directors are of the view that the occurrence of the aforementioned non-compliance incidents was principally due to the lack of knowledge of and familiarity with the applicable legal requirements. In preparation for the [REDACTED], our Directors have undergone training on the aforementioned laws and regulations and have also engaged legal advisors to advise them on applicable legal or regulatory requirements. Further, our Group will engage legal advisors to render advice and provide training to our Directors where necessary to ensure that we are in compliance with applicable laws and regulations pertaining to the aforementioned non-compliance incidents and their updates from time to time. After considering the above rectification and remedial actions taken by our Group, and our business nature and scale of operation, our Directors are satisfied that our internal control system is adequate and effective for our current operations. During the Track Record Period and up to the Latest Practicable Date, our Group had not been charged or penalized for the above non-compliance incidents. Our Directors expect that the non-compliance incidents will not have any material adverse operational and financial impact on our Group.

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View of our Directors and the Sole Sponsor

Having considered that (i) the nature and the circumstances giving rise to the above non-compliance incidents were principally due to lack of relevant legal knowledge and professional advice and there were no involvement of any dishonesty or fraudulent act on the part of our Directors; (ii) upon discovery of the non-compliance incidents, our Directors took actions proactively to carry out rectification measures and the non-compliance incidents have been rectified, where applicable; (iii) the maximum penalty is not material and the likelihood of prosecution is low based on the relevant legal opinions; and (iv) we have enhanced our internal control system and will engage external legal advisors to ensure compliance with the relevant laws and regulations and to prevent recurrence of the non-compliance incidents, our Directors are of the view and the Sole Sponsor concurs, that none of these incidents have any material adverse impact on our business operations and financial position and the above non-compliance incidents would not affect the suitability of our Directors to act as directors of a listed issuer under Rules 3.08 and 3.09 of the Listing Rules or the suitability of listing of our Company under Rule 8.04 of the Listing Rules.

RISK MANAGEMENT AND INTERNAL CONTROL

We have established and currently maintain risk management and internal control systems as well as corporate governance measures comprising policies and procedures in essential aspects of our business operations, including financial reporting, commingling funds, sanctions, and internal control. Our Board of Directors is responsible for establishing and monitoring our risk management and internal control systems, while our senior management oversees the daily implementation of the internal control procedures and measures of each department. We strive to foster a compliance culture among our employees. To this end, we adopted procedures and policies to ensure strict accountability of individual employees, and regularly conduct internal compliance checks and inspections and conduct compliance training.

To monitor the continuous implementation of risk management systems and corporate governance measures after the Listing, our Audit Committee, comprising Mr. Kot Man Tat, Mr. Lai Xiaoling, and Mr. Wan Kah Ming, all being our independent non-executive Directors, shall be responsible for, among other things, reviewing and supervising our financial reporting process and internal control systems, as well as reviewing the existing and potential risks of our Company.

In preparation for the Listing, we engaged an independent Internal Control Consultant in December 2020 to conduct a comprehensive review over selected areas of our internal controls (the “Internal Control Review”). The scope of the Internal Control Review performed by the Internal Control Consultant was agreed between us, the Sole Sponsor and the Internal Control Consultant. The selected areas of our internal controls over financial reporting that were reviewed

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BUSINESS by the Internal Control Consultant included (i) entity-level controls including control environment, risk assessment, control activities, information and communication and monitoring, and (ii) business process level controls including revenue and collection, purchase and payment, anti-money laundering and counter-terrorist financing management, selling expenses management, inventory and cost management, asset management, human resources and payroll management, cash and treasury management, financial reporting management, taxation management, insurance management, investment and financing management, contract management, intellectual property management, IT application controls and IT general controls. The Internal Control Consultant provided recommendations in relation to strengthening the aforesaid internal controls over financial reporting to our management for consideration.

The Internal Control Consultant performed a follow-up review in February 2021 to review the status of the management actions taken by us to address the findings of the Internal Control Review. The Internal Control Consultant did not have any further recommendation in the follow-up review and our Directors confirmed that all of the major recommendations provided by the Internal Control Consultant have been followed and corrective actions have been taken accordingly to address our internal control deficiencies and weaknesses.

Operational Risk Management

Fraud Detection

We have implemented various measures to ensure that we can effectively detect fraud on our platform. We adopt stringent seller onboarding verification procedures. We also collaborate with and adopt the anti-fraud model developed by a leading international third-party fraud solution service provider, to automate the detection of anomalies in our voluminous transactions. In the event that it cannot be determined whether or not it is fraud, a team of legal personnel will be responsible for determining it. We also continuously monitor buyers and sellers to identify potentially fraudulent activities. We maintain a blacklist of buyers and sellers who have been determined to have been involved in fraud. Depending on the level of fraud they have been involved in, they are subject to different levels of restrictions including, among others, restriction on transactions for a certain period, restriction on deposits withdrawal, and account cancellation.

Anti-counterfeiting

We have zero tolerance for counterfeit products, and have in place a robust system to ensure the authenticity of products listed on our platforms. We carefully screen and verify our sellers during the onboarding process, ensuring they have sufficient internal systems and policies to prevent the sale of counterfeit products. Among others, we require natural person sellers to provide identification documents and corporate sellers to provide business license, certificate of

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BUSINESS incorporation, identification of their authorized representatives. We use a combination of automated system inspection and manual inspection to verify the identification documents. We maintain brand qualification records containing seller and brand information to facilitate rights protection and the identification of counterfeit products. We also impose penalties including warning, selling restrictions and account cancellation on sellers for sale of counterfeit products on our platform.

Further, we leverage AI and data analytics technologies, and have devised and implemented a range of procedures to monitor the vast amount of products listed on our marketplace. Utilizing optical character recognition technologies, the images of the product and logos uploaded by sellers will be compared to our image bank and descriptions of products to be listed will also be compared to our words bank to identify potential counterfeit products. Further, we cooperate with a third-party international fraud detection services provider to proactively scan our product listings and identify counterfeit evading our detection as supplement to further reduce the possibility of counterfeit being listed on our platform.

In the event that it cannot be determined whether or not the product to be listed is counterfeit, it will be handled by our contracted team which had approximately 30 staff members as of December 31, 2020. The manual verification process is usually completed within 72 hours.

Financial Reporting Risk Management

We have designed and adopted comprehensive policies in respect of our financial reporting risk management, including financial system management, internal audit, budget management and operation analysis management. Accordingly, we have procedures in place to ensure the effective implementation of such policies, and our financial department regularly reviews our management accounts based on such procedures. We also require our financial department staff to participate in regular trainings to ensure they understand our accounting policies and procedures.

Commingling Funds Risk Management

To prevent commingling our own funds with our customers’, we have adopted stringent policies including maintaining separate accounts for our buyers, sellers and us. We have also adopted stringent policies for customers’ funds management, which stipulate that, among others, (i) the permissible scope of incoming funds into our customers’ accounts, such as allowing funds paid by customers and allocation of funds among multiple customers’ funds accounts, (ii) the permissible scope of withdrawal of funds from customers’ funds accounts, which shall be limited to, among others, customers’ withdrawal of funds, refunds, payment of banking fees incurred by the customers, and withdrawal of commissions and other service income.

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We also deploy designated personnel to monitor the activities of the customers’ accounts on a daily basis, and timely report any unusual activity identified to the management. Our internal audit department is responsible for conducting an independent review of customers’ funds management on an annual basis, ensuring effective implementation of the policies, and providing rectification suggestions.

Our Internal Control Consultant performed a review of our internal control measures on customers’ funds management in March 2021, based on the results of which, we have adopted a number of enhanced internal control measures. Our Internal Control Consultant performed a follow-up review in May 2021, and confirmed that all enhanced measures have been properly implemented, and did not raise any further recommendations. Our Internal Control Consultant is of the view that such measures, if implemented on a continuous basis, are effective and adequate to manage the commingling funds risk.

Sanction Risk Management

Certain countries or organizations, including the U.S., the European Union, the United Nations and Australia, maintain economic sanctions and trade restrictions targeting certain industries or sectors within the Sanctioned Countries. See “— Business Activities in Sanctioned Countries — Our Undertakings and Internal Control Procedures” for details.

Internal Control Risk Management

We have in place stringent internal control procedures to ensure that our business operations comply with applicable rules and regulations.

Our in-house legal and compliance department is responsible for taking all necessary measures including obtaining any requisite governmental pre-approvals or consents. They are also responsible for reviewing and updating the form of contracts we enter into with our customers, suppliers, and service providers. In addition, our legal department examines the contract terms and reviews relevant documents for our business operations, and the necessary underlying due diligence materials, before we enter into any contract or business arrangement.

Historically, there were incidents where we operated without the required licenses. See “— Legal Proceedings and Non-Compliance — Non-Compliance — Hong Kong.” Our Internal Control Consultant performed a review of our internal control measures over license management in March 2021, based on the results of which, we have adopted a number of enhanced internal control measures. Based on the follow-up review in May 2021, our Internal Control Consultant is of the

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BUSINESS view that our enhanced internal control measures are adequately and effectively designed to prevent the recurrence of non-compliance incidents as described above and such measures have been effectively implemented.

We continually review the implementation of our risk management policies and measures to ensure our policies and implementation are sufficient.

BUSINESS ACTIVITIES IN SANCTIONED COUNTRIES

The U.S. and other jurisdictions or organizations, including the European Union, the United Kingdom, the United Nations and Australia, have, through executive orders, passing of legislation or other governmental means, implemented measures that impose economic sanctions on certain countries or on targeted industry sectors, groups of companies or persons, and/or organizations within such countries, including but not limited to Crimea, Cuba and Iran. See “Regulatory Overview — Sanctions Laws and Regulations.”

During the Track Record Period, certain sellers on our platform took orders from buyers who had IP addresses from Crimea, Cuba and Iran, which are subject to comprehensive sanctions programs administered by OFAC. We also provided payment services with respect to some of these transactions. During the Track Record Period, our revenue generated from such historical activities represented approximately 0.003%, 0.001% and nil of our total revenue for the years ended December 31, 2018, 2019 and 2020, respectively.

Sanction Risks

U.S.

During the Track Record Period, we had identified the following transactions relating to Crimea, Cuba and Iran:

• 78 separate payments from 31 customers relating to transactions that listed deliveries to Crimea in 2018 to 2019 totaling USD3,490.4 (for which DHgate received commission fees of USD376.3);

• 34 separate payments from 15 customers relating to transactions that listed deliveries to Cuba in 2018 totaling USD3,067.7 (for which DHgate received commission fees of USD232.7); and

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• 337 separate payments from 42 customers relating to transactions that listed deliveries to Iran in 2018 totaling USD14,030.9 (for which DHgate received commission fees of USD1,652.2).

Hogan Lovells, our Special Counsels, are of the view that such transactions represented Primary Sanctioned Activities which were not consistent with the U.S.’ sanctions regulations. On February 25, 2020, we filed a voluntary self-disclosure (“VSD”) with OFAC in relation to historical transactions including, among others, the Primary Sanctioned Activities during the Track Record Period and cooperated with the U.S. government in resolving the matter. On January 27, 2021, OFAC responded to the VSD with the Cautionary Letter representing a final enforcement response, in which OFAC stated that it would not pursue any civil monetary penalty or take other enforcement action against the matters disclosed in the VSD. Accordingly, both we (as advised by our Special Counsels) and OFAC consider that the potential legal issues raised through the VSD to be fully closed with the issuance of the Cautionary Letter and without the imposition of any civil monetary penalty.

We ceased all our Primary Sanctioned Activities as well as other businesses involving or otherwise connecting to comprehensive sanctioned countries since February 2019, and do not have any plans, whether actual, anticipated or otherwise, to engage in any businesses that may involve or connect to the aforementioned countries or regions. See “— Our Undertakings and Internal Control Procedures.” Considering the insignificant revenue contribution from the Primary Sanctioned Activities during the Track Record Period, our Directors are of the view that the said cessations of businesses would not result in any material adverse financial and operational impact to our Group. As advised by our Special Counsels based on the information we provided to them, other than the Primary Sanctioned Activities, our business transactions do not implicate any other International Sanctions administered by the U.S.

United Nations

On the basis that our Group’s activities involving countries in which various forms of sanctions programs are in place were limited to the provision of delivery and payment processing services, and did not involve any products that are export-controlled, and that we do not have business dealings with parties targeted by sanctions imposed by the United Nations, our Special Counsels are of the view that our business dealings do not appear to implicate restrictive measures adopted by the United Nations.

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European Union (Including the United Kingdom) and the United Kingdom Overseas Territories

According to our Special Counsels, the prohibitions and wider restrictions under the existing European Union sanctions measures, including those extended to the United Kingdom Overseas Territories, are not implicated by our Group’s business activities with countries in which various forms of sanctions programs are in place under the applicable laws, given that:

• Virtually all activities involving countries in which various forms of sanctions programs are in place were not conducted by any national of or entity incorporated, domiciled, or otherwise located in either the territories of the European Union (including the United Kingdom) and the United Kingdom Overseas Territories;

• Our Group’s activities are limited to the provision of delivery and payment processing services, and did not involve any products that are export-controlled or subject to sectoral sanctions in the European Union or United Kingdom Overseas Territories;

• We are not engaged in transactions, business or financial dealings that directly or indirectly involve or benefit a person or entity listed under the relevant sanctions, or engage in any other activity subject to restrictions under sectoral European Union sanctions; and

• Our Group was not involved in any export from the European Union (including the United Kingdom) and the United Kingdom Overseas Territories of any items listed on the relevant military lists in respect of the control of exports of military technology and equipment.

Australia

Our Special Counsels are of the view that international sanctions measures administered and enforced by the Government of Australia do not appear to be implicated by the Group’s activities, on the basis that (i) our Group is not a person in, or a citizen or registered body of Australia, or owned or controlled by Australians or persons in Australia, or a person using an Australian flag vessel or aircraft to transport goods or transact services subject to Australian autonomous sanctions and (ii) our dealings do not appear involve products or services that are restricted under Australian export controls.

We have been advised by our Special Counsels that except for the historical USD transactions relating to regions that were subject to comprehensive U.S. sanctions, which the OFAC has resolved in response to the VSD with a cautionary letter representing a final enforcement response to such historical transactions, our business activities involving the Sanctioned Countries do not

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BUSINESS appear to have violated any applicable International Sanctions law or regulation and do not appear to give rise to any material sanctions risk. This assessment was provided by our Special Counsels subsequent to their review of documents and responses provided by us in respect of, among other things, our business operations, revenues, contracts and agreements, a list of all countries in which our customers are located, subsidiaries, ownership structure and management.

Our Undertakings and Internal Control Procedures

We have implemented procedures to manage our business to comply with the International Sanctions, such as disallowing access to our services by persons located in Sanctioned Countries and prohibition on transactions in Sanctioned Countries, evaluation of sanctions risks before we devise our expansion strategy, and regularly review our procedures regarding sanction matters to ensure compliance with such procedures.

We have made the following undertakings to the Stock Exchange:

• We will not use the [REDACTED] from the [REDACTED], as well as any other funds raised through the Stock Exchange, to finance or facilitate, directly or indirectly, activities or business with, or for the benefit of, any Sanctioned Countries or any other government, individual or entity sanctioned by the U.S., European Union, United Nations or Australia, including, without limitation, any government, individual or entity that is the subject of any OFAC-administered sanctions;

• We will not use the [REDACTED] from the [REDACTED], as well as any other funds raised through the Stock Exchange, to pay any damages for terminating or transferring any contracts that constitute activity violating international sanctions laws and/or regulations;

• We will not undertake any sanctionable transactions that would expose our Group, or any person or entity, the Stock Exchange, the listing sub-committee of the board of directors of the Stock Exchange, the HKSCC and the HKSCC Nominees Limited or our Shareholders, to the risk of being sanctioned; and

• We will disclose on the respective websites of the Stock Exchange and our Group if we believe that any transaction our Group has entered into in the Sanctioned Countries or with Sanctioned Persons would expose our Group or our Shareholders, or any other person involved in the [REDACTED], to any risk of being sanctioned, and in our annual reports or interim reports our efforts in monitoring our business exposure to sanctions risk and our business intention relating to the Sanctioned Countries and with Sanctioned Persons.

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We have adopted internal control and risk management measures to help us continuously monitor and evaluate our business and take measures to protect the interest of our Group and our Shareholders from sanctions risks. The following measures have been implemented as at the Latest Practicable Date:

• Implementation of IP geoblocking measures to prevent access to our website by online buyers or merchants whose IP addresses are located in comprehensively sanctioned countries/regions, including Crimea, Cuba, Iran, North Korea and Syria;

• Implementation of blocking measures to disallow transactions which designate any comprehensively sanctioned countries/regions (including Crimea, Cuba, Iran, North Korea and Syria) as the destination for delivery;

• Implementation of a sanctions compliance policy (敦煌網反洗錢反恐怖主義融資反制裁國家調查及規範) since June 2019 that applies to all sales on our marketplace, under which any transaction that is found suspicious by our internal risk control personnel cannot proceed unless it is reviewed, investigated and approved by our department of integrity and safety with advice from external legal counsel, as needed;

• Implementation of a screening process since March 2020 that would identify if any person or entity on the Consolidated Sanctions Lists maintained by OFAC (including the Specially Designated Nationals List) is trying to use our marketplace. Under the policy, such use would not be allowed;

• Implementation of a certification that all registrants’ on our Company’s website must review and agree to sanctions compliance prior to any use of our online platform, confirming that they are not themselves sanctioned;

• We will periodically review the sanction lists published on the website of the relevant authorities, and update our enterprise operating system accordingly. We will deploy dedicated staff to implement the relevant internal control measures with respect to sanctions risks, and in particular, monitoring suspicious transactions and file reports on sanctions countries to the risk management committee on quarterly basis, which will set out suspected cases, investigation results, measures taken and recommendations;

• To further enhance our existing internal risk management functions, our Board has established a risk management committee. The members of such committee comprise our three independent non-executive Directors, namely Mr. Kot Man Tat, Mr. Lai Xiaoling and Mr. Wan Kah Ming, and their responsibilities include, among other things,

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monitoring our exposure to sanctions risks and our implementation of the related internal control procedures. Our risk management committee will hold at least two meetings each year to monitor our exposure to sanctions risks;

• We will evaluate the sanctions risks prior to determining whether we should embark on any business opportunities in the Sanctioned Countries and with the Sanctioned Persons. According to our internal control procedures, the transaction network services (“TNS”) department needs to review and approve all relevant business transaction documentation from customers or potential customers from the Sanctioned Countries and with the Sanctioned Persons, and report to the risk management committee. In particular, the risk management committee will review the information (such as identity and nature of business as well as its ownership) relating to the counterparty to the contract along with the draft business transaction documentation. Our TNS department will check the counterparty against the various lists of restricted parties and countries maintained by the U.S., the European Union, United Nations or Australia, including, without limitation, any government, individual or entity that is the subject of any OFAC-administered sanctions which lists are publicly available, and determine whether the counterparty is, or is owned or controlled by, a person located in the Sanctioned Countries or a Sanctioned Person, and report to the risk management committee. If any potential sanctions risk is identified, we will seek advice from reputable external International Sanctions legal counsel with necessary expertise and experience in International Sanctions matters;

• Our risk management committee will periodically review our internal control policies and procedures with respect to sanctions matters. As and when our risk management committee considers necessary, we will retain external International Sanctions legal counsel with necessary expertise and experience in sanctions matters for recommendations and advice; and

• If necessary, external International Sanctions legal counsel will provide training programs relating to the sanctions to our Directors, our senior management and other relevant personnel to assist them in evaluating potential sanctions risks in our daily operations. In January 2020, our Special Counsels held a training in Beijing for members of management and legal and business operations teams who may be involved in overseas transactions to increase awareness regarding new compliance procedures. Our external International Sanctions legal counsel will provide a current/updated list of Sanctioned Countries to our Directors, senior management and other relevant personnel, who will in turn disseminate such information throughout our domestic operations and overseas offices and branches.

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Our Special Counsels have reviewed and evaluated our internal control measures above and is of the view that these relevant measures are reasonably designed, based on our services and risk assessment, to enable us to comply with applicable international sanctions laws and our undertakings to the Stock Exchange. If we were in breach of such undertakings to the Stock Exchange, we risk the possible delisting of our Shares on the Stock Exchange. See “Risk Factors — Risks Relating to Our Business and Industry — We could be adversely affected as a result of any sales we make to certain countries that are, or become subject to, export control and economic or trade sanctions administered by the U.S., the European Union, the United Kingdom, the United Nations, and other relevant sanctions authorities” for more details.

Having taken the advice of our Special Counsels into account, our Directors are of the view that the above measures provide a reasonably adequate and effective internal control framework to assist us in identifying and monitoring any material risk relating to sanctions laws so as to protect the interests of our Shareholders and us. After undertaking the relevant due diligence and having considered the measures adopted by the Company including the advice of the Special Counsels, subject to the full implementation and enforcement of such measures, the Sole Sponsor is of the view that these measures will provide a reasonably adequate and effective internal control framework to assist the Company in identifying and monitoring any material risk relating to sanction laws.

LICENSES, PERMITS AND REGULATORY APPROVALS

As of the Latest Practicable Date, as confirmed by our Legal Advisors, we had obtained all requisite licenses, permits, and approvals from relevant authorities that are material to our operations in our places of operations, except as disclosed in the section headed “— Legal Proceedings and Non-compliance.”

The following table sets forth the material license and permits currently held by us:

No. Licenses/Permits Holder Issuing Authority Issuance Date Expiry Date 1 Certificate of Century Heguang Beijing Customs District June 4, 2015 / Registration of (Beijing) of the People’s Customs Declaration Republic of China Entities (報關單位註冊 (中華人民共和國北京登記證書) ...... 海關)

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No. Licenses/Permits Holder Issuing Authority Issuance Date Expiry Date 2 Registration Form of Century Heguang Foreign Trade Business May 16, 2016 / Foreign (Beijing) Operators Archival Trade Operators (對外 Filing and Registration 貿易經營 Authority in Haidian 者備案) ...... District, Beijing (北京海澱對外貿易經營者備案登記機關)

3 Registration Form of Century Heguang Beijing Entry-Exit June 5, 2015 / Enterprises (Beijing) Inspection and Applying for Quarantine Bureau (北 Entry-Exit Inspection 京出入境檢驗檢疫局) and Quarantine (出入境檢驗檢疫報檢企業備案) ......

4 Value-Added Century Rich Palace Beijing Communication April 25, 2018 February 13, Telecommunication Administration (北京市 2023 Services License (增值通信管理局) 電信業務經營許可證) .

5 Certificate of Century Rich Palace Beijing Customs District October 25, / Registration of of the People’s 2016 Customs Declaration Republic of China (中 Entities (報關單位註冊華人民共和國北京海登記證書) ...... 關)

6 Registration Form of Century Rich Palace Beijing Entry-Exit November 4, / Enterprises Inspection and 2016 Applying for Quarantine Bureau (北 Entry-Exit Inspection 京出入境檢驗檢疫局) and Quarantine (出入境檢驗檢疫報檢企業備案) ......

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BUSINESS

No. Licenses/Permits Holder Issuing Authority Issuance Date Expiry Date 7 Registration Form of Century Rich Palace Foreign Trade Business September 20, / Foreign Trade Operators Archival 2016 Operators (對外貿易經 Filing and Registration 營者備案) ...... Authority in Haidian District, Beijing (北京海澱對外貿易經營者備案登記機關)

8 Registration Form of Century Rich Palace Beijing Municipal Bureau March 6, 2019 / Online Transaction of Press and Platform Providing Publication (北京市新 Services for the 聞出版局) Business of Publications Distribution (為出版物發行業務提供服務的網路交易平台備案) ..

9 Registration Form of Century Rich Palace Beijing Municipal August 3, 2018 / Provider of Platform Medical Products for Online Sale of Administration (北京市 Food Joint Operator 食品藥品監督管理局) (網絡食品交易協力廠商平台提供者備案) ..

10 Registration Form of Century Rich Palace Ministry of Commerce of // International Freight the People’s Republic Forwarder (國際貨運 of China (中華人民共代理企業的備案) .... 和國商務部)

11 Registration Form of Fuyue Technology Ministry of Commerce of // International Freight Development the People’s Republic Forwarder (國際貨運 (Shanghai) of China (中華人民共代理企業的備案) .... Company Limited * 和國商務部) (富越科技發展(上海)有限公司)

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ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

We do not operate any production facilities. Therefore, we are not subject to significant health, safety or environmental risks. To ensure compliance with applicable laws and regulations, our human resources department would, if necessary and after consultation with our legal advisors, adjust our human resources policies to accommodate material changes to relevant labor and safety laws and regulations. During the Track Record Period and up to the Latest Practicable Date, we had not been subject to any fines or other penalties due to non-compliance with health, safety or environmental regulations. Our Directors confirmed that during the Track Record Period and up to the Latest Practicable Date, there were no material accidents, nor claims for personal or property damage.

Our Board is responsible for establishing, implementing and evaluating the environmental, social and governance (“ESG”) policies and targets. Under our ESG Policy, we are dedicated to creating a dynamic community with our employees, buyers, sellers and service providers through supporting initiatives that focus on long-term benefits on the local community. Moreover, we also strive to minimize any negative impacts on the environment through our various measures in relation to energy saving and sustainable development. We will also endeavor to promote diversity and equal treatment for our employees within our organization.

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PRC REGULATORY BACKGROUND

Overview

Foreign investment activities in the PRC are mainly governed by the Guidance Catalog of Industries for Foreign Investment (the “Catalog”), which was promulgated and is amended from time to time jointly by the MOFCOM and the National Development and Reform Commission (“NDRC”). The Catalog divides industries into four categories in terms of foreign investment, namely, “encouraged”, “restricted”, “prohibited” and “permitted” (the last category of which includes all industries not listed under the “encouraged”, “restricted” and “prohibited” categories). Pursuant to the Catalog, the “restricted” and “prohibited” categories fall into the “Negative List.”

The principal business of Century Rich Palace involves provision of telecommunication and information services through websites, which falls within the scope of “value-added telecommunication service” under the Telecommunications Regulations《電信條例》 ( ). Century Rich Palace currently holds a Value-Added Telecommunication Services License (增值電信業務經營許可證) issued by Beijing Communication Administration (北京市通信管理局), which covers the following business categories: (1) an electronic data interchange license (the “EDI License”) only for the operating e-commerce business; and (2) a value-added telecommunications business operating license (the “ICP License”) only for the provision of Internet information service.

According to the applicable PRC laws and regulations, the e-commerce business is not subject to foreign ownership restriction but foreign investors are not allowed to hold more than 50% equity interests in any enterprise conducting value-added telecommunication service (other than e-commerce, domestic multiparty communications, store-and-forward and call center) and are subject to the Qualification Requirements (as defined below). On January 14, 2021, our PRC Legal Advisor and the legal advisor of the Sole Sponsor as to PRC law conducted a verbal consultation (the “Verbal Consultation”) with a division chief of the Ministry of Industry and Information Technology (the “MIIT”), during which it was confirmed that, according to the 2020 Foreign Investment Negative List and other applicable PRC laws, foreign investors are not allowed to hold more than 50% of the equity interests in an enterprise holding an ICP License like us, and the Qualification Requirements (as defined below) shall be satisfied when foreign investors do invest in the value-added telecommunications business (including businesses that require an EDI License and an ICP License). Our PRC Legal Advisor has advised us that (i) the MIIT is a competent government authority for regulating the Company’s relevant business activities; (ii) the division chief of the MIIT consulted has the authority to provide such confirmation; and (iii) based on the Verbal Consultation, the adoption of the Contractual Arrangements would not be challenged or subject to penalty for any violation of relevant PRC Laws and regulations. Our PRC Legal Advisor is of the view that the use of the Contractual Arrangements does not constitute a breach of the relevant PRC laws and regulations.

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For further details of the limitations on foreign ownership in PRC companies conducting the aforementioned business under PRC laws and regulations, please refer to “Regulatory Overview.”

Qualification requirements

Value-added telecommunication service business

On December 11, 2001, the State Council promulgated the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises《外商投資電信企業管理規定》 ( ) (the “FITE Regulations”), which were amended on September 10, 2008 and February 6, 2016, respectively. According to the FITE Regulations, foreign investors are not allowed to hold more than 50% of the equity interests in a company providing value-added telecommunications services, including Internet information services. In addition, a foreign investor who invests in a value-added telecommunications business in the PRC must possess prior experience in and a proven track record of operating value-added telecommunications businesses overseas (the “Qualification Requirements”). Foreign investors that meet these requirements must obtain approvals from the MIIT and/or its authorized local counterparts which retain considerable discretion in granting such approvals. Currently none of the applicable PRC laws and regulations provides clear guidance or interpretation on the Qualification Requirements. The MIIT issued a guidance memorandum on the application requirement for establishing foreign-invested value-added telecommunications enterprises in the PRC on August 1, 2019. According to this guidance memorandum, an applicant is required to provide, among other things, the applicant’s previous telecommunications business licenses issued by the relevant local authorities, satisfactory proof of the Qualification Requirements and a business development plan. The guidance memorandum does not provide any further guidance on the proof, record or document required to support the proof satisfying the Qualification Requirements. Further, this guidance memorandum does not purport to provide an exhaustive list on the application requirement.

Pursuant to the Verbal Consultation, the division chief of the MIIT further confirmed that there were no specific guidelines for the Qualification Requirements, and our PRC Legal Advisor has confirmed that the division chief of the MIIT consulted has the authority to provide such confirmation.

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Despite the lack of clear guidance or interpretation on the Qualification Requirements, we have been making efforts to gradually built up our track record of overseas telecommunications business operations for the purposes of being qualified, as early as possible, to acquire the entire equity interests in our Operating Entity when the relevant PRC laws and regulations allow foreign investors to invest and to directly hold equity interests in value-added telecommunications enterprises in China. For the purposes of meeting the Qualification Requirements, we have established and accumulated overseas experience, for example:

(i) We have owned and registered domain names outside of the PRC;

(ii) We have established subsidiaries in Hong Kong, France and the United Kingdom for the purpose of promoting the Company’s services and businesses, and entering into business contracts with offshore counterparties; and

(iii) Through our offshore subsidiaries, we plan to explore business opportunities for value-added telecommunications services in the overseas markets.

Based on the above and subject to the discretion of the competent authority on whether the Group has fulfilled the Qualification Requirements, our PRC Legal Advisor is of the view that these experiences are reasonable and appropriate to comply with the Qualification Requirements.

We will, as applicable and when necessary, disclose any updates to the Qualification Requirements in our annual and interim reports to inform Shareholders and other investors after the Listing. We will also make periodic inquiries with relevant PRC authorities to understand any new regulatory development and assess whether our level of overseas experience is sufficient to meet the Qualification Requirements.

OUR CONTRACTUAL ARRANGEMENTS

Overview

In order to comply with relevant PRC laws and regulations and to maintain effective control over all of its operations, in 2006 and 2010, Century Heguang (Beijing), a wholly owned subsidiary of Heguang International (Cayman), entered into a series of contractual arrangements with Chongqing Rich Palace and its shareholders, Ms. Wang and Ms. Liu. Through these contractual arrangements, Heguang International (Cayman) is able to gain effective control over, and receive all economic benefits generated by Chongqing Rich Palace and its subsidiaries.

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In preparation for the [REDACTED], we commenced a series of reorganization activities. Pursuant to the Reorganization, in replacement of the previous contractual arrangements, the Contractual Arrangements currently in effect were entered into on September 27, 2018, whereby Digitrading Beijing has acquired effective control over the financial and operational policies of our Operating Entity and has become entitled to all the economic benefits derived from its operations. The Contractual Arrangements allow the results of operations and assets and liabilities of Century Rich Palace to be consolidated into our results of operations and assets and liabilities under HKFRS as if it was a subsidiary of our Group. The aggregate revenue of all the operating entities we controlled through contractual arrangements amounted to approximately 43.6% of those of the Group for the year ended December 31, 2020. We believe that the Contractual Arrangements are narrowly tailored, as they are used to enable our Group to conduct businesses in industries that are subject to foreign investment restrictions in the PRC.

Our Directors believe that the Contractual Arrangements are fair and reasonable because: (i) the Contractual Arrangements were freely negotiated and entered into between Digitrading Beijing and our Operating Entity; (ii) by entering into the Exclusive Consultancy and Technical Services Agreement (as defined below) with Digitrading Beijing, which is one of our subsidiaries established in the PRC, our Operating Entity will enjoy better economic and technical support from us, as well as a better market reputation after the Listing; and (iii) a number of other companies use similar arrangements to accomplish the same purpose.

The following simplified diagram illustrates the flow of economic benefits from Century Rich Palace to our Group as stipulated under the Contractual Arrangements:

Our Company

Digitrading Registered Beijing(1) Shareholders(2)

Management and Consulting Service Services Fees

Century Rich Palace

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Notes:

(1) Digitrading Beijing is an indirect wholly-owned subsidiary of our Company.

(2) Ms. Wang and Ms. Liu are collectively referred to as the “Registered Shareholders.”

Circumstances under which we will unwind the Contractual Arrangements

Our Group will unwind and terminate the Contractual Arrangements as soon as practicable in respect of the operation of our website and mobile applications to the extent permissible and we will directly hold the maximum percentage of ownership interests permissible under relevant PRC laws and regulations if the relevant government authority grants the ICP License, to sino-foreign equity joint ventures or wholly-owned foreign investment entities under relevant PRC laws and regulations and the policy adopted by the competent authority.

Summary of the agreements under the Contractual Arrangements and other key terms thereunder

A description of each of the specific agreements that comprise the Contractual Arrangements is set out below:

Exclusive Consultancy and Technical Services Agreement

Pursuant to the exclusive consultancy and technical services agreement dated September 27, 2018 entered into between Digitrading Beijing, the Registered Shareholders and Century Rich Palace (the “Exclusive Consultancy and Technical Services Agreement”), Century Rich Palace agreed to engage Digitrading Beijing as its exclusive provider of consulting and technical services, including but not limited to, providing server maintenance, platform management and related consultancy services, platform marketing and promotional services, client maintenance and management services, server and software development, maintenance and upgrading service, e-commerce technical support service, staff training service for technical support employee and business staff, labor support and other relevant services to the extent permitted under PRC laws and regulations. Digitrading Beijing has the discretion to adjust the scope and term of the services from time to time. In exchange for these services, Century Rich Palace shall pay a service fee, which is equal to 80% of Century Rich Palace’s net profit. Digitrading Beijing may, at its discretion, adjust the amount of service fee to be paid by Century Rich Palace after taking into account various factors, including the results and profitability of Century Rich Palace, the cost of Digitrading Beijing for providing the consultancy and technical service, the efficiency in providing such service and the extent the operation of Century Rich Palace benefits from such services. The service fee shall be paid monthly to the designated bank account of Digitrading Beijing within seven business days after issuance of invoice by Digitrading Beijing.

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During the term of the Exclusive Business Cooperation Agreement, Digitrading Beijing enjoys all the economic benefits and bears all risks in relation to Century Rich Palace’s business operation. Pursuant to the Exclusive Business Cooperation Agreement, Digitrading Beijing may, but is not obligated to, provide financial assistance to Century Rich Palace.

The Exclusive Consultancy and Technical Services Agreement also provides that Digitrading Beijing has the exclusive proprietary rights to all intellectual property rights, including but not limited to copyright, patents, patent applications, trademarks, software, technical secrets, trade secrets and others, developed or created during the performance of the Exclusive Consultancy and Technical Services Agreement.

In addition, without the prior written consent of Digitrading Beijing, Century Rich Palace shall not, during the term of the Exclusive Consultancy and Technical Services Agreement, accept the same or any similar services provided by any third party which are covered by the Exclusive Consultancy and Technical Services Agreement. Digitrading Beijing may appoint other parties for the provision of the services under the Exclusive Consultancy and Technical Services Agreement.

The Exclusive Consultancy and Technical Services Agreement is valid during the term of operation of Century Rich Palace and continue to be effective to the extent permitted under the applicable PRC laws and regulations. It may be terminated by Digitrading Beijing with one month written notice or under certain circumstances, upon serving a written notice. Century Rich Palace has no right to terminate the Exclusive Consultancy and Technical Services Agreement unilaterally.

Intellectual Property Licensing Agreement

Pursuant to the intellectual property licensing agreement dated September 27, 2018 entered into between Digitrading Beijing, Century Rich Palace and the Registered Shareholders (the “Intellectual Property Licensing Agreement”), Digitrading Beijing has granted Century Rich Palace a non-exclusive and non-transferable license to use the intellectual property rights relating to the operation and management of the DHgate platform solely for the purposes of the operation and management of the DHgate platform.

In consideration of these services, Century Rich Palace agrees to pay a service fee, which is equal to 20% of Century Rich Palace’s monthly revenue. Digitrading Beijing has the discretion to adjust the amount of service fee taking into account the conditions of business operation. The service fee shall be paid monthly to the designated bank account of Digitrading Beijing within seven business days after issuance of invoice by Digitrading Beijing.

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In addition, without the prior written consent of Digitrading Beijing, Century Rich Palace shall not sell, lease, transfer or sub-lease the aforementioned intellectual property rights or any part thereof to any third party nor shall any third party be authorized usage of such rights or any part thereof. The Intellectual Property Licensing Agreement also provides that Digitrading Beijing has the exclusive proprietary rights to all intellectual property rights, including but not limited to copyright, patents, patent applications, trademarks, software, technical secrets, trade secrets and others, developed or created during the performance of the Intellectual Property Licensing Agreement or operation and management of DHgate platform.

The Intellectual Property Licensing Agreement is valid during the term of operation of Century Rich Palace and continue to be effective to the extent permitted under the applicable PRC laws and regulations. The agreement will cease to have effect when Digitrading Beijing fully exercises its right to purchase the assets of Century Rich Palace or all the shares of Century Rich Palace held by Ms. Wang and Ms. Liu and Digitrading Beijing completed the share transfer registration. The agreement may be terminated by Digitrading Beijing unilaterally with one month written notice. Century Rich Palace has no right to terminate the Intellectual Property Licensing Agreement unilaterally.

Exclusive Option Agreement

Pursuant to the exclusive option agreement dated September 27, 2018 entered into between Digitrading Beijing, Century Rich Palace and the Registered Shareholders (the “Exclusive Option Agreement”), Digitrading Beijing has the irrevocable and exclusive right to purchase, or to designate other persons to purchase, from Century Rich Palace all or any part of its equity and/or assets at any time at Digitrading Beijing’s absolute discretion. The consideration shall be a nominal price of RMB1.00 or the lowest price as permitted under applicable PRC laws and regulations. The Registered Shareholders have irrevocably undertaken that if the purchase price for all the equity and/or assets of Century Rich Palace is higher than RMB1.00, they will compensate Digitrading Beijing or its designated purchaser for the difference. Save as pledging the shares to Digitrading Beijing pursuant to the Equity Pledge Agreement (as defined below) or otherwise agreed by Digitrading Beijing with prior written consent, the Registered Shareholders agree not to sell, transfer, assign or otherwise dispose of the shares of Century Rich Palace or create encumbrances over such shares.

The Registered Shareholders and Century Rich Palace, among other things, have further undertaken that:

• they shall not, without the prior written consent of Digitrading Beijing, sell, transfer, pledge or otherwise dispose of any material assets, business, operation rights or revenue of Century Rich Palace;

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• they shall not, without the prior written consent of Digitrading Beijing, in any manner, amend the articles of association of Century Rich Palace or increase or reduce its registered capital;

• they shall not, without the prior written consent of Digitrading Beijing, merge or consolidate with other entities or acquire or invest in other entities;

• the Registered Shareholders shall not, without the prior written consent of Digitrading Beijing, terminate or procure the management of Century Rich Palace to terminate any material contract or enter into any other contracts which may contradict such material contracts;

• the Registered Shareholders shall procure that Century Rich Palace will not enter into any transactions which may have an actual impact on the assets, liabilities, operations, equity structures or other legal rights of Century Rich Palace without the prior written consent of Digitrading Beijing, save for transactions which are in the ordinary course of business of Century Rich Palace, or transactions which have been disclosed to Digitrading Beijing and have obtained written approval by Digitrading Beijing;

• Century Rich Palace shall not, without the prior written consent of Digitrading Beijing, enter into any agreement where the transaction amount exceeds the limit authorized by Digitrading Beijing or incur any costs or debt where the amount exceeds the limit authorized by Digitrading Beijing;

• Century Rich Palace shall not, without the prior written consent of Digitrading Beijing, provide any loan or guarantee to any third party (including any of its shareholders) or incur any debt except for debts in the forms other than loans incurred in the ordinary course of its business;

• Century Rich Palace shall not, without the prior written consent of Digitrading Beijing, in any manner distribute dividends to their shareholders, provided that upon the request of Digitrading Beijing, Century Rich Palace shall immediately distribute all distributable profits to its shareholders;

• they shall maintain Century Rich Palace’s corporate existence and Century Rich Palace shall not be liquidated or dissolved without the written consent of Digitrading Beijing;

• Century Rich Palace shall always operate all of its businesses in the ordinary course of business so as to maintain their asset value and refrain from any action/omission that may adversely affect its operational status and asset value;

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• Century Rich Palace shall, at the request of Digitrading Beijing, provide all information in relation to the business operations and financial condition of Century Rich Palace;

• if requested by Digitrading Beijing, Century Rich Palace shall maintain insurance over its assets with an insurance carrier acceptable to Digitrading Beijing, for an amount and type of coverage typical for companies that operate similar businesses and own similar property or asserts;

• at the request of Digitrading Beijing, they shall appoint any person(s) or remove any person(s) designated by Digitrading Beijing as the director(s), supervisor(s) and/or senior management of Century Rich Palace; and

• if Digitrading Beijing fails to exercise its exclusive right to purchase the shares due to the failure of Century Rich Palace and/or the Registered Shareholders to comply with their tax obligations under the applicable laws, Digitrading Beijing has the right to require Century Rich Palace and/or the Registered Shareholders to fulfill such tax obligations.

The Registered Shareholders have, among other things, further undertaken that:

• they shall not, without the prior written consent of Digitrading Beijing, request Century Rich Palace to declare or distribute in any manner distributable profit or dividends or vote in favor of any such shareholders’ resolution. If they receive any profit or dividend from Century Rich Palace, they shall promptly transfer such profit or dividend to Digitrading Beijing or any other person designated by Digitrading Beijing to the extent permitted under applicable PRC laws and regulations;

• they shall strictly adhere to the provisions of the Exclusive Option Agreement and all the other agreements that they, Century Rich Palace and Digitrading Beijing jointly or separately have entered into, duly perform the Exclusive Option Agreement and the other agreements, and refrain from any action/omission which may affect the effectiveness or enforceability of such agreements; and

• they shall procure that the designated directors of Century Rich Palace shall exercise their rights in accordance with the terms of the Exclusive Option Agreement to ensure Century Rich Palace performs its obligations under the agreement and in the event that any director fails to exercise his rights as agreed above, such director will be removed.

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The Exclusive Option Agreement is valid during the term of operation of Century Rich Palace and continue to be effective to the extent permitted under the applicable PRC laws and regulations. The Exclusive Option Agreement will cease to have effect when Digitrading Beijing fully exercises its right to purchase the assets of Century Rich Palace or all the equity interests in Century Rich Palace held by the Registered Shareholders and Digitrading Beijing completes the equity transfer registration. The Exclusive Option Agreement may be terminated by Digitrading Beijing with one month written notice. Century Rich Palace has no right to terminate the Exclusive Option Agreement unilaterally.

Powers of Attorney

An irrevocable power of attorney was entered into between Digitrading Beijing, Century Rich Palace and the Registered Shareholders on September 27, 2018 (the “Powers of Attorney”), whereby the Registered Shareholders appointed Digitrading Beijing, any directors authorized by Digitrading Beijing (except any person who is not independent or has a conflict of interest) and its successors (including a liquidator replacing Digitrading Beijing’s director) as their exclusive agent and attorney to act on their behalf on all matters concerning Century Rich Palace and to exercise all of its rights as a registered shareholder of Century Rich Palace in accordance with PRC laws and regulations and the articles of Century Rich Palace. These rights include (i) the right to attend shareholders’ meetings and to execute any and all written resolutions and meeting minutes in the name and on behalf of such shareholder; (ii) the right to exercise all shareholder’s rights in accordance with laws and the articles of Century Rich Palace including, but not limited to, voting rights, the right to sell, transfer, pledge or dispose of part or all of the shares of Century Rich Palace; (iii) the right to designate and appoint the legal representative, chairman, directors, supervisors, general manager and other senior management members of Century Rich Palace; (iv) the right to file documents with the relevant companies registry or to submit documents to the other government authorities; (v) the right to oversee the operation of Century Rich Palace, to approve the annual budget or to declare dividend and to inspect the financial information of Century Rich Palace; (vi) the right to vote on the winding up of Century Rich Palace; (vii) the right to bring derivative claims against directors or management of Century Rich Palace for wrongful acts; (viii) the right to approve the amendments to the articles of Century Rich Palace; and (ix) other shareholders’ rights provided under the articles of Century Rich Palace or the relevant laws and regulations.

The Powers of Attorney is valid during the term of operation of Century Rich Palace and continue to be effective to the extent permitted under the applicable PRC laws and regulations. The Powers of Attorney will cease to have effect when Digitrading Beijing fully exercises its right to purchase the assets of Century Rich Palace or all the equity interests in Century Rich Palace held by Registered Shareholders and Digitrading Beijing completes the equity transfer registration.

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Equity Pledge Agreement

Pursuant to the equity pledge agreement dated September 27, 2018 entered into between Digitrading Beijing, Century Rich Palace and the Registered Shareholders (the “Equity Pledge Agreement”), the Registered Shareholders agreed to pledge, as first priority charge, all of their respective equity interests in Century Rich Palace to Digitrading Beijing as collateral security for any and all of the guaranteed debt under the Contractual Arrangements and to secure the performance of their obligations under the Contractual Arrangements. During the pledge period, Digitrading Beijing is entitled to receive any dividends or other distributable benefits arising from the equity.

The pledge in favor of Digitrading Beijing takes effect upon the completion of registration on the register of members of Century Rich Palace. The Equity Pledge Agreement is valid during the term of operation of Century Rich Palace and continue to be effective to the extent permitted under the applicable PRC laws and regulations. The Equity Pledge Agreement will cease to have effect when Digitrading Beijing fully exercises its right to purchase the assets of Century Rich Palace or all the equity interests in Century Rich Palace held by the Registered Shareholders and Digitrading Beijing completes the equity transfer registration.

Should an event of default (as provided in the Equity Pledge Agreement) occurs, Digitrading Beijing may demand that the Registered Shareholders dispose of the pledged equity interest to repay any outstanding payments due under the Contractual Arrangements to Digitrading Beijing.

Our PRC Legal Advisor confirms that the pledges under the Equity Pledge Agreement have been duly registered with the relevant PRC authorities pursuant to PRC laws and regulations.

Spouse Undertaking

The spouse of each of the Registered Shareholders has signed an undertaking (the “Spouse Undertaking”) and has irrevocably undertaken that:

(i) the spouse has full knowledge of and has consented to the entering into of the Contractual Arrangements by each of the Registered Shareholders, and in particular, the arrangement as set out in the Contractual Arrangements in relation to the restrictions imposed on the equity interest in Century Rich Palace, pledge or transfer the equity interest in Century Rich Palace, or the disposal of the equity interest in Century Rich Palace in any other forms;

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(ii) the spouse has not participated, is not participating and shall not in the future participate in the operation, management, liquidation, dissolution and other matters in relation to Century Rich Palace;

(iii) the spouse authorizes each of the Registered Shareholders or their authorized person to execute all necessary documents and perform all necessary procedures from time to time for and on behalf of the spouse in relation to the spouse’s equity interest in Century Rich Palace in order to safeguard the interest of Digitrading Beijing under the Contractual Arrangements and give effect to the fundamental purposes thereunder, and confirms and agrees to all such documents and procedures;

(iv) any undertaking, confirmation, consent and authorization under the Spouse Undertakings shall not be revoked, prejudiced, invalidated or otherwise adversely affected by any increase, decrease, consolidation or other similar events relating to the equity interest in Century Rich Palace; and

(v) all undertakings, confirmations, consents and authorizations under the Spouse Undertakings shall continue to be valid and binding until otherwise terminated by both Digitrading Beijing and the spouse of each of the Registered Shareholders in writing.

Other key terms thereunder

Dispute resolution

Each of the Contractual Arrangements stipulates that the parties thereto shall negotiate in good faith to resolve any dispute which may arise in respect of the interpretation and performance of the provisions of any such Contractual Arrangements. In the event the parties fail to resolve such a dispute within 30 days after a party’s request for resolution of the dispute through negotiations, any party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the then effective arbitration rules. Any such arbitration shall be conducted in Beijing. The arbitration ruling shall be final and binding on all parties.

Each of the Contractual Arrangements also provides that (i) the arbitral tribunal may award remedies over the equity interests or assets of Century Rich Palace, award injunctive relief (e.g. for the conduct of business or to compel the transfer of assets) or order the winding up of Century Rich Palace; and (ii) a court of competent jurisdiction (including but not limited to the courts of the Cayman Islands, the BVI, Hong Kong, China and the places where the principal assets of our

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Company and Century Rich Palace are located) may grant interim relief to a party when requested for the purpose of facilitating the arbitration procedure, subject to the requirements under the PRC laws and the applicable arbitration rules.

However, our PRC Legal Advisor has advised that (i) a tribunal may not have the power to grant such kind of injunctive relief or winding up order of Century Rich Palace under PRC laws; (ii) interim remedies or enforcement order granted by overseas courts such as Hong Kong and the Cayman Islands may not be recognizable or enforceable in the PRC; and (iii) even if the abovementioned provisions may not be enforceable under PRC laws and regulations, the remaining provisions of the dispute resolution clauses are legal, valid and binding on the parties to the agreement under the Contractual Arrangements.

As a result of the above, in the event that our Operating Entity or the Registered Shareholders breach any of the Contractual Arrangements, we may not be able to obtain sufficient remedies in a timely manner, and our ability to exert effective control over our Operating Entity and conduct our business could be materially and adversely affected. See “Risk Factors — Risks Relating to our Contractual Arrangements — Certain terms of the Contractual Arrangements may not be enforceable under PRC laws” for details.

Succession

Under the Powers of Attorney, Exclusive Option Agreement and the Equity Pledge Agreement, each of the Registered Shareholders has confirmed and undertaken to the effect that in the event of death or loss of capacity or any other events that could possibly affect her holding or exercise of the rights and obligations in Century Rich Palace, her successor or such person designated as her successor shall be deemed to be a party to the Contractual Arrangements and shall assume all the rights and obligations of the Registered Shareholders under the Contractual Arrangements.

In addition, the spouse of each Registered Shareholder had respectively executed the Spouse Undertaking, whereby each of them had expressly and irrevocably acknowledged and undertaken that (i) any equity interests in Century Rich Palace, as held by the Registered Shareholders do not fall within the scope of their communal properties; (ii) he will not have any claim on the interests of Century Rich Palace obtained through the Contractual Arrangements; and (iii) he has never participated and will not participate in the operation or management of Century Rich Palace.

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CONTRACTUAL ARRANGEMENTS

Arrangements to address potential conflicts of interest

The Registered Shareholders have undertaken that, (a) in any circumstances, they shall not, directly or indirectly, commit any conduct, measure, action or omission which is against the purpose and intention of the Contractual Arrangements, that lead or may lead to any conflict of interests between Century Rich Palace and our Company (including its subsidiaries), and (b) if, during their performance of the Contractual Arrangements, there is a conflict of interests between the Registered Shareholders/Century Rich Palace and our Company (including its subsidiaries), the Registered Shareholders shall protect the legal interests of Digitrading Beijing under the Contractual Arrangements and follow the legitimate instructions of Digitrading Beijing.

The Powers of Attorney also provide that, in order to avoid potential conflicts of interest, the power of attorney is granted in favor of Digitrading Beijing, any directors authorized by Digitrading Beijing (except any person who is not independent or has a conflict of interest) or his/her successors, or a liquidator replacing Digitrading Beijing’s directors as their exclusive agent and attorney to act on their behalf on all matters concerning Century Rich Palace and to exercise all of its rights as a registered shareholder of Century Rich Palace in accordance with PRC laws and regulations and the articles of Century Rich Palace.

Loss sharing

None of the agreements constituting the Contractual Arrangements provides that our Company or Digitrading Beijing is obligated to share the losses of Century Rich Palace, but if Century Rich Palace suffers any loss or material difficulties, Digitrading Beijing may provide financial support as permitted under PRC laws and regulations to Century Rich Palace under the terms of the Exclusive Consultancy and Technical Services Agreement. Further, Century Rich Palace is a limited liability company and shall be solely liable for its own debts and losses. Under PRC laws and regulations, our Company or Digitrading Beijing is not expressly required to share the losses of Century Rich Palace or provide financial support to Century Rich Palace. Despite the foregoing, given that our Group conducts the Relevant Businesses in the PRC through Century Rich Palace, and that Century Rich Palace’s results of operations, and assets and liabilities are consolidated into our Group’s results of operations, and assets and liabilities under the applicable accounting principles, the Company’s business, financial condition and results of operations would be adversely affected if Century Rich Palace suffered losses.

Liquidation

Pursuant to the Exclusive Option Agreement, in the event of a mandatory liquidation required by PRC laws and regulations, Century Rich Palace shall sell all of its remaining assets to the extent permitted by PRC laws and regulations to Digitrading Beijing or an entity designated by

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CONTRACTUAL ARRANGEMENTS

Digitrading Beijing for a nominal consideration of RMB1.00 or the lowest selling price permitted by applicable PRC laws and regulations. Any obligation for Digitrading Beijing or the entity designated by Digitrading Beijing to pay Century Rich Palace as a result of such transaction shall be waived by Century Rich Palace and any profits arising from the above transaction shall be paid to Digitrading Beijing or the entity designated by Digitrading Beijing, as applicable under the then current PRC laws.

Termination

The Contractual Arrangements shall be terminated automatically upon once Digitrading Beijing holds the entire equity interests and/or the entire assets of Century Rich Palace held by the Registered Shareholders. In addition, pursuant to the terms of the Contractual Arrangements, Digitrading Beijing has the unilateral right to terminate these agreements at any time by providing one month’s advance written notice to Century Rich Palace.

Insurance

The Company does not maintain an insurance policy to cover the risks relating to the Contractual Arrangements.

Company’s confirmation

As of the Latest Practicable Date, the Company had not encountered any interference or encumbrance from any PRC governing bodies in operating its businesses through the operating entities under the contractual arrangements.

LEGALITY OF THE CONTRACTUAL ARRANGEMENTS

Based on the above, we believe that the Contractual Arrangements are designed to minimize the potential conflict with relevant PRC laws and regulations. Our PRC Legal Advisor has advised that, upon execution of the Contractual Arrangements:

(a) each of the Contractual Arrangements is valid, legal and binding under PRC laws and regulations, except for: (1) the dispute resolution provision which states that (i) the arbitral tribunal may award remedies over the equity interests or assets of Century Rich Palace, award injunctive relief (e.g. for the conduct of business or to compel the transfer of assets) or order the winding up of Century Rich Palace; and (ii) a court of competent jurisdiction (including but not limited to the courts of the Cayman Islands, the BVI, Hong Kong, China and the places where the principal assets of our Company and Century Rich Palace are located) may grant interim relief to a party when requested for

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CONTRACTUAL ARRANGEMENTS

the purpose of facilitating the arbitration procedure, subject to the requirements under the PRC laws and regulations and the applicable arbitration rules. Our PRC Legal Advisor has advised that the aforementioned dispute resolution provisions may not be enforceable under PRC laws and regulations; and (2) the provision that provides that (i) in the event of a mandatory liquidation required by PRC laws and regulations, Century Rich Palace shall sell all of their assets to the extent permitted by PRC law to Digitrading Beijing or an entity designated by Digitrading Beijing, for a nominal consideration of RMB1.00 or the lowest price permitted under applicable PRC laws and regulations; and (ii) any obligation for Digitrading Beijing to pay Century Rich Palace under a result of such transaction shall be waived by Century Rich Palace and any profits arising from the above transaction shall be paid to Digitrading Beijing or the entity designated by Digitrading Beijing. Our PRC Legal Advisor has advised that the aforementioned provisions may not be enforceable under PRC laws and regulations in the event of a mandatory liquidation required by PRC laws and regulations or bankruptcy liquidation;

(b) none of the Contractual Arrangements violates any provisions of the articles of association of Century Rich Palace or Digitrading Beijing;

(c) the execution and performance of the Contractual Arrangements do not violate the provisions of the Civil Code of the PRC (中華人民共和國民法典) including in particular “impairing others’ legitimate rights and interests with malicious collusion” or fall within any of the circumstances under which a contract may become invalid pursuant to the Civil Code of the PRC;

(d) the execution, delivery, effect and implementation of each of the Contractual Arrangements have obtained all required approvals, authorizations or consents from the PRC governmental authorities except that:

(i) any share pledge contemplated under the Equity Pledge Agreement is subject to the registration with local administration bureau for industry and commerce;

(ii) the disposal of any share pledged under the Equity Pledge Agent is subject to the approvals and/or registration with the PRC regulatory authority;

(iii) the transfer of intellectual property under the Intellectual Property Licensing Agreement are subject to registration with the PRC regulatory authorities;

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CONTRACTUAL ARRANGEMENTS

(iv) the exercise of the options to acquire the equity interests or assets under the Exclusive Option Agreement in the future are subject to the relevant approvals, registration or filings with the PRC regulatory authorities as applicable; and

(v) the arbitration awards/interim remedies provided under the dispute resolution provisions of the Contractual Arrangements shall be recognized by PRC courts before these awards or remedies can proceed.

However, as advised by our PRC Legal Advisor, since there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, there can be no assurance that the relevant PRC authorities will in the future take a view that is consistent with the above opinion of our PRC Legal Advisor.

Notwithstanding the foregoing, our PRC Legal Advisor and the legal advisor of the Sole Sponsor as to PRC law conducted the Verbal Consultation in respect of our Contractual Arrangements, which confirmed that the Contractual Arrangements are not prohibited by current PRC laws or regulations. Our PRC Legal Advisor has advised us that (i) MIIT is the competent government authority for regulating the Company’s relevant business activities; (ii) the division chief of the MIIT consulted has the authority to provide such confirmation; (iii) based on the Verbal Consultation, the adoption of the Contractual Arrangements would not be challenged or subject to penalty for any violation of current PRC laws and regulations in relation to the telecommunication industry; and (iv) that the use of the Contractual Arrangements does not constitute a breach of the relevant laws and regulations.

Furthermore, the application process for an ICP license by a sino-foreign equity joint venture is complicated and difficult. Pursuant to the Verbal Consultation, MIIT confirmed that if Century Rich Palace sets up a sino-foreign joint venture with Digitrading Hongkong and applies for an ICP license through such sino-foreign equity joint venture whose foreign ownership does not exceed 50%, it would not approve such application. Our PRC Legal Advisor is of the view that (i) MIIT is the competent authority to give the relevant confirmation in relation to PRC’s telecommunication regulatory matters; and (ii) the division chief of the MIIT consulted has the authority to provide such confirmation.

Based on the above analysis and advice from our PRC Legal Advisor, our Directors are of the view that the adoption of the Contractual Arrangements is unlikely to be deemed ineffective or invalid under the applicable PRC laws and regulations. See “Risk Factors — Risks Relating to our Contractual Arrangements — If the PRC government finds that the agreements that establish the structure for operating certain of our businesses in China do not comply with applicable PRC laws

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CONTRACTUAL ARRANGEMENTS and regulations, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe consequences including the nullification of the Contractual Arrangements and the relinquishment of our interests in our Operating Entity.”

COMPLIANCE WITH THE CONTRACTUAL ARRANGEMENTS

Our Group has adopted the following measures to ensure the effective operation of our Group with the implementation of the Contractual Arrangements and our compliance with the Contractual Arrangements:

(1) major issues arising from the implementation and compliance with the Contractual Arrangements or any regulatory enquiries from government authorities will be submitted to our Board, if necessary, for review and discussion as and when they arise;

(2) our Board will review the overall performance of and compliance with the Contractual Arrangements at least once a year;

(3) our Company will disclose the overall performance and compliance with the Contractual Arrangements in our annual reports; and

(4) our Company will engage external legal advisors or other professional advisors, if necessary, to assist the Board to review the implementation of the Contractual Arrangements, review the legal compliance of Digitrading Beijing and our Operating Entity to deal with specific issues or matters arising from the Contractual Arrangements.

ACCOUNTING ASPECTS OF THE CONTRACTUAL ARRANGEMENTS

Consolidation of financial results of operating entities

Under the Exclusive Consultancy and Technical Services Agreement and the Intellectual Property Licensing Agreement, it was agreed that, in consideration of the services provided by Digitrading Beijing and the intellectual property rights licensed to Century Rich Palace, Century Rich Palace shall pay monthly services fees and licensing fees to Digitrading Beijing. The aggregated services fees and licensing fees shall equal to Century Rich Palace’s consolidated net profit. Digitrading Beijing has the right to periodically receive or inspect the accounts of the Operating Entity.

In addition, under the Exclusive Option Agreement, Digitrading Beijing has absolute contractual control over the distribution of dividends or any other amounts to the Registered Shareholders as Digitrading Beijing’s prior written consent is required before any distribution can

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CONTRACTUAL ARRANGEMENTS be made. If the Registered Shareholders receive any income, profit distribution or dividend, they shall promptly transfer such income, profit distribution or dividend to Digitrading Beijing or any other person designated by Digitrading Beijing to the extent permitted under applicable PRC laws and regulations.

As a result of the Contractual Arrangements between Digitrading Beijing, Century Rich Palace and the Registered Shareholders, Digitrading Beijing is able to effectively control, recognize and receive substantially all the economic benefit of the business and operations of our Operating Entity. Accordingly, our Operating Entity is treated as a controlled structured entity of our Company and consolidated by our Company. The basis of consolidating the results of our Operating Entity is disclosed in Note 1 to the Accountants’ Report set out in Appendix I.

DEVELOPMENT IN THE PRC LEGISLATION ON FOREIGN INVESTMENT

Background of the Foreign Investment Law of the PRC

On March 15, 2019, the second meeting of the 13th National People’s Congress of PRC approved the Foreign Investment Law of the PRC《中華人民共和國外商投資法》 ( ) (the “FIL”) which became effective on January 1, 2020. The FIL replaced the Sino-foreign Equity Joint Venture Enterprise Law of the PRC, the Sino-foreign Cooperative Joint Venture Enterprise Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC to become the legal foundation for foreign investment in the PRC. The FIL stipulates three specific forms of foreign investment, but does not explicitly stipulate the contractual arrangements as a form of foreign investment.

The potential impact of the FIL on the Contractual Arrangements

The FIL specifically stipulates three specific forms of foreign investment, namely, (1) establishment of a foreign invested enterprise in the PRC by a foreign investor, either individually or collectively with any other investor; (2) obtaining shares, equity interests, assets, interests or any other similar rights or interests of an enterprise in the PRC by a foreign investor; and (3) investment in any new construction project in the PRC by a foreign investor, either individually or collectively with any other investor.

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CONTRACTUAL ARRANGEMENTS

The FIL does not explicitly stipulate the contractual arrangements as a form of foreign investment. As advised by our PRC Legal Advisors, (1) in respect of the legislative procedures under the PRC laws and regulations, the FIL has been promulgated by the National People’s Congress of the PRC, and (2) provided that no additional laws, administrative regulations, departmental rules or other regulatory documents on contractual arrangements has been issued and enacted, the FIL does not, by itself, have any material adverse operational and financial impact on the legality and validity of the Company’s Contractual Arrangements. Notwithstanding the above, the FIL stipulates that foreign investment includes “foreign investors invest through any other methods under laws, administrative regulations or provisions prescribed by the State Council.” Therefore, there remains uncertainty regarding whether future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, whether our Contractual Arrangements will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned Contractual Arrangements will be handled. In the event that such measures are not complied with, the Stock Exchange may take enforcement actions against us which may have a material adverse effect on the trading of our [REDACTED]. See “Risk Factors — Risks Relating to our Contractual Arrangements.” Our Company will disclose, as soon as possible, updates of changes to the FIL that will materially and adversely affect our Company as and when occur.

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CONNECTED TRANSACTIONS

OVERVIEW

We have entered into a number of continuing transactions with our connected persons in our ordinary and usual course of business. The transactions disclosed under this section will constitute continuing connected transactions under Chapter 14A of the Listing Rules upon completion of the [REDACTED].

The historical amounts disclosed for the financial years ended December 31, 2018, 2019, 2020 in respect of the continuing connected transactions in this section constitute only a portion of the amounts disclosed in respect of transactions with related parties for the financial years ended December 31, 2018, 2019, 2020 in Note 42 to the historical financial information in the Accountants’ Report set forth in Appendix I to this document. The remaining portion of the amounts disclosed in Note 42 to the historical financial information in the Accountants’ Report is attributable to transactions between our Company, Ms. Wang, entities controlled by Ms. Wang or their respective associates that will not continue following the Listing Date and therefore do not constitute continuing connected transactions requiring disclosure in this section.

SUMMARY OF OUR CONNECTED PERSONS

The table below sets forth certain parties who will become our connected persons and with whom we have entered into certain continuing transactions which will constitute continuing connected transactions following Listing:

Name Connected relationship Ms. Wang ...... One of our Controlling Shareholders

Camel Supply Chain Management Camel SCM is a 30%-controlled company (as defined in (Asia) Limited (“Camel SCM”) ... the Listing Rules) held by Ms. Wang, one of our Controlling Shareholders

Tuotuo Digital Technology (Beijing) Tuotuo Digital is a 30%-controlled company (as defined Co., Ltd. in the Listing Rules) held by Ms. Wang, one of our (“Tuotuo Digital”) ...... Controlling Shareholders

Xcommerces Gateway, Inc. Xcommerces is a 30%-controlled company (as defined in (“Xcommerces”) ...... the Listing Rules) held by the spouse of Ms. Wang, one of our Controlling Shareholders

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CONNECTED TRANSACTIONS

SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS

Set out below is a brief summary of our continuing connected transactions and the relevant waivers sought:

Proposed annual cap for the years ending December 31, (RMB’000) Applicable Transactions Listing Rule Waiver sought 2021 2022 2023 Partially-exempt continuing connected transactions Payment Services Framework Rule 14A.35 Announcement 2,100 8,300 14,000 Agreement ...... Rule 14A.76(2) Rule 14A.105

Technical Support and Rule 14A.35 Announcement 24,000 26,000 29,000 Consultancy Services Rule 14A.76(2) Framework Agreement.... Rule 14A.105

Advertising and Promotion Rule 14A.35 Announcement 2,800 3,300 3,800 Services Framework Rule 14A.76(2) Agreement ...... Rule 14A.105

Proposed annual cap for the years ending December 31, (USD’000)

2021 2022 2023 US Business Development Rule 14A.35 Announcement 1,700 2,200 3,000 Services Framework Rule 14A.76(2) Agreement ...... Rule 14A.105

Proposed annual cap for the years ending December 31, (RMB’000)

2021 2022 2023 Non-exempt continuing connected transactions Contractual Arrangements ... Rule 14A.35 Announcement and N/A N/A N/A Rule 14A.36 independent Rule 14A.52 shareholders’ Rule 14A.53 approval, circular, Rule 14A.105 annual cap, limiting the term to three years

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CONNECTED TRANSACTIONS

PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS

We set out below details of the continuing connected transactions which are exempt from circular (including independent financial advice) and independent shareholders’ approval requirements but subject to the annual reporting and announcement requirements under Rule 14A.76(2) of the Listing Rules.

1. Payment Services Framework Agreement

Description of the Transactions

On [•], 2021, our Company (for itself and on behalf of other members of our Group) entered into a framework agreement with Camel SCM, pursuant to which Camel SCM agreed to provide us with cross-border payment and settlement services including but not limited to cross-border fund settlement, money changing, fund remittance and payment services, overseas buyer payment installment services, overall solutions for USD value-added services products for VAS and overall solutions for collection of cross-border logistic fees for domestic PRC logistic service providers or platforms (the “Payment Services Framework Agreement”), and we shall in return pay service fees to Camel SCM. It is envisaged that from time to time and as required, members of our Group will enter into individual agreements with Camel SCM which will set out specific terms and conditions such as the precise scope of service, service fee calculation, method of payment and other details of the service arrangement.

Term

The term of the Payment Services Framework Agreement shall commence on the Listing Date and expire on December 31, 2023. The Payment Services Framework Agreement is automatically renewable upon expiry for additional three-year periods, unless terminated by written notice by either party. The Company will re-comply with the applicable requirements under Chapter 14A of the Listing Rules when the Payment Services Framework Agreement is renewed.

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CONNECTED TRANSACTIONS

Pricing Policy

The service fees for the payment and settlement services payable by our Group to Camel SCM shall be calculated (subject to adjustment as further elaborated below) in accordance with the following:

Service type Service fee rate USD payment settlement ...... USD5 per transaction

Cross-border fund settlement...... 0.01% of transaction amount

Cross-border fund remittance ...... 0.06% of transaction amount

Overseas buyer payment installment ...... 2.70% of transaction amount

Overall solutions for USD value-added services products for VAS

— Account opening ...... USD15 per transaction

— Service fee ...... 2.00% of transaction amount

Overall solutions for collection of cross-border logistic fees for domestic PRC logistics providers or platforms

— Account opening ...... USD15 per transaction

— Service fee ...... 0.30% of transaction amount

The above service fee rates have been determined after arm’s length negotiation between the parties with reference to the prevailing market fee rates offered by other independent third party service providers for comparable services.

During the continuation of the Payment Services Framework Agreement, our Group shall obtain service fee quotations from at least two other independent third party service providers for comparable services (where available) on or before December 15 of each calendar year (or at another time as mutually agreed by both parties). The service fee rates under the Payment Services Framework Agreement shall not be less favorable than the lowest of the service fee quotations

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CONNECTED TRANSACTIONS obtained, and for this purpose, the service fee rates under the Payment Services Framework Agreement shall be adjusted by a corresponding amount automatically. The adjusted service fee rates shall be effective from January 1 of the next calendar year.

Historical Amounts

As our engagement of Camel SCM in respect of the provision of the aforesaid payment and settlement services commenced in March 2021, there are no historical transaction amounts for each of the years ended December 31, 2018, 2019 and 2020.

Annual Caps and Basis of Annual Caps

For the years ending December 31, 2021, 2022 and 2023, the relevant annual caps are expected to be RMB2.1 million (estimated on a half-year basis), RMB8.3 million and RMB14.0 million, respectively. The annual caps for the years ending December 31, 2021, 2022 and 2023 are derived with reference to (i) the expected number of transactions utilizing the payment and settlement services provided by Camel SCM for the years ending December 31, 2021, 2022 and 2023; (ii) the expected GMV of our Group for the years ending December 31, 2021, 2022 and 2023; (iii) the historical percentage of GMV having utilized the payment and settlement services provided by previous MSO licensee service providers engaged by our Group; (iv) the expected increase in the percentage of GMV of our Group utilizing the payment and settlement services provided by Camel SCM for the years ending December 31, 2021, 2022 and 2023; and (v) the service fee rates charged by Camel SCM. Our Directors therefore consider that the proposed annual caps are fair and reasonable.

Reasons for the Transactions

Our Group requires the provision of the abovementioned payment and settlement services by an MSO licensee as arrangements involved in our Group’s cross-border payment aggregation, money changing and remittance services constitute money changing service and remittance service that is operated in Hong Kong as a business, which would require a MSO license pursuant to section 29 of AMLO. Prior to our Group’s engagement of Camel SCM, our Group exclusively engages an independent third party MSO licensee service provider for such payment and settlement services. Since March 2021, Camel SCM holds a valid MSO license in Hong Kong and the service fee rates offered by Camel SCM are (i) more favorable than the independent third party MSO licensee service provider previously exclusively engaged by us; and (ii) the most favorable as compared to those offered by other independent third party MSO licensee service providers from whom our Group obtained service fee quotations. Our Group will continue to engage one or more MSO licensee service providers (including Camel SCM), and/or utilize our Group’s MSO license, as and when appropriate according to our Group’s business needs from time to time.

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CONNECTED TRANSACTIONS

2. Technical Support and Consultancy Services Framework Agreement

Description of the Transactions

On [•], 2021, our Company (for itself and on behalf of other members of our Group) entered into a framework agreement with Tuotuo Digital (for itself and on behalf of its subsidiaries and associates, together with Tuotuo Digital, “Tuotuo Digital Group”), pursuant to which Tuotuo Digital Group agreed to provide technical support services (including but not limited to the establishment, operation and management of payment systems, provision of payment products and operation services, provision of product solutions and provision of technical support for e-wallet products) and consultancy services (including but not limited to provision of business development services in relation to selection and maintenance of suppliers and contract negotiation and provision of know-your-client (KYC) services) to us (the “Technical Support and Consultancy Services Framework Agreement”), and we shall in return pay service fees to Tuotuo Digital Group. It is envisaged that from time to time and as required, members of our Group will enter into individual agreements with members of Tuotuo Digital Group which will set out specific terms and conditions such as the precise scope of service, service fee calculation, method of payment and other details of the service arrangement.

Term

The term of the Technical Support and Consultancy Services Framework Agreement shall commence on the Listing Date and expire on December 31, 2023. The Technical Support and Consultancy Services Framework Agreement is automatically renewable upon expiry for additional three-year periods, unless terminated by written notice by either party. The Company will re-comply with the applicable requirements under Chapter 14A of the Listing Rules when the Technical Support and Consultancy Services Framework Agreement is renewed.

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CONNECTED TRANSACTIONS

Pricing Policy

The service fees for the technical support services payable by our Group to Tuotuo Digital Group shall be calculated (subject to adjustment as further elaborated below) in accordance with the following:

Service fee Fee rates Basic service fee ...... RMB200,000 per month

Transaction processing fees ...... Capped at RMB1,300,000 per month

— Payment collection ...... USD0.05 per transaction

— Refunds...... USD0.05 per transaction

— Payment refusal processing ...... USD1.00 per transaction

— Currency exchange processing...... USD0.40 per transaction

During the continuation of the Technical Support and Consultancy Services Framework Agreement, our Group shall obtain service fee quotations from at least two other independent third party service providers for comparable technical support services on or before December 15 of each calendar year (or at another time as mutually agreed by both parties). The technical support service fee rates under the Technical Support and Consultancy Services Framework Agreement shall not be less favorable than the lowest of the service fee quotations obtained, and for this purpose, the technical support service fee rates under the Technical Support and Consultancy Services Framework Agreement shall be adjusted by a corresponding amount automatically. The adjusted service fee rates shall be effective from January 1 of the next calendar year.

The service fees for the consultancy services payable by our Group to Tuotuo Digital Group will be determined after arm’s length negotiation between the parties with reference to the precise scope of service required and market rates for comparable services. The fee rates and calculation method shall be agreed between the parties separately.

Before entering into individual agreements for consultancy services pursuant to the Technical Support and Consultancy Services Framework Agreement, we will assess our business needs and compare the service fee rates proposed by Tuotuo Digital Group with the fee rates offered by at

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CONNECTED TRANSACTIONS least two other comparable service providers for comparable services. In addition, we will take into account a number of factors, including but not limited to (i) the past track record of provision of comparable consultancy services by different services providers; (ii) the quality of the consultancy services offered by different services providers; and (iii) the service fee rates offered. We will only enter into an individual service agreement with Tuotuo Digital Group if (i) the past track record for providing and the quality of consultancy services provided by Tuotuo Digital Group are comparable or better than other independent third party service providers; (ii) the fee rates offered for the consultancy services provided by Tuotuo Digital Group are no less favorable than those from other independent third party service providers; and (iii) it is in the best interests of our Company and the Shareholders as a whole.

Historical Amounts

Our cooperation with Tuotuo Digital Group in respect of its provision of technical support and consultancy services commenced in September 2020. For the years ended December 31, 2018, 2019 and 2020, the aggregate amounts of the technical support and consultancy service fees paid to Tuotuo Digital Group by us were nil, nil and approximately USD862,000 (in respect of technical support services only), respectively.

Annual Caps and Basis of Annual Caps

For the years ending December 31, 2021, 2022 and 2023, the relevant annual caps are expected to be RMB24 million, RMB26 million and RMB29 million, respectively. The annual caps for the years ending December 31, 2021, 2022 and 2023 are derived with reference to (i) the historical service fees paid to Tuotuo Digital Group by our Group for September to December 2020 projected to a full-year basis; (ii) the expected increase in the amount of services required to meet the growing business needs of our Group; (iii) the expected increase in the types of services required from Tuotuo Digital Group for the introduction of new products by our Group; and (iv) an expected reasonable upward adjustment in the service fee rates offered by Tuotuo Digital Group. Our Directors therefore consider that the proposed annual caps are fair and reasonable.

Reasons for the Transactions

Our principal business activities include the provision of payment service and require the abovementioned technical support and consultancy services. Considering our business has undergone and is expected to undergo rapid growth, we believe that obtaining such outsourced services from a third party service provider is a cost-effective alternative to building all supporting technology infrastructure internally. The Directors are of the view that the services to be provided by Tuotuo Digital Group to our Group will continue to help our Group to maintain and enhance its payment systems, and improve the related level of technology and services.

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CONNECTED TRANSACTIONS

3. Advertising and Promotion Services Framework Agreement

Description of the Transactions

On [•], 2021, our Company (for itself and on behalf of other members of our Group) entered into a framework agreement with Tuotuo Digital (for itself and on behalf of other members of Tuotuo Digital Group), pursuant to which our Group would provide advertising and promotion services to Tuotuo Digital Group in respect of its financial products on our platform (the “Advertising and Promotion Services Framework Agreement”). In return for these advertising and promotion services, Tuotuo Digital Group shall pay service fees to our Group. It is envisaged that from time to time and as required, members of our Group will enter into individual agreements with members of Tuotuo Digital Group which will set out specific terms and conditions such as the precise scope of service, service fee calculation, method of payment and other details of the service arrangement.

Term

The term of the Advertising and Promotion Services Framework Agreement shall commence on the Listing Date and expire on December 31, 2023. The Advertising and Promotion Services Framework Agreement is automatically renewable upon expiry for additional three-year periods, unless terminated by written notice by either party. The Company will re-comply with the applicable requirements under Chapter 14A of the Listing Rules when the Advertising and Promotion Services Framework Agreement is renewed.

Pricing Policy

The service fees will be determined after arm’s length negotiation between the parties with reference to the market rates. The fee rates and calculation method shall be agreed between the parties separately.

Before entering into any individual agreement pursuant to the Advertising and Promotion Services Framework Agreement, we will assess the scope of the advertising and promotion services requested by Tuotuo Digital Group and the fee rates offered by us to at least two other customers for comparable services. We will only enter into an advertising and promotion services agreement with Tuotuo Digital Group if (i) the fee rates for advertising and promotion services payable by Tuotuo Digital Group are no less favorable than those offered to other independent third party customers; and (ii) it is in the best interests of our Company and the Shareholders as a whole.

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CONNECTED TRANSACTIONS

Historical Amounts

Our cooperation with Tuotuo Digital Group in respect of our provision of advertising and promotion services commenced in August 2020. For the years ended December 31, 2018, 2019 and 2020, the aggregate amounts of the advertising and promotion service fees paid by Tuotuo Digital Group to our Group were nil, nil and approximately USD79,000, respectively.

Annual Caps and Basis of Annual Caps

For the years ending December 31, 2021, 2022 and 2023, the relevant annual caps are expected to be RMB2.8 million, RMB3.3 million and RMB3.8 million, respectively. The annual caps for the years ending December 31, 2021, 2022 and 2023 are derived with reference to (i) the historical advertising and promotion service fees paid by Tuotuo Digital Group for August 2020 to December 2020 projected to a full-year basis; (ii) the expected increasing demand of Tuotuo Digital Group for advertising and promotion services arising from its expansion in product and service categories; and (iii) an expected reasonable upward adjustment in the service fee rates offered by our Group. Our Directors therefore consider that the proposed annual caps are fair and reasonable.

Reasons for the Transactions

Tuotuo Digital Group has growing demands for advertising and promotion services for its financial products. We are a leading cross-border B2B e-commerce marketplace and provision of advertising and promotion services is a major part of our principal business. We, therefore, intend to continue to provide these advertising and promotion services and seek to enter into similar advertising and promotion services agreements with different members of Tuotuo Digital Group to maximize our revenue stream.

4. US Business Development Services Framework Agreement

Description of the Transactions

On [•], 2021, our Company (for itself and on behalf of other members of our Group) entered into a framework agreement with Xcommerces, pursuant to which Xcommerces would provide business development and marketing services to our Group in the US, including but not limited to online and offline marketing services relating to the display and promotion of products, transaction settlement, distribution arrangements, solicitation of purchasers, coordinating product information and contract negotiation within the US (the “US Business Development Services Framework Agreement”). In return for these business development and marketing services, our Group shall pay service fees to Xcommerces. It is envisaged that from time to time and as required, members

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CONNECTED TRANSACTIONS of our Group will enter into individual agreements with Xcommerces which will set out specific terms and conditions such as the precise scope of service, service fee calculation, method of payment and other details of the service arrangement.

Term

The term of the US Business Development Services Framework Agreement shall commence on the Listing Date and expire on December 31, 2023. The US Business Development Services Framework Agreement is automatically renewable upon expiry for additional three-year periods, unless terminated by written notice by either party. The Company will re-comply with the applicable requirements under Chapter 14A of the Listing Rules when the US Business Development Services Framework Agreement is renewed.

Pricing Policy

Before entering into any individual agreement pursuant to the US Business Development Services Framework Agreement, we will assess our business needs and compare the service fee rates proposed by Xcommerces with the fee rates offered by at least two other comparable service providers for comparable services. In addition, we will take into account a number of factors, including but not limited to (i) the past track record of provision of comparable business development and marketing services in the US by different services providers; (ii) the quality of the business development and marketing services offered by different services providers; and (iii) the service fee rates offered. We will only enter into an individual service agreement with Xcommerce if (i) the past track record for providing in the US and the quality of business development and marketing services provided by Xcommerces are comparable or better than other independent third party service providers; (ii) the fee rates offered for the business development and marketing services provided by Xcommerces are no less favorable than those from other independent third party service providers; and (iii) it is in the best interests of our Company and the Shareholders as a whole.

Historical Amounts

Our engagement of Xcommerces in respect of the provision of business development and marketing services in the US commenced in April 2020. For the years ended December 31, 2018, 2019 and 2020, the aggregate amounts of the business development and marketing service fees paid by our Group to Xcommerces were nil, nil and approximately USD948,000, respectively.

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CONNECTED TRANSACTIONS

Annual Caps and Basis of Annual Caps

For the years ending December 31, 2021, 2022 and 2023, the relevant annual caps are expected to be USD1.7 million, USD2.2 million and USD3.0 million, respectively. The annual caps for the years ending December 31, 2021, 2022 and 2023 are derived with reference to (i) the historical business development and marketing service fees paid by our Group for April 2020 to December 2020 projected to a full-year basis; (ii) our Group’s expected increasing demand for business development and marketing services in the US arising from our intended expansion into the US market; and (iii) an expected reasonable upward adjustment in the service fee rates offered by Xcommerces. Our Directors therefore consider that the proposed annual caps are fair and reasonable.

Reasons for the Transactions

As part of our business initiative to expand into the US market, our Group has growing demands for business development and marketing services in the US. Xcommerces, whilst having in-depth knowledge of our business, has a local team based in the US, thus is well-positioned to (i) approach and carry out marketing services targeted at potential domestic users, (ii) develop and promote the online user traffic of our platform and (iii) solicit SME merchant users of our platform, in the US. We believe that the business development and marketing services provided by Xcommerces will enable us to be connected with the domestic users and merchants in the US, increase their awareness of and familiarity with our platform and services and allow us to better understand the market trends of the domestic market, all of which will be crucial to the success of our expansion into the US market.

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

We set out below details of the continuing connected transactions which are subject to the annual reporting, annual review, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Contractual Arrangements

Corporate Structure and Connected Person

In order for our Company, as a foreign investor under the current regulatory regime, to maintain its Principal Business operations while complying with the PRC laws and regulations mentioned above, our Group conducts a substantial portion of the business through its Operating Entity.

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CONNECTED TRANSACTIONS

Digitrading Beijing, Century Rich Palace and the Registered Shareholders entered into the Contractual Arrangements on September 27, 2018. Our Group does not hold any equity interest in the Operating Entity. Rather, through the Contractual Arrangements, we effectively control the Operating Entity and are able to derive substantially all of their economic benefits, and expect to continue to do so.

For the purpose of Chapter 14A of the Listing Rules, and in particular the definition of “connected person”, the Operating Entity will be treated as our Company’s wholly-owned subsidiary, and its directors, chief executives or substantial shareholders (as defined in the Listing Rules) and their respective associates will be treated as our Company’s “connected persons.” Accordingly, the transactions contemplated under the Contractual Arrangements constitute continuing connected transactions of our Company under the Listing Rules upon Listing. The transactions contemplated under the Contractual Arrangements are continuing connected transactions of our Company.

The highest applicable percentage ratios (other than the profits ratio) under the Listing Rules in respect of the transactions associated with the Contractual Arrangements are expected to be more than 5%. As such, the transactions will be subject to the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Non-exempt Continuing Connected Transactions

Following the completion of the [REDACTED], the Contractual Arrangements will be subject to the reporting, annual review, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. These transactions include the transactions contemplated under the agreements underlying the Contractual Arrangements, which comprise the Exclusive Consultancy and Technical Services Agreement, the Intellectual Property Licensing Agreement, the Exclusive Option Agreement, the Equity Pledge Agreement, Power of Attorney, and Spouse Undertakings and Confirmation and Undertakings from the Registered Shareholders. Details of the terms of the Contractual Arrangements are set out in “Contractual Arrangements — Our Contractual Arrangements.”

The Contractual Arrangements are designed to enable our Group to (i) receive substantially all of the economic benefits from the Operating Entity in consideration for the services provided by Digitrading Beijing; (ii) exercise effective control over the Operating Entity; and (iii) hold an exclusive option to purchase all or part of the equity interests in and/or assets of the Operating Entity when and to the extent permitted by PRC laws and regulations. See “Contractual Arrangements” for detailed terms of the Contractual Arrangements.

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CONNECTED TRANSACTIONS

Application for Waivers

Our Directors (including our independent non-executive Directors) are of the view that the Contractual Arrangements and the transactions contemplated thereunder are fundamental to our Group’s legal structure and business operations; and the Contractual Arrangements and the transactions thereunder have been and will be entered into in our ordinary and usual course of business, are on normal commercial terms or better and the terms are fair and reasonable and in the interest of our Group and our Shareholders as a whole.

Our Directors also believe that our structure, whereby the financial results of Century Rich Palace are consolidated into our financial statements as if it was our Company’s wholly-owned subsidiary, and all the economic benefits of its business flow to our Group, places our Group in a special position in relation to the connected transactions rules. Accordingly, notwithstanding that the transactions contemplated under the Contractual Arrangements technically constitute continuing connected transactions under Chapter 14A of the Listing Rules, our Directors consider that it would be burdensome and impracticable, and would add unnecessary administrative costs to our Company, for all the transactions contemplated under the Contractual Arrangements to be subject to strict compliance with the requirements set out under Chapter 14A of the Listing Rules, including, among other things, the announcement and approval of independent Shareholders.

In addition, given the Contractual Arrangements were entered into prior to the Listing and are disclosed in this document, and potential investors of our Company will participate in the [REDACTED] on the basis of such disclosure, our Directors consider that compliance with the announcement and the independent Shareholders’ approval requirements in respect thereof immediately after Listing would add unnecessary administrative costs to our Company.

Conditions of Waiver

In view of the above, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with (i) the announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules in respect of the transactions contemplated under the Contractual Arrangements pursuant to Rule 14A.105 of the Listing Rules, (ii) the requirement of setting an annual cap for the transactions under the Contractual Arrangements under Rule 14A.53 of the Listing Rules, and (iii) the requirement of limiting the term of the Contractual Arrangements to three years or less under Rule 14A.52 of the Listing Rules, for so long as our Shares are listed on the Stock Exchange subject however to the following conditions:

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CONNECTED TRANSACTIONS

(a) No change without independent non-executive Directors’ approval

No change to the terms of any of the agreements constituting the Contractual Arrangements will be made without the approval of our independent non-executive Directors.

(b) No change without independent Shareholders’ approval

Save as described in paragraph (d) below, no change to the terms of any of the agreements constituting the Contractual Arrangements will be made without the approval of our independent Shareholders. Once independent Shareholders’ approval of any change has been obtained, no further announcement or approval of the independent Shareholders will be required under Chapter 14A of the Listing Rules unless and until further changes are proposed. The periodic reporting requirement regarding the Contractual Arrangements in the annual reports of our Company (as set out in paragraph (e) below) will however continue to be applicable.

The Contractual Arrangements shall continue to enable our Group to receive the economic benefits derived by the Operating Entity through (i) our Group’s options (if and when so allowed under the applicable PRC laws and regulations) to acquire all or part of the entire equity interests in and/or assets of the Operating Entity for nil consideration or the minimum amount of consideration permitted by applicable PRC laws and regulations, (ii) the business structure under which the profit generated by the Operating Entity (after deduction of any accumulated deficit of the Operating Entity in the preceding financial year(s), working capital, expenses, taxes and other statutory contributions) is substantially retained by our Group, such that no annual cap shall be set on the amount of service fees payable to Beijing Digitrading by the Operating Entity under the Exclusive Consultancy and Technical Services Agreement, and (iii) our Group’s right to control the management and operation of, as well as, in substance, all of the voting rights of the Operating Entity.

(d) Renewal and reproduction

On the basis that the Contractual Arrangements provide an acceptable framework for the relationship between our Company and its subsidiaries in which our Company has direct shareholding, on the one hand, and the Operating Entity, on the other hand, that framework may be renewed and/or reproduced upon the expiry of the existing arrangements or in relation to any existing or new wholly foreign-owned enterprise or operating company (including branch company) engaging in the same business as that of our Group which our Group might wish to establish when justified by business expediency, without obtaining the approval of the Shareholders, on substantially the same terms and conditions as described under “Contractual

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CONNECTED TRANSACTIONS

Arrangements.” The directors, chief executive or substantial shareholders of any existing or new wholly foreign-owned enterprise or operating company (including branch company) engaging in the same business as that of our Group which our Group may establish when justified by business expediency will, upon renewal and/or reproduction of the Contractual Arrangements, however be treated as connected persons of our Group and transactions between these connected persons and our Group other than those under similar Contractual Arrangements shall comply with Chapter 14A of the Listing Rules. This condition is subject to relevant PRC laws, regulations and approvals.

(e) Ongoing reporting and approvals

We will disclose details of the Contractual Arrangements on an ongoing basis as follows:

• the Contractual Arrangements in place during each financial period will be disclosed in our Company’s annual report and accounts in accordance with the relevant provisions of the Listing Rules;

• our independent non-executive Directors will review the Contractual Arrangements annually and confirm in our Company’s annual report and accounts for the relevant year that (i) the transaction carried out during such year have been entered into in accordance with the relevant provisions of the Contractual Arrangements, (ii) no dividends or other distributions have been made by our Operating Entity to the holders of its equity interests which are not otherwise subsequently assigned or transferred to our Group, and (iii) any new contracts entered into, renewed or reproduced between our Group and the Operating Entity during the relevant financial period under paragraph (d) above are fair and reasonable, or advantageous to our Shareholders, so far as our Group is concerned and in the interests of the Shareholders as a whole;

• our Company’s auditors will carry out review procedures annually on the transactions carried out pursuant to the Contractual Arrangements and will provide a letter to our Directors with a copy to the Stock Exchange confirming that the transactions have received the approval of our Directors, have been entered into in accordance with the relevant Contractual Arrangements and that no dividends or other distributions have been made by our Operating Entity to the holders of its equity interests which are not otherwise subsequently assigned or transferred to our Group;

• for the purpose of Chapter 14A of the Listing Rules, and in particular the definition of “connected person”, our Operating Entity will be treated as our Company’s subsidiary, but at the same time, the directors, chief executives or substantial shareholders (as defined in the Listing Rules) of the Operating Entity and its associates will be treated as

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CONNECTED TRANSACTIONS

connected persons of our Company (excluding for this purpose, the Operating Entity), and transactions between these connected persons and our Group (including for this purpose, the Operating Entity), other than those under the Contractual Arrangements, will be subject to requirements under Chapter 14A of the Listing Rules; and

• our Operating Entity will undertake that, for so long as the Shares are listed on the Stock Exchange, the Operating Entity will provide our Group’s management and our Company’s auditors full access to their relevant records for the purpose of our Company’s auditors’ review of the connected transactions. We will comply with the applicable requirements under the Listing Rules, and will immediately inform the Stock Exchange if there are any changes to these continuing connected transactions.

APPLICATION FOR WAIVERS

In respect of the transactions described in “— Partially-exempt Continuing Connected Transactions” above, as the highest relevant “percentage ratio” (other than the profits ratio) calculated for the purpose of Chapter 14A of the Listing Rules is expected to be more than 0.1% but less than 5%, such transactions are exempt from the circular and independent Shareholders’ approval requirements but subject to the annual reporting and announcement requirements as set out in Rules 14A.49 and 14A.35 of the Listing Rules and the annual review requirements as set out in Rules 14A.55 to 14A.59 and 14A.71(6) of the Listing Rules.

As described above, we expect these partially-exempt continuing connected transactions to be carried out on a continuing basis and to extend over a period of time. Our Directors therefore consider that strict compliance with the announcement requirement under the Listing Rules would be impractical and unduly burdensome and would impose unnecessary administrative costs upon us. Accordingly, pursuant to Rule 14A.105 of the Listing Rules, we have applied to the Stock Exchange for, and the Stock Exchange [has granted], a waiver from strict compliance with the announcement requirement relating to continuing connected transaction under Rule 14A.35 of the Listing Rules in respect of the transactions described in “— Partially-exempt Continuing Connected Transactions”, subject to the condition that the aggregate amounts of the continuing connected transactions for each financial year shall not exceed the relevant amounts set forth in the respective annual caps (as stated above).

We have also applied for, and the Stock Exchange [has granted] us, in respect of the Contractual Arrangements, (i) a waiver from strict compliance with the announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules; (ii) a waiver from strict compliance with the requirement to set a term of not exceeding three years under Rule 14A.52 of the Listing Rules; and (iii) a waiver from strict compliance with the requirements to set monetary annual caps under Rule 14A.53(1) of the Listing Rules. Please refer

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CONNECTED TRANSACTIONS to “— Non-exempt Continuing Connected Transaction — Contractual Arrangements — Application for Waivers” and “— Non-exempt Continuing Connected Transaction — Contractual Arrangements — Conditions of Waiver” above for further details.

We will comply at all times with the applicable requirements under the Listing Rules. In the event of any future amendments to the Listing Rules imposing more stringent requirements than those as of the date of this document on the continuing connected transactions referred to in this section, we will take immediate steps to ensure compliance with such new requirements.

DIRECTORS’ VIEW

Our Directors (including our independent non-executive Directors) are of the view that the continuing connected transactions described above have been and shall be entered into in the ordinary and usual course of business of our Company, are on normal commercial terms or better to our Group, and are fair and reasonable and in the interests of our Company and our Shareholders as a whole. Our Directors (including our independent non-executive Directors) are also of the view that the proposed annual caps for the partially-exempt continuing connected transactions described above are fair and reasonable and in the interests of our Company and our Shareholders as a whole. The conflicted Directors shall be required to abstain from participation and abstain from voting in the Board meetings at which resolutions in relation to the above continuing connected transactions are discussed.

THE SOLE SPONSOR’S VIEW

Based on the documentation and data provided by our Company and the Sole Sponsor’s due diligence with the management of our Company, the Sole Sponsor is of the view that (i) the continuing connected transactions described above have been and shall be entered into in the ordinary and usual course of business of our Company, are on normal commercial terms, or better to our Group, are fair and reasonable and in the interests of our Company and our Shareholders as a whole; (ii) the proposed annual caps (if any) are fair and reasonable and in the interests of our Company and our Shareholders as a whole; and (iii) it is normal business practice for the Contractual Arrangements to be a term greater than three years.

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DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth certain information regarding our Directors.

Directors

Relationship with other Directors or Date of senior Present position(s) in Date of joining appointment as management Name Age our Group our Group Director Roles and responsibilities members Ms. Wang Shutong .. 53 Chairman of our August 2004 April 2018 Formulating the overall None Board, chief development strategies executive officer and business plans of and executive our Company and Director overseeing the management and strategic development of our Company

Mr. Liu Sijun...... 51 Executive Director October May 2021 Managing the daily None and vice 2004 operation and president implementing business development strategies

Mr. Hou Jianchen ... 41 Executive Director April 2006 June 2019 Managing the daily None operation of DHgate and implementing business development strategies

Mr. Fan Ren Da 61 Non-executive May 2021 May 2021 Providing advice and None Anthony ...... Director making recommendations to our Board

Mr. Kot Man Tat ... 49 Independent [•] [•] Providing independent None non-executive advice and judgment to Director our Board

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DIRECTORS AND SENIOR MANAGEMENT

Mr. Lai Xiaoling.... 45 Independent [•] [•] Providing independent None non-executive advice and judgment to Director our Board

Note: Mr. Liu Sijun initially joined our Group in October 2004 and resigned in April 2012. He re-joined our Group in February 2020 as the vice president of our Group.

Senior Management

Our senior management team, in addition to the Directors listed above, comprises the following:

Relationship with other Date of Directors or appointment as senior Present position(s) in Date of joining senior management Name Age our Group our Group management Roles and responsibilities members Ms. Ho Yip Betty ... 52 Chief strategic April 2020 April, 2020 Assisting the chief None officer executive officer with developing, communicating, executing, and sustaining corporate strategic initiatives

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DIRECTORS AND SENIOR MANAGEMENT

Relationship with other Date of Directors or appointment as senior Present position(s) in Date of joining senior management Name Age our Group our Group management Roles and responsibilities members Mr. Zhang Peng .... 40 Chief financial November November Supervising the financial None officer 2019 2019 management, including accounting, tax, budgeting and forecasting, treasury and financing, of our Group

Mr. Liu Wentao .... 40 Vice president of April 2008 August 2020 Managing the research None technology and development of the center transaction system

Ms. Liu Fengrong ... 46 Vice president of August, November Overseeing organizational None organization 2004 2020 development and development and human resource human resource management

DIRECTORS

Our Board currently consists of seven Directors, comprising three executive Directors, one non-executive Director and three independent non-executive Directors. The functions and duties of our Board include convening general meetings, implementing the resolutions passed at general meetings, determining business and investment plans, formulating our annual financial budget and financial accounts, and formulating our proposals for profit distributions as well as exercising other powers, functions and duties as conferred by the Articles of Association. For the residential address of each Director, please see “Directors and Parties Involved in the [REDACTED].”

Executive Directors

Ms. Wang Shutong (王樹彤), aged 53, founded our Group in August 2004 and was appointed as the chairman of our Board, the chief executive officer and our Director in April 2018 and redesignated as our executive Director in June 2019. Ms. Wang also holds directorships in other subsidiaries in our Group. Ms. Wang is primarily responsible for formulating the overall

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DIRECTORS AND SENIOR MANAGEMENT development strategies and business plans of our Company and overseeing the management and strategic development of our Company. Ms. Wang is one of our Controlling Shareholders and the principal founder of our Group.

Ms. Wang has over 23 years of experiences in the digital trading and e-commerce industry. Prior to establishing our Group, from October 1993 to January 1999, she served as the manager of business development department of Microsoft (China) Co., Ltd., where she was primarily responsible for business development of the company. From June 1999 to December 1999, she was the marketing director of Hong Kong Cisco System (HK) Co., Ltd., where she was primarily responsible for formulating marketing strategies. After that, she also served as the chief executive officer of Joyo.com (卓越網, now known as Amazon.cn (亞馬遜中國)), where she was primarily responsible for overseeing the operation of the company and formulating business development strategies.

Ms. Wang obtained her bachelor’s degree in radio technology from Beijing Union University (北京聯合大學) in July 1991 and is currently pursuing a master of business administration degree at Tsinghua University (清華大學). In August 2016, she was elected as the chairperson of the APEC Women Leadership Summit. From January 2019 to January 2020, she was the deputy chairperson of 50 Cross-border E-Commerce Leaders in China. Ms. Wang is currently a co-chair of Business 20 Italy’s Digital Transformation Task Force, a convenor of APEC Business Advisory Council and a member of the Chinese Chapter of BRICS Women’s Business Alliance. Further, Academy of China Open Economy Study of University of International Business and Economics (對外經濟貿易大學國家對外開放研究院) has appointed her as a council member since August 2017. Ms. Wang has been a member of High-level Advisory Council of the Organizing Committee of the World Internet Conference since November 2018 for a term of three years. In January 2020, Ms. Wang was appointed as a China alternate member of APEC Business Advisory Council by the Ministry of Foreign Affairs of the People’s Republic of China (中華人民共和國外交部) and China Council for the Promotion of International Trade (中國國際貿易促進委員會).

Mr. Liu Sijun (劉思軍), aged 51, was appointed as our executive Director in May 2021. Mr. Liu is primarily responsible for managing the daily operation and implementing business development strategies of our Group.

Mr. Liu has had more than 17 years of experience in the cross border B2B e-commerce market and retail industry. From July 1991 to August 1994, Mr. Liu worked at Beijing Academy of Space Electromechanics (北京空間機電研究所) as an assistant engineer responsible for scientific researches. From July 1997 to October 2004, he had successively served as a software engineer, a project manager and a deputy general manager at Beijing Century Zhongheng Technology Development Co., Ltd. (北京世紀衆恒科技發展有限公司), a company engaged in technology development, where he was primarily responsible the development and delivery of IT projects. Mr.

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DIRECTORS AND SENIOR MANAGEMENT

Liu initially joined our Group in October 2004 as a deputy manager of technology, in which he was responsible for the operation of our cross border B2B e-commerce marketplace, and resigned in April 2012. From May 2012 to October 2013, Mr. Liu served as the deputy general manager of Wanda Information Technology Company (萬達信息科技公司), a company primarily engaged in online retailing, where he was responsible for the online retailing business of the company. From October 2013 to May 2014, Mr. Liu was the senior director of Beijing Jingdong Century Trade Co., Ltd.* (北京京東世紀貿易有限公司), a wholly-owned subsidiary of JD.com, Inc (京東), a company whose shares are listed on the Stock Exchange (stock code: 9618.hk) and NASDAQ (ticker symbol: JD), respectively, where he was responsible for cross border e-commerce marketplace. From May 2014 to December 2019, Mr. Liu successively served as the general manager, vice president, president, deputy chairman of executive department and president of e-commerce within the group of Dashang Group Co., Ltd., a company primarily engaged in retail industry.

From August 2016 to December 2019, Mr. Liu was a non-executive director of Zhongxing-Shenyang Commercial Building (Group) Co., Ltd.* (中興-瀋陽商業大廈(集團)股份有限公司), a company whose shares listed on the Shenzhen stock exchange (stock code: 000715). He was also a director of Xinjiang Youhao (Group) Co., Ltd.* (新疆友好(集團)股份有限公司), a company whose shares are listed on the Shanghai Stock exchange (stock code: 600778), from May 2018 to December 2019. In February 2020, Mr. Liu re-joined our Group as the vice president, and was responsible for the Group’s cross border B2B e-commerce business.

Mr. Liu obtained his undergraduate degree in optical equipment from Zhejiang University (浙江大學) in July 1991 and his master degree in automation instrumentation from China Academy of Space Technology (中國空間技術研究院) in October 1997.

Mr. Hou Jianchen (侯建臣), aged 41, was appointed as our executive Director in June 2019. Mr. Hou is responsible for managing the daily operation of DHgate and implementing business development strategies.

Mr. Hou has over 15 years of experience in cross-border trading. Mr. Hou joined our Group in April 2006 as a sales manager responsible for engaging sellers of computers. From August 2009 to October 2012, he was promoted to the general manager of Century Heguang (Beijing), responsible for overseeing the development of computer, cell phone, communication and consumer products business line. From October 2012 to May 2016, he was appointed as the president of our new business department responsible for business development in emerging industries. Since May 2016, he has been the vice president of Digitrading Beijing, responsible for managing the daily operations of our Group.

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Mr. Hou obtained his bachelor’s degree in visual communication design from China University of Geosciences (中國地質大學) in December 2017. He completed the courses of the executive business administration program in Renmin University of China (中國人民大學)in September 2019.

Non-Executive Director

Mr. Fan Ren Da Anthony (范仁達), aged 61, was appointed as our non-executive Director in May 2021. Mr. Fan is primarily responsible for providing advice and making recommendations to our Board.

Mr. Fan has extensive experience in corporate management. He has been the chairman and managing director of AsiaLink Capital Limited since October 2007.

Mr. Fan has been an independent non-executive director of CITIC Resources Holdings Limited (中信資源控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1205.hk), since August 2000, an independent non-executive director of Uni-President China Holdings Ltd. (統一企業中國控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 0220.hk), since August 2007, an independent non-executive director of China Dili Group (中國地利集團), a company whose shares are listed on the Stock Exchange (stock code: 1387.hk), since 2008, an independent non-executive director of Hong Kong Resources Holdings Company Limited (香港資源控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 2882.hk), since September 2008, an independent non-executive director of Shanghai Industrial Urban Development Group Limited (上海實業城市開發集團有限公司), a company whose shares are listed on the Stock Exchange (stock code: 0563.hk), since July 2010, an independent non-executive director of Technovator International Limited (同方泰德國際科技有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1206.hk), since September 2011, an independent non-executive director of China Development Bank International Investment Limited (國開國際投資有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1062.hk), since March 2012, an independent non-executive director of Neo-Neon Holdings Ltd. (同方友友控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1868.hk), since August 2014, an independent non-executive director of Semiconductor Manufacturing International Corporation (中芯國際集成電路製造有限公司), a company whose shares are listed on the Stock Exchange (stock code: 0981.hk), since June 2018. Mr. Fan was also an independent non-executive director of Tenfu (Cayman) Holdings Company Limited (天褔(開曼)控股有限公司)(“Tenfu”), a company whose shares are listed on the Stock Exchange (stock code: 6868.hk), from August 2011 to May 2021 and has been re-designated to an executive director of the company in May 2021.

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Although Mr. Fan is currently holding directorships in ten companies listed on the Stock Exchange as disclosed above, our Directors believe that Mr. Fan can devote sufficient time to discharge his duties and responsibility as a non-executive Director, for the reasons as shown below: (i) except for Mr. Fan’s new responsibility at Tenfu as an executive director, his responsibilities in the other nine listed companies only require him to oversee their management independently rather than to participate in the day-to-day management and operations of the listed companies; (ii) he has demonstrated that he would be able to allocation sufficient time to discharge his duties owed to each of the listed companies by attending board meetings and board committee meetings during previous financial years; (iii) as retrieved from the annual report(s) of the listed companies that he has been or was a director, he has attended most of the board meetings, board committee meetings and shareholders’ meetings, as required, during his tenure as a director of the listed companies, (iv) as confirmed by Mr. Fan, none of the listed companies that he holds directorship with has questioned or complained about his time devoted to such companies; (v) his directorships in different listed companies have provided him with extensive experiences in corporate management and substantial knowledge in corporate governance which would allow him to properly discharge his duties and responsibilities as our non-executive Director; (vi) Mr. Fan’s role in our Group is non-executive in nature and he will not be involved in the daily management of our Group’s business; therefore, his engagement as our non-executive Director will not require his full-time participation; and (vii) he has confirmed that he will have sufficient time to fulfill his duties as a non-executive Director notwithstanding his directorships in ten other listed companies.

He was an independent non-executive director of Raymond Industrial Limited (利民實業有限公司), a company whose shares are listed on the Stock Exchange (stock code: 0229.hk), from December 1994 to May 2021. From March 2012 to June 2018, he was an independent director of Shandong Buchang Pharmaceuticals Co., Ltd. (山東步長製藥股份有限公司), a company whose shares are listed on the Shanghai Stock Exchange (stock code: 603858). He was an independent non-executive director of CGN New Energy Holdings Co., Ltd. (中國廣核新能源控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1811.hk), from September 2014 to June 2018. Mr. Fan obtained his master’s degree in business administration from the University of Dallas in December 1986. Mr. Fan is the founding president of the Hong Kong Independent Non-Executive Director Association and the chairman of the Asia Independent Non-Executive Director Association.

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Independent Non-Executive Directors

Mr. Kot Man Tat (葛文達), aged 49, was appointed as our independent non-executive Director in [•]. Mr. Kot is primarily responsible for providing independent advice and judgment to our Board.

Mr. Kot has over 21 years of experiences in the finance industry and financial management. From August 1999 to April 2001, he served as an accountant at KPMG, where he was primarily responsible for audit-related matters. From April 2001 to November 2004, he successively served as a senior accountant and a manager of Ernst & Young, where he was primarily responsible for managing audit workstreams. From June 2008 to June 2011, he served as the vice president of General Atlantic (Beijing) Investment Consultancy Limited, an investment fund, where he was responsible for managing investment activities of the company. From July 2011 to February 2013, he was the head of capital market of Zhongsheng Group Holdings Limited (中升集團控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 0881.hk), where he was responsible for corporate financing matters. From March 2013 to April 2016, he served as the senior vice president of General Atlantic (Beijing) Investment Consultancy Limited, where he was responsible for managing investment activities of the company. From June 2016 to May 2021, he was the chief financial officer of China Zhongwang Holdings Limited (中國忠旺控股有限公司), a company whose shares are listed on the Stock Exchange (stock code: 1333.hk), where he is responsible managing the financial functions of the company. Starting from May 2021, Mr. Kot works at Joy Spreader Interactive Technology Limited, a company whose shares are listed on the Stock Exchange (stock code: 6988), as the chief financial officer of the company.

Mr. Kot obtained his bachelor’s degree in business administration from the Chinese University of Hong Kong (香港中文大學) in December 1996.

Mr. Wan Kah Ming (溫嘉明), aged 50, was appointed as our independent non-executive Director in [•]. Mr. Wan is primarily responsible for providing independent advice and judgment to our Board.

Mr. Wan established Leung & Wan Solicitors, focusing on China inbound and outbound investment, finance, mergers, acquisitions and restructuring, in October 2001 and has been the principal of the firm since then. Since March 2007, he has been a director of Boen Capital Limited (previously known as Leung & Wan Management Limited and Leung & Wan Pegasus Group Limited). Since April 2018, he has been the chairman of the board of FrancXav Asia Ratings Limited, a company which is licensed under the SFO to conduct type 10 (credit rating services) regulated activity as defined under the SFO.

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Mr. Wan has been serving as an independent non-executive director of SPT Energy Group Inc., a company whose shares are listed on the Stock Exchange (stock code: 1251.hk) since December 2011. From December 2018 to December 2019, he was the independent non-executive director of Lerthai Group Limited, a company whose shares are listed on the Stock Exchange (stock code: 0112.hk).

Mr. Wan received his bachelor of law (Hons) and Postgraduate Certificate in Laws (PCLL) from The University of Hong Kong (香港大學) in November 1993 and June 1994, respectively. He was qualified to practise as a solicitor in Hong Kong in 1996. He was admitted as a Solicitor by the High Court of Hong Kong and the Supreme Court of England and Wales in 1996 and 2000, respectively. He is also currently a member of the Law Society of Hong Kong and the Chartered Institute of Arbitrators. He has been appointed as a China-Appointed Attesting Officer by the Ministry of Justice, PRC (中國司法部授權中國委託公證人) and a member of the Torture Claims Appeal Board since April 2009 and February 2017, respectively. Since February 2019, he has been a member of the Disciplinary Panel A of Hong Kong Institute of Certified Public Accountants.

Mr. Lai Xiaoling (賴曉凌), aged 45, was appointed as our independent non-executive Director in [•]. Mr. Lai is primarily responsible for providing independent advice and judgment to our Board.

Mr. Lai has had over 13 years of experience in venture capital investment. From October 2007 to February 2012, he was the investment manager and vice president of Chenchuang Qixing (Shanghai) Investment Management Consulting Co., Ltd.* (晨創啟興(上海)投資管理諮詢有限公司). From May 2012 to December 2017, he was a partner of Beijing Sinovation Ark Technology Co.,Ltd.(北京創新方舟科技有限公司). Since January 2018, Mr. Lai has been the partner of Beijing Shunwei Capital Investment Consulting Co., Ltd. (北京順為資本投資諮詢有限公司).

Mr. Lai has been an independent non-executive director of Feiyu Technology International Company Limited, a company whose shares are listed on the Stock Exchange (stock code: 1022.hk) since November 2014. He has also been an independent non-executive director of Meitu, Inc., a company whose shares are listed on the Stock Exchange (stock code: 1357.hk) since January 2019.

Mr. Lai obtained his bachelor’s degree in engineering physics from Tsinghua University (清華大學) in July 1999, and obtained his masters degree in business administration from the Chinese University of Hong Kong (香港中文大學) in December 2007.

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Disclosure Required under Rule 13.51(2) of the Listing Rules

Ms. Wang, our executive Director, the chairman of our Board and chief executive officer, was a director of the following companies which were established in the PRC or Hong Kong prior to their dissolution:

Principal business Means of Reason for Name of the relevant company activity dissolution dissolution Date of dissolution Dunhuang Heguang (Suzhou) Information Project company of Deregistration Not in operation January 4, 2021 Technology Company Limited* (敦煌禾 governmental 光(蘇州)信息技術有限公司) ...... projects

Dunhuang Heguang (Ningxia) Information Project company of Deregistration Not in operation November 20, Technology Company Limited* (敦煌禾 governmental 2020 光(寧夏)信息技術有限公司) ...... projects

Century Weiye Limited* (世紀偉業有限公 N/A Voluntary Not in operation July 19, 2019 司) ...... dissolution

Century Hesheng Limited* (世紀合盛有限 N/A Voluntary Not in operation July 19, 2019 公司) ...... dissolution

Ms. Wang confirmed that, to the best of her knowledge, (i) the dissolved companies above was solvent immediately prior to their dissolution and had no outstanding claim or liabilities; (ii) she has not received any notification in respect of penalty, acting or proceeding from the PRC or Hong Kong authorities as a result of the dissolution; and (iii) she is not aware of any actual or potential claim which has been or will be made against her as a result of the dissolution.

SENIOR MANAGEMENT

Our executive Directors and senior management are responsible for the day-to-day management and operation of our business. Information concerning our executive Directors is shown in “— Directors” above.

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Our senior management is responsible for the day-to-day management and operation of our business. The biography of each of our senior management member is set out below:

Ms. Ho Yip Betty (何曄), aged 52, was appointed as our chief strategic officer in April 2020. Ms. Ho is responsible for assisting the chief executive officer with developing, communicating, executing, and sustaining corporate strategic initiatives.

Ms. Ho has had more than 13 years of diversified and professional experiences in public companies, merger and acquisitions, private equity across a wide range of industries of Internet, TMT, manufacturing and retail. Prior to joining our Group, from July 2007 to January 2011, she served as the executive director, chief financial officer and company secretary of A8 Digital Music Holding Limited (now known as A8 New Media Group), a company whose shares are listed on the Stock Exchange (stock code: 800.hk), where she was responsible for the strategic planning, financial management and internal control of the group. From October 2013 to November 2019 and from November 2017 to November 2019, she was the chief financial officer and a director of Phoenix New Media Limited, a company whose shares are listed on the New York stock exchange (stock code: FENG), where she was responsible for accounting and finance, mergers and acquisition, investors relations and other corporate management functions.

Ms. Ho obtained her bachelor’s degree in commerce from University of Toronto in June 1993 and completed the Stanford Senior Executive Leadership Program in May 2018. She has been a member of the American Institute of Certified Public Accountants since September 1997.

Mr. Zhang Peng (張鵬), aged 40, was appointed as our chief financial officer in November, 2019. Mr. Zhang is responsible for supervising the financial management, including accounting, tax, budgeting and forecasting, treasury and financing of our Group.

Mr. Zhang has had over 14 years of experience in finance and investment management. He joined our Group in November 2019 as the chief financial officer. Prior to joining our Group, from October 2006 to July 2012, he served as an audit manager at the audit department of Ernst & Young. From July 2012 to December 2018, he worked at a series of affiliate entities of Warburg Pincus LLC, where he was responsible for the investment and portfolio management, with his last position as an associate director. From January 2019 to October 2019, he was the finance head of Shanghai Boping Corporate Management Co., Ltd.* (上海博平企業管理有限公司) where he was responsible for supervising the financing and financial management of the company.

Mr. Zhang obtained his bachelor’s degree and his master degree in economics from Fudan University in July 2003 and June 2006, respectively. Mr. Zhang has been a member of Chinese institute certified public accountants since September 2012.

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Mr. Liu Wentao (劉文濤), aged 40, was appointed as the vice president of technology center of our Group in August 2020. He is mainly responsible for the management and research and development of the transaction system of our Group.

Mr. Liu has had over 13 years of experience in technology management and research and development. He joined our Group in April 2008 as the senior software engineer, and has since served as the senior manager of database department and the director and general manager of system maintenance and operation department, respectively. Mr. Liu has also been the general manager of internet technology and system maintenance and operation of Century Rich Palace. From April 2004 to April 2008, Mr. Liu worked at HC Group Inc., a company whose shares are listed on the Stock Exchange (stock code: 2280.hk), with his last position there being a project manager, where he was responsible for the development of B2B internet technology, system infrastructure and project management.

Mr. Liu obtained his bachelor’s degree in computer science and technology from Northeast Normal University (東北師範大學) in July 2016.

Ms. Liu Fengrong (劉鳳榮), aged 46, was appointed as the vice president of organization development and human resource of our Group in November 2020. She is mainly responsible for overseeing organizational development and human resource management of our Group.

Ms. Liu has over 16 years of experience in human resource management and consulting. Ms. Liu joined our Group in August 2004 at its inception as a human resource manager. From August 2009 to August 2011, she was the director of human resources business partner of platform operation department. She was promoted to the positions of the director of human resources and vice president in August 2011, and started to be the supervisor of administration and law in January 2017. Starting from September 2019 and before she was promoted to her current position, she served as the vice president responsible for client relationship management department and trust and safety department.

Ms. Liu obtained her associate degree in human resources management from Beijing Jiaotong University (北京交通大學, formerly known as Northern Jiaotong University (北方交通大學)) in July 1995. She finished her graduate study in applied psychology from Chinese Academy of Science (中國科學院) in September 2012.

JOINT COMPANY SECRETARIES

Mr. Xie Yifeng (解一峰), aged 40, has been appointed as one of our joint company secretaries in May 2021. Mr. Xie joined our Company in October 2013. Since then, he has been responsible for the legal compliance and governance matters of our Company. Mr. Xie has more

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DIRECTORS AND SENIOR MANAGEMENT than 14 years of professional experiences in law. Prior to joining our Company, he worked as an associate of Chang Tsi & Partners (北京市鑄成律師事務所) from April 2007 to April 2010. From February 2011 to October 2013, he worked as an associate of Hylands Law Firm (北京市浩天信和律師事務所). Mr. Xie obtained his bachelor’s degree in law from Tianjin University of Commerce (天津商業大學) in June 2003. He obtained his master of laws from University College Cork in December 2006.

Ms. Szeto Kar Yee Cynthia (司徒嘉怡) has been appointed as one of our joint company secretaries in May 2021. Ms. Szeto is an associate member of the Hong Kong Institute of Chartered Secretaries and the Chartered Governance Institute (formerly known as the Institute of Chartered Secretaries and Administrators) in the United Kingdom. She obtained a bachelor’s degree of Arts in Language Studies with Business from The Hong Kong Polytechnic University in November 2004 and a master’s degree of Science in Professional Accounting and Corporate Governance from City University of Hong Kong in July 2012. Ms. Szeto has more than 10 years of professional and in-house experience in the company secretarial field. She works in the listing services department of TMF Hong Kong Limited and is responsible for providing corporate secretarial and compliance services to listed companies. She is currently a company secretary of First Service Holding Limited, a company listed on the Stock Exchange (stock code: 2107.hk), and a joint company secretary of Inke Limited, a company listed on the Stock Exchange (stock code: 3700.hk) and Ming Yuan Cloud Group Holdings Limited, a company listed on the Stock Exchange (stock code: 909.hk), respectively.

DIRECTORS’ AND SENIOR MANAGEMENT’S INTEREST

Save as disclosed in “— Directors”, “— Senior Management” and “— Joint Company Secretaries”, each of our Directors and the members of our senior management (i) did not hold other positions in our Group as of the Latest Practicable Date; (ii) had no other relationship with any Directors or our members of the senior management as of the Latest Practicable Date; and (iii) did not hold any other directorship in listed companies in the three years prior to the Latest Practicable Date. See “Statutory and General Information” in Appendix IV for further information about our Directors, including the particulars of their service contracts of letters of appointment and remuneration, and details of the interests of the Directors in the Shares (within the meaning of Part XV of the SFO).

Save as disclosed “— Directors”, “— Senior Management” and “— Joint Company Secretaries”, there are no other matters in respect of each of our Directors and the members of our senior management that is required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules and there are no other material matters relating to our Directors and the members of our senior management that need to be brought to the attention of our Shareholders.

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BOARD COMMITTEES

Audit Committee

Our Company established an Audit Committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code as set out in Appendix 14 to the Listing Rules (“Corporate Governance Code”). The Audit Committee consists of three members, namely Mr. Kot Man Tat, Mr. Lai Xiaoling and Mr. Wan Kah Ming. Mr. Kot Man Tat has been appointed as the chairman of the Audit Committee, and is our independent non-executive Director possessing the appropriate professional qualifications. The primary duties of the Audit Committee are to review and supervise the financial reporting process and internal control system of our Company, oversee the audit process, review and oversee the existing and potential risks of our Company, and perform other duties and responsibilities as assigned by our Board.

Remuneration Committee

Our Company established a Remuneration Committee with written terms of reference in compliance with Rule 3.25 of the Listing Rules and the Corporate Governance Code. The Remuneration Committee has three members, namely Mr. Lai Xiaoling, Ms. Wang and Mr. Kot Man Tat. Mr. Lai Xiaoling has been appointed as the chairman of the Remuneration Committee. The primary duties of the Remuneration Committee are to establish and review the policy and structure of the remuneration for the Directors and senior management and make recommendations on employee benefit arrangement.

Nomination Committee

Our Company established a Nomination Committee with written terms of reference in compliance with the Corporate Governance Code. The Nomination Committee consists of two independent non-executive Directors, namely Mr. Kot Man Tat and Mr. Wan Kah Ming and our executive Director and chairman of our Board, namely Ms. Wang, who is the chairman of the Nomination Committee. The primary duties of the Nomination Committee are to make recommendations to our Board on the appointment and removal of Directors of our Company.

CODE PROVISION A.2.1 OF THE CORPORATE GOVERNANCE CODE

Ms. Wang is the chairman of the Board and chief executive officer. Since the founding of our Group in 2004, Ms. Wang has been responsible for formulating our overall business development strategies and leading our overall operations, and therefore has been instrumental to our growth and business development. The vision and leadership of Ms. Wang have played a pivotal role in the success and achievements of our Group, therefore our Board considers that vesting the roles of

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DIRECTORS AND SENIOR MANAGEMENT chairman and chief executive officer in the same person is beneficial to the management of our Group. Our long-serving and outstanding senior management team and our Board, which comprise individuals of high-caliber and with extensive experience in their respective fields, provide a check on the balance of power and authority. Our Board comprises three executive Directors (including Ms. Wang), a non-executive Director and three independent non-executive Directors, and therefore has a fairly strong independence element in its composition.

We aim to achieve high standards of corporate governance which are crucial to our development and safeguard the interests of our Shareholders. Save as disclosed above, we are in compliance with all code provisions of the Corporate Governance Code.

WAIVER GRANTED BY THE STOCK EXCHANGE

We have applied to the Stock Exchange for[, and the Stock Exchange has granted,] a waiver from strict compliance with the requirement under Rule 8.12 of the Listing Rules in relation to the requirement of management presence in Hong Kong. For more information on the waiver, see “Waivers from Compliance with the Listing Rules and Exemptions from Compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance — Waiver in Relation to Management Presence in Hong Kong.”

We have applied to the Stock Exchange for[, and the Stock Exchange has granted,] a waiver from strict compliance with the requirement of Rules 3.28 and 8.17 of the Listing Rules in relation to the academic or professional qualifications of our Company’s joint company secretaries. For details of the waiver, see “Waivers from Compliance with the Listing Rules and Exemptions from Compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance — Waiver in Relation to Joint Company Secretaries.”

COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT

Our Directors and senior management receive compensation in the form of salaries, allowances, discretionary bonuses, share options, contributions to retirement benefits schemes and other benefits in kind subject to applicable laws, regulations and rules. The aggregate amount of remuneration (including salaries, allowances, discretionary bonuses, contributions to retirement benefits schemes and other benefits in kind) paid to the Directors for the years ended December 31, 2018, 2019 and 2020 was approximately USD564,000, USD920,000, and USD740,000, respectively. The five highest paid individuals of our Group included two Directors for the three years ended December 31, 2018, 2019 and 2020. Excluding those Directors, the aggregate amount of remuneration (including salaries, allowances, discretionary bonuses, contributions to retirement

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DIRECTORS AND SENIOR MANAGEMENT benefit schemes and other benefits in kind) paid to the remaining three highest paid individuals of our Group for the years ended December 31, 2018, 2019 and 2020 were approximately USD640,000, USD620,000, and USD806,000, respectively.

Under the arrangements currently in force, the aggregate remunerations, excluding discretionary bonus and share-based payments expense, if any, of the Directors for the year ending December 31, 2021 is estimated to be approximately USD470,500.

We adopted the [REDACTED] Incentive Scheme on March 20, 2019 to attract and retain the best available personnel, provide additional incentives to employees, Directors, senior managements and consultants and to promote the success of our Company’s business. The principal terms of the [REDACTED] Incentive Scheme are set out in “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document. Pursuant to the [REDACTED] Incentive Scheme, the maximum number of Shares in respect of which share options may be granted shall not exceed 28,237,956 Shares, representing approximately [REDACTED] of our Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU scheme). As of the Latest Practicable Date, our Company had granted share options to subscribe for an aggregate of 23,504,864 Shares under the [REDACTED] Incentive Scheme, representing approximately [REDACTED] of our Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme). None of the share options were exercised. For further information regarding the awardees under the [REDACTED] Incentive Scheme, see “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document.

We further adopted the RSU Scheme on May 24, 2021 to grant awards of restricted share units as incentives to directors, senior management and other selected personnel to our Company and its subsidiaries. The principal terms of the RSU Scheme are set out in “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV to this document. Pursuant to the RSU Scheme, the maximum number of Shares in respect of which awards may be granted shall not exceed 9,569,246 Shares, representing approximately [REDACTED] of the Company’s issued share capital immediately after the Share Subdivision and the [REDACTED] (assuming (i) the [REDACTED] is not exercised, (ii) the options granted under the [REDACTED] Incentive Scheme are not exercised, and (iii) without taking into account Shares which may be issued under the RSU Scheme). As the RSU Scheme will become effective from the Listing Date, no RSUs have been granted under the RSU Scheme as of the Latest Practicable Date.

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The independent non-executive Directors receive fees from the Company. All Directors receive reimbursements from the Company for expenses which are necessary and reasonably incurred for providing services to the Company or executing matters in relation to the operations of the Company and are paid out of the funds of the Company by way of fees for their services as directors, such sums (if any) as the Directors may from time to time determine (not exceeding in aggregate an annual sum excluding other amounts payable (e.g. expenses as remuneration for employment) or such larger amount as the Company may by ordinary resolution determine). Save as disclosed above, the Directors are not entitled to receive any other special benefits from the Company. The compensation of the Directors is determined by our Board which, following the Listing, will receive recommendation from the Remuneration Committee which will take into account applicable laws, regulations and rules.

No remuneration was paid to our Directors or the three, three and two highest paid individuals for the years ended December 31, 2018, 2019 and 2020, respectively, as an inducement to join, or upon joining, our Group. No compensation was paid to, or receivable by, our Directors or past Directors for the Track Record Period for the loss of office as director of any member of our Group or of any other office in connection with the management of the affairs of any member of our Group. None of our Directors waived any emoluments during the same period.

BOARD DIVERSITY POLICY

In order to enhance the effectiveness of our Board and to maintain the high standard of corporate governance, we have adopted our board diversity policy which sets out the objective and approach to achieve and maintain diversity of our Board. Pursuant to the board diversity policy, we seek to achieve board diversity through the consideration of a number of factors when selecting the candidates to our Board, including but not limited to gender, skills, age, professional experience, knowledge, cultural and education background, ethnicity and length of service. The ultimate decision of the appointment will be based on merit and the contribution to which the selected candidates will bring to our Board.

Our Directors have a balanced mix of knowledge and skills, including overall management and strategic development, information technology, accounting and financial management, corporate governance and software development. They obtained degrees in various majors including law, radio technology, engineering, commerce and visual communication design. We have three independent non-executive Directors with different industry backgrounds, representing a third of the members of our Board. Furthermore, our Board has a wide range of age, ranging from 41 years to 61 years old. Taking into account our existing business model and specific needs as well as the different background of our Directors, the composition of our Board satisfies our board diversity policy.

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DIRECTORS AND SENIOR MANAGEMENT

Our Nomination Committee is responsible for ensuring the diversity of our Board members. After the Listing, our Nomination Committee will review the board diversity policy from time to time to ensure its continued effectiveness and we will disclose in our corporate governance report about the implementation of the board diversity policy on an annual basis.

COMPLIANCE ADVISOR

We have appointed Messis Capital Limited as our compliance advisor pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, our compliance advisor will advise us in the following circumstances:

• before the publication of any regulatory announcement, circular or financial report;

• where a transaction, which might be a notifiable or connected transaction, is contemplated, including share issues and share repurchases;

• where we propose to use the [REDACTED] of the [REDACTED] in a manner different from that detailed in this document or where our business activities, developments or results deviate from any forecast, estimate or other information in this document; and

• where the Stock Exchange makes an inquiry of us regarding unusual movements in the price or trading volume of our Shares.

The term of the appointment shall commence on the Listing Date and end on the date on which we distribute our annual report in respect of our financial results for the first full financial year commencing after the Listing Date or the compliance advisor mandate is terminated pursuant to the terms thereof (whichever is earlier).

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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

OUR CONTROLLING SHAREHOLDERS

As at the Latest Practicable Date, our Company was owned as to 41.75%, 15.78%, 28.98% and 1.19% by Idea Edge, Heguang International (BVI) (together with Ms. Wang and Idea Edge, collectively as the “Wang Entities”), TDF China and TDF Advisors (together with TDF China, TDF Capital China Management II, LP and TDF Management II, LLC, collectively as the “TDF Entities”), respectively. The Wang Entities and the TDF Entities are independent from each other and there has been no understanding or arrangement (formal or otherwise) that they would vote in any coordinated manner. Each of the Wang Entities and the TDF Entities are controlling shareholders of our Company as defined under the Listing Rules prior to the completion of the [REDACTED].

Immediately following the completion of the Share Subdivision and the [REDACTED] (assuming that the [REDACTED] is not exercised and without taking into account Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme), the Wang Entities and the TDF Entities will be entitled to exercise in general meetings voting rights attached to Shares representing approximately [REDACTED] and [REDACTED] of the total issued share capital of our Company, respectively. Since the TDF Entities will hold [REDACTED] our post [REDACTED] enlarged share capital, the TDF Entities will not be our controlling shareholder as defined under the Listing Rules upon Listing despite the fact that they are referred to as “Controlling Shareholders” in this document.

RELATIONSHIP WITH THE WANG ENTITIES

Ms. Wang is the principal founder of our Group. For further details of Ms. Wang, see “Directors and Senior Management — Directors.”

Heguang International (BVI) is controlled and wholly owned by Ms. Wang, and Idea Edge Limited is a BVI company wholly owned by New Element Holdings Limited, which is in turn wholly owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, which is a discretionary trust established by Ms. Wang. For further details of Huguang International (BVI) and Idea Edge, see “History, Reorganization and Corporate Structure.”

During the Track Record Period and up to the Latest Practicable Date, there were certain connected transactions between our Group and the Wang Entities or their respective close associates which will continue after the completion of the [REDACTED]. For further details, see “Connected Transactions.” All such transactions were determined after arm’s length negotiations and on normal commercial terms. We expect that we will be able to maintain the aggregate

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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS amounts of the continuing connected transactions with the Wang Entities or their respective close associates within the respective annual caps after the Listing. Accordingly, such continuing connected transactions are not expected to affect our operational independence as a whole.

RELATIONSHIP WITH THE TDF ENTITIES

Each of TDF China and TDF Advisors is an exempted limited partnership incorporated under the laws of the Cayman Islands on June 21, 2005, respectively, and managed by TDF Capital China Management II, LP, the general partner, which is in turn managed by its general partner, TDF Management II, LLC. Each of TDF China and TDF Advisors primarily focuses on investments in high-tech and fast-growing companies in the Greater China region. For further details of the TDF Entities, see “History, Reorganization and Corporate Structure.”

As at the Latest Practicable Date, save for the investments in our Group, the TDF Entities have not invested in other companies. Further, none of the TDF Entities or their respective close associates is engaged in the operation of cross-border B2B e-commerce marketplace. In light of the above, our Directors are of the view that there is a clear delineation between the business operated by the TDF Entities and its close associates and our Company. Each of the TDF Entities and its respective close associates does not have any interest in a business, apart from the business of our Company, which competes or is likely to compete, directly or indirectly, with our business, which would require disclosure under Rule 8.10 of the Listing Rules.

COMPETING INTERESTS

Each of our Controlling Shareholders and Directors confirms that he/she/it or his/her/its respective close associates do not have any interest in a business, apart from the business of our Group, which competes or is likely to compete, directly or indirectly, with our business, which would require disclosure under Rule 8.10 of the Listing Rules.

INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS

Having considered the following factors, our Directors are satisfied that we are capable of carrying out our business independently from our Controlling Shareholders and their respective close associates after the Listing.

Management Independence

The day-to-day management of the business of the Group rests primarily with our Board and our senior management as of the Latest Practicable Date. Our Board comprises three executive Directors, one non-executive Director and three independent non-executive Directors. Although

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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

Ms. Wang is the chairman of the Board, an executive Director and also a Controlling Shareholder and the sole director of Heguang International (BVI), our management and operational decisions are made by all our executive Directors and senior management, most of whom have served our Group for a long time and all of whom have substantial experience in the industries in which we are engaged and/or in their respective fields of expertise. The balance of power and authority is ensured by the operation of the senior management and our Board. See “Directors and Senior Management” for further details.

Each of our Directors is aware of his/her fiduciary duties as a Director which require, among others, that he/she must act for the benefit of and in the best interests of our Company and not allow any conflict between his/her duties as a Director and his/her personal interests. Further, we believe our independent non-executive Directors will bring independent judgment to the decision-making process of our Board. In addition, our Directors shall not vote in any Board resolution approving any contract or arrangement or any other proposal in which he or any of his close associates have a material interest and shall not be counted in the quorum present at the particular Board meeting.

Based on the above, our Directors are satisfied that our Board as a whole together with our senior management team are able to perform the managerial role in our Group independently.

Operational Independence

Despite that the Wang Entities will retain a controlling interest in our Company after the Listing, we have full rights to make all decisions regarding, and to carry out, our own business operations independently from our Controlling Shareholders. Our Company (through our subsidiaries and the Operating Entity) holds or enjoys the benefit of all relevant licenses necessary to carry on our businesses, and has sufficient capital, equipment, access to customers and suppliers, and employees to operate our business independently from our Controlling Shareholders. In addition, our organizational structure is made up of individual departments, each with specific areas of responsibilities. We have also established a set of internal control measures to facilitate the effective operation of our business.

Save for the transactions set out in the section headed “Connected Transactions” in this document, our Directors do not expect that there will be any other significant transactions between our Group and our Controlling Shareholders upon or shortly after the Listing.

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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

Financial Independence

During the Track Record Period and up to the Latest Practicable Date, our Group has our own internal control, accounting and financial management system and we make financial decisions according to our own business needs. In addition, our Group does not rely on our Controlling Shareholders and/or their close associates by virtue of their provision of financial assistance.

Our Directors confirm that non-trade amounts due to or from, and loans or guarantees provided by our Controlling Shareholders and their respective close associates, will be fully repaid or released before the Listing. Our Directors believe that we are capable of obtaining financing from external sources without reliance on our Controlling Shareholders.

Based on the above, our Directors believe that we have the ability to operate independently of our Controlling Shareholders and their respective close associates from a financial perspective and are able to maintain financial independence from our Controlling Shareholders and their respective close associates.

CORPORATE GOVERNANCE MEASURES

Each of our Controlling Shareholders has confirmed that she/it fully comprehends she/its obligations to act in our Shareholders’ and our best interests as a whole. Our Directors believe that there are adequate corporate governance measures in place to manage existing and potential conflicts of interest. In order to further avoid potential conflicts of interest, we have implemented the following measures:

(a) as part of our preparation for the [REDACTED], we have amended our Articles of Association to comply with the Listing Rules. In particular, our Articles of Association provide that, unless otherwise provided, a Director shall not vote on any resolution approving any contract or arrangement or any other proposal in which such Director or any of his/her close associates have a material interest nor shall such Director be counted in the quorum present at the meeting;

(b) a Director with material interests shall make full disclosure in respect of matters that conflict or potentially conflict with our interest and absent himself/herself from the board meetings on matters in which such Director or his/her close associates have a material interest, unless the attendance or participation of such Director at such meeting of the Board is specifically requested by a majority of the independent non-executive Directors;

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RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

(c) we are committed that our Board should include a balanced composition of executive and non-executive Directors (including independent non-executive Directors). We have appointed three independent non-executive Directors and we believe our independent non-executive Directors possess sufficient experience and they are free of any business or other relationship which could interfere in any material manner with the exercise of their independent judgment and will be able to provide an impartial and external opinion to protect the interests of our public Shareholders. Details of our independent non-executive Directors are set out in “Directors and Senior Management — Directors — Independent Non-executive Directors”;

(d) in the event that the independent non-executive Directors are requested to review any conflicts of interests circumstances between our Group on the one hand and our Controlling Shareholders and/or our Directors on the other hand, our Controlling Shareholders and/or our Directors shall provide the independent non-executive Directors with all necessary information and our Company shall disclose the decisions of the independent non-executive Directors either through our annual report or by way of announcements; and

(e) we have appointed Messis Capital Limited as our compliance advisor, which will provide advice and guidance to us in respect of compliance with the applicable laws and the Listing Rules including various requirements relating to directors’ duties and corporate governance.

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SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, immediately following the completion of the Share Subdivision and the [REDACTED] and without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares that may be issued pursuant to the exercise of options which were granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme, the following persons will have an interest or a short position in Shares or underlying Shares of our Company which will be required to be disclosed to our Company and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company or any of our subsidiaries:

Approximate Approximate percentage of percentage of interest in our Number of Shares interest in our Name of shareholder Name of company Nature of interest Number of Shares Company (Note 9) Company (Note 2) Ms. Wang (Notes 3 and 4) ... The Company Interest in controlled corporation [87,991,734] [57.53]% [REDACTED] [REDACTED] and founder of a discretionary trust

Mr. Shen Jun (沈軍) (Note 5) The Company Spousal interest [87,991,734] [57.53]% [REDACTED] [REDACTED]

Heguang The Company Beneficial owner [24,131,920] [15.78]% [REDACTED] [REDACTED] International (BVI) (Note 3) ......

Idea Edge (Note 4) ..... The Company Beneficial owner [63,859,814] [41.75]% [REDACTED] [REDACTED]

New Element Holdings The Company Interest in controlled corporation [63,859,814] [41.75]% [REDACTED] [REDACTED] Limited (Note 4) .....

Silkroad Enterprise Limited The Company Interest in controlled corporation [63,859,814] [41.75]% [REDACTED] [REDACTED] (Note 4) ......

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SUBSTANTIAL SHAREHOLDERS

Immediately after the Share Subdivision and the [REDACTED] (without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares that may be issued pursuant to the exercise of options which may be granted under the [REDACTED] Incentive Scheme or As of the date of this document pursuant to the RSU Scheme) Approximate Approximate percentage of percentage of interest in our Number of Shares interest in our Name of shareholder Name of company Nature of interest Number of Shares Company (Note 9) Company (Note 2) Cantrust (Far East) Limited The Company Trustee of a trust [63,859,814] [41.75]% [REDACTED] [REDACTED] (Note 4) ......

TDF China (Note 6) ..... The Company Beneficial owner [44,322,231] [28.98]% [REDACTED] [REDACTED]

TDF Advisors (Note 6) ... The Company Beneficial owner [1,817,986] [1.19]% [REDACTED] [REDACTED]

TDF Capital China The Company Interest in controlled corporation [46,140,217] [30.17]% [REDACTED] [REDACTED] Management II. L.P. (Note 6) ......

TDF Management II, LLC The Company Interest in controlled corporation [46,140,217] [30.17]% [REDACTED] [REDACTED] (Note 6) ......

Ms. Wang...... Century Rich Palace Beneficial owner RMB4,000,000 80% RMB4,000,000 80% registered registered capital capital

Mr. Shen Jun (沈軍) (Note 7) Century Rich Palace Spousal interest RMB4,000,000 80% RMB4,000,000 80% registered registered capital capital

Ms. Liu...... Century Rich Palace Beneficial owner RMB1,000,000 20% RMB1,000,000 20% registered registered capital capital

Mr. Wang Shuping Century Rich Palace Spousal interest RMB1,000,000 20% RMB1,000,000 20% (王樹平) (Note 8) ..... registered registered capital capital

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SUBSTANTIAL SHAREHOLDERS

Notes:

1. All interests stated are long positions.

2. The calculation is based on the total number of [REDACTED] Shares in issue immediately following the completion of the Share Subdivision and the [REDACTED] and without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares that may be issued pursuant to the exercise of options which were granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme.

3. Assuming the Series B Preferred Shares are converted into the Shares on a one-for-one basis, Heguang International (BVI) shall hold [REDACTED] Shares, representing approximately [REDACTED] of the total issued share capital of our Company upon Listing. Heguang International (BVI) is wholly owned by Ms. Wang. Therefore, Ms. Wang is deemed under the SFO to be interested in these [REDACTED] Shares held by Heguang International (BVI).

4. Idea Edge is a BVI company wholly owned by New Element Holdings Limited, which is in turn wholly-owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, a discretionary trust established by Ms. Wang. Therefore, each of New Element Holdings Limited, Silkroad Enterprise Limited, Cantrust (Far East) Limited and Ms. Wang is deemed under the SFO to be interested in these [REDACTED] Shares held by Idea Edge.

5. Mr. Shen Jun (沈軍) is a spouse of Ms. Wang and is therefore deemed under the SFO to be interested in these [REDACTED] Shares interested by Ms. Wang.

6. Assuming the Preferred Shares are converted into the Shares on a one-for-one basis, TDF China and TDF Advisors shall hold [REDACTED] Shares and [REDACTED] Shares, representing approximately [REDACTED] and [REDACTED] of the total issued share capital of our Company, respectively, upon Listing. Both TDF China and TDF Advisors are exempted liability partnerships established in the Cayman Islands. The general partner of TDF China and TDF Advisors is TDF Capital China Management II. L.P., also an exempted liability partnership established in the Cayman Islands, which is in turn controlled by its general partner, TDF Management II, LLC. Therefore, each of TDF Capital China Management II L.P. and TDF Management II, LLC is deemed to be interested in the [REDACTED] Shares and [REDACTED] Shares held by TDF China and TDF Advisors, respectively.

7. Mr. Shen Jun (沈軍) is a spouse of Ms. Wang and is therefore deemed under the SFO to be interested in the 80% equity interest in Century Rich Palace held by Ms. Wang.

8. Mr. Wang Shuping (王樹平) is a spouse of Ms. Liu and is therefore deemed under the SFO to be interested in the 20% equity interest in Century Rich Palace held by Ms. Liu.

Other than disclosed above, the substantial shareholders are not related to one another.

Save as disclosed above and in “Statutory and General Information — C. Further Information about Our Directors and Substantial Shareholders — 1. Disclosure of Interests” in Appendix IV, our Directors are not aware of any person who will, immediately following the completion of the [REDACTED] and assuming that the [REDACTED] is not exercised or any Shares that may be issued pursuant to the exercise of options which were granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme, have an interest or a short position in the Shares or underlying Shares which will be required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of our Group.

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SHARE CAPITAL

AUTHORIZED AND ISSUED SHARE CAPITAL

The following is a description of the authorized share capital of our Company as of the Latest Practicable Date and immediately following the completion of the Share Subdivision and the [REDACTED]:

Authorized share capital

As of the Latest Practicable Date, our authorized share capital was USD50,000 divided into 500,000,000 shares of par value of US$0.0001 each, consisting of (i) 419,274,881 Shares, (ii) 24,305,500 Series A Preferred Shares, (iii) 32,175,890 Series B Preferred Shares, (iv) 5,396,380 Series C-1 Preferred Shares, (v) 2,997,990 Series C-2 Preferred Shares, (vi) 5,396,377 Series C-3 Preferred Shares, and (vii) 10,452,982 Series D Preferred Shares.

The Preferred Shares will be converted into Shares on a one-for-one basis immediately after the [REDACTED] becoming unconditional and in any event before the Listing, and immediately following the completion of the Share Subdivision and the [REDACTED], our authorized share capital shall be US$[REDACTED] divided into [REDACTED] Shares of par value of US$[REDACTED] each.

The following is a description of the issued share capital of our Company in issue and to be issued as fully paid or credited as fully paid prior to and immediately following the completion of the Share Subdivision and the [REDACTED]:

Issued share capital

Shares Description of Shares Total nominal value

USD [152,947,319] Shares in issue as of the date of this document [15,294.7319]

[REDACTED] Shares in issue after the Share Subdivision [REDACTED]

[REDACTED] Shares to be issued pursuant to the [REDACTED] [REDACTED]

[REDACTED] Total [REDACTED]

ASSUMPTIONS

The above table assumes that the [REDACTED] becomes unconditional, the Shares are issued pursuant to the [REDACTED] and the Preferred Shares will be converted into Shares on a one-for-one basis immediately after the [REDACTED] becoming unconditional and in any event before the Listing. The above does not take into account any shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares which may be issued or

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SHARE CAPITAL repurchased by our Company pursuant to the general mandates granted to our Directors to issue or repurchase Shares as described below or any Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme.

RANKING

The Shares are ordinary shares in the share capital of our Company and rank equally with all Shares currently in issue or to be issued and, in particular, will rank in full for all dividends or other distributions declared, made or paid on the Shares in respect of a record date which falls after the date of this document.

CIRCUMSTANCES UNDER WHICH GENERAL MEETINGS AND CLASS MEETINGS ARE REQUIRED

With effect from Listing, our Company has only one class of shares, namely ordinary shares, each of which ranks pari passu with the other shares.

Pursuant to the Cayman Companies Act and the provisions of our Memorandum and Articles of Association, our Company may from time to time by ordinary shareholders’ resolution (i) increase its capital; (ii) consolidate and divide its capital into Shares of larger amount; (iii) divide its Shares into classes; (iv) subdivide its Shares into Shares of smaller amount; and (v) cancel any Shares which have not been taken. In addition, our Company may reduce or redeem its share capital by shareholders’ special resolution. For more details, please see “Summary of the Constitution of the Company — 2. Articles of Association — 2.5. Alteration of capital” in Appendix III.

Pursuant to the Cayman Companies Act and the provisions of our Memorandum and Articles of Association, all or any of the special rights attached to the Share or any class of Shares may be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued Shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the Shares of that class. For more details, please see “Summary of the Constitution of the Company — 2. Articles of Association — 2.4. Variation of rights of existing shares or classes of shares” in Appendix III.

GENERAL MANDATE TO ISSUE AND REPURCHASE SHARES

Subject to the conditions stated in “Structure of the [REDACTED] — Conditions of the [REDACTED]”, our Directors have been granted general unconditional mandates to issue and repurchase our Shares.

For further details of these general mandate, please see “Statutory and General Information — A. Further Information About the Group — 3. Resolutions in Writing of the Shareholders of Our Company Passed on [•]” in Appendix IV.

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SHARE CAPITAL

SHARE INCENTIVE SCHEMES

We have adopted the [REDACTED] Incentive Scheme and the RSU Scheme. The principal terms of the incentive schemes are summarized in “Statutory and General Information — D. Share Incentive Schemes” in Appendix IV.

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FINANCIAL INFORMATION

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements as of and for each of the years ended December 31, 2018, 2019 and 2020 and the accompanying notes included in the Accountants’ Report set out in Appendix I to this document. Our consolidated financial statements have been prepared in accordance with HKFRS. Potential investors should read the whole of the Accountants’ Report set out in Appendix I to this document and not rely merely on the information contained in this section. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. For additional information regarding these risks and uncertainties, see “Risk Factors.”

OVERVIEW

We are a leading global cross-border B2B e-commerce marketplace for procurement from China, connecting buyers from around the world with sellers primarily located in China. Our principal business lines include:

• Cloud-based commercial solutions, which are offered through MyyShop and entail SaaS solutions that facilitate our B2B2C business model through helping small and micro merchants, including social media influencers, intelligently build and operate their online businesses, who reciprocally support the continuous growth of our ecosystem;

• Value-added services

• Logistics service, which comprises (i) Ongate logistics service, which entails end-to-end supply chain solutions and overseas warehouse services that holistically support the logistics and fulfillment needs of sellers on DHgate, digitalizing international supply chains; and (ii) Offgate logistics service, which is offered as an independent service primarily to corporate customers in China which aggregate demands for international logistics service from their local network of shippers, allowing them to tap into our global distribution network;

• Payment service, which is offered mainly through DHpay to enable sellers and buyers to complete payment securely and conveniently on our marketplace; and

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FINANCIAL INFORMATION

During the Track Record Period, we experienced significant growth. Our GMV increased from USD1,361.5 million in 2018 to USD1,493.3 million in 2019 and further to USD1,864.9 million in 2020 with a CAGR of 17.0%. Our revenue increased from USD117.9 million to USD178.7 million and further to USD230.5 million, representing a CAGR of 39.8%. We incurred net losses of USD50.4 million and USD6.7 million in 2018 and 2019, respectively. We recognized net profit of USD6.1 million in 2020. Our adjusted net (loss)/profit was USD(28.2) million, USD14.1 million and USD26.7 million in 2018, 2019 and 2020, respectively. Our adjusted EBITDA amounted to USD(21.2) million, USD29.1 million and USD34.3 million in 2018, 2019 and 2020, respectively.

MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS

The principal factors that directly or indirectly affect our business, financial conditions, results of operations and prospects include:

• Overall market and economic conditions in China, the U.S. and other parts of the world;

• Ability to attract and retain buyers and sellers;

• Cross-selling;

• Ability to enhance technology and IT Infrastructure; and

• Relationships with third-party service providers.

Overall Market and Economic Conditions in China, the U.S. and Other Parts of the World

Our revenue and net income are largely affected by the market and economic conditions in China, the U.S. and other parts of the world as they affect buyers’ purchasing sentiment, sellers’ supplying capacity, and thereby our GMV. We are a global cross-border B2B e-commerce marketplace for procurement from China serving global buyers and primarily domestic sellers. Historically, our results of operations primarily depended upon the volume of cross-border commercial activities. If China, the U.S. or other parts of the world were to experience any economic depression or recession, the volume of cross-border commercial activities would be adversely affected, which in turn would harm our business and results of operations. For further information in market and economic conditions in China, the U.S. and other parts of the world, see “Industry Overview — Fast Growing Global E-commerce Market.”

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FINANCIAL INFORMATION

Ability to Attract and Retain Buyers and Sellers

Increment in the number of our buyers, sellers and other participants of our marketplace is a key driver of our business and revenue growth. During the Track Record Period, our revenue primarily comprised commissions from buyers placing orders on our marketplace and service fees from our value-added services, in particular our logistics service. We must attract and retain buyers, sellers and other participants on our marketplace and increase their use of our marketplace to bolster revenue growth. To that end, we would continuously diversify our product and service offerings and deepen our service penetration. Our GMV grew from USD1,361.5 million in 2018 to USD1,493.3 million in 2019 and further to USD1,864.9 million in 2020, representing a CAGR of 17.0%. Our continued revenue growth depends on our ability to offer a variety of products and services to expand our market share and customer base.

Cross-selling

Our vast base of buyers and sellers of our marketplace represent a sizable opportunity to cross-sell our cloud-based commercial solutions and value-added services. We have developed and offered a wide variety of value-added services, including logistics service, payment service and marketing service. Our revenue generated from value-added services and other services increased by 86.9% from USD30.7 million in 2018 to USD57.3 million in 2019, and further increased by 103.8% to USD116.8 million in 2020, representing 26.0%, 32.1% and 50.7% of our total revenue in 2018, 2019 and 2020, respectively. Apart from value-added services, we also offer cloud-based commercial solutions through MyyShop, which allow us to strengthen and grow our global buyer network and fuel the growth of our ecosystem. We plan to keep investing in technological development as well as sales and marketing of our cloud-based commercial solutions and value-added services to increase the awareness and use of these services. Our financial condition and results of operation depend upon our ability to cross-sell our cloud-based commercial solutions service and value-added services to our existing and potential buyers and sellers.

Ability to Enhance Technology and IT Infrastructure

Our technology and IT infrastructure are the backbones of our business operations and a critical part to accommodate our fast-growing user base. Our results of operations depend upon our technology and innovation capabilities, including our big data analytics and AI technology and the strength of our IT infrastructure. We are dedicated to investing in research and development to continuously improve our technology. For the years ended December 31, 2018, 2019 and 2020, our research and development expenses amounted to USD12.0 million, USD10.9 million and USD12.8 million, respectively. Our ability to develop and apply improved technology is critical to our business operations as well as our ability to offer better services to buyers and sellers. For instance, our marketplace is supported by our AI-powered multi-lingual capability which helps

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FINANCIAL INFORMATION overcome language barriers between our global buyers and sellers. We also capitalize on our strong AI technology capacities to provide our sellers with a wide array of marketing tools and strengthen our marketing capabilities. See “Business — Technology and IT Infrastructure — Our Technologies.” Operation-wise, our ability to improve our IT infrastructure will impact our operational efficiency, and thereby our overall financial performance and results of operations.

Relationships with Third-party Service Providers

We rely on certain third-party service providers to provide services complementary and ancillary to our business operations. We primarily collaborate with logistics partners and payment service providers for their delivery, payment gateways and foreign exchange services. The large volume of orders placed on our marketplace has helped us build solid relationships with our third-party service providers as we bring them a steady stream of business, which, in turn, may also facilitate us to obtain more favorable terms. Maintaining amicable and stable relationships with our third-party service providers allows us to ensure reliable access to services critical to the operations of our marketplace and thus our profitability.

BASIS OF PREPARATION

The historical financial information has been prepared in accordance with HKFRSs (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants and accounting principles generally accepted in Hong Kong. All HKFRSs effective for the accounting period commencing from January 1, 2020, together with the relevant transitional provisions, have been early adopted by the Group in the preparation of the historical financial information throughout the Track Record Period.

The preparation of the historical financial information in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying our Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the historical financial information are disclosed in note 4 to the Accountants’ Report as set out in Appendix I.

The historical financial information has been prepared under the historical cost convention except for the preferred shares that have been measured at fair value.

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FINANCIAL INFORMATION

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

We have identified certain accounting policies and estimates that are significant to the preparation of our financial statements in accordance with HKFRS. Some of our accounting policies involve subjective assumptions, estimates and judgments that affected the application of policies and reported amounts of assets, liabilities, revenues and expenses, as well as their accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could, in the future, result in outcomes that require a material adjustment to the carrying amounts of the assets and liabilities affected. When reviewing our financial statements, the following factors should be considered: (i) our selection of critical accounting policies, (ii) the judgment and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions.

Our significant accounting policies and judgements made by the management which have significant effect on our financial condition and results of operations are set forth in detail in note 3 and note 4 to the Accountants’ Report as set out in Appendix I. Estimates and judgments are continually re-evaluated and are based on historical experience and other factors, including industry practices and expectations of future events that are believed to be reasonable under the circumstances. We have not changed our assumptions or estimates in the past and have not noticed any material errors regarding our assumptions or estimates. Under current circumstances, we do not expect that our assumptions or estimates are likely to change significantly in the future. We set forth below the accounting policies, estimates and judgments that we believe are critical to the preparation of our financial statements.

Revenue Recognition

The Group principally derives revenue from commissions, value-added services and other services and online direct sales.

Revenue from commissions

Revenue from commissions represented commission income from online marketplace. Commission income is recognized for transactions where the Group is not the primary obligor, is not subject to inventory risk, and does not have latitude in establishing prices and selecting suppliers. Commission income is recognized on a net basis which is based on a fixed percentage of the sales amount. Commission income is recognized when the customer obtained the control of the goods.

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FINANCIAL INFORMATION

Revenue from value-added services and other services

Value-added services and other services mainly include logistics service, marketing service, payment service and other services.

Revenue from logistics service is recognized on a gross basis when the Group acts as a principal. The Group recognizes revenue over time and uses an output method to measure progress towards complete satisfaction of the services, as customers receive the benefit of the services as the goods are delivered from one location to another. The output method is based on the basis of time-in-transit as it best depicts the transfer of control to the customer.

Revenue from marketing service is recognized over time.

Revenue from payment service and other services is recognized at a point in time when the service is rendered.

Revenue from online direct sales

Revenue from online direct sales and related costs is recognized on a gross basis when the Group acts as a principal. Revenue from online direct sales is recognized when the customer has obtained the control of the goods.

Contract Liabilities

A contract liability is recognized when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

Share-based Payments

The Group operates share option schemes for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including Directors) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees for grants is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, further details of which are given in note 34 to the Accountants’

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Report as set out in Appendix I. The cost of equity-settled transactions is recognized in share-based payment expenses, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of each year during the Track Record Period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognized as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognized. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognized for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is canceled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the canceled award, and is designated as a replacement award on the date that it is granted, the canceled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

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FINANCIAL INFORMATION

Foreign Currencies

The historical financial information is presented in U.S. dollar, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of each year during the Track Record Period. Differences arising on settlement or translation of monetary items are recognized in the statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognized in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss, respectively).

The functional currencies of certain subsidiaries are currencies other than the U.S. dollar. As at the end of each year during the Track Record Period, the assets and liabilities of these entities are translated into U.S. dollar at the exchange rates prevailing at the end of each year during the Track Record Period and their statements of profit or loss are translated into U.S. dollar at the weighted average exchange rates for each year during the Track Record Period.

The resulting exchange differences are recognized in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in the statement of profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

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FINANCIAL INFORMATION

For the purpose of the consolidated statement of cash flows, the cash flows of certain subsidiaries are translated into U.S. dollar at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of certain subsidiaries which arise throughout the year are translated into U.S. dollar at the weighted average exchange rates for each year during the Track Record Period.

Fair Value Measurement

The Group measures Preferred Shares at fair value at the end of each year during the Track Record Period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the historical financial information are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly; and

Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

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FINANCIAL INFORMATION

For assets and liabilities that are recognized in the historical financial information on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each year during the Track Record Period.

Investments and Other Financial Assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under HKFRS 15 in accordance with the policies set out for “Revenue Recognition” above.

In order for a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

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FINANCIAL INFORMATION

All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortized cost (debt instruments)

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the statement of profit or loss when the asset is derecognized, modified or impaired.

Derecognition of Financial Assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

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Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of Financial Assets

The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Debt investments at fair value through other comprehensive income and financial assets at amortized cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below.

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Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 — Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 — Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial Liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables and interest-bearing bank and other borrowings.

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Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by HKFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in HKFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognized in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognized in the statement of profit or loss does not include any interest charged on these financial liabilities.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in the statement of profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in the statement of profit or loss.

Derecognition of Financial Liabilities

A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially

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FINANCIAL INFORMATION modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in the statement of profit or loss.

Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Cash and Cash Equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Provisions

A provision is recognized when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognized for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of profit or loss.

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Significant Accounting Judgements and Estimates

In the process of applying the Group’s accounting policies, our management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognized in the historical financial information:

Contractual Arrangements

We do not have direct or indirect legal ownership in equity interests in the Operating Entity and its subsidiaries. However, as a result of the Contractual Arrangements, we have rights to exercise power over the Operating Entity and its subsidiaries, receive variable returns from our involvement with the Operating Entity and its subsidiaries and have the ability to affect those returns through our power over the Operating Entity and its subsidiaries and are therefore considered to have control over the Operating Entity and its subsidiaries. Consequently, we regard the Operating Entity and its subsidiaries as controlled structured entities and have consolidated the financial position and results of operations of the Operating Entity and its subsidiaries in the historical financial information during the Track Record Period.

Nevertheless, the Contractual Arrangements may not be as effective as direct legal ownership in providing us with direct control over the Operating Entity and its subsidiaries. Uncertainties presented by the legal system in mainland China could impede our beneficiary rights of the results, assets and liabilities of the Operating Entity and its subsidiaries. Our Directors, based on the advice of the PRC Legal Advisor, consider that the Contractual Arrangements are in compliance with the relevant laws and regulations in mainland China and are legally binding and enforceable.

Revenue recognition: gross versus net

Application of various accounting principles related to the measurement and recognition of revenue requires us to make judgements and estimates. Specifically, significant judgements are required in determining whether we are acting as the principal in a transaction. We are a principal in a transaction if we control the goods or services provided before they are provided to customers. If control is unclear, we have to consider whether we are primarily obligated in a transaction, are subject to inventory risk or have latitude in establishing prices. The judgement of revenue recognition on gross versus net basis is based on continuing assessment of the above factors on a transaction basis. We record revenue from logistics service and online direct sales on a gross basis.

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FINANCIAL INFORMATION

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each year during the Track Record Period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:

Estimation of fair value of preferred shares

The Preferred Shares issued by the Group are not traded in an active market and the respective fair values are determined by using valuation techniques. The fair value losses of approximately USD8,562,000, USD18,429,000 and USD26,021,000 were recognized in the consolidated statements of profit or loss for the years ended December 31, 2018, 2019 and 2020, respectively.

The fair values of Preferred Shares were valued by a third party valuer. The enterprise value allocation model is used in the valuation of our Preferred Shares based on the estimated underlying equity value of the Company. The underlying equity value of the Company is estimated by the valuer using the method of discounting the future expected cash flows. Key inputs used in valuing the underlying equity value are set forth in detail in note 32 to the Accountants’ Report as set out in Appendix I. The carrying amounts of Preferred Shares included in current liabilities as of December 31, 2018, 2019 and 2020 were USD86,611,000, USD105,040,000 and USD131,061,000, respectively.

Recognition of employee benefit expenses for share options granted

We operate share incentive plans, under which employees render service as consideration for share options of the Group, for the purpose of providing incentives and rewards to eligible participants who contribute to the success of our operations. Employees (including executive and non-executive Directors) of the Group receive remuneration in the form of share-based payments, which are equity-settled transactions. The cost of equity-settled transactions with employees for share options should be measured by reference to the fair value of the share options at the grant date and the replacement date. The cost of equity-settled transactions is recognized in share-based payment expenses, together with a corresponding increase in equity, over the vesting period in which the performance and/or service conditions are fulfilled. The total fair values of the share options at respective grant dates and the replacement date were valued using the binomial valuation model. Significant estimate on assumptions, such as risk-free interest rate, expected volatility and expected forfeiture rate, is required to be made by the directors and disclosed in note 34 to the Accountants’ Report as set out in Appendix I.

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Provision for expected credit losses on trade receivables and contract assets

The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on the ageing for groupings of various customer segments that have similar loss patterns (i.e., product type, and customer type and rating).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

The assessment of the correlation among historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of a customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in note 18 and note 19 to the Historical Financial Information, respectively.

Provision for ECLs on financial assets included in prepayments, other receivables and other assets, amounts due from related parties and funds receivable

We use general approach to calculate ECLs for financial assets included in prepayments, other receivables and other assets and amounts due from related parties and funds receivable. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The information about the ECLs on the financial assets included in prepayments, other receivables and other assets and amounts due from related parties and funds receivable is disclosed in note 20, 23 and note 42 to the Accountants’ Report as set out in Appendix I.

Impairment of non-financial assets (other than goodwill)

We assess whether there are any indicators of impairment for all non-financial assets (including the right-of-use-assets) at the end of each year during the Track Record Period. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs

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FINANCIAL INFORMATION to sell and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value-in-use calculations are undertaken, our management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Useful lives and residual values of items of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, we have to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in the production and provision of services, or from a change in the market demand for the product or service output of the asset, expected usage of the asset, expected physical wear and tear, care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on our experience with similar assets that are used in a similar way. Additional depreciation is made if the estimated useful lives and/or residual values of items of property, plant and equipment are different from previous estimation. Useful lives and residual values are reviewed at the end of each of the year based on changes in circumstances. Further details of the property, plant and equipment are set out in note 14 to the Accountants’ Report as set out in Appendix I.

Leases — Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in a lease, and therefore, it uses an incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group “would have to pay”, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when it needs to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

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FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The following table sets forth our consolidated statements of comprehensive income in absolute amounts and as percentages of revenue for the years indicated:

For the year ended December 31, 2018 2019 2020 USD’000 % USD’000 % USD’000 % Revenue ...... 117,856 100.0 178,678 100.0 230,501 100.0 Cost of sales ...... (66,422) (56.4) (81,508) (45.6) (124,526) (54.0) Gross profit ...... 51,434 43.6 97,170 54.4 105,975 46.0 Other income and gains ...... 200 0.2 1,054 0.6 9,815 4.3 Selling and distribution expenses.. (46,707) (39.6) (44,484) (24.9) (50,845) (22.1) Administrative expenses ...... (28,829) (24.5) (26,853) (15.0) (24,372) (10.6) Fair value losses on Preferred Shares...... (8,562) (7.3) (18,429) (10.3) (26,021) (11.3) Other expenses...... (7,688) (6.5) (3,938) (2.2) (4,401) (1.9) Share-based payment expenses ... (7,189) (6.1) (1,358) (0.8) (1,646) (0.7) Finance costs...... (1,946) (1.7) (8,600) (4.8) (1,804) (0.8) (Loss)/Profit before tax ...... (49,287) (41.8) (5,438) (3.0) 6,701 2.9 Income tax expense ...... (1,078) (0.9) (1,285) (0.7) (615) (0.3) (Loss)/Profit for the year...... (50,365) (42.7) (6,723) (3.8) 6,086 2.6 Exchange differences on translation of foreign operations . 7,240 6.1 2,608 1.5 (5,497) (2.4) Reclassification adjustments for foreign operations disposed of during the year ...... — — (614) (0.3) — — Other comprehensive income/(loss) for the year, net of tax ...... 7,240 6.1 1,994 1.1 (5,497) (2.4)

Total comprehensive (loss)/income for the year .... (43,125) (36.6) (4,729) (2.6) 589 0.3

Attributable to: Owners of the parent ...... (43,125) (36.6) (4,729) (2.6) 589 0.3 Non-HKFRS measures (unaudited): Adjusted net (loss)/profit...... (28,202) (23.9) 14,105 7.9 26,710 11.6 Adjusted EBITDA...... (21,223) (18.0) 29,123 16.3 34,282 14.9

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FINANCIAL INFORMATION

SELECTED ITEMS FROM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Revenue

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Commissions...... 62,429 53.0 102,808 57.5 113,714 49.3 Value-added services and other services...... 30,658 26.0 57,305 32.1 116,787 50.7 Logistics service...... 6,725 5.7 28,996 16.2 83,553 36.2 • Ongate logistics service ... 3,868 3.3 17,738 9.9 34,014 14.8 • Offgate logistics service ... 2,857 2.4 11,258 6.3 49,539 21.5 — Corporate customers ... 429 0.4 9,219 5.2 48,721 21.1 — Non-DHgate sellers .... 2,428 2.1 2,039 1.1 818 0.4 Payment service ...... 10,856 9.2 9,864 5.5 10,183 4.4 Marketing service ...... 9,941 8.4 14,859 8.3 21,756 9.4 Other services ...... 3,136 2.7 3,586 2.0 1,295 0.6 Online direct sales ...... 24,769 21.0 18,565 10.4 — — Total Revenue ...... 117,856 100.0 178,678 100.0 230,501 100.0

We experienced substantial revenue growth during the Track Record Period. The increase in revenue from commissions was primarily due to the growth of GMV on our marketplace, DHgate, from USD1,361.5 million in 2018 to USD1,493.3 million in 2019 and further to USD1,864.9 million in 2020. Revenue from value-added services and other services increased significantly during the Track Record Period primarily due to (i) the increase in revenue from logistics service, see “— Period-to-period Comparison of Results of Operations — Year Ended December 31, 2020 Compared to Year Ended December 31, 2019” for details, and (ii) the increase in revenue from our marketing service as a result of our growing GMV and the continuous promotional efforts for our marketing service.

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FINANCIAL INFORMATION

Commissions

We collect commissions from buyers for each order placed on our marketplace at fixed rates with reference to the value of the order. During the Track Record Period, our commission rates generally ranged from 5.5% to 21.5% for different categories of products available on our marketplace, subject to adjustments based on the volume of the transaction. Shoes, bags, watches, sporting goods and apparel would be generally charged at higher commission rates compared with other products. In 2018, 2019 and 2020, revenue from commissions amounted to USD62.4 million, USD102.8 million and USD113.7 million, representing 53.0%, 57.5% and 49.3% of our total revenue, respectively, which was attributable to (i) the growth of our GMV from USD1,361.5 million in 2018 to USD1,493.3 million in 2019 and further to USD1,864.9 million in 2020, and (ii) the increase in our overall commission rates in 2019. The growth of revenue from commissions slowed down in 2020 because of the delay in delivery of products sold on our marketplace attributable to the outbreak of COVID-19. As a result, revenue from orders placed on our marketplace in the last two months in 2020 was generally recognized in 2021 upon delivery of products.

Value-added services and other services

During the Track Record Period, we also generated revenue from the provision of value-added services and other services which comprise:

(i) logistics service, where we charge customers service fees and recognize revenue from logistics service on a gross basis;

(ii) payment service, where we charge sellers service fees for the facilitation of the process and settlement of payments made through our platform;

(iii) marketing service, where we charge sellers (i) fixed annual subscription fees based on the tier of subscription, each of which comprises different package of services and (ii) services fees for their selected add-on services; and

(iv) other services, where we receive service fees for collaborative projects with local governments in the PRC, where we were engaged to construct e-commerce platforms. For the year ended December 31, 2018, 2019 and 2020, we obtained three, seven and two collaborative projects with local governments in the PRC, respectively.

In 2018, 2019 and 2020, revenue from value-added services and other services amounted to USD30.7 million, USD57.3 million and USD116.8 million, representing 26.0%, 32.1% and 50.7% of our total revenue, respectively.

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FINANCIAL INFORMATION

Online Direct Sales

Revenue from online direct sales represents proceeds from the sale of products on our direct sales platform, DHselect. Revenue from online direct sales amounted to USD24.8 million, USD18.6 million and nil in 2018, 2019 and 2020, representing 21.0%, 10.4% and nil of our total revenue, respectively. We experienced a decrease in revenue from online direct sales during the Track Record Period primarily because we gradually ceased to operate DHselect due to an adjustment in our business strategies to focus on our wholesale platform and its value-added services, which are more in line with our asset-light business model.

Cost of Sales

Our cost of sales comprises (i) cost of commissions, (ii) cost of value-added services and other services, and (iii) cost of online direct sales. The following table sets forth a breakdown of our cost of sales by business line for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Cost of commissions ...... 30,356 45.7 30,082 36.9 36,387 29.2 Cost of value-added services and other services ...... 12,346 18.6 34,302 42.1 88,139 70.8 • Logistics service ..... 6,584 9.9 28,657 35.2 82,208 66.0 • Payment service ..... 2,209 3.3 3,221 4.0 1,649 1.3 • Marketing service .... 1,638 2.5 2,099 2.6 3,549 2.9 • Other service...... 1,915 2.9 325 0.4 733 0.6 Cost of online direct sales . 23,720 35.7 17,124 21.0 — — Total ...... 66,422 100.0 81,508 100.0 124,526 100.0

Cost of commissions primarily comprises (i) service fees paid to overseas third-party payment service providers when they process payments from buyers on our marketplace and (ii) operational and staff costs attributable to our marketplace.

Cost of value-added services and other services primarily comprises (i) payments to logistics partners for our logistics service; (ii) services fees paid to domestic third-party payment service providers which enable us to settle payments received from buyers to sellers on our marketplace; (iii) staff costs associated with the provision of our value-added services and other services; and (iv) other costs.

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FINANCIAL INFORMATION

Cost of online direct sales represents the procurement costs of the products sold through our direct sales platform, DHselect.

During the Track Record Period, the cost of value-added services and other services as a percentage of total cost of sales continued to increase, while cost of commissions and online direct sales as a percentage of total cost of sales decreased, primarily due to the rapid growth of our logistics service and the cessation of our online direct sales due to an adjustment in our business strategies to focus on wholesale platform and its value-added services.

Gross Profit and Gross Profit Margin

The following table sets forth our gross profit and gross profit margin by business line for the years indicated:

For the year ended December 31,

2018 2019 2020

%of %of %of Gross total Gross total Gross total Gross profit gross Gross profit gross Gross profit gross profit margin profit profit margin profit profit margin profit

USD’000 % % USD’000 % % USD’000 % % Commissions ...... 32,073 51.4 62.4 72,726 70.7 74.8 77,327 68.0 73.0 Value-added services and other services ...... 18,312 59.7 35.6 23,003 40.1 23.7 28,648 24.5 27.0 • Logistics service..... 141 2.1 0.3 339 1.2 0.3 1,345 1.6 1.3 • Payment service ..... 8,647 79.7 16.8 6,643 67.3 6.8 8,534 83.8 8.1 • Marketing service .... 8,303 83.5 16.1 12,760 85.9 13.1 18,207 83.7 17.2 • Other services ...... 1,221 38.9 2.4 3,261 90.9 3.4 562 43.4 0.5 Online direct sales(1)..... 1,049 4.2 2.0 1,441 7.8 1.5 — — — Total Gross Profit ...... 51,434 43.6 100.0 97,170 54.4 100.0 105,975 46.0 100.0

Note:

1. Our online direct sales ceased operations in December 2019. See “Business — Our Services — Online Direct Sales.”

Our gross profit margin from commissions amounted to 51.4%, 70.7% and 68.0% in 2018, 2019 and 2020, respectively. The increase in our gross profit margin from commissions from 51.4% in 2018 to 70.7% in 2019 was primarily due to the rapid growth of revenue from commissions because of the increase in the overall commission rates of products available on our

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FINANCIAL INFORMATION marketplace in 2019. Our gross profit margin from commissions slightly decreased from 70.7% in 2019 to 68.0% in 2020, primarily attributable to the timing difference between recognition of revenue from commissions and that of cost of commissions in 2020. Our revenue from commissions is recognized upon delivery of products to buyers, while service fees paid to overseas third-party payment service providers are recognized upon payment by buyers. Revenue from orders placed in the last two months of 2020 was generally recognized in 2021 due to the delay in delivery of products as a result of the outbreak of COVID-19, whereas cost of commissions related to these orders was already recognized when buyers completed payments.

Comparatively, our gross profit margin from value-added services and other services, which amounted to 59.7%, 40.1% and 24.5% in 2018, 2019 and 2020, respectively, decreased during the Track Record Period primarily due to the expansion of our logistics service, which has a lower gross profit margin than that of other value-added services.

Our gross profit margin from online direct sales increased slightly from 4.2% in 2018 to 7.8% in 2019 primarily due to adjustments to the prices of our products.

Other Income and Gains

Our other income and gains consist of (i) interest income, (ii) investment income from other current financial assets, (iii) foreign exchange gains, net, (iv) gain on debt restructure and (v) others. The following table sets forth the breakdown of our other income and gains for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Interest Income ...... 53 26.5 110 10.4 230 2.3 Investment income from other current financial assets ...... 27 13.5 26 2.5 — — Foreign exchange gains, net ..... ————7,631 77.7 Gain on debt restructuring ...... ————8278.4 Others(1)...... 120 60.0 918 87.1 1,127 11.5 Total...... 200 100.0 1,054 100.0 9,815 100.0

Note:

(1) Including sponsorship income, penalty for breach of contract due from Freetradepay arising from the contractual dispute with payment service provider A, and payment obligation exempted by Xinguang Holding, see “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation” for details.

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FINANCIAL INFORMATION

We recognized other income and gains of USD0.2 million, USD1.1 million and USD9.8 million for the years ended December 31, 2018, 2019 and 2020, respectively. The significant increase in our other income and gains in 2020 was mainly attributable to (i) foreign exchange gains, net which represented exchange differences on translation of our domestic subsidiaries’ receivables due from our offshore subsidiaries, and (ii) exemption of payment obligation by Xinguang Holding. As of December 31, 2018, 2019 and 2020, monetary assets and liabilities denominated in currencies other than our functional currency were translated at the foreign exchange rates ruling at the dates. Foreign exchange gains resulting from the translation of monetary assets at such dates were recognized as our other income and gains.

Selling and Distribution Expenses

Our selling and distribution expenses primarily consist of (i) advertising and promotion expenses, mainly comprising payments to our marketing service providers, such as search engines and social media platforms, (ii) customer care expenses for outsourcing of hot-line service, (iii) traveling expenses, (iv) employee compensations and benefits and (v) others. In 2018, 2019 and 2020, our selling and distribution expenses amounted to USD46.7 million, USD44.5 million and USD50.8 million, representing 39.6%, 24.9% and 22.0% of our total revenue, respectively.

The following table sets forth a breakdown of our selling and distribution expenses for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Advertising and promotion expenses ...... 36,281 77.7 34,458 77.5 44,023 86.6 Customer care expenses ... 1,578 3.4 1,928 4.3 1,024 2.0 Traveling expenses ...... 1,532 3.3 535 1.2 506 1.0 Employee compensations and benefits ...... 6,133 13.1 6,228 14.0 4,735 9.3 Others(1) ...... 1,183 2.5 1,335 3.0 557 1.1 Total ...... 46,707 100.0 44,484 100.0 50,845 100.0

Note:

(1) Other selling and distribution expenses consist of purchase of office supplies for sales and marketing staff, communication expenses, project consultancy expenses, depreciation expenses, training expenses and recruitment expenses, etc.

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FINANCIAL INFORMATION

Our selling and distribution expenses increased from USD44.5 million 2019 to USD50.8 million in 2020 primarily due to (i) an increase in advertising and promotion expenses of USD9.6 million for the promotion of our products and services, partially offset by (ii) a decrease in employee compensations and benefits of USD1.5 million because of social insurance contribution relief according to preferential policies issued by local governments in view of the outbreak of COVID-19 and (iii) a decrease in customer care expenses of USD0.9 million due to our cost control measures.

Our selling and distribution expenses remained relatively stable at USD46.7 million in 2018 and USD44.5 million in 2019, respectively.

Administrative Expenses

Our administrative expenses primarily consist of (i) research and development expenses, (ii) employee compensation and social insurance, (iii) outsourcing service fees in relation to intellectual property application and promotional material design, (iv) depreciation and amortization expenses, (v) [REDACTED] expenses, (vi) consultancy fees paid to third-party professional advisors engaged in preparation for our financing activities, such as accountants and legal advisors, (vii) human resources management expenses, which represent service fees paid to third-party human resource management companies and (viii) others. In 2018, 2019 and 2020, our administrative expenses amounted to USD28.8 million, USD26.9 million and USD24.4 million, representing 24.5%, 15.0% and 10.6% of our total revenue, respectively.

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FINANCIAL INFORMATION

The following table sets forth a breakdown of our administrative expenses for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Research and development expenses: ...... 12,049 41.8 10,873 40.5 12,759 52.4 Employee compensation and benefits ...... 9,827 34.1 8,005 29.8 9,179 37.7 Depreciation costs ...... 776 2.7 1,690 6.3 2,200 9.0 Other expenses (1) ...... 1,446 5.0 1,178 4.4 1,380 5.7 Employee compensation and social insurance..... 6,123 21.2 4,303 16.0 3,348 13.7 Outsourcing service fees ... 401 1.4 2,161 8.0 917 3.8 Depreciation and amortization expenses ... 2,756 9.6 2,811 10.5 2,779 11.4 [REDACTED] expenses ... 318 1.1 374 1.4 588 2.4 Consultancy fees ...... 3,850 13.4 4,092 15.2 1,672 6.9 Human resources management expenses ... 1,520 5.3 479 1.8 346 1.4 Others (2)...... 1,812 6.3 1,760 6.6 1,963 8.1 Total ...... 28,829 100.0 26,853 100.0 24,372 100.0

Notes:

(1) Including without limitation outsourcing service fees, office expenses and travel expenses.

(2) Including without limitation office expenses, travel expenses, communication expenses and bank charges.

Our administrative expenses decreased from USD26.9 million in 2019 to USD24.4 million in 2020, primarily due to a decrease in consultancy fees of USD2.4 million because we incurred service fees paid to third-party professional advisors engaged in preparation for our financing activities only in 2019. The decrease in our administrative expenses was partially offset by an increase in research and development expenses of USD1.9 million, primarily due to the increase in employee compensation and benefits for research and development personnel as a result of the combined effects of increased headcount and pay raises.

Our administrative expenses decreased from USD28.8 million in 2018 to USD26.9 million in 2019, primarily due to (i) a decrease in employee compensation and social insurance of USD1.8 million because certain managerial staff were transferred to non-management departments in 2019,

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FINANCIAL INFORMATION resulting in the decrease in the number of our managerial and administrative personnel and (ii) a decrease in human resources management expenses of USD1.0 million as a result of our cost control efforts, partially offset by (iii) an increase in outsourcing service fees of USD1.8 million.

Fair Value Losses on Preferred Shares

Our fair value losses on Preferred Shares represent changes in fair value of the Preferred Shares issued by the Group. Since 2006, we have completed six rounds of financing by the issue of Preferred Shares in Heguang International (Cayman). The fair value of the Preferred Shares was valued by an independent third-party valuer, who adopted the enterprise value allocation model in the valuation of our Preferred Shares based on our estimated underlying equity value. Our underlying equity value was estimated by the valuer using the method of discounting the future expected cash flows. In 2018, 2019 and 2020, the fair value losses on the Preferred Shares amounted to USD8.6 million, USD18.4 million and USD26.0 million, respectively, as a result of the increase in the valuation of our Company. See note 32 to the Accountants’ Report as set out in Appendix I for details.

Other Expenses

Other expenses primarily consist of (i) loss on disposal of non-current assets, (ii) penalties, (iii) foreign exchange losses, net, (iv) impairment loss on trade receivables, (v) loss on disposal of subsidiaries and (vi) others. In 2018, 2019 and 2020, our other expenses amounted to USD7.7 million, USD3.9 million and USD4.4 million, representing 6.5%, 2.2% and 1.9% of our total revenue, respectively.

The following table sets forth a breakdown of our other expenses for the years indicated:

For the year ended December 31, 2018 2019 2020 USD’000 % USD’000 % USD’000 % Loss on disposal of items of property, plant and equipment ...... 58 0.8 6 0.2 14 0.3 Penalties ...... 1,053 13.7 1,175 29.8 900 20.4 Foreign exchange loss, net . 6,094 79.3 667 16.9 — — Impairment loss on trade receivables...... 51 0.7 135 3.4 504 11.5 Loss on disposal of subsidiaries ...... — — 516 13.1 — — Others(1) ...... 432 5.6 1,439 36.5 2,983 67.8 Total ...... 7,688 100.0 3,938 100.0 4,401 100.0

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FINANCIAL INFORMATION

Note:

(1) Including provision for inventory impairment in relation to the cessation of our online direct sales, loss on product returns and penalty for selling non-authorized products by Ongate sellers.

Our other expenses decreased significantly from US7.7 million in 2018 to USD3.9 million in 2019, and further increased slightly to USD4.4 million in 2020, primarily because the foreign exchange loss, net decreased continuously during the Track Record Period as a result of exchange differences on translation of our domestic subsidiaries’ receivables due from our offshore subsidiaries attributable to the depreciation of U.S. dollar against Renminbi. The decrease in other expenses during the Track Record Period was partially offset by the increase in provision for inventory impairment in relation to the cessation of our online direct sales, which was recognized as “others” of our other expenses.

Share-based Payment Expenses

Our share-based payment expenses represent payments to the grantees under a share option scheme operated by a wholly-owned subsidiary of the Company which was canceled and replaced by the [REDACTED] Share Option Scheme on March 20, 2019 for the purpose of providing incentives to employees who made significant contribution to our Group. In 2018, 2019 and 2020, we recognized share-based payment expenses of USD7.2 million, USD1.4 million and USD1.6 million, respectively. The significant amount of share-based payment expenses incurred in 2018 arose from the share options granted to Ms. Liu in 2018. See note 34 to the Accountants’ Report as set out in Appendix I for details.

Finance Costs

Our finance costs consist of (i) interest on bank loans and other loans and (ii) interest on lease liabilities.

The following table sets forth a breakdown of our finance costs for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Interest on bank loans and other loans...... 1,801 92.5 8,018 93.2 1,281 71.0 Interest on lease liabilities.. 145 7.5 582 6.8 523 29.0 Total ...... 1,946 100.0 8,600 100.0 1,804 100.0

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FINANCIAL INFORMATION

Our interest on bank loans and other loans increased significantly in 2019 as a result of the loan borrowed from an asset management company, which was an Independent Third Party. The loan carried a higher interest rate than our other bank loans. Our interest on bank loans and other loans decreased significantly in 2020, primarily due to the shorter interest accruing period as most of our banking facilities were drawn down in the fourth quarter of 2020.

Income Tax Expense

Our income tax expense amounted to approximately USD1.1 million, USD1.3 million and USD0.6 million in 2018, 2019 and 2020, respectively. Expenses not deductible for tax purpose mainly comprise fair value losses of share-based payment expenses. As of the Latest Practicable Date, we did not have any disputes with any tax authority.

We are subject to income tax on an entity basis on profits arising in or derived from the countries/jurisdictions in which members of the Group are domiciled and operate.

Cayman Islands

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the law of the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution, brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.

Hong Kong

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profits arising in Hong Kong during the Track Record Period.

PRC

The provision for the PRC corporate income tax is based on the statutory rate of 25% of the assessable profits of the subsidiaries of the Group operating in the PRC as determined in accordance with the EIT Law which was approved and became effective on January 1, 2008. Century Heguang (Beijing), Digitrading Beijing and Century Rich Palace have been identified as “high and new technology enterprises” and were entitled to a preferential income tax rate of 15% for a 3-year period from 2018 to 2020, 2020 to 2022 and 2020 to 2022, respectively, during the

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FINANCIAL INFORMATION

Track Record Period in accordance with the EIT Law. We will reapply for the “high and new technology enterprise” certificate for each of Century Heguang (Beijing), Digitrading Beijing and Century Rich Palace upon expiry of each of their respective certificate.

Pursuant to the EIT Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in the PRC. The requirement is effective from January 1, 2008 and applies to earnings after December 31, 2007. A lower withholding tax rate may be applied if there is a tax treaty between the PRC and the jurisdiction of the foreign investors. For the Group, the applicable rate is 5% or 10%. The Group is therefore liable for withholding taxes on dividends distributed by those subsidiaries established in the PRC in respect of earnings generated from January 1, 2008.

NON-HKFRS MEASURES AND KEY FINANCIAL RATIOS

Non-HKFRS Measures

We adopt the adjusted net (loss)/profit and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which are not required by or presented in accordance with HKFRS as additional financial measures to supplement our consolidated financial statements. We believe that the non-HKFRS measures facilitate comparisons of operating performance from period to period and company to company, by eliminating potential impacts of items that our management does not consider indicative of our operating performance. We believe that the non-HKFRS measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as they help our management. However, our presentation of the adjusted net (loss)/profit and adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. The use of the non-HKFRS measures has limitations as an analytical tool, and you should not consider them in isolation from, or as substitute for analysis of, our results of operations or financial condition as reported under HKFRS.

We define adjusted net (loss)/profit as (loss)/profit for the year adjusted by excluding (i) fair value losses on preferred shares, (ii) share-based payment expenses, (iii) [REDACTED] expenses and (iv) foreign exchange losses/(gains), net. We exclude these items because they are not indicative of our core operating results and business outlook. Our fair value losses on preferred shares are non-cash in nature and also non-recurring because all of the Preferred Shares will be automatically converted into ordinary shares upon Listing. Share-based payment expenses are non-operational expenses arising from granting share options to selected employees, the amount of which may not directly correlate with the underlying performance of our business operations. [REDACTED] expenses are one-off expenses in relation to the [REDACTED]. Foreign exchange losses/(gains), net are volatile in nature and are primarily affected by the global exchange rates and the macroeconomics environment, both of which are beyond our control. We do not consider foreign exchange

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FINANCIAL INFORMATION losses/(gains), net directly related to our operating results, and therefore this item has been adjusted to facilitate comparison of our performance across periods. The following table illustrates reconciliations to our adjusted net (loss)/profit from our (loss)/profit for the year for the periods indicated:

For the year ended December 31,

2018 2019 2020

USD’000 USD’000 USD’000 (Loss)/Profit for the year ...... (50,365) (6,723) 6,086 Add: Fair value losses on Preferred Shares ..... 8,562 18,429 26,021 Share-based payment expenses ...... 7,189 1,358 1,646 [REDACTED] expenses ...... 318 374 588 Foreign exchange losses/(gains), net ...... 6,094 667 (7,631) Adjusted net (loss)/profit (unaudited).... (28,202) 14,105 26,710

We define adjusted EBITDA as EBITDA, which equals (loss)/profit for the year adjusted for finance costs, income tax expense, depreciation and amortization charges, adjusted by excluding (i) fair value losses on Preferred Shares, (ii) share-based payment expenses, (iii) [REDACTED] expenses and (iv) foreign exchange losses/(gains), net. The following table sets forth the reconciliation of (loss)/profit for the year to adjusted EBITDA for the periods indicated:

For the year ended December 31,

2018 2019 2020

USD’000 USD’000 USD’000 (Loss)/Profit for the year ...... (50,365) (6,723) 6,086 Add: Finance costs...... 1,946 8,600 1,804 Income tax expense...... 1,078 1,285 615 Depreciation of items of property, plant and equipment ...... 1,559 2,125 2,245 Depreciation of right-of-use assets ...... 2,083 2,727 2,761 Amortization of intangible assets ...... 313 281 147 Fair value losses on Preferred Shares ..... 8,562 18,429 26,021 Share-based payment expenses ...... 7,189 1,358 1,646 [REDACTED] expenses ...... 318 374 588 Foreign exchange losses/(gains), net ...... 6,094 667 (7,631) Adjusted EBITDA (unaudited) ...... (21,223) 29,123 34,282

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FINANCIAL INFORMATION

Key Financial Ratios

The following table sets forth our key financial ratios for the years/as of the dates indicated:

For the year ended/As of December 31,

2018 2019 2020 Profitability ratios (%) Gross profit margin (1) ...... 43.6 54.4 46.0 Net profit margin (2) ...... (42.7) (3.8) 2.6 Adjusted net (loss)/profit margin (3) ...... (23.9) 7.9 11.6 Adjusted EBITDA margin (4)...... (18.0) 16.3 14.9

Liquidity ratio (times) Current ratio (5) ...... 0.30 0.41 0.62 Total debt to total assets ratio (6)...... 0.16 0.14 0.23

Notes:

1. Gross profit margin equals gross profit for the year divided by revenue for the year and multiplied by 100%.

2. Net profit margin equals (loss)/profit for the year divided by revenue for the year and multiplied by 100%.

3. Adjusted net (loss)/profit margin equals adjusted net (loss)/profit for the year divided by revenue for the year and multiplied by 100%.

4. Adjusted EBITDA margin equals adjusted EBITDA for the year divided by revenue for the year and multiplied by 100%.

5. Current ratio is calculated by dividing current assets by current liabilities as of the year-end date.

6. Total debt to total assets ratio is calculated by dividing total debt, comprising interest-bearing bank and other borrowings and lease liabilities, by total assets as of the year-end date.

Adjusted Net (Loss)/Profit Margin

Our adjusted net (loss)/profit margin amounted to (23.9)%, 7.9% and 11.6% in 2018, 2019 and 2020, respectively, primarily attributable to our cost control efforts leading to the overall decrease in our selling and distribution expenses and administrative expenses as a percentage of revenue to achieve the economy of scale.

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FINANCIAL INFORMATION

Adjusted EBITDA Margin

Our adjusted EBITDA margin amounted to (18.0)%, 16.3% and 14.9% in 2018, 2019 and 2020, respectively, primarily attributable to (i) the continuous increase in our revenue in line with our business expansion and (ii) our cost control efforts leading to the overall decrease in our selling and distribution expenses and administrative expenses as a percentage of revenue.

Current Ratio

Our current ratio increased from 0.30 as of December 31, 2018 to 0.41 as of December 31, 2019 primarily due to (i) a significant increase in our cash and cash equivalents from USD21.8 million as of December 31, 2018 to USD76.3 million as of December 31, 2019 as a result of our net cash flows generated from operating activities of USD71.1 million in 2019, partially offset by (ii) an increase in the balance of the Preferred Shares of USD18.4 million as a result of an increase in the valuation of our Group.

Our current ratio increased from 0.41 as of December 31, 2019 to 0.62 as of December 31, 2020 primarily due to (i) a significant increase in our cash and cash equivalents from USD76.3 million as of December 31, 2019 to USD176.4 million as of December 31, 2020 as a result of our net cash flows from generated operating and financing activities of USD80.4 million and USD21.7 million in 2020, respectively, partially offset by (ii) an increase in the balance of the Preferred Shares of USD26.0 million as a result of an increase in the valuation of our Group.

Total Debt to Total Assets Ratio

Our total debt to total assets ratio remained relatively stable at 0.16 in 2018 and 0.14 in 2019, respectively. Our total debt to total assets ratio increased from 0.14 in 2019 to 0.23 in 2020 primarily due to the increase in our interest-bearing bank and other borrowings.

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FINANCIAL INFORMATION

PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Our revenue increased by 29.0% from USD178.7 million in 2019 to USD230.5 million in 2020, primarily due to the movements of our operating results from the following lines of business:

Commissions. Revenue from commissions increased by 10.6% from USD102.8 million in 2019 to USD113.7 million in 2020, primarily due to (i) the growth of GMV on our marketplace from USD1,493.3 million in 2019 to USD1,864.9 million in 2020 while our product delivery rate and product return rate remained relatively stable in both 2019 and 2020 and (ii) the relatively stable overall commission rates of products listed on our marketplace in both 2019 and 2020. The growth of revenue from commissions slowed down in 2020 primarily due to the delay in delivery of products sold on our marketplace attributable to the outbreak of COVID-19. As a result, revenue from orders placed on our marketplace in the last two months of 2020 was generally recognized in 2021 upon delivery of products.

Value-added services and other services. Revenue from value-added services and other services increased significantly by 103.8% from USD57.3 million in 2019 to USD116.8 million in 2020, which was attributable to the rapid growth of our revenue from logistics service.

• Revenue from logistics service increased significantly by 188.2% from USD29.0 million in 2019 to USD83.6 million in 2020, primarily due to the following:

(i) Revenue from Ongate logistics service increased by 91.8% from USD17.7 million in 2019 to USD34.0 million in 2020, primarily because we successfully maintained our supply of logistics service to satisfy customers’ needs amidst the COVID-19 pandemic, leading to the increase in the penetration rate of our Ongate logistics service on DHgate from 12.1% in 2019 to 20.8% in 2020; and

(ii) Revenue from Offgate logistics service increased significantly by 340.0% from USD11.3 million in 2019 to USD49.5 million in 2020, primarily due to (i) the overall growth in the logistics service market as well as our heightened efforts in developing Offgate logistics service; (ii) our ability in maintaining stable supply of services to our customers amidst the COVID-19 pandemic as a result of our scale; and (iii) market consolidation resulted from the COVID-19 pandemic, which drove a considerable amount of less sizable players out of the market because customers tended to choose logistics service providers with stronger fulfilment capabilities.

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FINANCIAL INFORMATION

• Revenue from payment service increased slightly by 3.2% from USD9.9 million in 2019 to USD10.2 million in 2020, which was in line with the growth of our GMV.

• Revenue from marketing service increased by 46.4% from USD14.9 million in 2019 to USD21.8 million in 2020, primarily due to the growth of our GMV and the continuous promotional efforts for our marketing service.

• Revenue from other services decreased by 63.9% from USD3.6 million in 2019 to USD1.3 million in 2020 primarily due to less projects with local governments obtained in 2020.

Online direct sales. Revenue from online direct sales decreased from USD18.6 million in 2019 to nil in 2020 primarily because we completely ceased the operation of our online direct sales platform in December 2019.

Cost of sales

Our cost of sales increased by 52.8% from USD81.5 million in 2019 to USD124.5 million in 2020, primarily due to (i) a significant increase in the cost of value-added services and other services by USD53.8 million, or 157.0%, as a result of the rapid growth of our logistics service and (ii) an increase in the cost of commissions by USD6.3 million, or 21.0%, associated with the growth of our revenue from commissions, partially offset by (iii) a decrease in the cost of online direct sales by USD17.1 million, as we ceased the operation of our online direct sales platform in December 2019.

Gross profit and gross profit margin

Our gross profit increased by 9.1% from USD97.2 million in 2019 to USD106.0 million in 2020. Our gross profit margin decreased from 54.4% in 2019 to 46.0% in 2020, primarily due to the rapid growth of our logistics service, which has a lower gross profit margin than that of our other services.

Other income and gains

Our other income and gains increased significantly by 831.2% from USD1.1 million in 2019 to USD9.8 million in 2020, primarily due to (i) an increase in foreign exchange gains, net of USD7.6 million resulted from the depreciation of the U.S. dollar against Renminbi in 2020 (ii) gain on debt restructuring of USD0.8 million recognized in 2020 which was mainly attributable to the exemption of payment obligation by Xinguang Holding.

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FINANCIAL INFORMATION

Selling and distribution expenses

Our selling and distribution expenses increased by 14.3% from USD44.5 million in 2019 to USD50.8 million in 2020, primarily due to (i) an increase in advertising and promotion expenses of USD9.6 million for the promotion of our products and services, partially offset by (ii) a decrease in employee compensations and benefits of USD1.5 million because of social insurance contribution relief according to preferential policies issued by local government in view of the outbreak of COVID-19 and (iii) a decrease in customer care expenses of USD0.9 million due to our cost control measures, such as outsourcing of hot-line service. Selling and distribution expenses as a percentage of revenue decreased from 24.9% in 2019 to 22.1% in 2020 as a result of increase in operating leverage.

Administrative expenses

Our administrative expenses decreased by 9.2% from USD26.9 million in 2019 to USD24.4 million in 2020, primarily due to a decrease in consultancy fees of USD2.4 million because we incurred service fees paid to third-party professional advisors engaged in preparation for our financing activities only in 2019. The decrease in our administrative expenses was partially offset by an increase in research and development expenses of USD1.9 million, primarily due to the increase in employee compensation and benefits for research and development personnel as a result of the combined effects of increased headcount and pay raises. Administrative expenses as a percentage of revenue decreased from 15.0% in 2019 to 10.6% in 2020 as a result of increase in operating leverage.

Fair value losses on Preferred Shares

Our fair value losses on Preferred Shares increased by 41.2% from losses of USD18.4 million in 2019 to losses of USD26.0 million in 2020 as a result of the increase in the valuation of our Company.

Other expenses

Other expenses remained relatively stable at USD3.9 million in 2019 and USD4.4 million in 2020.

Share-based payment expenses

Share-based payment expenses increased by 21.2% from USD1.4 million in 2019 to USD1.6 million in 2020 arising from the share options granted on April 30, 2020. For details, see note 34 to the Accountants’ Report as set out in Appendix I.

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FINANCIAL INFORMATION

Finance costs

Our finance costs decreased by 79.0% from USD8.6 million in 2019 to USD1.8 million in 2020 primarily due to a decrease in interest on bank loans and other loans by USD6.7 million attributable to repayment of our loans.

(Loss)/Profit before tax

As a result of the foregoing, we incurred loss before tax of USD5.4 million in 2019, while we recognized profit before tax of USD6.7 million in 2020.

Income tax expense

Our income tax expense decreased by 52.1% from USD1.3 million in 2019 to USD0.6 million in 2020 primarily due to a decrease in our taxable income.

(Loss)/Profit for the year

As a result of the foregoing, we incurred loss for the year of USD6.7 million in 2019, while we recognized profit for the year of USD6.1 million in 2020.

Exchange differences on translation of foreign operations

Our exchange gains on translation of foreign operations amounted to USD2.6 million in 2019 while we recognized exchange losses on translation of foreign operations of USD5.5 million in 2020, primarily due to conversion differences in Renminbi-based financial statements.

Total comprehensive (loss)/income for the year

As a result of the foregoing, we incurred total comprehensive loss for the year of USD4.7 million in 2019, while we recognized total comprehensive income for the year of USD0.6 million in 2020.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Revenue

Our revenue increased by 51.6% from USD117.9 million in 2018 to USD178.7 million in 2019, primarily due to the movements of our operating results from the following lines of business:

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FINANCIAL INFORMATION

Commissions. Revenue from commissions increased by 64.7% from USD62.4 million in 2018 to USD102.8 million in 2019 primarily due to the increase in the overall commission rates of products available on our marketplace in 2019.

Value-added services and other services. Revenue from value-added services and other services increased by 86.9% from USD30.7 million in 2018 to USD57.3 million in 2019, which was associated with our revenue growth in logistics service and marketing service.

• Revenue from logistics service increased significantly by 331.2% from USD6.7 million in 2018 to USD29.0 million in 2019, primarily due to the following:

(i) Revenue from Ongate logistics service increased significantly by 358.6% from USD3.9 million in 2018 to USD17.7 million in 2019, primarily because (1) we had enhanced our cooperation with logistics partners since 2018, the number of which increased from around ten in 2018 to 35 in 2019, enabling us to offer more delivery options on our platform and (2) we organized online and offline marketing campaigns, including several offline logistic product exhibitions and online promotions on holidays, and as a result, the penetration of our Ongate logistics service on DHgate increased. The number of orders on DHgate delivered via DHLink increased from 3.2% in 2018 to 12.1% in 2019; and

(ii) Revenue from Offgate logistics service increased significantly by 294.0% from USD2.9 million in 2018 to USD11.3 million in 2019, primarily due to (1) the organic growth of our Offgate logistics service and (2) the promotion of DHLink, enabling us to develop more customers.

• Revenue from payment service decreased by 9.1% from USD10.9 million in 2018 to USD9.9 million in 2019 primarily because we reduced our services to payment aggregators and sellers from third-party platforms, instead of our marketplace, for risk management purpose. For details, see “Business — Our Services — Payment Service — Offgate Payment Service.”

• Revenue from marketing service increased by 49.5% from USD9.9 million in 2018 to USD14.9 million in 2019, primarily due to (i) the increase in the number of sellers who subscribed for our marketing service from 4,352 in 2018 to 5,637 in 2019; (ii) revenue contribution from the fixed annual subscription fees for access to our marketing service which we started to charge in 2019; and (iii) the growth in our GMV in line with our business growth.

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FINANCIAL INFORMATION

• Revenue from other services increased by 14.3% from USD3.1 million in 2018 to USD3.6 million in 2019 primarily due to revenue contribution from new projects with local PRC governments obtained in 2019.

Online direct sales. Revenue from online direct sales decreased by 25.0% from USD24.8 million in 2018 to USD18.6 million in 2019 primarily because we gradually ceased the operation of our online direct sales platform due to an adjustment in our business strategies to focus on wholesale platform and its value-added services.

Cost of sales

Our cost of sales increased by 22.7% from USD66.4 million in 2018 to USD81.5 million in 2019, primarily due to (i) an increase in the cost of value-added services and other services by USD22.0 million, or 177.8%, as a result of the rapid growth of our logistics service, and partially offset by (ii) a decrease in the cost of online direct sales by USD6.6 million, or 27.8%, as we gradually ceased the operation of our online direct sales platform due to an adjustment in our business strategies.

Gross profit and gross profit margin

Our gross profit increased by 88.9% from USD51.4 million in 2018 to USD97.2 million in 2019. Our gross profit margin increased from 43.6% in 2018 to 54.4% in 2019, primarily due to (i) the increase in the gross profit margin of our marketplace from 51.4% in 2018 to 70.7% in 2019 as a result of the increase in the overall commission rates of products available on our marketplace in 2019, partially offset by (ii) the increase in revenue from our logistics service as a percentage of our total revenue, which has a lower gross profit margin compared to that of our other service lines.

Other income and gains

Our other income and gains increased from USD0.2 million in 2018 to USD1.1 million in 2019 primarily due to the exemption of payment obligation by Xinguang Holding. See “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigations.”

Selling and distribution expenses

Our selling and distribution expenses remained relatively stable at USD46.7 million in 2018 and USD44.5 million in 2019, respectively.

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FINANCIAL INFORMATION

Administrative expenses

Our administrative expenses decreased by 6.9% from USD28.8 million in 2018 to USD26.9 million in 2019, primarily due to (i) a decrease in employee compensation and social insurance of USD1.8 million because certain managerial staff were transferred to non-management departments in 2019, resulting in the decrease in the number of our managerial and administrative personnel and (ii) a decrease in human resources management expenses of USD1.0 million as a result of our cost control efforts, partially offset by (iii) an increase in outsourcing service fees of USD1.8 million. Administrative expenses as a percentage of revenue decreased from 24.5% in 2018 to 15.0% in 2019 as a result of increase in operating leverage.

Fair value losses on Preferred Shares

Our fair value losses on Preferred Shares increased by 115.2% from losses of USD8.6 million in 2018 to losses of USD18.4 million in 2019 as a result of the increase in the valuation of our Company.

Other expenses

Other expenses decreased by 48.8% from USD7.7 million in 2018 to USD3.9 million in 2019 primarily due to a decrease in the foreign exchange loss, net of USD5.4 million as a result of exchange differences on translation of our domestic subsidiaries’ receivables due from our offshore subsidiaries.

Share-based payment expenses

Share-based payment expenses decreased by 81.1% from USD7.2 million in 2018 to USD1.4 million in 2019 primarily because we recorded one-off share-based payments in 2018 associated with the share options granted to Ms. Liu in consideration of consulting services rendered by Ms. Liu to our Company, details of which are disclosed in note 34 to the Accountants’ Report as set out in Appendix I.

Finance costs

Our finance costs increased significantly by 341.9% from USD1.9 million in 2018 to USD8.6 million in 2019, primarily due to an increase in interest on bank loans and other loans by USD6.2 million as a result of the loan borrowed from an asset management company, which was an Independent Third Party, in 2019. The loan carried a higher interest rate than our other bank loans.

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FINANCIAL INFORMATION

Loss before tax

As a result of the foregoing, we incurred loss before tax of USD49.3 million in 2018 and USD5.4 million in 2019, respectively.

Income tax expense

Our income tax expense increased by 19.2% from USD1.1 million in 2018 to USD1.3 million in 2019 primarily due to an increase in our taxable income.

Loss for the year

As a result of the foregoing, our loss for the year amounted to USD50.4 million in 2018 and USD6.7 million in 2019, respectively.

Exchange differences on translation of foreign operations

Our exchange gains on translation of foreign operations amounted to USD7.2 million and USD2.6 million in 2018 and 2019, respectively, primarily due to conversion differences in Renminbi-based financial statements.

Total comprehensive loss for the year

As a result of the foregoing, our total comprehensive loss for the year amounted to USD43.1 million in 2018 and USD4.7 million in 2019, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Working Capital

During the Track Record Period and up to the Latest Practicable Date, we have funded our working capital principally from cash generated from our business operations and bank borrowings. Our primary uses of cash during the Track Record Period were for working capital needs and funding our capital expenditures and growth of our operations. After the [REDACTED], we intend to finance our future capital requirements through similar sources of funds, together with the net [REDACTED] to be received from the [REDACTED]. We do not anticipate any change to the availability of financing to fund our operations in the future. We currently do not expect any significant change in the mix and the relative costs of our capital resources.

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FINANCIAL INFORMATION

As of December 31, 2018, 2019 and 2020, we had cash and cash equivalents of USD21.8 million, USD76.3 million and USD176.4 million, respectively. Our cash and cash equivalents primarily consist of cash at bank and cash in hand.

Working Capital Statement

We had net current liabilities amounting to USD210.0 million, USD214.7 million, and USD177.0 million as of December 31, 2018, 2019 and 2020 mainly because of the significant balance of Preferred Shares, which are accounted for as current liabilities. The Preferred Shares will be re-designated from liabilities to equity as a result of the automatic conversion into ordinary shares upon Listing and the net liabilities position of the Company is expected to be significantly improved after the Listing.

Based on the foregoing and taking into account the estimated net [REDACTED] from the [REDACTED] and the financial resources presently available to us, including our cash and cash equivalents, cash flows from operating activities and our available banking facilities, our Directors are of the opinion, and the Sole Sponsor concurs, that we have sufficient funds to meet our working capital requirements for at least the next 12 months from the date of this document.

Cash Flows

The following table sets forth a summary of our cash flows for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Net cash flows generated from operating activities ...... 4,715 71,143 80,382 Net cash flows used in investing activities . (4,183) (3,779) (4,679) Net cash flows (used in)/generated from financing activities...... (11,308) (12,750) 21,658 Net (decrease)/increase in cash and cash equivalents ...... (10,776) 54,614 97,361 Cash and cash equivalents at the beginning of the year...... 33,440 21,752 76,266 Effects of foreign exchange rate changes, net ...... (912) (100) 2,763 Cash and cash equivalents at the end of the year ...... 21,752 76,266 176,390

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FINANCIAL INFORMATION

Net cash flows generated from operating activities

Our net cash flows generated from operating activities primarily comprises revenue from our commissions, valued-added services and other services and online direct sales. Cash flow from operating activities reflects (i) our (loss)/profit before tax adjusted for non-cash items, such as depreciation, amortization, share-based payments, fair value losses on Preferred Shares and finance costs, (ii) changes in working capital and (iii) other cash items such as interest received and paid as well as income tax paid.

In 2020, our net cash flows generated from operating activities amounted to USD80.4 million, representing our profit before tax of USD6.7 million, adjusted by (i) non-cash items of USD41.6 million, which mainly represented fair value losses on Preferred Shares of USD26.0 million due to the increase in the valuation of our Group and finance costs of USD1.8 million, (ii) an increase in advance from buyers of USD15.8 million due to the growth in GMV of our marketplace, (iii) an increase in payable to sellers of USD18.1 million due to the growth in the GMV of our marketplace, (iv) an increase in trade payables of USD12.5 million in line with the expansion of our logistics service business and (v) an increase in other payables and accruals of USD11.9 million resulted from payables mainly attributable to the increase in accrued expenses and other payables, partially offset by (vi) an increase in funds receivable from overseas third-party payment service providers of USD10.7 million primarily as a result of fluctuations in the amount of customer funds around the end of the year.

In 2019, our net cash flows generated from operating activities amounted to USD71.1 million, representing our loss before tax of USD5.4 million, adjusted by (i) non-cash items of USD29.4 million, which mainly represented fair value losses on Preferred Shares of USD18.4 million due to the increase in the valuation of our Group and finance costs of USD8.6 million, (ii) an increase in payable to sellers of USD22.4 million due to the growth in the GMV of our marketplace and (iii) an increase in advance from buyers of USD12.2 million as a result of the increase in the GMV of our marketplace along with our business growth.

In 2018, our net cash flows generated from operating activities amounted to USD4.7 million, representing our loss before tax of USD49.3 million, adjusted by (i) non-cash items of USD27.5 million, which mainly represented fair value losses on Preferred Shares of USD8.6 million as a result of the increase in the valuation of our Group, (ii) an increase in payable to sellers of USD46.9 million as a result of the increase in the GMV of our marketplace along with our business growth, partially offset by (iii) an increase in funds receivable from overseas third-party payment service providers of USD32.9 million primarily as a result of the increase in the transaction amount which was temporarily withheld by payment service provider A. For details, see “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation.”

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FINANCIAL INFORMATION

Net cash flows used in investing activities

Our cash flows used in investing activities primarily consist of our purchases of property, plant and equipment, loans to related parties and purchases of other current financial assets. Our cash flows generated from investing activities primarily consist of repayment of loans from related parties, receipt of government grants and proceeds from disposal of other current financial assets. Government grants we received were one-off subsidies from the local government in the PRC in favor of cross-border e-commence companies and were non-recurring in nature. There were no unfulfilled conditions or contingencies relating to the government grants. Purchases of other current financial assets in the amount of USD0.8 million in 2018 represented the principal-guaranteed wealth management products we purchased from major and reputable commercial banks. As of December 31, 2018, 2019 and 2020, our other current financial assets, which represented the wealth management products we purchased with expected rates of return ranging from 3.60% to 3.65% per annum, amounted to USD0.7 million, nil and nil, respectively.

We generally take into consideration the following criteria when assessing proposals to invest in wealth management products, including but not limited to: (i) investment in non-principal guaranteed products are prohibited; (ii) the proposed investment must not interfere with our business operations or capital expenditures; and (iii) the wealth management products should be issued by reputable national banks. Our finance department is responsible for reviewing proposals to invest in wealth management products, and those proposals will be implemented after final review and approval by our chief executive officer.

In 2020, our net cash flows used in investing activities amounted to USD4.7 million, primarily consisted of (i) the purchases of property plant and equipment of USD4.6 million as we acquired servers, computers and office equipment associated with our business expansion.

In 2019, our net cash flows used in investing activities amounted to USD3.8 million, primarily consisted of (i) the purchases of property, plant and equipment of USD3.8 million as we acquired servers, computers and office equipment to support our business expansion, partially offset by (ii) proceeds from disposal of other current financial assets of USD0.8 million and (iii) receipt of government grants of USD0.6 million.

In 2018, our net cash flows used in investing activities amounted to USD4.2 million, primarily consisted of (i) the purchases of property, plant and equipment of USD3.7 million as we acquired servers, computers and office equipment for our business expansion and (ii) loans to related parties of USD3.2 million, partially offset by (iii) the repayment of loans from related parties of USD2.5 million.

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FINANCIAL INFORMATION

Net cash flows (used in)/generated from financing activities

Our financing activities comprise (i) new bank and other borrowings, (ii) proceeds from and repayments of bank loans and other borrowings, (iii) repayment of the principal portion of lease liabilities and (iv) payment of interest and penalty.

In 2020, our net cash flows generated from financing activities amounted to USD21.7 million, which was primarily attributable to (i) new bank and other borrowings of USD64.7 million, partially offset by (ii) repayment of bank and other borrowings of USD11.2 million.

In 2019, our net cash flows used in financing activities amounted to USD12.8 million, which was primarily attributable to (i) the repayment of bank loans and other borrowings of USD101.0 million and (ii) payment of interest of USD7.4 million, partially offset by (iii) proceeds from new bank and other borrowings of USD98.7 million.

In 2018, our net cash flows used in financing activities amounted to USD11.3 million, which was primarily attributable to (i) repayment of bank and other borrowings of USD5.7 million, (ii) payment of interest of USD3.4 million and (iii) the repayment of the principal portion of lease liabilities of USD3.0 million, partially offset by (iv) proceeds from new bank and other borrowings of USD1.5 million.

SELECTED ITEMS FROM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Current Assets and Liabilities

A substantial proportion of our assets and liabilities are current assets and liabilities due to the nature of our business, as we receive, process and transfer a significant amount of funds on behalf of sellers and buyers on our marketplace on a daily basis.

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FINANCIAL INFORMATION

The following table sets forth the components of our current assets and current liabilities as of the dates indicated:

As of December 31, As of April 30, 2018 2019 2020 2021 USD’000 USD’000 USD’000 USD’000 (Unaudited) Inventories ...... 509——— Trade receivables ...... 975 1,285 12,938 10,361 Contract assets ...... 76 189 802 661 Prepayments, other receivables and other assets ...... 7,390 14,437 20,210 21,576 Amounts due from related parties .... 7,179 6,735 7,621 6,413 Other current financial assets ...... 729——— Pledged deposits ...... 291 14 17,870 18,014 Restricted cash ...... 6,503 6,364 4,447 4,091 Funds receivable ...... 44,038 42,318 52,997 20,541 Cash and cash equivalents...... 21,752 76,266 176,390 221,335 Total current assets ...... 89,442 147,608 293,275 302,992

Trade payables ...... 877 2,596 15,303 11,669 Payable to sellers ...... 87,430 109,859 127,969 114,126 Advance from buyers ...... 68,212 80,423 96,242 105,790 Contract liabilities...... 16,616 24,498 32,718 38,470 Other payables and accruals ...... 24,945 22,790 38,968 36,584 Interest-bearing bank and other borrowings...... 12,711 12,438 22,611 19,941 Preferred Shares (1) ...... 86,611 105,040 131,061 132,319 Lease liabilities ...... 974 2,362 2,876 3,724 An amount due to a related party .... — — 108 — Tax payable...... 1,078 2,322 2,376 1,640 Total current liabilities ...... 299,454 362,328 470,232 464,263

Net current liabilities ...... (210,012) (214,720) (176,957) (161,271)

Note:

(1) The redemption rights shall be terminated immediately before the date of submission of the listing application of our Company, and all other special rights will be terminated upon completion of the [REDACTED] in accordance with the terms of the [REDACTED] Shareholders’ Agreement.

We had net current liabilities as of December 31, 2018, 2019 and 2020 and April 30, 2021. Our net current liabilities position as of each of these dates was primarily attributable to our large balance of payables to sellers, advance from buyers and the Preferred Shares.

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FINANCIAL INFORMATION

Our net current liabilities decreased from USD177.0 million as of December 31, 2020 to USD161.3 million as of April 30, 2021, primarily due to the increase in the balance of our cash and cash equivalents of USD14.3 million attributable to cash flows generated from our operating and financing activities.

Our net current liabilities decreased from USD214.7 million as of December 31, 2019 to USD177.0 million as of December 31, 2020, primarily due to (i) the increase in the balance of our cash and cash equivalents of USD100.1 million associated with cash flows generated from our opereating and financing activities, partially offset by (ii) the increase in the balance of the Preferred Shares of USD26.0 million as a result of an increase in the valuation of our Group.

Our net current liabilities increased from USD210.0 million as of December 31, 2018 to USD214.7 million as of December 31, 2019, primarily due to (i) the increase in the balance of the Preferred Shares of USD18.4 million as a result of an increase in the valuation of our Group, and (ii) an increase in payables to sellers of USD22.4 million as a result of the growing GMV we processed on our marketplace associated with our business growth and expansion.

Inventories

Our inventories are primarily products purchased from suppliers to be sold directly to buyers through our online direct sales platform. Our inventories decreased from USD0.5 million as of December 31, 2018 to nil and nil as of December 31, 2019 and 2020, respectively, primarily because we gradually ceased the operation of our direct sales platform, as a result of an adjustment of our business strategies to focus on wholesale platform and its value-added services.

Trade receivables

Our trade receivables mainly comprise service fees to be paid by customers to which we offered Offgate logistics service. See “Business — Our Services — Logistics Service — Offgate Logistics Service” for details of our payment terms with certain Offgate logistics service customers. The credit period of our trade receivables is generally one month, extendable to up to 12 months for major customers. Each customer has a maximum credit limit. Our trade receivables increased by 31.8% from USD1.0 million as of December 31, 2018 to USD1.3 million as of December 31, 2019, and further increased significantly by 906.8% to USD12.9 million as of December 31, 2020 as a result of the expansion of our logistics service business.

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FINANCIAL INFORMATION

The following table sets forth an aging analysis of our trade receivables, based on the invoice date and net of loss allowance, as of the dates indicated:

As of December 31,

2018 2019 2020 Within 3 months ...... 187 464 6,152 3 to 6 months ...... 255 50 111 6 to 12 months ...... 78 84 5,970 1 to 2 years...... 455 339 156 2 to 3 years...... — 348 283 Over 3 years ...... — — 266 Total ...... 975 1,285 12,938

During the Track Record Period, our trade receivables turnover days, calculated by the ending balance of trade receivables for the year divided by our revenue from logistics service for the year and multiplied by 365, amounted to 53 days, 16 days and 57 days for the year ended December 31, 2018, 2019 and 2020, respectively. The decrease in our trade receivables turnover days from 53 days in 2018 to 16 days in 2019 was primarily because our Offgate logistics service grew rapidly in 2019 and we granted customers shorter credit periods. The increase in our trade receivables turnover days from 16 days in 2019 to 57 days in 2020 was primarily due to the extended credit periods which we granted to certain customers in view of the outbreak of COVID-19.

As of the Latest Practicable Date, USD11.4 million or 87.8% of our trade receivables outstanding as of December 31, 2020 had been settled.

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FINANCIAL INFORMATION

Prepayments, other receivables and other assets

Our prepayments, other receivables and other assets mainly comprise (i) prepaid expenses for advertisement, (ii) prepayments to logistics partners (which we pay upon placing of orders for the procurement of logistics products for both our Ongate and Offgate logistics service. See “Business — Our Services — Logistics Service” for details of our payment terms with our logistics partners) and others, (iii) deposits for leased properties and office renovation, (iv) value-added tax recoverable and (v) other receivables, representing payments for which the invoices had not yet been received. The following table sets forth details of our prepayments, other receivables and other assets as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Prepaid expenses ...... 329 689 159 Prepayments ...... 1,949 2,618 10,989 — to logistics partners ...... 1,261 2,384 10,538 — to others ...... 688 234 451 Deposits ...... 1,317 1,390 1,655 Value-added tax recoverable ...... 987 816 1,241 Other receivables ...... 2,808 8,924 6,166 Total ...... 7,390 14,437 20,210

Our prepayments, other receivables and other assets increased by 40.0% from USD14.4 million as of December 31, 2019 to USD20.2 million as of December 31, 2020, primarily due to an increase in prepayments to logistics partners which we pay upon placing of orders of USD8.2 million as a result of the expansion of our logistics service business.

Our prepayments, other receivables and other assets increased by 95.4% from USD7.4 million as of December 31, 2018 to USD14.4 million as of December 31, 2019, primarily due to an increase in other receivables of USD6.1 million associated with (i) transaction funds to be transferred to us by a MSO licensed service provider we engaged and (ii) overpayment of USD4.0 million to be returned by payment aggregator B. The overpayment arose as a result of the dispute with payment service provider A in the course of providing Offgate payment service. See “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation.” In November 2018, before payment service provider A withheld the transaction funds of sellers referred by payment aggregator B, we had prematurely settled part of it with payment aggregator B. The overpaid sum was subsequently recorded as other receivables in 2019 when the matter was clarified and payment aggregator B agreed to repay to us the overpaid funds. As of the Latest Practicable Date, payment service provider A had released to us a substantial portion of the withheld funds, in the amount of USD30.7 million, which will be returned to payment aggregator

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FINANCIAL INFORMATION

B after deducting the outstanding overpaid sum. This was an isolated incident, and we have ceased to provide Offgate payment service. Our Directors confirmed that during the Track Record Period and until the Latest Practicable Date, there had not been occurrence of similar incidents.

During the Track Record Period, prepayments, other receivables and other assets were normally settled within 30 days. As of the Latest Practicable Date, USD9.1 million, or 45.1% of our prepayments, other receivables and other assets outstanding as of December 31, 2020 had been settled.

Funds receivable

Our funds receivable represents customer funds temporarily retained by third-party payment service providers which will be generally settled and transferred into our bank accounts within several days. As of December 31, 2018, 2019 and 2020, funds receivable of approximately USD31.7 million, USD31.4 million and nil was temporarily withheld by payment service provider A. For details, see “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation.”

Our funds receivable decreased by 3.9% from USD44.0 million as of December 31, 2018 to USD42.3 million as of December 31, 2019, and increased by 25.2% to USD53.0 million as of December 31, 2020, representing normal fluctuations of the balance of customer funds around year ends.

Trade payables

Our trade payables mainly represent payables to logistics partners which granted us credit terms and provided services to us before receiving payments. See “Business — Our Services — Logistics Service” for details of our payment terms with our logistics partners. Our trade payables increased by 196.0% from USD0.9 million in 2018 to USD2.6 million in 2019, and further increased significantly by 489.5% to USD15.3 million in 2020, primarily due to the rapid growth of our logistic service business.

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FINANCIAL INFORMATION

The following table sets forth an aging analysis of our trade payables, based on the invoice date, as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Within 3 months ...... 698 2,558 11,272 3 to 6 months ...... 136 38 3,801 6 to 12 months ...... 43 — 61 1 to 2 years...... — — 169 Total ...... 877 2,596 15,303

During the Track Record Period, our trade payables turnover days, calculated by the ending balance of trade payables for the year divided by cost of sales of our logistics service for the year and multiplied by 365, amounted to 49 days, 33 days and 68 days for the year ended December 31, 2018, 2019 and 2020, respectively. The decrease in our trade payable turnover days from 49 days in 2018 to 33 days in 2019 was primarily because we generally settled payments to suppliers within one month for our Offgate logistics service business in 2019. The increase in our trade payable turnover days from 33 days in 2019 to 68 days in 2020 was primarily because suppliers of our logistics service offered us longer credit periods as we had more bargaining power in 2020 due to the rapid growth of our logistics service business.

During the Track Record Period, substantially all of our trade payables were outstanding for less than 60 days. As of the Latest Practicable Date, USD13.5 million, or 84.7% of our trade payables outstanding as of December 31, 2020 had been settled.

Payable to sellers

Our payable to sellers represents funds retained in sellers’ accounts on our marketplace that are yet to be withdrawn by the sellers. Our payable to sellers increased by 25.7% from USD87.4 million as of December 31, 2018 to USD109.9 million as of December 31, 2019 and further by 16.5% to USD128.0 million as of December 31, 2020, primarily due to (i) the growth in the GMV of our marketplace associated with our business growth and expansion and (ii) the extended settlement of fund withdrawn by sellers to a 14-working-day period upon receipt of the withdrawal requests from sellers in order to keep in line with that of our industry peers.

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FINANCIAL INFORMATION

The following table sets forth an aging analysis of our payable to sellers, based on the invoice date, as of the dates indicated:

As at December 31,

2018 2019 2020

USD’000 % USD’000 % USD’000 % Within 3 months ...... 65,618 75.1 39,893 36.3 67,684 52.9 3 to 6 months ...... 5,804 6.6 11,978 10.9 11,118 8.7 6 to 12 months ...... 6,124 7.0 14,456 13.2 7,147 5.6 1 to 2 years...... 3,550 4.1 35,585 32.4 6,051 4.7 2 to 3 years...... 2,766 3.2 2,156 2.0 29,039 22.7 Over 3 years ...... 3,568 4.1 5,791 5.3 6,930 5.4 Total ...... 87,430 100.0 109,859 100.0 127,969 100.0

During the Track Record Period, our payable to sellers turnover days, calculated by dividing the ending balance of payable to sellers for the year by GMV (with respect to orders for which payment had been received) for the year and multiplied by 365, amounted to 38 days, 42 days and 43 days for the year ended December 31, 2018, 2019 and 2020, respectively. The increase in our payable to sellers turnover days was primarily due to the extended settlement of fund withdrawn by sellers to a 14-working-day period upon receipt of the withdrawal requests from sellers in 2019. We recognized payable to sellers aging over one year as certain sellers had kept transaction funds in their account on our marketplace for a long time.

As of the Latest Practicable Date, USD26.7 million or 20.8% of our payable to sellers as of December 31, 2020 had been withdrawn.

Advance from buyers

Our advance from buyers mainly represents funds collected from buyers. When a buyer confirms receipt of products, commission revenue will be recognized, and amounts of advance from buyers, after having deducted commissions, will be recognized as payable to sellers.

Our advance from buyers increased by 17.9% from USD68.2 million as of December 31, 2018 to USD80.4 million as of December 31, 2019 and further increased by 19.7% to USD96.2 million as of December 31, 2020 due to the growth in the GMV of our marketplace associated with our business growth and expansion.

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FINANCIAL INFORMATION

Contract liabilities

Our contract liabilities represent payments received or due from customers before we transfer the related goods or services to them. We incur contract liabilities in the provision of both Ongate and Offgate logistics service. See “Business — Our Services — Logistics Service” for details of our payment terms with Ongate and Offgate logistics service customers. The following table sets forth a breakdown of our contract liabilities by business line as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Commissions...... 6,174 11,890 15,369 Value-added services and other services ... 9,372 12,608 17,349 — Logistics service ...... 2,681 3,652 8,876 — Others...... 6,691 8,956 8,473 Online direct sales...... 1,070 — — Total ...... 16,616 24,498 32,718

Our contract liabilities increased by 47.4% from USD16.6 million as of December 31, 2018 to USD24.5 million as of December 31, 2019 and further increased by 33.6% to USD32.7 million as of December 31, 2020, primarily due to (i) the growth of our GMV in line with our business expansion and the increase in our overall commission rates in 2019, (ii) the increased prepaid subscription fees for our marketing service from sellers resulted from our continuous promotional efforts and (iii) the increase in prepaid service fees as a result of the rapid growth of our logistics service business in 2020.

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FINANCIAL INFORMATION

Other payables and accruals

Our other payables and accruals comprise (i) deposits from customers of our logistics and marketing services, (ii) seller deposits for participating in our marketing campaigns, (iii) accrued expenses (representing service fees payable to our overseas marketing service providers, such as search engines and social media platforms) and other payables, (iv) payroll and welfare payables, (v) other taxes payable and (vi) penalty payable relating to the contractual dispute with Xinguang Holding. The following table sets forth a breakdown of our other payables and accruals as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Deposits from customers ...... 2,312 2,349 1,713 Seller deposits...... 2,428 2,578 2,201 Accrued expenses and other payables ..... 10,968 8,857 27,361 Payroll and welfare payables...... 8,242 6,118 6,368 Other taxes payable...... 555 1,153 1,184 Penalty payable ...... 440 1,735 141 Total ...... 24,945 22,790 38,968

Other payables and accruals increased by 71.0% from USD22.8 million as of December 31, 2019 to USD39.0 million as of December 31, 2020, primarily due to an increase in accrued expenses and other payables of USD18.5 million attributable to (i) an increase in accrued expenses as we negotiated with our overseas marketing service providers for longer credit periods in light of the outbreak of COVID-19 and (ii) payments in transit which were settled by the banks in a couple of days.

Other payables and accruals decreased by 8.6% from USD24.9 million as of December 31, 2018 to USD22.8 million as of December 31, 2019, primarily due to (i) a decrease in payroll and welfare payables of USD2.1 million as a result of write-offs on over-accrued bonus, partially offset by (ii) an increase in penalty payable of USD1.3 million for the contractual dispute with Xinguang Holding, see “Business — Legal Proceedings and Non-compliance — Material Dispute and Litigation” for details.

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FINANCIAL INFORMATION

Non-current Assets

Our non-current assets consist of (i) property, plant and equipment, which primarily represents computers and office equipment, (ii) right-of-use assets, which are the leases for our offices and (iii) intangible assets, representing our office software.

The following table sets forth a breakdown of our non-current assets as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Property, plant and equipment ...... 4,024 4,126 6,589 Right-of-use assets ...... 3,229 10,909 9,215 Intangible assets ...... 396 172 28 Total ...... 7,649 15,207 15,832

Our non-current assets increased by 4.1% from USD15.2 million as of December 31, 2019 to USD15.8 million as of December 31, 2020, primarily due to an increase in property, plant and equipment of USD2.5 million, primarily resulted from our purchase of servers in 2020, partially offset by a decrease in right-of-use assets of USD1.7 million because of normal depreciation.

Our non-current assets increased significantly by 98.8% from USD7.6 million as of December 31, 2018 to USD15.2 million as of December 31, 2019, primarily due to an increase in right-of-use assets by USD7.7 million resulting from the lease of new office space in 2019.

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FINANCIAL INFORMATION

Non-current Liabilities

Our non-current liabilities comprise (i) deferred income; (ii) non-current portion of lease liabilities which represent the net present value of our lease payments; and (iii) non-current interest-bearing bank and other borrowings.

The following table sets forth a breakdown of our non-current liabilities as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Deferred income ...... 746 447 478 Lease liabilities ...... 1,840 8,360 6,434 Interest-bearing bank and other borrowings ...... — — 38,048 Total ...... 2,586 8,807 44,960

Our non-current liabilities increased significantly by 410.5% from USD8.8 million as of December 31, 2019 to USD45.0 million as of December 31, 2020, primarily due to an increase in interest-bearing bank and other borrowings of USD38.0 million, mainly comprising bank loans obtained in 2020 for general working capital uses.

Our non-current liabilities increased significantly by 240.6% from USD2.6 million as of December 31, 2018 to USD8.8 million as of December 31, 2019, primarily due to an increase in lease liabilities by USD6.5 million resulting from the lease of new office space in 2019.

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FINANCIAL INFORMATION

INDEBTEDNESS

Our indebtedness mainly includes lease liabilities, interest-bearing bank borrowings and other borrowings. The following table sets forth a breakdown of our lease liabilities, interest-bearing borrowings and other borrowings as of the dates indicated:

As of December 31, As of April 30,

2018 2019 2020 2021

USD’000 USD’000 USD’000 USD’000 (Unaudited) Non-current Lease liabilities ...... 1,840 8,360 6,434 6,869 Interest-bearing bank borrowings (unsecured with guarantee) ...... — — 7,336 18,534 Interest-bearing bank borrowings (unsecured without guarantee) ..... — — 29,180 29,931 Other borrowings (unsecured with guarantee) ...... — — 1,532 1,546

Current Lease liabilities ...... 974 2,362 2,876 3,724 Interest-bearing bank borrowings (unsecured with guarantee) ...... 731 — 2,453 1,844 Interest-bearing bank borrowings (secured without guarantee) ...... 732 — 17,313 16,152 Interest-bearing bank borrowings (unsecured without guarantee) ..... — — 2,845 1,945 Other borrowings (secured with guarantee) ...... 11,248 12,438 — — Total ...... 15,525 23,160 69,969 80,545

As of December 31, 2018, 2019 and 2020 and April 30, 2021, our borrowings amounted to USD12.7 million, USD12.4 million, USD60.7 million and USD70.0 million, respectively. For the years ended December 31, 2018 and 2020, our secured bank borrowings without guarantee, which are short term and would mature within one year, bore an effective interest rate of 5.0% and 4.0% per annum, respectively.

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FINANCIAL INFORMATION

For the years ended December 31, 2018, 2019 and 2020, our secured other borrowings with guarantee, which represented the loan from Xinguang Holding, bore an effective interest rate of 13.0%, 13.0% and nil per annum, respectively. Our unsecured other borrowings with guarantee represents borrowings from a governmental fund in (“the Fund”) which is interest-free within the first year and is interest-bearing at an annual interest rate of 5% from the second year. The Fund is an independent third party. We became acquainted with the Fund by the introduction of the local government, which cooperated with us in a governmental project where we constructed an e-commerce platform for the local government. Our borrowings from the Fund is interest-free within the first year to facilitate the project as we established long term cooperation relationship with the local government.

As of April 30, 2021, our banking facilities totaling USD100.3 million was utilized to the extent of USD73.8 million.

Save as otherwise disclosed in this document, as of April 30, 2021, we did not have any outstanding mortgages, charges, debentures or other loan capital (issued or agreed to issue), bank overdrafts, loans, liabilities under acceptance or acceptance credits, or other similar indebtedness, finance lease commitments, hire purchase commitments, any guarantees or other material contingent liabilities.

Our Directors confirmed that as of the Latest Practicable Date, the agreements for our bank borrowings or other borrowings did not contain any covenant that would have a material adverse effect on our ability to make additional borrowings or issue debt or equity securities in the future. Our Directors further confirm that we had no material defaults in payment of our liabilities, and/or breaches of financial covenants during the Track Record Period. We currently do not have any plans for material additional external financing other than the [REDACTED].

CONTINGENT LIABILITIES AND GUARANTEES

We had overdue interest-bearing other borrowings secured with guarantee since April 1, 2018, which was fully repaid in the year of 2020. We also had the transaction amount that was temporarily withheld by a third-party payment processing agency. As of December 31, 2020, and April 30, 2021, there were no withheld amount.

Save as disclosed above, as of December 31, 2018, 2019 and 2020 and April 30, 2021, we did not have any material contingent liabilities or guarantees.

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FINANCIAL INFORMATION

CAPITAL EXPENDITURES AND COMMITMENTS

Our capital expenditures primarily consist of purchases of items of property, plant and equipment and additions to intangible assets. The following table sets forth our capital expenditures for the years indicated:

For the year ended December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Purchases of items of property, plant and equipment ...... 3,687 3,845 4,588 Additions to intangible assets ...... 107 61 — Total ...... 3,794 3,906 4,588

During the Track Record Period, our capital expenditures were primarily related to the purchase of servers, computers and office equipment. We primarily funded these expenditures with cash generated from our operations and bank borrowings.

We estimate that our capital expenditures for 2021 will be approximately USD11.3 million, which will be used primarily for purchasing property, plant and equipment. We plan to fund these capital expenditures with a combination of cash generated from our operations, bank borrowings and the net [REDACTED] received from the [REDACTED].

Capital Commitments

As of December 31, 2018, 2019 and 2020 and April 30, 2021, we had capital commitments of approximately USD24,000, USD110,000, USD82,000 and USD318,000, which primarily consisted of capital commitment contracted but not provided for property, plant and equipment.

RELATED PARTY TRANSACTIONS

During the Track Record Period, we entered into a number of related party transactions. See note 42 to the Accountants’ Report as set out in Appendix I for details.

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FINANCIAL INFORMATION

The following table sets forth our major related party transactions by nature for the periods indicated:

For the year ended December 31, 2018 2019 2020 USD’000 USD’000 USD’000 Loans to related parties Ms. Wang ...... 904—— Camel Bell Commercial Factoring (Guangzhou) Company Limited ...... 2,062 290 — Camel International Trading Limited ...... 78—— Camel Financial Service Technology (Guangzhou) Company Limited ...... 44 1,199 384 Century Tuobang Technology Development (Beijing) Company Limited ...... —42— DHgate Holding Limited ...... 110——

Payments to sellers through related parties Camel Bell Commercial Factoring (Guangzhou) Company Limited(1) ...... 2,015 619 — Camel International Trading Limited(2) .... 42,846 106,986 38,117

Service fee charged by a related party for receipts from buyers through such related party Camel International Trading Limited ...... — 2,005 542

Service fees paid for technical support and consultancy services provided by a related party Tuotuo Digital Technology (Beijing) Co., Ltd...... — — 862

Service fees recognized for providing advertising and promotion services to a related party Tuotuo Digital Technology (Beijing) Co., Ltd...... ——79

Payments for U.S. business development services provided by a related party Xcommerces GateWay, Inc ...... — — 948

Notes:

1. We engaged Camel Bell Commercial Factoring (Guangzhou) Company Limited for the return of previously deposited funds retained by Century Heguang (Beijing) to relevant merchants. We ceased this arrangement in June 2019 after all previously deposited funds was returned.

2. We engaged Camel International Trading Limited for the transfer of transaction funds from our Hong Kong bank account to sellers in the PRC during the Track Record Period, and have ceased such arrangement since November 2020.

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FINANCIAL INFORMATION

The following table sets forth the outstanding balances with related parties as of the dates indicated:

As of December 31,

2018 2019 2020

USD’000 USD’000 USD’000 Amounts due from related parties Ms. Wang ...... 6,042 5,264 5,628 Camel Bell Commercial Factoring (Guangzhou) Company Limited ...... 905 164 99 Camel Financial Service Technology (Guangzhou) Company Limited ...... 44 1,211 1,700 Camel International Trading Limited ...... 78 96 103 Tuotuo Digital Technology (Beijing) Co., Ltd...... ——91 DHgate Holding Limited ...... 110—— 7,179 6,735 7,621

An amount due to a related party: Tuotuo Digital Technology (Beijing) Co., Ltd...... — — 108

We plan to settle all non-trade outstanding balance with related parties before Listing. Our Directors believe that our transactions with related parties during the Track Record Period were conducted on an arm’s length basis, and they did not distort our results of operations or make our historical results not reflective of our future performance.

OFF-BALANCE SHEET ARRANGEMENTS

During the Track Record Period and as of the Latest Practicable Date, we had not entered into any off-balance sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Our principal financial instruments comprise interest-bearing bank and other borrowings, payable to sellers, advance from buyers and cash and cash equivalents. The main purpose of these financial instruments is to raise finance for our operations. We have various other financial assets and liabilities such as deposits and other receivables, other current financial assets and trade payables, which arise directly from our operations.

– 397 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

FINANCIAL INFORMATION

The main risks arising from our financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. Details of the risks to which we are exposed are disclosed in note 45 to the Accountants’ Report as set out in Appendix I.

DIVIDEND

Dividend distribution to our Shareholders is recognized as a liability in the period in which the dividends are approved by our Shareholders or Directors, where appropriate. During the Track Record Period, we did not declare or pay any dividend. We do not have a fixed dividend payout ratio.

DISTRIBUTABLE RESERVES

As of December 31, 2020, our Group did not have any distributable reserves.

UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

The following unaudited pro forma adjusted consolidated net tangible liabilities has been prepared in accordance with Rule 4.29 of the Listing Rules and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants for illustration purpose only, and is set out below to illustrate the effect of the [REDACTED] on our consolidated net tangible liabilities as of December 31, 2020 as if it had taken place on that date.

– 398 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

FINANCIAL INFORMATION

The unaudited pro forma adjusted consolidated net tangible liabilities attributed to the owners of the Company has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the [REDACTED] been completed as of December 31, 2020 or any future date. It is prepared based on the consolidated net tangible liabilities as at December 31, 2020 as set out in the Accountants’ Report as set out in Appendix I, and adjusted as described below. The unaudited pro forma adjusted consolidated net tangible liabilities does not form part of the Accountants’ Report as set out in Appendix I.

Unaudited pro forma adjusted Consolidated consolidated net tangible net tangible liabilities assets attributable attributable to owners of Automatic to owners of Unaudited pro forma adjusted the Company Estimated net conversion of the Company consolidated net tangible as of [REDACTED] preferred as of assets attributable to owners December 31, from the shares upon December 31, of the Company per Share as 2020 [REDACTED] Listing 2020 of December 31, 2020

USD’000 USD’000 USD’000 USD’000 USD HK$ (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) Based on an [REDACTED] of [REDACTED] per Share...... (206,113) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Based on an [REDACTED] of [REDACTED] per Share...... (206,113) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Notes:

(1) The consolidated net tangible liabilities attributable to owners of the Company as of December 31, 2020 is extracted from the historical financial information set out in Appendix I, which is based on the audited consolidated equity attributable to owners of the Company as of December 31, 2020 of approximately minus USD206,085,000 after deducting intangible assets attribute to owners of the Company of USD28,000.

(2) The estimated net [REDACTED] from the [REDACTED] (assuming the [REDACTED] is not exercised and without taking into account Shares which may be issued pursuant to exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme) are based on the [REDACTED] of [REDACTED] and [REDACTED] per Share, being the lower end [REDACTED] and higher end [REDACTED] of the stated [REDACTED] range, respectively, after deduction of the [REDACTED] fees and other related expenses payable by the Company.

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FINANCIAL INFORMATION

(3) Upon the [REDACTED], the Preferred Shares will have been automatically converted into ordinary [REDACTED] shares under which the carrying amount of the preferred shares recorded as a liability of the Company will be transferred to the Company’s equity. Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro forma adjusted net tangible assets attributable to owners of the Company as set out in the above table will be increased by [REDACTED] being the carrying amounts of the liabilities arising from such Preferred Shares.

(4) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the Company and the amounts per Share are arrived at after the adjustments referred to in the preceding paragraphs and on the basis that [REDACTED] Shares were in issue assuming that the [REDACTED] had been completed on December 31, 2020 and the respective [REDACTED] of [REDACTED] and [REDACTED] per Share.

(5) In connection with the preparation of the unaudited pro forma financial information, the unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the Company per Share are converted into Hong Kong dollars at a rate of HK$1 = USD0.1288. No representation is made that the USD amounts have been, could have been or may be converted into Hong Kong dollar, or vice versa at that rate.

(6) No adjustment has been made to reflect any trading result or other transactions of our Group entered into subsequent to December 31, 2020.

EVENTS AFTER THE TRACK RECORD PERIOD

For details of events after the Track Record Period, see note 46 to the Accountants’ Report as set out in Appendix I.

DISCLOSURE REQUIRED UNDER THE LISTING RULES

As of the Latest Practicable Date, our Directors confirm that there are no circumstances that would give rise to a disclosure requirement under Rule 13.13 to Rule 13.19 of the Listing Rules.

NO MATERIAL ADVERSE CHANGE

Our Directors confirm that, as of the date of this document, other than the outbreak of the COVID-19 pandemic as described below, there had been no material adverse change in our financial and trading positions or prospects since December 31, 2020, being the end of the period reported on in the Accountants’ Report set out in Appendix I.

Impact of the COVID-19 Pandemic on our Operations

The outbreak of COVID-19 has resulted in an adverse impact on the China and global economy. Countries and regions across the world, including China, have imposed widespread lockdowns, closure of work places and restrictions on mobility and travel to contain the spread of COVID-19. We have taken a series of measures in response to the outbreak, including, among others, remote working arrangements for some of our employees. Despite the hit of COVID-19,

– 400 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

FINANCIAL INFORMATION our GMV still increased from USD1,493.3 million in 2019 to USD1,864.9 million in 2020, representing an increase of 24.9%, whilst our revenue increased from USD178.7 million and further to USD230.5 million, representing a growth rate of 29.0%.

Nevertheless, COVID-19 has still inevitably affected our business in different ways. On one hand, growth of revenue from commissions slowed down in 2020 because of the delay in delivery of products sold on our marketplace as a result of the outbreak of COVID-19. On the other hand, our logistics service, in particular Offgate logistics service experienced significant growth because of among others, our ability in maintaining stable supply of services to our customers amidst the COVID-19 pandemic as a result of our scale, as well as market consolidation as a result of COVID-19, which drove a considerable amount of less sizable players out of the market because customers tended to choose logistics service providers with stronger fulfillment capabilities.

The extent to which COVID-19 may continue to adversely affect the macroeconomic environment as well as our business, results of operations and financial condition remains uncertain, and will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable. See “Risk Factors — Risks Related to our Business and Industry — We face risks related to natural disasters, health epidemics and other outbreaks, such as the outbreak of COVID-19, which could significantly disrupt our operations.”

[REDACTED] EXPENSES

The [REDACTED] expenses in connection with the [REDACTED] primarily consist of [REDACTED] commissions and professional fees and, assuming an [REDACTED] of [REDACTED] per Share, being the mid-point of the proposed [REDACTED] range, are estimated to be approximately [REDACTED]. During the Track Record Period, we incurred [REDACTED] expenses of approximately [REDACTED], of which approximately [REDACTED] was recognized in the consolidated statements of comprehensive income for the three years ended December 31, 2020 and approximately [REDACTED] was recognized as prepayments in the consolidated statements of financial position as of December 31, 2020, which will be accounted for as a deduction from equity upon Listing. Subsequent to the Track Record Period, we expect to further incur [REDACTED] expenses of approximately [REDACTED] prior to and upon completion of the [REDACTED], of which (i) approximately [REDACTED] is expected to be recognized as expenses in our consolidated statement of comprehensive income; and (ii) approximately [REDACTED] is expected to be accounted for as a deduction from equity upon Listing under the relevant accounting standard.

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FUTURE PLANS AND USE OF [REDACTED]

FUTURE PLANS

See “Business — Our Strategies” for a detailed discussion of our future plans.

USE OF [REDACTED]

We intend to use the net [REDACTED] from the [REDACTED] for the purposes and in the amounts set forth below:

• approximately [REDACTED],or[REDACTED], for implementing our global expansion initiatives, among which:

• approximately [REDACTED],or[REDACTED], for expanding into emerging markets and acquiring new users for DHgate and MyyShop. Among others, we will (i) increase our advertising spending, especially on search engine marketing to accelerate the expansion of our user base in targeted markets; and (ii) strengthen our global brand awareness and recognition by increasing the launch of advertising projects and social media campaigns, collaborating with more local partners and sellers to organize online exhibitions, and collaborating with institutions, universities and research centers to launch capacity-building projects; and

• approximately [REDACTED],or[REDACTED], for upgrading our supply chains. Among others, we will seek to (i) invest in and cooperate with quality brands and factories in order to expand our products selections and improve their quality and pricing; and (ii) incubate and support the growth of third-party brands and manufacturers on our platform. As of the Latest Practicable Date, we had not identified or pursued any acquisition target; and

• approximately [REDACTED],or[REDACTED], for implementing our global localization initiatives, including establishing overseas centers by recruiting local talents to conduct overseas market analysis and maintain key overseas customers;

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FUTURE PLANS AND USE OF [REDACTED]

• approximately [REDACTED],or[REDACTED], for enhancing our logistics service, among which:

• approximately [REDACTED],or[REDACTED], for digitalizing and automizing logistics system to improve the overall operational efficiency and reduce operational costs of logistics service, especially in emerging markets with less developed e-commerce infrastructure;

• approximately [REDACTED],or[REDACTED], for enhancing our fulfillment, shipping and overseas warehouse service offerings. We will optimize and integrate each stage of fulfillment, shipping and overseas warehouse service chain, including domestic fulfillment service, main line transportation, customs clearance, overseas sorting and after-sales service and last-mile delivery to elevate user experience; and

• approximately [REDACTED],or[REDACTED], for (i) recruiting talents with extensive experience in the logistics service industry and (ii) enhancing our training and talent management systems for logistics service personnel;

• approximately [REDACTED],or[REDACTED], for strengthening our research and development capabilities, including:

• approximately [REDACTED],or[REDACTED], for developing our SaaS products, with a focus on enhancing the functionalities and features to improve user experience of MyyShop;

• approximately [REDACTED],or[REDACTED], for enhancing our AI-based product recommendation tools, including (i) exploring wider application of AI technologies; (ii) establishing a data middle platform to enhance our ability in buyer behavior prediction, intelligent product selection and buyer credit analytics; (iii) enhancing the prediction accuracy of our AI-based product recommendation tools; and (iv) expanding the use case scenarios of our AI-based recommendation tools to cover more areas including supply chain decisioning;

• approximately [REDACTED],or[REDACTED], for enhancing technology infrastructure and system security, including purchase of servers, equipment and cloud services to enhance our computing and order processing capabilities;

– 403 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

FUTURE PLANS AND USE OF [REDACTED]

• approximately [REDACTED],or[REDACTED], for pursuing strategic alliances with, and acquisitions of technology companies with complementary cutting-edge technologies. As of the Latest Practicable Date, we had not identified or pursued any acquisition target; and

• approximately [REDACTED],or[REDACTED], for (i) recruiting talents with extensive industry experience, especially with regard to big data and AI technologies, search engine optimization, cloud computing and cyber security; and (ii) enhancing our training and talent management systems for technology personnel; and

• approximately [REDACTED],or[REDACTED], for working capital and other general corporate purposes.

Implementation Timeline

The table below sets forth the expected implementation timetable of our planned use of [REDACTED]:

For the year ended December 31,

2021 2022 2023 Total

(HK$ in millions) Global expansion initiatives ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Expanding into emerging markets and acquisition of new users .... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Upgrading supply chain ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Global localization...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Enhancing logistic service ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Digitalizing and automizing logistics system ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Enhancing our fulfillment, shipping and overseas warehouse service offerings...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Recruiting talents...... [REDACTED] [REDACTED] [REDACTED] [REDACTED]

– 404 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

FUTURE PLANS AND USE OF [REDACTED]

For the year ended December 31,

2021 2022 2023 Total

(HK$ in millions) Strengthening research and development capabilities ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Developing SaaS products ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Enhancing AI-based product recommendation tools...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Enhancing technology infrastructure and system security ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Pursuing strategic alliances with, and acquisitions of technology companies ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Recruiting talents...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Working capital and general corporate purposes...... [REDACTED] [REDACTED] [REDACTED] [REDACTED] Total ...... [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Range of Net [REDACTED]

In the event that the [REDACTED] is set at the high end or the low end of the [REDACTED] range, the net [REDACTED] of the [REDACTED] will increase or decrease by approximately [REDACTED] and [REDACTED], respectively. Under such circumstances, we will increase or decrease the allocation of the net [REDACTED] to the above purposes on a pro-rata basis.

If the [REDACTED] is exercised in full, the additional net [REDACTED] that the Company will receive will be approximately [REDACTED], assuming an [REDACTED] of [REDACTED] per [REDACTED], being the mid-point of the [REDACTED] range. The Company may be required to issue up to an aggregate of [REDACTED] additional [REDACTED] pursuant to the [REDACTED].

To the extent that the net [REDACTED] of the [REDACTED] are not immediately required for the above purposes or if we are unable to put into effect any part of our development plan as intended, we may hold such funds in short-term deposits or purchase short-term investment products, or hold such funds in short-term interest-bearing accounts at authorized licensed banks, so long as it is deemed to be in the best interests of the Company.

We will issue announcements, where required, if there is any material change in the use of [REDACTED] mentioned above.

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UNDERWRITING

HONG KONG [REDACTED]

[REDACTED]

[REDACTED] ARRANGEMENTS AND EXPENSES

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

– 409 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

–411– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

UNDERWRITING

[REDACTED]

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UNDERWRITING

Undertakings to the Stock Exchange pursuant to the Listing Rules

(A) Undertakings by our Company

Pursuant to Rule 10.08 of the Listing Rules, we [have undertaken] to the Stock Exchange that, no further Shares or securities convertible into equity securities of our Company (whether or not of a class already listed) shall be issued by us or form the subject of any agreement to such issue within six months from the Listing Date (whether or not such issue of Shares or securities will be completed within six months from the commencement of dealing), except (i) pursuant to the [REDACTED] (including any exercise of the [REDACTED]); or (ii) in certain circumstances provided under Rule 10.08 of the Listing Rules.

(B) Undertakings by our Controlling Shareholders

[REDACTED]

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UNDERWRITING

[REDACTED]

Undertakings pursuant to the Hong Kong [REDACTED] Agreement

(A) Undertakings by our Company

[REDACTED]

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UNDERWRITING

[REDACTED]

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UNDERWRITING

[REDACTED]

(B) Undertakings by our Controlling Shareholders

[REDACTED]

– 416 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

UNDERWRITING

[REDACTED]

[REDACTED] Interests in Our Company

[Except for their obligations under the Hong Kong [REDACTED] Agreement [and save as disclosed in this document], the [REDACTED] do not have any shareholding interest in our Company or any right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for securities in our Company or any member of our Group.]

– 417 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

UNDERWRITING

Following the completion of the [REDACTED],the[REDACTED] and their affiliated companies may hold a certain portion of the Shares as a result of fulfilling their obligations under the Hong Kong [REDACTED] Agreement.

[REDACTED]

International [REDACTED] Agreement

[REDACTED]

Commissions and Expenses

The Hong Kong [REDACTED] will receive a gross [REDACTED] commission equal to [REDACTED] of the aggregate [REDACTED] in respect of all the Hong Kong [REDACTED] (excluding any International [REDACTED] reallocated to and from the [REDACTED]). Our Company may also in our sole discretion pay the Hong Kong [REDACTED] an additional incentive fee of up to [REDACTED] of the aggregate [REDACTED].

– 418 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

UNDERWRITING

For unsubscribed Hong Kong [REDACTED] reallocated to the [REDACTED] (in such proportion as the [REDACTED] (for itself and on behalf of the Hong Kong [REDACTED])in their sole discretion consider appropriate, the [REDACTED] commission regarding such Hong Kong [REDACTED] shall be reallocated to the International [REDACTED] (in such proportion as may be agreed).

Assuming the [REDACTED] is not exercised, the aggregate commissions and fees, together with Stock Exchange listing fees, SFC transaction levy and Stock Exchange trading fee, legal and other professional fees and printing and other expenses relating to the [REDACTED], which are currently estimated to amount in aggregate to approximately [REDACTED] (assuming an [REDACTED] of [REDACTED] per [REDACTED], being the mid-point of the indicative [REDACTED] range stated in this document), are payable and borne by our Company.

INDEPENDENCE OF THE SOLE SPONSOR

The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.

[REDACTED]

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UNDERWRITING

[REDACTED]

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STRUCTURE OF THE [REDACTED]

[REDACTED]

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STRUCTURE OF THE [REDACTED]

[REDACTED]

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STRUCTURE OF THE [REDACTED]

[REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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STRUCTURE OF THE [REDACTED]

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HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

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HOW TO APPLY FOR THE [REDACTED]

[REDACTED]

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HOW TO APPLY FOR THE [REDACTED]

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APPENDIX I ACCOUNTANTS’ REPORT

The following is the text of a report received from the Company’s reporting accountants, Ernst & Young, Certified Public Accountants, Hong Kong, for the purpose of inclusion in this document.

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE DIRECTORS OF CHINA DHGATE GROUP LIMITED AND CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

Introduction

We report on the historical financial information of China DHgate Group Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-109, which comprises the consolidated statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group for each of the years ended 31 December 2018, 2019 and 2020 (the “Relevant Periods”), and the consolidated statements of financial position of the Group as at 31 December 2018, 2019 and 2020 and the statements of financial position of the Company as at 31 December 2018, 2019 and 2020 and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages I-4 to I-109 forms an integral part of this report, which has been prepared for inclusion in the document of the Company dated [REDACTED] (the “Document”) in connection with the initial listing of the shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively, and for such internal control as the directors determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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APPENDIX I ACCOUNTANTS’ REPORT

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively, in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the financial position of the Group and the Company as at 31 December 2018, 2019 and 2020 and of the financial performance and cash flows of the Group for each of the Relevant Periods in accordance with the basis of presentation and the basis of preparation set out in notes 2.1 and 2.2 to the Historical Financial Information, respectively.

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APPENDIX I ACCOUNTANTS’ REPORT

Report on matters under the Rules Governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page I-4 have been made.

Dividends

We refer to note 12 to the Historical Financial Information which states that no dividends have been paid by the Company in respect of the Relevant Periods.

No historical financial statements for the Company

As at the date of this report, no statutory financial statements have been prepared for the Company since its date of incorporation.

Certified Public Accountants Hong Kong [Date]

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APPENDIX I ACCOUNTANTS’ REPORT

I HISTORICAL FINANCIAL INFORMATION

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The financial statements of the Group for the Relevant Periods, on which the Historical Financial Information is based, were audited by Ernst & Young in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) (the “Underlying Financial Statements”).

The Historical Financial Information is presented in United States dollars (“USD”) and all values are rounded to the nearest thousand (USD’000) except when otherwise indicated.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

Section II Year ended 31 December

Notes 2018 2019 2020

USD’000 USD’000 USD’000 REVENUE ...... 6 117,856 178,678 230,501 Cost of sales ...... (66,422) (81,508) (124,526) Gross profit ...... 51,434 97,170 105,975 Other income and gains...... 6 200 1,054 9,815 Selling and distribution expenses ...... (46,707) (44,484) (50,845) Administrative expenses ...... (28,829) (26,853) (24,372) Fair value losses on preferred shares..... 32 (8,562) (18,429) (26,021) Other expenses ...... (7,688) (3,938) (4,401) Share-based payment expenses ...... 34 (7,189) (1,358) (1,646) Finance costs...... 7 (1,946) (8,600) (1,804) (LOSS)/PROFIT BEFORE TAX ...... 8 (49,287) (5,438) 6,701

Income tax expense...... 11 (1,078) (1,285) (615) (LOSS)/PROFIT FOR THE YEAR ..... (50,365) (6,723) 6,086

Attributable to: ...... Owners of the parent...... (50,365) (6,723) 6,086

(LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT...... Basic and diluted ...... 13 N/A N/A N/A

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APPENDIX I ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Section II Year ended 31 December Note 2018 2019 2020 USD’000 USD’000 USD’000 (LOSS)/PROFIT FOR THE YEAR ..... (50,365) (6,723) 6,086 OTHER COMPREHENSIVE INCOME/(LOSS) Other comprehensive income/(loss) that may be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations ...... 7,240 2,608 (5,497) Reclassification adjustments for foreign operations disposed of during the year ...... 37 — (614) — OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX ...... 7,240 1,994 (5,497) TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR .. (43,125) (4,729) 589

Attributable to: Owners of the parent...... (43,125) (4,729) 589

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APPENDIX I ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Section II As at 31 December Notes 2018 2019 2020 USD’000 USD’000 USD’000 NON-CURRENT ASSETS Property, plant and equipment ...... 14 4,024 4,126 6,589 Right-of-use assets ...... 15(a) 3,229 10,909 9,215 Intangible assets ...... 16 396 172 28 Total non-current assets...... 7,649 15,207 15,832 CURRENT ASSETS Inventories ...... 17 509—— Trade receivables ...... 18 975 1,285 12,938 Contract assets ...... 19 76 189 802 Prepayments, other receivables and other assets...... 20 7,390 14,437 20,210 Amounts due from related parties ...... 42 7,179 6,735 7,621 Other current financial assets ...... 21 729—— Pledged deposits ...... 22 291 14 17,870 Restricted cash ...... 22 6,503 6,364 4,447 Funds receivable ...... 23 44,038 42,318 52,997 Cash and cash equivalents...... 24 21,752 76,266 176,390 Total current assets ...... 89,442 147,608 293,275 CURRENT LIABILITIES Trade payables ...... 25 877 2,596 15,303 Payable to sellers ...... 26 87,430 109,859 127,969 Advance from buyers ...... 27 68,212 80,423 96,242 Contract liabilities...... 28 16,616 24,498 32,718 Other payables and accruals ...... 29 24,945 22,790 38,968 Interest-bearing bank and other borrowings...... 30 12,711 12,438 22,611 Preferred shares...... 32 86,611 105,040 131,061 Lease liabilities ...... 15(b) 974 2,362 2,876 An amount due to a related party ...... 42 — — 108 Tax payable...... 1,078 2,322 2,376 Total current liabilities ...... 299,454 362,328 470,232 NET CURRENT LIABILITIES ...... (210,012) (214,720) (176,957) TOTAL ASSETS LESS CURRENT LIABILITIES ...... (202,363) (199,513) (161,125) NON-CURRENT LIABILITIES...... Deferred income ...... 31 746 447 478 Lease liabilities ...... 15(b) 1,840 8,360 6,434 Interest-bearing bank and other borrowings...... 30 — — 38,048 Total non-current liabilities ...... 2,586 8,807 44,960 Net liabilities ...... (204,949) (208,320) (206,085) EQUITY Equity attributable to owners of the parent Share capital ...... 33 16 16 16 Reserves ...... 36 (204,965) (208,336) (206,101) Total equity...... (204,949) (208,320) (206,085)

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APPENDIX I ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the parent

Exchange Section II Capital Share option fluctuation Accumulated Total Notes Share capital reserve* reserve* reserve* losses* equity

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 At 1 January 2018 ...... — 123 164 (1,263) (168,037) (169,013) Loss for the year...... ————(50,365) (50,365) Other comprehensive income for the year: Exchange differences on translation of foreign operations ...... — — — 7,240 — 7,240 Total comprehensive income/(loss) for the year.. — — — 7,240 (50,365) (43,125) Equity-settled share option arrangements ..... 34 — — 7,189 — — 7,189 Issue of ordinary shares ...... 33 16 (16) ———— At 31 December 2018 and 1 January 2019 16 107 7,353 5,977 (218,402) (204,949) Loss for the year...... ————(6,723) (6,723) Other comprehensive income for the year: Exchange differences on translation of foreign operations ...... — — — 2,608 — 2,608 Disposal of subsidiaries ...... 37 — — — (614) — (614) Total comprehensive income/(loss) for the year.. — — — 1,994 (6,723) (4,729) Equity-settled share option arrangements ..... 34 — — 1,358 — — 1,358 At 31 December 2019 and 1 January 2020 16 107 8,711 7,971 (225,125) (208,320) Profit for the year ...... ————6,086 6,086 Other comprehensive loss for the year: Exchange differences on translation of foreign operations ...... — — — (5,497) — (5,497) Total comprehensive income/(loss) for the year.. — — — (5,497) 6,086 589 Equity-settled share option arrangements ..... 34 — — 1,646 — — 1,646 At 31 December 2020 ...... 16 107 10,357 2,474 (219,039) (206,085)

* These reserve accounts comprised the consolidated other reserves of minus USD204,965,000, minus USD208,336,000 and minus USD206,101,000 in the consolidated statements of financial position as at 31 December 2018, 2019 and 2020, respectively.

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APPENDIX I ACCOUNTANTS’ REPORT

CONSOLIDATED STATEMENTS OF CASH FLOWS

Section II Year ended 31 December

Notes 2018 2019 2020

USD’000 USD’000 USD’000 CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before tax ...... (49,287) (5,438) 6,701 Adjustments for: ...... Finance costs ...... 7 1,946 8,600 1,804 Interest income...... 6 (53) (110) (230) Investment income from other current financial assets ...... 6 (27) (26) — Loss on disposal of items of property, plant and equipment...... 8 58 6 14 Loss on disposal of subsidiaries ...... 8 — 516 — Fair value losses on preferred shares ...... 8 8,562 18,429 26,021 Depreciation of items of property, plant and equipment...... 8 1,559 2,125 2,245 Depreciation of right-of-use assets...... 8 2,083 2,727 2,761 Amortisation of intangible assets...... 8 313 281 147 Write-down of inventories to net realisable value ...... 8 84 802 — Impairment loss on trade receivables ...... 8 51 135 504 Share-based payment expenses ...... 34 7,189 1,358 1,646 (27,522) 29,405 41,613 Decrease/(increase) in inventories...... 557 (293) — Increase in trade receivables ...... (480) (326) (11,564) Increase in prepayments, other receivables and other assets ...... (4,686) (7,936) (4,774) Increase in contract assets ...... (76) (114) (600) Increase in amounts due from related parties .. — — (86) (Increase)/decrease in restricted cash ...... (1,826) 139 1,917 (Increase)/decrease in funds receivable ...... (32,917) 1,720 (10,679) Decrease in pledged deposits ...... 883 277 — Increase in trade payables ...... 190 1,734 12,527 Increase in other payables and accruals ...... 10,464 3,660 11,894 Increase in advance from buyers ...... 9,330 12,211 15,819 Increase in payable to sellers ...... 46,924 22,429 18,110 Increase in an amount due to a related party .. — — 108 Increase in contract liabilities ...... 3,828 8,151 6,526

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APPENDIX I ACCOUNTANTS’ REPORT

Section II Year ended 31 December

Notes 2018 2019 2020

USD’000 USD’000 USD’000 Cash generated from operations ...... 4,669 71,057 80,811 Interest received ...... 53 110 230 Income tax paid ...... (7) (24) (659) Net cash flows from operating activities ..... 4,715 71,143 80,382 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment ...... (3,687) (3,845) (4,588) Proceeds from disposal of items of property, plant and equipment ...... — 240 33 Additions to intangible assets ...... (107) (61) — Proceeds from disposal of other current financial assets ...... 781 763 — Purchases of other current financial assets .... (754) — — Repayment of loans from related parties ..... 2,481 349 73 Advance of loans to related parties...... 42 (3,198) (1,531) (384) Receipt of government grants ...... 31 301 637 187 Disposal of subsidiaries ...... 37 — (331) — Net cash flows used in investing activities.... (4,183) (3,779) (4,679) CASH FLOWS FROM FINANCING ACTIVITIES...... New bank and other borrowings...... 41(b) 1,514 98,701 64,710 Increase in pledged deposits ...... — — (17,855) Repayment of bank and other borrowings .... 41(b) (5,742) (101,019) (11,198) Payments of lease liabilities ...... 41(b) (3,027) (3,005) (3,201) Interest paid ...... 41(b) (3,422) (7,427) (8,163) Penalty paid ...... 41(b) (631) — (2,635) Net cash flows (used in)/from financing activities ...... (11,308) (12,750) 21,658 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (10,776) 54,614 97,361 Cash and cash equivalents at beginning of year ...... 33,440 21,752 76,266 Effect of foreign exchange rate changes, net .. (912) (100) 2,763 CASH AND CASH EQUIVALENTS AT END OF YEAR 21,752 76,266 176,390

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APPENDIX I ACCOUNTANTS’ REPORT

Section II Year ended 31 December

Note 2018 2019 2020

USD’000 USD’000 USD’000 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and cash equivalents as stated in the consolidated statements of financial position and statements of cash flows ...... 24 21,752 76,266 176,390

STATEMENTS OF FINANCIAL POSITION OF THE COMPANY

Section II As at 31 December Notes 2018 2019 2020

USD’000 USD’000 USD’000 NON-CURRENT ASSETS Investments in subsidiaries ...... 35 16 1,557 3,203 Total non-current assets...... 16 1,557 3,203 CURRENT ASSETS Cash and cash equivalents...... 30 8 11 Total current assets ...... 30 8 11 CURRENT LIABILITIES Other payables and accruals ...... 43 50 67 Preferred shares...... 69,288 105,040 131,061 Total current liabilities ...... 69,331 105,090 131,128 NET CURRENT LIABILITIES ...... (69,301) (105,082) (131,117) TOTAL ASSETS LESS CURRENT LIABILITIES ...... (69,285) (103,525) (127,914)

Net liabilities ...... (69,285) (103,525) (127,914)

EQUITY Share capital ...... 33 16 16 16 Reserves ...... 36 (69,301) (103,541) (127,930) Total equity...... (69,285) (103,525) (127,914)

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APPENDIX I ACCOUNTANTS’ REPORT

II NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. CORPORATE INFORMATION

The Company is a limited liability company incorporated in the Cayman Islands on 13 April 2018. The registered address of the Company is located at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

The Company is an investment holding company. During the Relevant Periods, the Company’s subsidiaries were engaged in the provision of online wholesale marketplace service, online direct sales and other services in the Mainland China and other countries and regions.

The Company and its subsidiaries now comprising the Group underwent the Reorganisation as set out in the paragraph headed “Reorganisation” in the section headed “History, Reorganisation and Corporate Structure” in the Document. Apart from the Reorganisation, the Company has not commenced any business or operation since its incorporation.

During the Relevant Periods, the Company had direct and indirect interests in its subsidiaries, all of which are private limited liability companies (or, if incorporated outside Hong Kong, have substantially similar characteristics to a private company incorporated in Hong Kong), the particulars of which are set out below:

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Rich Palace Holdings Limited (Note (a)) .. Hong Kong Hong Kong dollars — 100% Collection and payment 3 November 2004 (“HKD”) 10,000 services

Chongqing Rich Palace Information People’s Republic of Renminbi (“RMB”) — Note 1 Internet information service Technology Company Limited* China (“PRC”)/ 1,000,000 Note 3 business, network 重慶富軒信息技術有限公司 (Note (b)) Mainland China technology development, (“Chongqing Rich Palace”) ..... 8 December 2004 technology transfer and technology services

Century Heguang Technology PRC/Mainland China United States dollars — 100% Network technology Development (Beijing) Company 27 April 2006 (“USD”) 4,600,000 development, technology Limited* transfer and 世紀禾光科技發展(北京) technology services 有限公司 (Note (c)) (“Century Heguang (Beijing)”)....

Rich Palace Holdings British Virgin Islands USD50,000 — 100% Investment holding Limited (Note (d)) ...... 29 October 2010

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Dunhuang Holdings Limited Hong Kong HKD10,000 — 100% Collection and payment (Note (e)) ...... 17 November 2010 services

Jiahe Holdings Limited Hong Kong HKD10,000 — 100% Collection and payment (Note (e)) ...... 26 November 2010 services

Sunlight (UK) Trading England and Wales Great Britain pound — 100% Collection and payment Limited (Note (d)) ...... 1 May 2013 (“GBP”) 100 services

Ningbo Zhenxin Ruitu Information PRC/Mainland China RMB50,000,000 — Note 2 Network technology Technology Company Limited* 11 November 2013 Note 3 development, technology 寧波臻信睿途信息技術有限公司 transfer and technology (Note (b)) ...... services

Zhejiang Yinnuo Weixun Information PRC/Mainland China RMB10,000,000 — Note 2 Network technology Technology Company Limited* 28 November 2013 Note 3 development, technology 浙江因諾威訊信息技術有限公司 transfer and technology (Note (f)) ...... services

Shanghai Aogang International Logistics PRC/Mainland China RMB5,000,000 — Note 2 Maritime/Aviation/Highway Company Limited* 29 January 2014 Note 3 international freight 上海奧港國際物流有限公司 (Note (g)).. forwarding and domestic freight forwarding

Harbin Gaoxun Information Technology PRC/Mainland China RMB20,000,000 — Note 2 Network technology Company Limited* 31 December 2013 Note 3 development, technology 哈爾濱高訊信息技術有限公司 transfer and technology (Note (h)) ...... services

Bengbu Digitrading Science & PRC/Mainland China RMB40,000,000 — 100% Network technology Technology Company Limited* 23 March 2020 development, technology 蚌埠數貿科技有限公司 (Note (t)) .... transfer and technology services

Shenzhen Wuxian Weida Information PRC/Mainland China RMB1,000,000 — Note 2 Network technology Technology Company Limited* 4 May 2015 Note 3 development, technology 深圳無限偉達信息技術有限公司 Note 6 transfer and technology (Note (i)) ...... services

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Century Rich Palace Technology PRC/Mainland China RMB5,000,000 — Note 1 Provision of Development (Beijing) Company 29 June 2015 telecommunication and Limited* information services 世紀富軒科技發展(北京)有限公司 through websites and (Note (c)) (“Century Rich Palace”) ... value-added services

Dunhuang Heguang (Hangzhou) PRC/Mainland China RMB10,000,000 — Note 2 Network technology Information Technology Company 29 September 2015 Note 3 development, technology Limited* transfer and technology 敦煌禾光(杭州)信息技術有限公司 services (Note (j)) ......

Chongqing Dunhuang Heguang PRC/Mainland China RMB5,000,000 — Note 2 Network technology Information Technology Company 26 April 2016 Note 3 development, technology Limited* transfer and technology 重慶敦煌禾光信息技術有限公司 services (Note (k)) ......

Yancheng Dunhuang Heguang PRC/Mainland China RMB10,000,000 — Note 2 Network technology Information Technology Company 29 July 2016 Note 3 development, technology Limited* transfer and technology 鹽城敦煌禾光信息技術有限公司 services (Note (b)) ......

Xi’an Dunhuang Heguang Information PRC/Mainland China RMB10,000,000 — 100% Network technology Technology Company Limited* 15 November 2016 development, technology 西安敦煌禾光信息技術有限公司 transfer and technology (Note (l)) ...... services

Hefei Dunhuang Heguang Information PRC/Mainland China RMB5,000,000 — 100% Network technology Technology Company Limited* 29 November 2016 development, technology 合肥敦煌禾光信息技術有限公司 transfer and technology (Note (m)) ...... services

Chengdu Dunhuang Heguang PRC/Mainland China RMB10,000,000 — 100% Network technology Information Technology Company 17 January 2017 development, technology Limited* transfer and technology 成都敦煌禾光信息技術有限公司 services (Note (c)) ......

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Dunhuang Heguang (Ningxia) PRC/Mainland China RMB10,000,000 — 100% Network technology Information Technology Company 6 March 2017 Note 8 development, technology Limited* transfer and technology 敦煌禾光(寧夏)信息技術有限公司 services (Note (s)) ......

Heguang International Limited (Note (d)).. Cayman Islands USD4,000 100% — Platform revenue and 22 February 2006 operation management

Digitrading Hongkong Limited (Note (n)) . Hong Kong HKD10,000 — 100% Online sales platform 13 November 2017

Dunhuang Heguang (Suzhou) PRC/Mainland China RMB10,000,000 — 100% Network technology Information Technology Company 8 March 2017 Note 4 development, technology Limited* transfer and technology 敦煌禾光(蘇州)信息技術有限公司 services (Note (o)) ......

Yantai Dunhuang Heguang Information PRC/Mainland China RMB5,000,000 — 100% Network technology Technology Company Limited* 12 June 2017 development, technology 烟台敦煌禾光信息技術有限公司 transfer and technology (Note (c)) ...... services

Zhangzhou Dunhuang Heguang PRC/Mainland China RMB10,000,000 — 100% Network technology Information Technology Company 13 October 2017 development, technology Limited* transfer and technology 漳州敦煌禾光信息技術有限公司 services (Note (c)) ......

Mianyang Heguang Information PRC/Mainland China RMB5,000,000 — 100% Network technology Technology Company Limited* 1 December 2017 development, technology 綿陽禾光信息技術有限公司 transfer and technology (Note (d)) ...... services

Century Weiye Limited (Note (d)) ..... Hong Kong USD18,250,000 — 100% Investment holding 1 February 2016 Note 9

Century Hesheng Limited (Note (d)) .... Hong Kong HKD10,000 — Note 2 Investment holding 23 June 2016 Note 3 Note 10

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect DHgate Technology Development British Virgin Islands USD1 100% — Investment Holding Limited (Note (d)) ...... 18 October 2018

Digitrading Technology Hong Kong Hong Kong HKD1 — 100% E-commerce and Limited (Note (e)) ...... 22 October 2018 international trading

Digitrading Group Limited British Virgin Islands USD50,000 100% — Investment and financing (Note (d)) ...... 4 January 2016 management and advisory and e-commerce services

DHgate Investment Limited (Note (d)) ... British Virgin Islands USD1 100% — Investment holding 3 September 2018

Digitrading Technology (Beijing) PRC/Mainland China USD50,000,000 — 100% Technology development, Company Limited* 26 January 2018 consultation, transfer, 數貿科技(北京)有限公司 (Note (c)) service and promotion (“Digitrading Beijing”)......

Beihai Heguang Digitrading Information PRC/Mainland China RMB10,000,000 — 100% Business development and Technology Company Limited* 15 October 2018 online traffic diversion 北海禾光數貿信息技術有限公司 (Note (c)) ......

Beijing Research Power Information PRC/Mainland China RMB10,000,000 — 100% Research and development Technology Company Limited* (北京 20 March 2018 Note 7 研動力信息技術有限公司) (Note (p)) ..

Digitrading Technology (Liaoning PRC/Mainland China RMB10,000,000 — 100% Network technology Shenfu New Area) Company Limited* 13 March 2019 development, technology 數貿科技(遼寧省沈撫新區)有限公司 transfer and technology (Note (u)) ...... services

Xinxiang Digitrading Information PRC/Mainland China RMB10,000,000 — 100% Network technology Technology Company Limited* 26 April 2019 development, technology 新鄉數貿信息技術有限公司 (Note (u)).. transfer and technology services

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Tangshan Digitrading Information PRC/Mainland China RMB10,000,000 — 100% Network technology Technology Company Limited* 5 December 2019 development, technology 唐山數貿信息科技有限公司 (Note (u)).. transfer and technology services

Dongguan Wuxian Chuangyou PRC/Mainland China RMB10,000,000 — Note 2 Network technology Information Technology Company 14 February 2014 Note 3 development, technology Limited* transfer and technology 東莞無限創優信息技術有限公司 services (Note (q)) ......

Digitrading Rich Palace Technology PRC/Mainland China RMB5,000,000 — 100% Network technology (Shenzhen) Company Limited* 13 April 2020 development, technology 數貿富軒科技(深圳)有限公司 (Note (t)) . transfer and technology services

Fuyue Technology Development PRC/Mainland China RMB5,000,000 — 95% Provision of value-added (Shanghai) Company Limited* 11 September 2020 Note 5 services 富越科技發展(上海)有限公司 (Note (t)) .

Digitrading Technology (Shanghai) PRC/Mainland China RMB50,000,000 — 100% Network technology Company Limited* 14 July 2020 development, technology 數貿科技(上海)有限公司 (Note (t)) ... transfer and technology services

Digitrade Yunyou (Shanghai) Technology PRC/Mainland China RMB5,000,000 — 100% Network technology Development Company Limited* 24 August 2020 development, technology 數貿運優(上海)科技發展有限公司 transfer and technology (Note (t)) ...... services

Digitrading SAS (Note (d))...... France EUR50,000 — 100% Network technology 9 September 2020 development, technology transfer and technology services

Digitrading Rich Palace Technology PRC/Mainland China RMB1,000,000 — Note 11 Network technology (Zhuhai) Company Limited* 29 October 2019 development, technology 數貿富軒科技(珠海)有限公司 (Note (d)) . transfer and technology services

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APPENDIX I ACCOUNTANTS’ REPORT

Place and date of Nominal value of issued incorporation/registration ordinary/registered share Percentage of equity Name and place of operations capital attributable to the Company Principal activities Direct Indirect Digitrading Technology Investment Hong Kong HKD10,000 — 100% Investment holding Limited (Note (r)) ...... 26 November 2019

Note 1: These entities were set up under the PRC laws and were controlled by the Company via contractual arrangements. Details please refer to “Contractual Arrangements” below.

Note 2: The Company does not have directly or indirectly legal ownership of these entities which were controlled by the Group through Chongqing Rich Palace. These companies were wholly-owned subsidiaries of Chongqing Rich Palace.

Note 3: On 1 June 2019, Century Heguang (Beijing) terminated the Chongqing Rich Palace Contractual Arrangements with Chongqing Rich Palace and its shareholders, Ms. Wang Shutong and Ms. Liu Yunhua, and Chongqing Rich Palace and its subsidiaries have been disposed of from the Group. The transaction was completed on 31 July 2019. Details are given in note 37 to the Historical Financial Information.

Note 4: On 4 January 2021, this entity was deregistered.

Note 5: On 7 April 2021, the Group transferred 5% of equity of this entity to a third party and the percentage of equity attributable to the Company of this entity changed from 100% to 95%.

Note 6: On 30 December 2020, this entity was deregistered.

Note 7: On 3 September 2020, this entity was deregistered.

Note 8: On 20 November 2020, this entity was deregistered.

Note 9: On 19 July 2019, this entity was deregistered.

Note 10: On 19 July 2019, this entity was deregistered.

Note 11: On 18 December 2020, this entity was deregistered.

Notes:

(a) The statutory financial statements prepared under Hong Kong Financial Reporting Standards (“HKFRSs”) of this entity for the years ended 31 December 2018, 2019 and 2020 were audited by Uniwin International CPA Limited, certified public accountants registered in Hong Kong.

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APPENDIX I ACCOUNTANTS’ REPORT

(b) The statutory financial statements prepared under PRC Generally Accepted Accounting Principles (“PRC GAAP”) of these entities for the year ended 31 December 2018 were audited by Beijing Zhimoujince CPA Firm, certified public accountants registered in the PRC.

(c) The statutory financial statements prepared under PRC GAAP of these entities for the years ended 31 December 2018, 2019 and 2020 were audited by Beijing Zhimoujince CPA Firm, certified public accountants registered in the PRC.

(d) No statutory financial statements have been prepared for these entities since their incorporation as the entities were not subject to any statutory audit requirements under the relevant rules and regulations in their jurisdictions of incorporation.

(e) The statutory financial statements prepared under the Hong Kong Small and Medium-Sized Entity Financial Reporting Standard of these entities for the years ended 31 December 2018, 2019 and 2020 were audited by Uniwin International CPA Limited, certified public accountants registered in Hong Kong.

(f) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Yiwu Jufeng Certified Public Accountants Corporation, certified public accountants registered in the PRC.

(g) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Shanghai Haide Certified Public Accountants Co., Ltd., certified public accountants registered in the PRC.

(h) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Heilongjiang Jiahua Accounting Firm, certified public accountants registered in the PRC.

(i) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Shenzhen Yongming Accounting Firm, certified public accountants registered in the PRC.

(j) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Hangzhou Zhufeng Accounting firm, certified public accountants registered in the PRC.

(k) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Chongqing Huaxin Accounting firm, certified public accountants registered in the PRC.

(l) The statutory financial statements prepared under PRC GAAP of this entity for the years ended 31 December 2018, 2019 and 2020 were audited by Shanxi Haisheng United Certified Public Accountants, Shanxi Elite United Certified Public Accountants and Beijing Zhimoujince CPA Firm, respectively, all of which are certified public accountants registered in the PRC.

(m) The statutory financial statements prepared under PRC GAAP of this entity were audited by Hefei Yide Accounting Firm for the years ended 31 December 2018 and 2019, and Beijing Zhimoujince Accounting Firm for the year ended 31 December 2020, both of which are certified public accountants registered in the PRC.

(n) The statutory financial statements prepared under HKFRS for Private Entities of this entity for the years ended 31 December 2018 and 2019 were audited by Uniwin International CPA Limited, certified public accountants registered in Hong Kong.

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APPENDIX I ACCOUNTANTS’ REPORT

(o) The statutory financial statements prepared under PRC GAAP of this entity were audited by Beijing Zhimoujince CPA Firm for the years ended 31 December 2018 and 2020, and Jiangsu Zhongcheng United Accounting Firm for the year ended 31 December 2019, both of which are certified public accountants registered in the PRC.

(p) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2019 were audited by Beijing Zhimoujince Accounting Firm, certified public accountants registered in the PRC.

(q) The statutory financial statements prepared under PRC GAAP of this entity for the year ended 31 December 2018 were audited by Daxin Accounting Firm Guangdong Branch, certified public accountants registered in the PRC.

(r) The statutory financial statements prepared under the Hong Kong Small and Medium-Sized Entity Financial Reporting Standard of this entity for the year ended 31 December 2020 were audited by Uniwin International CPA Limited, certified public accountants registered in Hong Kong.

(s) The statutory financial statements prepared under PRC GAAP of this entity for the years ended 31 December 2018 and 2019 were audited by Beijing Zhimoujince CPA Firm, certified public accountants registered in the PRC.

(t) The statutory financial statements prepared under PRC GAAP of these entities for the year ended 31 December 2020 were audited by Beijing Zhimoujince CPA Firm, certified public accountants registered in the PRC.

(u) The statutory financial statements prepared under PRC GAAP of these entities for the years ended 31 December 2019 and 2020 were audited by Beijing Zhimoujince CPA Firm, certified public accountants registered in the PRC.

* The English names of these entities represent the best efforts made by management of the Company to directly translate the Chinese names as they do not register any official English names.

Contractual Arrangements

The regulations in PRC restrict foreign ownership of companies that provide certain internet related businesses, where certain activities and services operated by the Group are included in such categories.

In order to comply with relevant PRC laws and regulations and to maintain effective control over all of its operations, in February 2010, Century Heguang (Beijing), a wholly-owned subsidiary of the Company, entered into a series of contractual arrangements with Chongqing Rich Palace and its shareholders, Ms. Wang Shutong and Ms. Liu Yunhua (the “Chongqing Rich Palace Contractual Arrangements”).

On 27 September 2018, Digitrading Beijing, a wholly-owned subsidiary of the Company, entered into a series of contractual arrangements with Century Rich Palace and its shareholders, Ms. Wang Shutong and Ms. Liu Yunhua (the “Century Rich Palace Contractual Arrangements”).

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APPENDIX I ACCOUNTANTS’ REPORT

The Chongqing Rich Palace Contractual Arrangements and Century Rich Palace Contractual Arrangements (collectively the “Contractual Arrangements”) have enabled the Group to conduct businesses in industries that are subject to foreign restrictions in Mainland China and enable the Group to:

(1) govern the financial and operating policies of Chongqing Rich Palace and Century Rich Palace;

(2) exercise equity holders’ voting rights of Chongqing Rich Palace and Century Rich Palace;

(3) receive substantially all of the economic interest returns generated by Chongqing Rich Palace and Century Rich Palace as consideration for the business support, technical and consulting services provided by Century Heguang (Beijing) and Digitrading Beijing;

(4) obtain an irrevocable and exclusive right to purchase all or part of the equity interests in Chongqing Rich Palace and Century Rich Palace from the respective registered shareholders at a minimum purchase price when it is permitted under laws and regulations in Mainland China. Century Heguang (Beijing) and Digitrading Beijing can exercise such options at any time until the Group acquired all equity interests in Chongqing Rich Palace and Century Rich Palace; and

(5) obtain a pledge over the respective existing and future equity interests, including any interest for the shares in Chongqing Rich Palace and Century Rich Palace, to Century Heguang (Beijing) and Digitrading Beijing as a security interest to guarantee the performance of contractual obligations and the payment of outstanding debts from the respective registered shareholders.

As a result of the Contractual Arrangements, the Group has rights to exercise power over Chongqing Rich Palace and Century Rich Palace, receives variable returns from its involvement in Chongqing Rich Palace and Century Rich Palace, has the ability to affect those returns through its power over Chongqing Rich Palace and Century Rich Palace and is considered to have control over Chongqing Rich Palace and Century Rich Palace. Consequently, the Company regards Chongqing Rich Palace and Century Rich Palace as controlled structured entities and consolidated the financial position and results of operations of Chongqing Rich Palace and Century Rich Palace in the Historical Financial Information of the Group.

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APPENDIX I ACCOUNTANTS’ REPORT

Nevertheless, the Contractual Arrangements may not be as effective as direct legal ownership in providing the Group with direct control over Chongqing Rich Palace and Century Rich Palace. Uncertainties presented by the legal system in PRC could impede the Group’s beneficiary rights of the results, assets and liabilities of Chongqing Rich Palace and Century Rich Palace. The directors of the Company, based on the advice of its legal counsel, consider that the Contractual Arrangements are in compliance with the relevant laws and regulations in PRC and are legally binding and enforceable.

2.1 BASIS OF PRESENTATION

Pursuant to the Reorganisation, as more fully explained in the paragraph headed “Reorganisation” in the section headed “History, Reorganisation and Corporate Structure” in the Document, the Company became the holding company of the companies now comprising the Group on 27 May 2019. The companies now comprising the Group were under the common control of Ms. Wang Shutong (the “Controlling Shareholder”) before and after the Reorganisation. Accordingly, for the purpose of this report, the Historical Financial Information has been prepared on a consolidated basis by applying the principles of merger accounting.

The consolidated statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group for the Relevant Periods include the results and cash flows of all companies now comprising the Group from the earliest date presented or since the date when the subsidiaries and/or businesses first came under the common control of the Controlling Shareholder, where this is a shorter period. The consolidated statements of financial position of the Group as at 31 December 2018, 2019 and 2020 have been prepared to present the assets and liabilities of the subsidiaries and/or businesses using the existing book values from the Controlling Shareholder’s perspective. No adjustments are made to reflect fair values, or recognise any new assets or liabilities as a result of the Reorganisation.

Equity interests in subsidiaries and/or businesses held by parties other than the Controlling Shareholder, and changes therein, prior to the Reorganisation are presented as non-controlling interests in equity in applying the principles of merger accounting.

All intra-group transactions and balances have been eliminated on consolidation.

2.2 BASIS OF PREPARATION

The Historical Financial Information has been prepared in accordance with HKFRSs (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA and accounting principles generally

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APPENDIX I ACCOUNTANTS’ REPORT accepted in Hong Kong. All HKFRSs effective for the accounting period commencing from 1 January 2020, together with the relevant transitional provisions, have been early adopted by the Group in the preparation of the Historical Financial Information throughout the Relevant Periods.

The Historical Financial Information has been prepared under the historical cost convention except for preferred shares that have been measured at fair value.

Going concern basis

The Group recorded net current liabilities of USD210,012,000, USD214,720,000 and USD176,957,000 as at 31 December 2018, 2019 and 2020, respectively. In addition, the Group recorded net liabilities of USD204,949,000, USD208,320,000 and USD206,085,000 as at 31 December 2018, 2019 and 2020, respectively.

In view of the net current liabilities position, the directors have given careful consideration to the future liquidity and performance of the Group and its available sources of finance in assessing whether the Group will have sufficient financial resources to continue as a going concern.

Having considered the cash inflow from operations, the directors are satisfied that the Group is able to meet in full its financial obligations as they fall due for the foreseeable future. To mitigate any liquidity issues that might be faced by the Group, the Group has obtained adequate credit facilities to meet its obligations as and when they fall due.

Accordingly, the directors are of the opinion that it is appropriate to prepare the Historical Financial Information on a going concern basis. Should the Group be unable to operate as a going concern, adjustments would have to be made to write down the value of assets to their recoverable amounts, and to provide for any further liabilities which might arise. The effect of these adjustments has not been reflected in the Historical Financial Information.

Basis of consolidation

The Historical Financial Information includes the financial information of the Group for the Relevant Periods. As explained in note 2.1 above, the Historical Financial Information has been prepared on a consolidated basis by using the merger accounting.

A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

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APPENDIX I ACCOUNTANTS’ REPORT

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee;

(b) rights arising from other contractual arrangements; and

The financial information of the subsidiaries is prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in this Historical Financial Information.

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APPENDIX I ACCOUNTANTS’ REPORT

Amendments to HKFRS 9, Interest Rate Benchmark Reform — Phase 21 HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16 Amendment to HKFRS 16 Covid-19-Related Rent Concessions beyond 30 June 20212 Amendments to HKFRS 3 Reference to the Conceptual Framework3 Amendments to HKAS 16 Property, Plant and Equipment: Proceeds before Intended Use3 Amendments to HKAS 37 Onerous Contracts — Cost of Fulfilling a Contract3 Amendments to HKFRS 10 Sale or Contribution of Assets between an Investor and its and HKAS 28 (2011) Associate or Joint Venture4 Amendments to HKAS 1 Disclosure of Accounting Policies5 Amendments to HKAS 8 Definition of Accounting Estimates5 HKFRS 17 Insurance Contracts5 Amendments to HKAS 12 Deferred tax related to Assets and Liabilities arising from a single Transaction5 Amendments to HKFRS 17 Insurance Contracts5,6 Amendments to HKAS 1 Classification of Liabilities as Current or Non-current5,7 Annual Improvements to Amendments to HKFRS 1, HKFRS 9, Illustrative Examples HKFRSs 2018-2020 accompanying HKFRS 16, and HKAS 413

1 Effective for annual periods beginning on or after 1 January 2021 2 Effective for annual periods beginning on or after 1 April 2021 3 Effective for annual periods beginning on or after 1 January 2022 4 No mandatory effective date yet determined but available for adoption 5 Effective for annual periods beginning on or after 1 January 2023 6 As a consequence of the amendments to HKFRS 17 issued in October 2020, HKFRS 4 was amended to extend the temporary exemption that permits insurers to apply HKAS 39 rather than HKFRS 9 for annual periods beginning before 1 January 2023 7 As a consequence of the amendments to HKAS 1, Hong Kong Interpretation 5 Presentation of Financial Statements — Classification by the Borrower of a Term Loan that Contains a Repayment on Demand Clause was revised in October 2020 to align the corresponding wordings with no change in conclusion

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, it has concluded that the adoption of them will not have material impact on the Group’s financial position and financial performance.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fair value measurement

The Group measures preferred shares at fair value at the end of each of the Relevant Periods. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the

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APPENDIX I ACCOUNTANTS’ REPORT liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the Historical Financial Information on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each of the Relevant Periods.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories and financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset

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APPENDIX I ACCOUNTANTS’ REPORT does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each of the Relevant Periods as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

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APPENDIX I ACCOUNTANTS’ REPORT

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity);and

(viii)the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with HKFRS 5. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

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APPENDIX I ACCOUNTANTS’ REPORT

Computer equipment ...... 19.00%-31.67% Office equipment...... 19.00%-31.67% Leasehold improvements ...... 33.33%-50.00%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the statement of profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

Research and development costs

All research costs are charged to the statement of profit or loss as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditure which does not meet these criteria is expensed when incurred.

Computer software

Expenditure on computer software is capitalised and amortised using the straight-line method over its estimated useful life of three years.

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APPENDIX I ACCOUNTANTS’ REPORT

Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(a) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Buildings...... 1.1to5years

(b) Lease liabilities

Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount

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APPENDIX I ACCOUNTANTS’ REPORT of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

The Group applies the short-term lease recognition exemption to its short-term leases of building and equipment (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of equipment that is considered to be of low value.

Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee are accounted for as finance leases.

When the Group is an intermediate lessor, a sublease is classified as a finance lease or operating lease with reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to which the Group applies the on-balance sheet recognition exemption, the Group classifies the sublease as an operating lease.

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APPENDIX I ACCOUNTANTS’ REPORT

Investments and other financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

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APPENDIX I ACCOUNTANTS’ REPORT

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• the rights to receive cash flows from the asset have expired; or

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

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APPENDIX I ACCOUNTANTS’ REPORT

Impairment of financial assets

The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables and contract assets which apply the simplified approach as detailed below.

Stage 1 — Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

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APPENDIX I ACCOUNTANTS’ REPORT

Simplified approach

For trade receivables and contract assets that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include preferred shares, trade and other payables and interest-bearing bank and other borrowings.

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows:

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APPENDIX I ACCOUNTANTS’ REPORT

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by HKFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities designated upon initial recognition as at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in HKFRS 9 are satisfied. Gains or losses on liabilities designated at fair value through profit or loss are recognised in the statement of profit or loss, except for the gains or losses arising from the Group’s own credit risk which are presented in other comprehensive income with no subsequent reclassification to the statement of profit or loss. The net fair value gain or loss recognised in the statement of profit or loss does not include any interest charged on these financial liabilities.

Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the statement of profit or loss.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially

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APPENDIX I ACCOUNTANTS’ REPORT modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated on specific identification basis as appropriate and comprises all cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Cash and cash equivalents

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

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APPENDIX I ACCOUNTANTS’ REPORT

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of profit or loss.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the Relevant Periods, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of each of the Relevant Periods between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

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APPENDIX I ACCOUNTANTS’ REPORT

• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each of the Relevant Periods and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each of the Relevant Periods and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the Relevant Periods.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as a deduction from the related expense on a systematic basis over the periods that the costs, for which it is intended to compensate, are expensed.

Where the grant relates to an asset, the fair value is deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced depreciation charge.

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APPENDIX I ACCOUNTANTS’ REPORT

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

The Group principally derives revenue from commissions, value-added services and other services and online direct sales.

(i) Revenue from commissions

Revenue from commissions represented commission income from online marketplace. Commission income is recognised for transactions where the Group is not the primary obligor, is not subject to inventory risk, and does not have latitude in establishing prices and selecting suppliers. Commission income is recognised on a net basis which is based on a fixed percentage of the sales amount. Commission income is recognised when the customer has obtained the control of the goods.

(ii) Revenue from value-added services and other services

Value-added services and other services mainly include logistics service, marketing service, payment service and other services.

Revenue from logistics service is recognised on a gross basis when the Group acts as a principal. The Group recognises revenue over time and uses an output method to measure progress towards complete satisfaction of the services, as customers receive the benefit of the services as the goods are delivered from one location to another. The output method is based on the basis of time-in-transit as it best depicts the transfer of control to the customer.

Revenue from marketing service is recognised over time.

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APPENDIX I ACCOUNTANTS’ REPORT

Revenue from payment service and other services is recognised at a point in time when the service is rendered.

(iii) Revenue from online direct sales

Revenue from online direct sales and related costs is recognised on a gross basis when the Group acts as a principal. Revenue from online direct sales is recognised when the customer has obtained the control of the goods.

(iv) Revenue from other sources

Rental income is recognised on a time proportion basis over the lease terms. Variable lease payments that do not depend on an index or a rate are recognised as income in the accounting period in which they are incurred.

Other income

Interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Dividend income is recognised when the shareholders’ right to receive payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are subject to impairment assessment, details of which are included in the accounting policies for impairment of financial assets.

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

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APPENDIX I ACCOUNTANTS’ REPORT

Share-based payments

The Group operates share option schemes for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions is recognised in share-based payment expenses, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each of the Relevant Periods until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the statement of profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

For awards that do not ultimately vest because non-market performance and/or service conditions have not been met, no expense is recognised. Where awards include a market or non-vesting condition, the transactions are treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

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APPENDIX I ACCOUNTANTS’ REPORT

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Other employee benefits

Social pension plans

The Group has social pension plans for its employees arranged by local government labour and security authorities. The Group makes contributions on a monthly basis to the social pension plans. The contributions are charged to the statement of profit or loss as they become payable in accordance with the rules of the social pension plans. Under the plans, the Group has no further obligations beyond the contributions made.

Housing fund and other social insurances

The Group has participated in defined social security contribution schemes for its employees pursuant to the relevant laws and regulations of the PRC. These include housing fund, basic and supplementary medical insurance, unemployment insurance, injury insurance and maternity insurance. The Group makes monthly contributions to the housing fund and other social insurances. The contributions are charged to the statement of profit or loss on an accrual basis. The Group has no further obligations beyond the contributions made.

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APPENDIX I ACCOUNTANTS’ REPORT

Borrowing costs

Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily takes a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in the notes to the Historical Financial Information.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

The Historical Financial Information is presented in USD, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of each of the Relevant Periods. Differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss.

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APPENDIX I ACCOUNTANTS’ REPORT value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

The functional currencies of certain subsidiaries are currencies other than the USD. As at the end of each of the Relevant Periods, the assets and liabilities of these entities are translated into USD at the exchange rates prevailing at the end of each of the Relevant Periods and their statements of profit or loss are translated into USD at average exchange rates (unless this average rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) for each of the Relevant Periods.

The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the statement of profit or loss.

For the purpose of the consolidated statement of cash flows, the cash flows of certain subsidiaries are translated into USD at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of certain subsidiaries which arise throughout the year are translated into USD at the weighted average exchange rates for each of the Relevant Periods.

4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Historical Financial Information requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the Historical Financial Information:

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APPENDIX I ACCOUNTANTS’ REPORT

Contractual Arrangements

The Company does not have direct or indirect legal ownership in equity interests in certain of the PRC entities (Chongqing Rich Palace and Century Rich Palace). However, as a result of the Contractual Arrangements, the Group has rights to exercise power over these PRC entities, receives variable returns from its involvement with these PRC entities and has the ability to affect those returns through its power over these PRC entities and is therefore considered to have control over these PRC entities. Consequently, the Company regards these PRC entities as controlled structured entities and has consolidated the financial position and results of operations of these PRC entities in the Historical Financial Information during the Relevant Periods.

Nevertheless, the Contractual Arrangements may not be as effective as direct legal ownership in providing the Group with direct control over Chongqing Rich Palace and Century Rich Palace. Uncertainties presented by the legal system in Mainland China could impede the Group’s beneficiary rights of the results, assets and liabilities of Chongqing Rich Palace and Century Rich Palace. The directors of the Company, based on the advice of its legal counsel, consider that the Contractual Arrangements are in compliance with the relevant laws and regulations in Mainland China and are legally binding and enforceable.

Revenue recognition: gross versus net

Application of various accounting principles related to the measurement and recognition of revenue requires the Group to make judgements and estimates. Specifically, significant judgements are required in determining whether the Group is acting as the principal in a transaction. The Group is a principal in a transaction if the Group controls the goods or services provided before they are provided to customers. If control is unclear, the Group has to consider whether it is primarily obligated in a transaction, is subject to inventory risk or has latitude in establishing prices. The judgement of revenue recognition on gross versus net basis is based on continuing assessment of the above factors on a transaction basis. The Group records revenue from logistics service and online direct sales on a gross basis.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each of the Relevant Periods, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

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APPENDIX I ACCOUNTANTS’ REPORT

Estimation of fair value of preferred shares

The preferred shares issued by the Group are not traded in an active market and the respective fair values are determined by using valuation techniques. The fair value losses of approximately USD8,562,000, USD18,429,000 and USD26,021,000 were recognised in the consolidated statements of profit or loss for the years ended 31 December 2018, 2019 and 2020, respectively.

The fair values of preferred shares were valued by a third party valuer. The enterprise value allocation model is used in the valuation of preferred shares of the Group based on the estimated underlying equity value of the Company. The underlying equity value of the Company is estimated by the valuer using the method of discounting the future expected cash flows (the “DCF Method”). Key inputs used in valuing the underlying equity value are set forth in detail in note 32 to the Historical Financial Information. The carrying amounts of preferred shares included in current liabilities as at 31 December 2018, 2019 and 2020 were USD86,611,000, USD105,040,000 and USD131,061,000, respectively.

Recognition of employee benefit expenses for share options granted

The Group operates share incentive plans, under which employees render service as consideration for share options of the Group, for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including executive and non-executive directors) of the Group receive remuneration in the form of share-based payments, which are equity-settled transactions. The cost of equity-settled transactions with employees for share options should be measured by reference to the fair value of the share options at the grant date and the replacement date. The cost of equity-settled transactions is recognised in share-based payment expenses, together with a corresponding increase in equity, over the vesting period in which the performance and service conditions are fulfilled. The total fair values of the share options at respective grant dates and the replacement date were valued using the binomial valuation model. Significant estimate on assumptions, such as risk-free interest rate, expected volatility and expected forfeiture rate, is required to be made by the directors and disclosed in note 34 to the Historical Financial Information.

Provision for expected credit losses on trade receivables and contract assets

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APPENDIX I ACCOUNTANTS’ REPORT

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At the end of each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

Provision for expected credit losses on financial assets included in prepayments, other receivables and other assets, amounts due from related parties and funds receivable

The Group uses general approach to calculate ECLs for financial assets included in prepayments, other receivables and other assets, amounts due from related parties and funds receivable. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). The information about the ECLs on the financial assets included in prepayments, other receivables and other assets, amounts due from related parties and funds receivable is disclosed in notes 20, 42 and 23 to the Historical Financial Information.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets (including the right-of-use-assets) at the end of each of the Relevant Periods. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. When value-in-use calculations are

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APPENDIX I ACCOUNTANTS’ REPORT undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Useful lives and residual values of items of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, the Group has to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in the provision of services, or from a change in the market demand for the service output of the asset, expected usage of the asset, expected physical wear and tear, care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of the Group with similar assets that are used in a similar way. Additional depreciation is made if the estimated useful lives and/or residual values of items of property, plant and equipment are different from previous estimation. Useful lives and residual values are reviewed at the end of each of the year based on changes in circumstances. Further details of the property, plant and equipment are set out in note 14 to the Historical Financial Information.

Leases — Estimating the incremental borrowing rate

5. OPERATING SEGMENT INFORMATION

The Group was principally engaged in the provision of online marketplace service, online direct sales and other services during the Relevant Periods.

HKFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reporting about components of the Group that are regularly reviewed by the chief operating decision-makers in order to allocate resources to segments and to assess their

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APPENDIX I ACCOUNTANTS’ REPORT performance. The information reported to the directors of the Company, who are the chief operating decision-makers, for the purpose of resource allocation and assessment of performance does not contain discrete operating segment financial information and the directors reviewed the financial results of the Group as a whole. Therefore, no further information about the operating segment is presented.

Geographical information

(a) Revenue from external customers

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Mainland China...... 18,050 32,557 75,414 Other countries/regions ...... 99,806 146,121 155,087 117,856 178,678 230,501

The revenue information above is based on the locations of the customers.

(b) Non-current assets

As at the end of each of the Relevant Periods, almost all of the Group’s non-current assets were located in Mainland China.

Information about major customers

Since none of the Group’s sales to a single customer amounted to 10% or more of the Group’s revenue during the Relevant Periods, no major customer information in accordance with HKFRS 8 Operating Segments is presented.

6. REVENUE, OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Revenue from contracts with customers.... 117,856 178,678 230,501

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APPENDIX I ACCOUNTANTS’ REPORT

Revenue from contracts with customers

(a) Disaggregated revenue information

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Types of goods or services Commissions...... 62,429 102,808 113,714 Value-added services and other services ... 30,658 57,305 116,787 Online direct sales...... 24,769 18,565 — Total revenue from contracts with customers...... 117,856 178,678 230,501

A breakdown of value-added services and other services is as follows:

Logistics service ...... 6,725 28,996 83,553 Marketing service ...... 9,941 14,859 21,756 Payment service ...... 10,856 9,864 10,183 Other services ...... 3,136 3,586 1,295 30,658 57,305 116,787

Geographical markets Mainland China...... 18,050 32,557 75,414 Other countries/regions ...... 99,806 146,121 155,087 117,856 178,678 230,501

Timing of revenue recognition Goods transferred at a point in time ...... 24,769 18,565 — Services transferred at a point in time..... 76,421 116,258 125,192 Services transferred over time ...... 16,666 43,855 105,309 117,856 178,678 230,501

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APPENDIX I ACCOUNTANTS’ REPORT

The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period:

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Commissions...... 5,540 6,174 11,890 Value-added services and other services ... 6,682 9,372 12,608 Online direct sales...... 1,210 1,070 — 13,432 16,616 24,498

(b) Performance obligations

Information about the Group’s performance obligations is summarised below:

Commissions

The performance obligation is satisfied upon the buyers having obtained the control of the goods. Payment in advance from buyers is required.

Value-added services and other services

(i) Logistics service

The performance obligation is satisfied over time as customers receive the benefit of the services as the goods are transported from one location to another. Payment in advance is generally required except for some customers, where the trading terms are on credit.

(ii) Marketing service

The performance obligation is satisfied over time as the service is rendered. Payment in advance is required.

(iii) Payment service and other services

The performance obligation is satisfied upon the related services are rendered. Payment is generally due upon completion of services.

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APPENDIX I ACCOUNTANTS’ REPORT

Online direct sales

The performance obligation is satisfied upon the customer having obtained the goods. Payment in advance is normally required.

The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at the end of each of the Relevant Periods are as follows:

As at 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Commissions...... 6,174 11,890 15,369 Value-added services and other services ... 9,372 12,608 17,349 Online direct sales...... 1,070 — — 16,616 24,498 32,718

Management expects that the transaction prices allocated to the unsatisfied performance obligations as at the end of each of the Relevant Periods are to be recognised within one year.

Year ended 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Other income and gains Interest income ...... 53 110 230 Investment income from other financial assets...... 27 26 — Foreign exchange gains, net ...... — — 7,631 Gain on debt restructuring...... — — 827 Others ...... 120 918 1,127 200 1,054 9,815

7. FINANCE COSTS

An analysis of finance costs is as follows:

Year ended 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Interest on bank and other loans ...... 1,801 8,018 1,281 Interest on lease liabilities...... 145 582 523 1,946 8,600 1,804

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APPENDIX I ACCOUNTANTS’ REPORT

8. (LOSS)/PROFIT BEFORE TAX

The Group’s (loss)/profit before tax is arrived at after charging/(crediting):

Section II Year ended 31 December

Notes 2018 2019 2020

USD’000 USD’000 USD’000 Cost of commissions ...... 30,356 30,082 36,387 Cost of value-added services and other services ...... 12,346 34,302 88,139 Cost of online direct sales...... 23,720 17,124 — Total cost of sales* ...... 66,422 81,508 124,526

Depreciation of items of property, plant and equipment** ...... 14 1,559 2,125 2,245 Depreciation of right-of-use assets ...... 15(a) 2,083 2,727 2,761 Amortisation of intangible assets...... 16 313 281 147 Research and development costs** ...... 12,049 10,873 12,759 Lease payments not included in the measurement of lease liabilities ...... 15(c) 1,479 1,813 710 Fair value losses on preferred shares..... 32 8,562 18,429 26,021 Auditors’ remuneration ...... 249 564 200 [REDACTED] ...... 318 374 588 Employee benefit expenses (including directors’ and chief executive’s remuneration (note 9))** Wages and salaries...... 28,935 27,522 25,684 Equity-settled share option expenses ... 34 17 1,358 1,646 Pension scheme contributions ...... 1,952 1,329 213 30,904 30,209 27,543

Impairment loss on trade receivables*** .. 18 51 135 504 Loss on disposal of items of property, plant and equipment***...... 58 6 14 Loss on disposal of subsidiaries***...... 37 — 516 — Investment income from other current financial assets ...... 6 (27) (26) — Interest income ...... 6 (53) (110) (230) Foreign exchange losses/(gains), net*** .. 6,094 667 (7,631) Write-down of inventories to net realisable value ...... 84 802 —

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APPENDIX I ACCOUNTANTS’ REPORT

* The Group recognised employee benefit expenses of USD9,607,000, USD8,654,000 and USD6,709,000 for the years ended 31 December 2018, 2019 and 2020, respectively, in “Cost of sales” in the consolidated statements of profit or loss.

** Employee benefit expenses of USD9,827,000, USD8,005,000 and USD9,180,000 for the years ended 31 December 2018, 2019 and 2020, respectively, are included in “Research and development costs” above. Depreciation of items of property, plant and equipment of USD776,000, USD1,690,000 and USD2,200,000 for the years ended 31 December 2018, 2019 and 2020, respectively, is included in “Research and development costs” above.

*** Impairment loss on trade receivables, loss on disposal of items of property, plant and equipment, loss on disposal of subsidiaries, and foreign exchange gains/losses are included in “Other expenses” or “Other income and gains” in the consolidated statements of profit or loss.

9. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

Certain of the directors received remuneration from the subsidiaries now comprising the Group for their appointment as directors or officers of these subsidiaries. The remuneration of each of these directors as recorded in the financial statements of the subsidiaries is set out below:

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Fees ...... ——— Other emoluments: Salaries, allowances and benefits in kind .. 527 575 414 Equity-settled share option expenses ...... 11 317 322 Pension scheme contributions ...... 26 28 4 564 920 740

(a) Independent non-executive directors

There were neither fees nor other emoluments paid to the independent non-executive directors during the Relevant Periods.

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APPENDIX I ACCOUNTANTS’ REPORT

(b) Executive directors, a non-executive director and the chief executive

Year ended 31 December 2018

Salaries, allowances and Equity-settled Pension benefits share option scheme in kind expenses contributions Total

USD’000 USD’000 USD’000 USD’000 Executive directors: Ms. Wang Shutong (chief executive) .. 189 — 8 197 Mr. Hou Jianchen ...... 151 2 6 159 Mr. Zhou Yanjun ...... 127 9 8 144 Ms. Wang Wenli ...... 60 — 4 64 527 11 26 564

Year ended 31 December 2019

Salaries, allowances and Equity-settled Pension benefits share option scheme in kind expenses contributions Total

USD’000 USD’000 USD’000 USD’000 Executive directors: Ms. Wang Shutong (chief executive) .. 214 — 7 221 Mr. Hou Jianchen ...... 93 110 7 210 Mr. Zhou Yanjun ...... 132 207 7 346 Ms. Wang Wenli ...... 136 — 7 143 575 317 28 920

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APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December 2020

Salaries, allowances and Equity-settled Pension benefits share option scheme in kind expenses contributions Total

USD’000 USD’000 USD’000 USD’000 Executive directors: Ms. Wang Shutong (chief executive) .. 213 — 1 214 Mr. Hou Jianchen ...... 107 147 1 255 Mr. Zhou Yanjun ...... 39 — 1 40 Ms. Wang Wenli ...... ———— Mr. Liu Sijun ...... 55 175 1 231 414 322 4 740

(1) On 13 April 2018, Ms. Wang Shutong was appointed as an executive director of the Company.

(2) On 6 June 2019, Mr. Hou Jianchen, Mr. Zhou Yanjun and Ms. Wang Wenli were appointed as executive directors of the Company.

(3) On 6 June 2019, Ms. Wu Haiyan was appointed as a non-executive director of the Company.

(4) On 17 June 2019, Ms. Wang Shutong was appointed as the chief executive of the Company.

(5) On 30 January 2020, Ms. Wang Wenli resigned as an executive director of the Company.

(6) On 15 April 2020, Mr. Zhou Yanjun resigned as an executive director of the Company.

(7) On 4 February 2021, Ms. Wu Haiyan resigned as a non-executive director of the Company.

(8) On 14 May 2021, Mr. Liu Sijun was appointed as an executive director of the Company.

(9) On 14 May 2021, Mr. Fan Ren Da Anthony was appointed as a non-executive director of the Company.

There were no fees or other emoluments payable to a non-executive director during the Relevant Periods.

There was no arrangement under which the directors waived or agreed to waive any remuneration during the Relevant Periods.

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APPENDIX I ACCOUNTANTS’ REPORT

10. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the Relevant Periods included two, two and two directors, respectively, details of whose remuneration are set out in note 9 above. Details of the remuneration of the five highest paid employees for the Relevant Periods who are neither a director nor chief executive of the Company are as follows:

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Salaries, allowances and benefits in kind .. 616 433 333 Equity-settled share option expenses ...... — 165 472 Pension scheme contributions ...... 24 22 1 640 620 806

The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows:

Year ended 31 December

2018 2019 2020 HKD1,000,001 to HKD1,500,000 ...... 11— HKD1,500,001 to HKD2,000,000 ...... 222 HKD2,000,001 to HKD3,000,000 ...... —— 1 333

11. INCOME TAX

The Group is subject to income tax on an entity basis on profits arising in or derived from the countries/jurisdictions in which members of the Group are domiciled and operate.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the law of the Cayman Islands and accordingly is not subject to income tax.

Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profits arising in Hong Kong during the Relevant Periods.

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APPENDIX I ACCOUNTANTS’ REPORT

The provision for Mainland China corporate income tax is based on the statutory rate of 25% of the assessable profits of the subsidiaries of the Group operating in Mainland China as determined in accordance with the PRC Corporate Income Tax Law which was approved and became effective on 1 January 2008. Certain subsidiaries of the Group have been identified as “high and new technology enterprise” and were entitled to a preferential income tax rate of 15% during the Relevant Periods in accordance with the PRC Corporate Income Tax Law.

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Current income tax — Mainland China ... 230 62 545 Current income tax — Hong Kong ...... 848 1,223 70 Total tax charge for the year ...... 1,078 1,285 615

A reconciliation of the tax expense applicable to (loss)/profit before tax at the statutory income tax rate applicable in Mainland China to the tax charge at the effective tax rate is as follows:

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 (Loss)/profit before tax ...... (49,287) (5,438) 6,701

Tax at the PRC Corporate Income Tax rate of 25%...... (12,322) (1,360) 1,675 Effect of different tax rates in different jurisdictions ...... 3,819 3,322 5,201 Income not subject to tax ...... (189) (148) (2,641) Expenses not deductible for tax...... 4,868 1,299 848 Tax losses utilised from previous periods .. (404) (4,625) (5,635) Tax losses not recognised ...... 5,306 2,797 1,167 Tax charge at the Group’s effective tax rate ...... 1,078 1,285 615

Pursuant to the PRC Corporate Income Tax Law, a 10% withholding tax is levied on dividends declared to foreign investors from the foreign investment enterprises established in Mainland China. The requirement is effective from 1 January 2008 and applies to earnings after 31 December 2007. A lower withholding tax rate may be applied if there is a tax treaty between

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APPENDIX I ACCOUNTANTS’ REPORT

Mainland China and the jurisdiction of the foreign investors. For the Group, the applicable rate is 5% or 10%. The Group is therefore liable for withholding taxes on dividends distributed by those subsidiaries established in Mainland China in respect of earnings generated from 1 January 2008.

As at 31 December 2018, 2019 and 2020, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group’s subsidiaries established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. The aggregate amounts of temporary differences associated with investments in subsidiaries in Mainland China for which deferred tax liabilities have not been recognised totaled approximately USD2,271,000, USD2,817,000 and USD3,239,000 as at 31 December 2018, 2019 and 2020, respectively.

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

As at 31 December 2018 and 2019 and 2020, the Group has unused tax losses and unrecognised deductible temporary differences of USD109,657,000, USD83,018,000 and USD60,260,000, respectively, available for offset against future profits. No deferred tax assets have been recognised in respect of such tax losses or deductible temporary differences due to the unpredictability of future taxable profit streams.

12. DIVIDENDS

During the Relevant Periods, no dividends have been declared and paid by the Company since its incorporation.

13. (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

No (loss)/earnings per share information is presented as its inclusion, for the purpose of the Historical Financial Information, is not considered meaningful due to the Reorganisation and the basis of presentation of the results of the Group for the Relevant Periods.

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APPENDIX I ACCOUNTANTS’ REPORT

14. PROPERTY, PLANT AND EQUIPMENT

31 December 2018

Office Computer Leasehold equipment equipment improvements Total

USD’000 USD’000 USD’000 USD’000 At 1 January 2018: Cost...... 434 6,826 2,123 9,383 Accumulated depreciation ...... (282) (5,392) (1,551) (7,225) Net carrying amount ...... 152 1,434 572 2,158

At 1 January 2018, net of accumulated depreciation ...... 152 1,434 572 2,158 Additions ...... 15 2,950 722 3,687 Disposals...... (1) (57) — (58) Government grants received (note 31) .. — — (36) (36) Depreciation provided during the year. (67) (888) (604) (1,559) Exchange alignment ...... (9) (129) (30) (168) At 31 December 2018, net of accumulated depreciation ...... 90 3,310 624 4,024

At 31 December 2018: Cost...... 424 8,674 2,684 11,782 Accumulated depreciation ...... (334) (5,364) (2,060) (7,758) Net carrying amount ...... 90 3,310 624 4,024

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APPENDIX I ACCOUNTANTS’ REPORT

31 December 2019

Office Computer Leasehold equipment equipment improvements Total

USD’000 USD’000 USD’000 USD’000 At 1 January 2019: Cost...... 424 8,674 2,684 11,782 Accumulated depreciation ...... (334) (5,364) (2,060) (7,758) Net carrying amount ...... 90 3,310 624 4,024

At 1 January 2019, net of accumulated depreciation ...... 90 3,310 624 4,024 Additions ...... 31 2,786 1,028 3,845 Disposals...... (5) (241) — (246) Disposal of subsidiaries (note 37)...... (5) (152) (116) (273) Government grants received (note 31) .. — — (927) (927) Depreciation provided during the year. (43) (1,672) (410) (2,125) Exchange alignment ...... (26) (140) (6) (172) At 31 December 2019, net of accumulated depreciation ...... 42 3,891 193 4,126

At 31 December 2019: Cost...... 300 8,833 2,218 11,351 Accumulated depreciation ...... (258) (4,942) (2,025) (7,225) Net carrying amount ...... 42 3,891 193 4,126

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APPENDIX I ACCOUNTANTS’ REPORT

31 December 2020

Office Computer Leasehold equipment equipment improvements Total

USD’000 USD’000 USD’000 USD’000 At 1 January 2020: Cost...... 300 8,833 2,218 11,351 Accumulated depreciation ...... (258) (4,942) (2,025) (7,225) Net carrying amount ...... 42 3,891 193 4,126

At 1 January 2020, net of accumulated depreciation ...... 42 3,891 193 4,126 Additions ...... 28 4,338 222 4,588 Disposals...... (9) (38) — (47) Government grants received (note 31) .. — — (187) (187) Depreciation provided during the year. (18) (2,090) (137) (2,245) Exchange alignment ...... 8 338 8 354 At 31 December 2020, net of accumulated depreciation ...... 51 6,439 99 6,589

At 31 December 2020: Cost...... 291 11,710 2,409 14,410 Accumulated depreciation ...... (240) (5,271) (2,310) (7,821) Net carrying amount ...... 51 6,439 99 6,589

15. LEASES

The Group as a lessee

The Group has lease contracts for certain buildings. Leases of buildings generally have lease terms between 1.1 and 5 years.

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APPENDIX I ACCOUNTANTS’ REPORT

(a) Right-of-use assets

The carrying amounts of right-of-use assets and the movements during the Relevant Periods are as follows:

2018 2019 2020

Buildings Buildings Buildings

USD’000 USD’000 USD’000 As at 1 January ...... 2,071 3,229 10,909 Additions ...... 3,271 13,116 475 Cancellation of lease contracts ...... — (2,627) (7) Disposal of subsidiaries (note 37)...... — (60) — Depreciation charge...... (2,083) (2,727) (2,761) Exchange realignment ...... (30) (22) 599 As at 31 December ...... 3,229 10,909 9,215

(b) Lease liabilities

The carrying amounts of lease liabilities and the movements during the Relevant Periods are as follows:

2018 2019 2020

Buildings Buildings Buildings

USD’000 USD’000 USD’000 Carrying amount at 1 January ...... 2,553 2,814 10,722 Additions ...... 3,271 13,116 475 Cancellation of lease contracts ...... — (2,706) (7) Disposal of subsidiaries (note 37)...... — (69) — Accretion of interest recognised during the year ...... 145 582 523 Payments...... (3,027) (3,005) (3,201) Exchange realignment ...... (128) (10) 798 Carrying amount at 31 December ...... 2,814 10,722 9,310

Analysed into: Current portion ...... 974 2,362 2,876

Non-current portion ...... 1,840 8,360 6,434

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APPENDIX I ACCOUNTANTS’ REPORT

The maturity analysis of lease liabilities is disclosed in note 45 to the Historical Financial Information.

2018 2019 2020

USD’000 USD’000 USD’000 Interest on lease liabilities...... 145 582 523 Depreciation charge of right-of-use assets .. 2,083 2,727 2,761 Expense relating to short-term leases and leases of low-value assets ...... 1,479 1,813 710 Total amount recognised in profit or loss .. 3,707 5,122 3,994

(d) The total cash outflow for leases is disclosed in note 41(c) to the Historical Financial Information.

16. INTANGIBLE ASSETS

31 December 2018

Computer software

USD’000 At 1 January 2018: Cost...... 1,590 Accumulated amortisation ...... (973) Net carrying amount ...... 617

Cost at 1 January 2018, net of accumulated amortisation ...... 617 Additions ...... 107 Amortisation provided during the year ...... (313) Exchange alignment ...... (15) At 31 December 2018 ...... 396

At 31 December 2018: ...... Cost...... 1,625 Accumulated amortisation ...... (1,229) Net carrying amount ...... 396

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APPENDIX I ACCOUNTANTS’ REPORT

31 December 2019

Computer software

USD’000 At 31 December 2018 and at 1 January 2019: Cost...... 1,625 Accumulated amortisation ...... (1,229) Net carrying amount ...... 396

Cost at 1 January 2019, net of accumulated amortisation ...... 396 Additions ...... 61 Amortisation provided during the year ...... (281) Exchange alignment ...... (4) At 31 December 2019 ...... 172

At 31 December 2019: Cost...... 1,406 Accumulated amortisation ...... (1,234) Net carrying amount ...... 172

31 December 2020

Computer software

USD’000 At 31 December 2019 and at 1 January 2020: Cost...... 1,406 Accumulated amortisation ...... (1,234) Net carrying amount ...... 172

Cost at 1 January 2020, net of accumulated amortisation ...... 172 Amortisation provided during the year ...... (147) Exchange alignment ...... 3 At 31 December 2020 ...... 28

At 31 December 2020: Cost...... 1,488 Accumulated amortisation ...... (1,460) Net carrying amount ...... 28

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APPENDIX I ACCOUNTANTS’ REPORT

17. INVENTORIES

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Merchandise in transit...... 550 844 844 Merchandise held for trading...... 43 42 — Less: Provision for inventories ...... (84) (886) (844) 509——

The above inventories were held by the Group for online direct sales business.

18. TRADE RECEIVABLES

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Trade receivables ...... 1,035 1,477 13,659 Impairment ...... (60) (192) (721) 975 1,285 12,938

The Group’s trading terms with its customers are mainly payment in advance, except for some logistics customers, where the trading terms are on credit. The credit period is generally one month, extending up to 12 months for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

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APPENDIX I ACCOUNTANTS’ REPORT

An ageing analysis of the trade receivables as at the end of each of the Relevant Periods, based on the invoice date and net of loss allowance, is as follows:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Within 3 months ...... 187 464 6,152 3 to 6 months ...... 255 50 111 6 to 12 months ...... 78 84 5,970 1 to 2 years...... 455 339 156 2 to 3 years...... — 348 283 Over 3 years ...... — — 266 975 1,285 12,938

The movements in the loss allowance for impairment of trade receivables are as follows:

2018 2019 2020

USD’000 USD’000 USD’000 At beginning of year ...... 11 60 192 Impairment losses, net (note 8) ...... 51 135 504 Exchange realignment ...... (2) (3) 25 At end of year...... 60 192 721

An impairment analysis is performed at the end of each of the Relevant Periods using a provision matrix to measure expected credit losses. The provision rates are based on the ageing for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

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APPENDIX I ACCOUNTANTS’ REPORT

Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:

As at 31 December 2018

Ageing

Within 3 3to6 6to12 1to2 2to3 Over 3 months months months years years years Total Expected credit loss rate ...... — 2% 5% 10% 30% 50% 6% Gross carrying amount (USD’000) ...... 187 260 83 505 — — 1,035 Expected credit losses (USD’000) ...... —5550——60

As at 31 December 2019

Ageing

Within 3 3to6 6to12 1to2 2to3 Over 3 months months months years years years Total Expected credit loss rate ...... — 2% 5% 10% 30% 50% 13% Gross carrying amount (USD’000) ...... 464 51 88 377 497 — 1,477 Expected credit losses (USD’000) ...... — 1 4 38 149 — 192

As at 31 December 2020

Ageing

Within 3 3to6 6to12 1to2 2to3 Over 3 months months months years years years Total Expected credit loss rate ...... — 2% 5% 10% 30% 50% 5% Gross carrying amount (USD’000) ...... 6,152 114 6,284 174 404 531 13,659 Expected credit losses (USD’000) ...... — 3 314 18 121 265 721

19. CONTRACT ASSETS

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Contract assets arising from: Logistics service ...... 76 189 802

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APPENDIX I ACCOUNTANTS’ REPORT

Contract assets are initially recognised for revenue earned from the provision of logistics service as the receipt of consideration is conditional on successful completion of such service. Upon completion of service and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade receivables. The increase in contract assets in 2020 and 2019 was the result of the increase in the provision of logistics service as at the end of each of the Relevant Periods.

As at the end of each of the Relevant Periods, the Group did not recognise any allowance for expected credit losses on contract assets. The Group’s trading terms and credit policy with customers are disclosed in note 18 to the Historical Financial Information.

The expected timing of recovery or settlement for contract assets as at 31 December is as follows:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Within one year...... 76 189 802

20. PREPAYMENTS, OTHER RECEIVABLES AND OTHER ASSETS

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Prepaid expenses ...... 329 689 159 Prepayments ...... 1,949 2,618 10,989 Deposits ...... 1,317 1,390 1,655 Value-added tax recoverable ...... 987 816 1,241 Other receivables ...... 2,808 8,924 6,166 7,390 14,437 20,210

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

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APPENDIX I ACCOUNTANTS’ REPORT

21. OTHER CURRENT FINANCIAL ASSETS

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Measured at amortised cost ...... 729——

As at 31 December 2018, the Group’s wealth management financial products with guaranteed principal and returns of a carrying amount of USD729,000 were pledged as security for the Group’s bank loans, as further explained in note 30 to the Historical Financial Information.

22. PLEDGED DEPOSITS AND RESTRICTED CASH

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Pledged deposits ...... 291 14 17,870

The above deposits are mainly deposited with creditworthy banks with no recent history of default by the Group as the pledge for certain of its businesses, operations and one bank loan.

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Restricted cash ...... 6,503 6,364 4,447

The above amounts are mainly customer funds deposited in the virtual account of Barclays Bank. The customer funds are restricted to use and only for onward remittance.

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APPENDIX I ACCOUNTANTS’ REPORT

23. FUNDS RECEIVABLE

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Funds receivable ...... 44,038 42,318 52,997

Funds receivable represent customer transaction funds withheld by third-party payment processing agencies. Generally, funds receivable will be settled and transferred into the bank account of the Group after several days.

As at 31 December 2018 and 2019, funds receivable which amounted to USD31,651,000 and USD31,449,000 was frozen by a third-party payment processing agency because of processing transactions through the account for goods and services other than those specified. Pursuant to a settlement agreement in December 2020, the agency released a sum of approximately USD30,686,000, which was received by the Group on 4 January 2021, while retaining a guarantee in the sum of USD237,000, which will be paid to the Group after a period of one year from the agreement date.

24. CASH AND CASH EQUIVALENTS

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Cash and bank balances ...... 21,752 76,266 176,390

Cash and bank balances of the Group denominated in RMB amounted to USD6,635,000, USD12,466,000 and USD70,368,000 as at 31 December 2018, 2019 and 2020, respectively. The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

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APPENDIX I ACCOUNTANTS’ REPORT

25. TRADE PAYABLES

An ageing analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoice date, is as follows:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Within 3 months ...... 698 2,558 11,272 3 to 6 months ...... 136 38 3,801 6 to 12 months ...... 43 — 61 1 to 2 years...... — — 169 877 2,596 15,303

The trade payables are non-interest-bearing and are normally settled on 60-day terms.

26. PAYABLE TO SELLERS

An ageing analysis of the payable to sellers as at the end of each of the Relevant Periods, based on the invoice date, is as follows:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Within 3 months ...... 65,618 39,893 67,684 3 to 6 months ...... 5,804 11,978 11,118 6 to 12 months ...... 6,124 14,456 7,147 1 to 2 years...... 3,550 35,585 6,051 2 to 3 years...... 2,766 2,156 29,039 Over 3 years ...... 3,568 5,791 6,930 87,430 109,859 127,969

Payable to sellers represents amounts collected from buyers on behalf of the sellers for online sales. It is non-interest-bearing and payable on demand.

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APPENDIX I ACCOUNTANTS’ REPORT

27. ADVANCE FROM BUYERS

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Advance from buyers ...... 68,212 80,423 96,242

Advance from buyers represents amounts collected from buyers, which excludes commissions. Commissions are presented as contract liabilities and will be recognised as revenue when the transaction is completed.

It is non-interest-bearing and payable on demand.

28. CONTRACT LIABILITIES

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Commissions...... 6,174 11,890 15,369 Value-added services and other services ... 9,372 12,608 17,349 Online direct sales...... 1,070 — — 16,616 24,498 32,718

The contract liabilities primarily relate to the Group’s obligations to transfer goods or services to customers for which the Group has received consideration from the customers.

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APPENDIX I ACCOUNTANTS’ REPORT

29. OTHER PAYABLES AND ACCRUALS

As at 31 December

Note 2018 2019 2020

USD’000 USD’000 USD’000 Deposits from customers ...... 2,312 2,349 1,713 Merchant deposits ...... 2,428 2,578 2,201 Payroll and welfare payables...... 8,242 6,118 6,368 Other taxes payable...... 555 1,153 1,184 Penalty payable ...... (a) 440 1,735 141 Accrued expenses and other payables .... 10,968 8,857 27,361 24,945 22,790 38,968

Note:

(a) Penalty payable was mainly accrued by the Group due to an overdue interest-bearing other borrowing. Details are given in note 30 to the Historical Financial Information.

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APPENDIX I ACCOUNTANTS’ REPORT

30. INTEREST-BEARING BANK AND OTHER BORROWINGS

As at 31 December

2018 2019 2020

Effective Effective Effective interest interest interest rate Maturity USD’000 rate Maturity USD’000 rate Maturity USD’000 Current Bank loans — secured without guarantee (note 1)...... 5.00% 2019 732 — — — 4.00% 2021 17,313 Bank loans — unsecured with guarantee (note 2)...... 5.00% 2019 731 — — — 13.59% 2021 2,453 Bank loans — unsecured without guarantee ...... ——————9.86% 2021 2,845 Other borrowings — secured with guarantee (note 3) ..... 13.00% 2018 11,248 13.00% 2018 12,438 — — — 12,711 12,438 22,611

As at 31 December

2018 2019 2020

Effective Effective Effective interest interest interest rate Maturity USD’000 rate Maturity USD’000 rate Maturity USD’000 Non-current Bank loans — unsecured with guarantee (note 2)...... ——————13.59% 2022 7,336 Bank loans — unsecured without guarantee ...... ——————9.86% 2022 29,180 Other borrowings — unsecured with guarantee (note 4) ..... ——————0.00% 2023 1,532 — — 38,048

Note 1: The Group’s bank loan was secured by the pledge of the Group’s wealth management financial products amounting to USD729,000 as at 31 December 2018. The Group’s bank loan in China Zheshang Bank was secured by the pledge of the deposit amounting to USD17,855,000 as at 31 December 2020.

Note 2: Ms. Wang Shutong, who is the controlling shareholder of the Group, has guaranteed the bank loan as at 31 December 2018. Digitrading Technology (Beijing) Co. Ltd., which is a subsidiary of the Group, has guaranteed the bank loan in Bank of Shanghai as at 31 December 2020.

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APPENDIX I ACCOUNTANTS’ REPORT

Note 3: As at 31 December 2018 and 2019, the Group’s other borrowings amounting to USD11,200,000 and USD12,438,000 was secured by the pledge of 4% and 4% shares of Chongqing Rich Palace, respectively. Simultaneously, Ms. Wang Shutong has also guaranteed the loan. According to the agreements with the lender, the loan had been overdue since 1 April 2018 and the Group had accrued penalty payables which were included in other payables and accruals. The loan was fully repaid in 2020.

Note 4: The Group obtained a loan of USD1,532,000 from a governmental fund, which is interest-free within the first year and interest-bearing at an annual interest rate of 5% from the second year. Digitrading Technology (Beijing) Co., Ltd., which is a subsidiary of the Group, has guaranteed this borrowing.

31. DEFERRED INCOME

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 At beginning of year ...... 514 746 447 Additions ...... 306 653 290 Deducted from property, plant and equipment (note 14) ...... (36) (927) (187) Released to profit or loss ...... (5) (16) (103) Exchange alignment ...... (33) (9) 31 At end of year...... 746 447 478

Deferred income represents the government grants received for subsidies. There are no unfulfilled conditions or contingencies relating to these grants.

32. PREFERRED SHARES

Up to the date of this report, Heguang International Limited, a wholly-owned subsidiary of the Company, completed the issuance of the following preferred shares to certain investors.

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APPENDIX I ACCOUNTANTS’ REPORT

Conversion price (USD/share) Number of shares Before share After share Before share After share Total Date of issuance split split split split consideration USD (Note (a)) (Note (a)) (Note (a)) (Note (a)) Series A preferred shares ... 7 April 2006 7.200 0.072 243,055 24,305,500 1,750,000 Series B preferred shares ... 5 June 2007 1.865 0.186 3,217,589 32,175,890 6,000,000 Series C-1 preferred shares (Notes (b), (c)) ...... 10 February 2010 3.706 0.371 539,638 5,396,380 2,000,000 Series C-2 preferred shares (Note (b)) ...... 10 February 2010 3.336 0.334 299,799 2,997,990 1,000,000 Series C-3 preferred shares (Note (b)) ...... 14 May 2014 N/A 0.371 N/A 5,396,377 2,000,000 Series D preferred shares ... 20 August 2014 N/A 0.957 N/A 10,452,982 10,000,000 80,725,119 22,750,000

Notes:

(a) On 5 June 2007, each issued preferred share was subdivided into 10 shares. On 25 February 2010, each issued preferred share was further subdivided into 10 shares.

(b) Series C preferred shares include Series C-1, Series C-2 and Series C-3 preferred shares.

(c) On 10 February 2010, Heguang International Limited issued 5,936,015 Series C-1 preferred shares and subdivided into 59,360,150 on 25 February 2010. In August 2013, Heguang International Limited repurchased 53,963,770 Series C-1 preferred shares at an aggregate repurchase price of USD12,000,000 and after the repurchase, the number of preferred shares was reduced to 80,725,119. There was no change on the number of preferred shares during the Relevant Periods.

On 31 May 2018, DHgate Holding Limited, the parent of the Company, issued in aggregate 157,731,942 shares at a par value of USD0.0001 each, including 77,006,823 ordinary shares and 80,725,119 preferred shares. The number of preferred shares issued by DHgate Holding Limited and relevant investors are the same with that of the preferred shares issued by Heguang International Limited as mentioned above. According to the relevant agreements, the Company has the obligations to redeem the preferred shares issued by DHgate Holding Limited.

On 27 May 2019, Heguang International Limited issued a total number of 152,947,319 ordinary shares at a par value of USD0.00001 each to the Company. On 27 May 2019, Heguang International Limited repurchased a total number of 152,947,319 outstanding shares from the then shareholders at a par value of USD0.00001 each, using the proceeds from the issuance of shares by Heguang International Limited to the Company. Upon completion of the share repurchase, Heguang International Limited became a wholly-owned subsidiary of the Company.

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APPENDIX I ACCOUNTANTS’ REPORT

To eliminate the duplicate holding structure of the Company, on 24 May 2021, an aggregate of 80,725,119 ordinary shares were redesignated into preferred shares. DHgate Holding Limited repurchased an aggregate of 152,947,319 shares from its original shareholders, in consideration of which an aggregate of 152,947,319 shares (including preferred shares) of the Company were transferred from DHgate Holding Limited to the original shareholders. The Company repurchased an aggregate of 4,784,623 shares from DHgate Holding Limited, at a nominal consideration of USD478.4623. Upon the above-mentioned steps, DHgate Holding Limited ceased to be a shareholder of the Company.

The key terms of the preferred shares issued by DHgate Holding Limited on 31 May 2018 are summarised as follows:

(a) Conversion rights

The holders of the preferred shares shall have the following rights with respect to the conversion of the preferred shares into ordinary shares. The number of ordinary shares to which a holder shall be entitled upon conversion of any preferred share shall be the quotient of the original purchase price divided by the effective conversion price.

Optional conversion

Subject to the requirements of the Companies Act of the Cayman Islands, each series of preferred shares may, at the option of the holder thereof, be converted at any time into fully-paid and non-assessable ordinary shares based on the then effective conversion price.

Automatic conversion

Without any action being required by the holder of such shares and whether or not the certificates representing such share are surrendered to DHgate Holding Limited or its transfer agent, each series of preferred shares shall automatically be converted, based on the then effective conversion price, into ordinary shares upon the closing of a qualified IPO.

Adjustments to applicable conversion price

At any time, or from time to time after the Series D original issue date, DHgate Holding Limited shall issue or sell additional shares or ordinary share equivalents for a consideration per share (the “Future Issuance Price”) less than the Series A conversion price, the Series B conversion price, and the Series C conversion price in effect on the date of, and immediately prior

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APPENDIX I ACCOUNTANTS’ REPORT to, such issuance, if such Series A conversion price, Series B conversion price and Series C conversion price, as applicable, shall be reduced concurrently with such issuance to a price equal to the Future Issuance Price.

(b) Redemption features

At any time after 31 May 2018, any holders of at least a majority of the then outstanding Series B preferred shares may require that DHgate Holding Limited, and DHgate Holding Limited shall, redeem all of the then outstanding Series B preferred shares (the “Series B Redemption”) out of funds legally available for such redemption, at a redemption price per applicable Series B preferred share equal to the Series B original issue price, plus 8% compound annual return on the Series B original issue price and all declared or accrued but unpaid dividends thereon up until the date of actual payment of redemption price (in each case as adjusted for any share subdivisions, share dividends, combinations, recapitalisations or similar transactions) (the “Series B Redemption Price”).

At any time after the earlier of (a) the fifth (5th) anniversary of 20 August 2014, and (b) the occurrence of material breach, any holders of at least a majority of the then outstanding Series D preferred shares may require that DHgate Holding Limited, and DHgate Holding Limited shall, redeem all of the then outstanding Series D preferred shares (the “Series D Redemption”) out of funds legally available for such redemption, at a redemption price per applicable Series D preferred share equal to the Series D original issue price, plus 8% compound annual return on the Series D original issue price and all declared or accrued but unpaid dividends thereon up until the date of actual payment of redemption price (in each case as adjusted for any share subdivisions, share dividends combinations, recapitalisations or similar transactions) (the “Series D Redemption Price”).

Subject to the prior payments in full of the Series D Redemption Prices to the holders of Series D preferred shares, any holders of the remaining outstanding preferred shares may require that DHgate Holding Limited, and DHgate Holding Limited shall, redeem all of the then remaining outstanding preferred shares out of funds legally available for such redemption, at a redemption price per applicable outstanding preferred share equal to the respective original issue price, plus 8% compound annual return on the respective original issue price and all declared or accrued but unpaid dividends thereon up until the date of actual payment of redemption price (in each case as adjusted for any share subdivisions, share dividends, combinations, recapitalisations or similar transactions).

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APPENDIX I ACCOUNTANTS’ REPORT

Upon any liquidation, dissolution, or winding up of DHgate Holding Limited, whether voluntary or involuntary, any liquidation proceeds shall be distributed to the members in the following order of priority:

Each holder of a series of preferred shares shall be entitled to receive, on a pari passu basis with that series, an amount equal to 100% of the original issue price of preferred shares then held by such holder (adjusted for any share subdivisions, share dividends, combinations, recapitalisation and similar transactions), plus 8% compound annual return on the original issue price of preferred shares then held by such holder, plus all dividends accrued or declared but unpaid with respect thereto (as adjusted for any share subdivisions, share dividends, combinations, recapitalisations and similar transactions) per preferred share then held by such holder (the “Liquidation Preference Amount”), subject to the liquidation order as below: first to the holders of Series D preferred shares, second to the holders of Series C (including C-1, C-2 and C-3) preferred shares, third to the holders of Series B preferred shares and fourth to the holders of Series A preferred shares. If, upon any such liquidation, distribution or winding up, the assets of DHgate Holding Limited shall be insufficient to make payment to such holders in full of the Liquidation Preference Amount for that series, then such assets shall be distributed among the holders of that series, ratably in proportion to the full amounts to which they would otherwise be respectively entitled thereon, subject to the above liquidation preference order.

After distribution or payment in full of the amount distributable or payable on the above preferred shares, the remaining assets of DHgate Holding Limited shall be distributed ratably among the holders of outstanding ordinary shares and preferred shares.

As the Company has the obligations to redeem the preferred shares issued by DHgate Holding Limited, the entire instruments are designated as financial liabilities at fair value through profit or loss with changes in the fair value recorded in the consolidated statement of profit or loss except for the fair value change from own credit risk charged to other comprehensive income.

The fair value losses on preferred shares of USD8,562,000, USD18,429,000, USD26,021,000 are recognised in the consolidated statements of profit or loss for the years ended 31 December 2018, 2019 and 2020, respectively. The fair value change from own credit risk is minimal.

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APPENDIX I ACCOUNTANTS’ REPORT

The movements of preferred shares during the Relevant Periods are as follows:

USD’000 At 1 January 2018...... 78,049 Fair value loss on preferred shares ...... 8,562 At 31 December 2018 ...... 86,611 Fair value loss on preferred shares ...... 18,429 At 31 December 2019 ...... 105,040 Fair value loss on preferred shares ...... 26,021 At 31 December 2020 ...... 131,061

The fair values of preferred shares as at the end of each of the Relevant Periods were valued by an independent third party valuer. The equity value allocation model is used to determine the fair values of the preferred shares at the end of each of the Relevant Periods.

Total equity values of the Group at 31 December 2018, 2019 and 2020 are estimated by the valuer using the discounted cash flow method. Key inputs used in valuing total equity value by the discounted cash flow method mainly include discount rate, long term growth rate and expected volatility. In addition, a discount rate due to lack of marketability (“DLOM”) is used in arriving at the total equity value after DLOM.

The key inputs of the above valuing methods are detailed as follows:

As at 31 December

2018 2019 2020 Discount rate...... 21% 21% 20% Long term growth rate ...... 3% 3% 3% DLOM ...... 3%-16% 5%-15% 4%-9% Expected volatility ...... 36% 45% 47%

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APPENDIX I ACCOUNTANTS’ REPORT

Discount rate was estimated by weighted average cost of capital as of each valuation date. DLOM was quantified by the Finnerty Put Options Model. Under this option-pricing method, which assumed that the price of a put option remains the average price of the stock before the privately held shares can be sold, the cost of the put option was considered as a basis to determine the DLOM. This option pricing method is one of the methods commonly used in estimating DLOM as it takes into consideration factors such as timing of a liquidity event, for instance an initial public offering, and estimated volatility of our shares. Volatility was estimated based on annualised deviation of daily stock price returns of comparable companies for periods from the respective value dates and with similar span as the time to expiration. Probability weight under each of the conversion rights, redemption features and liquidation preferences was based on the Group’s best estimates. In addition to the assumptions adopted above, the Company’s projections of future performance are also factored into the determination of the fair value of preferred shares on each valuation date.

Below is a summary of significant unobservable inputs to the valuation of preferred shares together with a quantitative sensitivity analysis:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 1% increase in discount rate ...... (6,007) (6,018) (7,314) 1% decrease in discount rate ...... 4,979 6,497 8,299 1% increase in long term growth rate ..... 3,602 6,533 9,276 1% decrease in long term growth rate ..... (4,638) (6,884) (8,288) 5% increase in DLOM ...... (5,788) (5,876) (7,042) 5% decrease in DLOM ...... 3,740 5,854 6,951 5% increase in expected volatility ...... 160 103 27 5% decrease in expected volatility ...... (171) (96) (25)

33. SHARE CAPITAL

The Company was incorporated in the Cayman Islands under the laws of Cayman Islands as an exempted company with limited liability on 13 April 2018 with authorised share capital of amount divided into 50,000 shares with a par value of USD1 each. On the same day, one ordinary share was issued to DHgate Holding Limited, the parent of the Company.

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APPENDIX I ACCOUNTANTS’ REPORT

On 22 June 2018, the Company effected a share subdivision, pursuant to which each ordinary share was subdivided into 10,000 ordinary shares, and the par value of the shares was changed from USD1 each per share to USD0.0001 each per share. Immediately after the share subdivision, the authorised share capital of the Company became USD50,000 divided into 500,000,000 ordinary shares of par value of USD0.0001 each.

On 22 June 2018, the Company issued 157,721,942 ordinary shares of par value of USD0.0001 each to DHgate Holding Limited. DHgate Holding Limited held an aggregate of 157,731,942 ordinary shares of the Company thereafter.

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Issued and fully paid: 157,731,942 ordinary shares ...... 16 16 16

A summary of movements in the Company’s share capital is as follows:

Number of shares in issue Share capital

USD’000 At 13 April 2018...... 1—* Share subdivision ...... 9,999 — Issue of ordinary shares ...... 157,721,942 16 At 31 December 2018, 31 December 2019 and 31 December 2020...... 157,731,942 16

* The amount is less than USD1,000.

On 24 May 2021, the Company repurchased and cancelled an aggregate of 4,784,623 shares from DHgate Holding Limited, at a nominal consideration of USD478.4623 and the number of shares issued became 152,947,319.

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APPENDIX I ACCOUNTANTS’ REPORT

34. SHARE-BASED PAYMENTS

(a) Share option schemes

Heguang International Limited, a wholly-owned subsidiary of the Company, operates a share option scheme (the “Share Option Scheme 2010”) for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Eligible participants of the Share Option Scheme 2010 include the Group’s employees and consultants. The Share Option Scheme 2010 became effective on 26 February 2010 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

Heguang International Limited shall not issue more than 14,300,400 ordinary shares under the Share Option Scheme 2010 and shall reserve from its authorised share capital an aggregate number of ordinary shares sufficient to cover the 14,300,400 ordinary shares reserved for issuance under the Share Option Scheme 2010.

In connection with the Reorganisation, the Share Option Scheme 2010 was cancelled by the board of directors of Heguang International Limited on 20 March 2019. On 20 May 2019, with the consent of all grantees, 4,720,432 outstanding share options under the Share Option Scheme 2010 were cancelled.

Pursuant to a new share option scheme of the Company approved and adopted by the board of directors of the Company on 20 March 2019 (“[REDACTED] Share Option Scheme”), a total of 11,355,432 share options were granted to 122 grantees on 20 May 2019, which included the above 4,720,432 replaced share options and 6,635,000 newly granted share options and a total of 780,000 share options were granted to 11 grantees on 31 July 2019, a total of 1,000,000 share options and 1,850,000 share options were granted to 5 and 39 grantees on 30 April 2020 and 31 December 2020, respectively. The Company shall not issue more than 14,118,978 ordinary shares under the [REDACTED] Share Option Scheme. The vesting conditions of the share options include the term of service and the completion of listing.

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APPENDIX I ACCOUNTANTS’ REPORT

The following share options were outstanding under the Share Option Scheme 2010 and [REDACTED] Share Option Scheme during the Relevant Periods:

Year ended 31 December

2018 2019 2020

Weighted Weighted Weighted average average average exercise price Number of exercise price Number of exercise price Number of USD per share options USD per share options USD per share options At 1 January ...... 0.23 5,418,932 0.21 4,748,932 0.28 9,925,432 Granted during the year ...... — — 0.35 7,415,000 0.37 2,850,000 Forfeited during the year...... 0.36 (670,000) 0.36 (2,238,500) 0.36 (2,355,000) At 31 December ...... 0.21 4,748,932 0.28 9,925,432 0.28 10,420,432

The exercise prices and exercise periods of the share options outstanding as at the end of each of the Relevant Periods are as follows:

At 31 December 2018

Number of Exercise price options USD per share Exercise period 1,886,000 0.18647 Listing date to 20 May 2022 870,432 0.01 Listing date to 20 May 2022 620,000 0.36238 Listing date to 20 May 2024 190,000 0.01 Listing date to 20 May 2024 75,000 0.36238 Listing date to 20 May 2024 1,057,500 0.36238 Listing date to 20 May 2024 50,000 0.36238 Listing date to 20 May 2024 4,748,932

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APPENDIX I ACCOUNTANTS’ REPORT

At 31 December 2019

Number of Exercise price options USD per share Exercise period 1,866,000 0.18647 Listing date to 20 May 2022 870,432 0.01 Listing date to 20 May 2022 620,000 0.36238 Listing date to 20 May 2024 190,000 0.01 Listing date to 20 May 2024 75,000 0.36238 Listing date to 20 May 2024 964,000 0.36238 Listing date to 20 May 2024 50,000 0.36238 Listing date to 20 May 2024 2,720,000 0.36585 Listing date/20 May 2020 to 20 May 2029 300,000 0.01 Listing date/20 May 2020 to 20 May 2029 1,380,000 0.36585 Listing date/20 May 2021 to 20 May 2029 10,000 0.36585 Listing date to 20 May 2022 100,000 0.01 Listing date to 20 May 2029 125,000 0.36585 Listing date/31 July 2020 to 31 July 2029 655,000 0.36585 Listing date/31 July 2021 to 31 July 2029 9,925,432

At 31 December 2020

Number of Exercise price options USD per share Exercise period 1,806,000 0.18647 Listing date to 20 May 2029 870,432 0.01 Listing date to 20 May 2029 370,000 0.36238 Listing date to 20 May 2029 190,000 0.01 Listing date to 20 May 2029 75,000 0.36238 Listing date to 20 May 2029 829,000 0.36238 Listing date to 20 May 2029 50,000 0.36238 Listing date to 20 May 2029 2,255,000 0.36585 Listing date to 20 May 2029 300,000 0.01 Listing date to 20 May 2029 275,000 0.36585 Listing date/20 May 2021 to 20 May 2029 10,000 0.36585 Listing date to 20 May 2022 100,000 0.01 Listing date to 20 May 2029 125,000 0.36585 Listing date to 31 July 2029 315,000 0.36585 Listing date/31 July 2021 to 31 July 2029 650,000 0.36585 Listing date/30 April 2022 to 30 April 2030 350,000 0.36585 Listing date/30 April 2021 to 30 April 2030 640,000 0.36585 Listing date/31 December 2021 to 31 December 2030 1,210,000 0.36585 Listing date/31 December 2022 to 31 December 2030 10,420,432

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APPENDIX I ACCOUNTANTS’ REPORT

Under the Share Option Scheme 2010 and [REDACTED] Share Option Scheme, the Group recognised share-based payment expenses of USD17,000, USD1,358,000 and USD1,646,000 for the years ended 31 December 2018, 2019 and 2020, respectively.

Based on the fair value of the underlying ordinary shares, the Group has adopted the binomial model to determine the fair value of the share option as of the grant date. Key assumptions are set as below:

As at 20 May As at 31 July As at 30 April As at 31 2019 2019 2020 December 2020 Risk-free interest rate ...... 2.41% 2.02% 0.64% 0.93% Expected volatility ...... 43.66% 42.99% 43.87% 44.30% Expected forfeiture rate...... 10% 10% 10% 10%

The expected life of the options is based on the best estimation of management of the Company and is not necessarily indicative of the exercise patterns that may occur. The expected forfeiture rate and volatility reflect the assumption that the historical forfeiture rate and volatility of companies in the same industry are indicative of future trends, which may also not necessarily be the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

(b) Awarded shares to a related party

On 21 December 2018, Heguang International Limited (“Heguang International (BVI)”), a company wholly-owned by Ms. Wang Shutong, transferred 8,362,386 ordinary shares of DHgate Holding Limited to Everfine Global Limited, a company wholly-owned by Ms. Liu Yunhua, for a cash consideration of USD836.2386. The transaction was regarded as awarded shares to compensate Ms. Liu Yunhua’s services rendered to the Group, and share-based payment expense of USD7,172,000 was recorded in the consolidated statement of profit or loss during the year ended 31 December 2018.

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APPENDIX I ACCOUNTANTS’ REPORT

35. INVESTMENTS IN SUBSIDIARIES

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Unlisted shares, at cost ...... 16 18 18 Deemed investment arising from share-based compensation ...... — 1,539 3,185 16 1,557 3,203

Particulars of the principal subsidiaries are included in note 1 to the Historical Financial Information.

36. RESERVES

The amounts of the Group’s reserves and the movements therein for the Relevant Periods are presented in the consolidated statements of changes in equity of the Historical Financial Information.

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APPENDIX I ACCOUNTANTS’ REPORT

The Company

Share option Accumulated reserve Capital reserve losses Total

USD’000 USD’000 USD’000 USD’000 At 1 January 2018 ...... ———— Loss for the year...... — — (4,755) (4,755) Total comprehensive loss for the year . — — (4,755) (4,755) Repurchase obligation due to Reorganisation ...... — (64,546) — (64,546) At 31 December 2018 and 1 January 2019...... — (64,546) (4,755) (69,301) Loss for the year...... — — (17,296) (17,296) Total comprehensive loss for the year . — — (17,296) (17,296) Equity-settled share option arrangements ...... 1,539 — — 1,539 Repurchase obligation due to Reorganisation ...... — (18,483) — (18,483) At 31 December 2019 and 1 January 2020...... 1,539 (83,029) (22,051) (103,541) Loss for the year...... — — (26,035) (26,035) Total comprehensive loss for the year . — — (26,035) (26,035) Equity-settled share option arrangements ...... 1,646 — — 1,646 At 31 December 2020 ...... 3,185 (83,029) (48,086) (127,930)

37. DISPOSAL OF SUBSIDIARIES

On 1 June 2019, Century Heguang (Beijing) terminated the Chongqing Rich Palace Contractual Arrangements with Chongqing Rich Palace and its shareholders, Ms. Wang Shutong and Ms. Liu Yunhua. The transaction was completed on 31 July 2019. After that, Chongqing Rich Palace and its subsidiaries had been disposed of from the Group.

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APPENDIX I ACCOUNTANTS’ REPORT

Year ended 31 December 2019

USD’000 Net assets disposed of: Property, plant and equipment (note 14) ...... 273 Right-of-use assets (note 15) ...... 60 Cash and cash equivalents...... 331 Prepayments, other receivables and other assets ...... 769 Amounts due from related parties ...... 212 Tax payable...... (16) Other payables and accruals ...... (430) Lease liabilities (note 15) ...... (69) 1,130 Exchange fluctuation reserve...... (614) Loss on disposal of subsidiaries recorded in other expenses ...... (516) —

An analysis of the net outflow of cash and cash equivalents in respect of the disposal of subsidiaries is as follows:

Year ended 31 December 2019

USD’000 Cash consideration ...... — Cash and bank balances disposed of ...... (331) Net outflow of cash and cash equivalents in respect of the disposal of subsidiaries ...... (331)

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APPENDIX I ACCOUNTANTS’ REPORT

38. COMMITMENTS

The Group had the following capital commitments at the end of each of the Relevant Periods:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Contracted but not provided for: Property, plant and equipment ...... 24 110 82

39. CONTINGENT LIABILITIES

The Group did not have any contingent liabilities not disclosed in the Historical Financial Information at the end of each of the Relevant Periods.

40. PLEDGE OF ASSETS

Details of the Group’s assets pledged are included in notes 21, 22 and 30 to the Historical Financial Information.

41. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

(a) Major non-cash transactions

During the years ended 31 December 2018, 2019 and 2020, the Group had non-cash additions to right-of-use assets and lease liabilities of USD3,271,000, USD13,116,000 and USD475,000, respectively, in respect of lease arrangements for buildings.

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APPENDIX I ACCOUNTANTS’ REPORT

(b) Changes in liabilities arising from financing activities

Interest-bearing bank and other borrowings Penalty payable Lease liabilities

USD’000 USD’000 USD’000 At 1 January 2018...... 18,858 — 2,553 New bank and other borrowings ...... 1,514 — — Exchange alignment ...... (298) 18 (128) Interest expense (note 7) ...... 1,801 — 145 Accrual of penalty...... — 1,053 — Interest paid ...... (3,422) — — Penalty paid ...... — (631) — Additions of lease contracts ...... — — 3,271 Payments of lease liabilities ...... — — (3,027) Repayment of bank and other borrowings .. (5,742) — — At 31 December 2018 and 1 January 2019 . 12,711 440 2,814 New bank and other borrowings ...... 98,701 — — Exchange alignment ...... 1,454 (21) (10) Interest expense (note 7) ...... 8,018 — 582 Accrual of penalty...... — 1,175 — Interest paid ...... (7,427) — — Additions of lease contracts ...... — — 13,116 Cancellation of lease contracts ...... — — (2,706) Disposal of subsidiaries...... — — (69) Payments of lease liabilities ...... — — (3,005) Repayment of bank and other borrowings .. (101,019) — — At 31 December 2019 and 1 January 2020 . 12,438 1,594 10,722 New bank and other borrowings ...... 64,710 — — Exchange alignment ...... 1,591 141 798 Interest expense (note 7) ...... 1,281 — 523 Accrual of penalty...... — 900 — Interest paid ...... (8,163) — — Penalty paid ...... — (2,635) — Additions of lease contracts ...... — — 475 Cancellation of lease contracts ...... —— (7) Payments of lease liabilities ...... — — (3,201) Repayment of bank and other borrowings .. (11,198) — — At 31 December 2020 ...... 60,659 — 9,310

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APPENDIX I ACCOUNTANTS’ REPORT

The total cash outflow for leases included in the statement of cash flows is as follows:

2018 2019 2020

USD’000 USD’000 USD’000 Within operating activities...... 1,479 1,813 710 Within financing activities...... 3,027 3,005 3,201 4,506 4,818 3,911

42. RELATED PARTY TRANSACTIONS

The directors of the Company are of the view that the following parties are related parties that had transactions or balances with the Group during the Relevant Periods.

(a) Name and relationship

Name of related parties Relationship with the Group Ms. Wang Shutong Controlling shareholder Heguang International (BVI)* An entity wholly owned by Ms. Wang Shutong Mr. Shen Jun A close family member of Ms. Wang Shutong Ms. Liu Yunhua A close family member of Ms. Wang Shutong Camel Bell Commercial Factoring A fellow subsidiary (Guangzhou) Company Limited Camel Financial Service Technology A fellow subsidiary (Guangzhou) Company Limited Camel International Trading Limited A fellow subsidiary Tuotuo Digital Technology (Beijing) A fellow subsidiary Co., Ltd. DHgate Holding Limited** The parent company of the Company Xcommerces GateWay, Inc. An entity controlled by Mr. Shen Jun Century Tuobang Technology An entity controlled by Mr. Shen Jun Development (Beijing) Company Limited Everfine Global Limited An entity controlled by Ms. Liu Yunhua

* This entity was incorporated in British Virgin Islands. ** As disclosed in note 46, DHgate Holding Limited ceased to be the parent company of the Company from 24 May 2021.

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APPENDIX I ACCOUNTANTS’ REPORT

(b) Related party transactions

In addition to the transactions and balances disclosed elsewhere in this Historical Financial Information, the Group had the following material transactions with related parties during the Relevant Periods:

(i) Loans to related parties

Year ended 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Ms. Wang Shutong ...... 904—— Camel Bell Commercial Factoring (Guangzhou) Company Limited ...... 2,062 290 — Camel International Trading Limited ...... 78—— Camel Financial Service Technology (Guangzhou) Company Limited ...... 44 1,199 384 Century Tuobang Technology Development (Beijing) Company Limited ...... —42— DHgate Holding Limited ...... 110—— 3,198 1,531 384

(ii) Payments to sellers through related parties

The Group paid to sellers of USD2,015,000, USD619,000 and nil for the years ended 31 December 2018, 2019 and 2020, respectively, through Camel Bell Commercial Factoring (Guangzhou) Company Limited. In addition, the Group paid to sellers of USD42,846,000, USD106,986,000 and USD38,117,000 for the years ended 31 December 2018, 2019 and 2020, respectively, through Camel International Trading Limited.

(iii) Receipts from buyers through a related party

The Group received from buyers amounts of USD68,989,000 and USD15,704,000 for the years ended 31 December 2019 and 2020, respectively, through Camel International Trading Limited and as at 31 December 2019, transaction funds of USD2,110,000 were in transit and had been transferred into the Group’s bank accounts subsequently. The service fees charged by Camel International Trading Limited were USD2,005,000 and USD542,000 for the years ended 31 December 2019 and 2020, respectively.

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APPENDIX I ACCOUNTANTS’ REPORT

(iv) Technical support and consultancy services provided by a related party

Tuotuo Digital Technology (Beijing) Co., Ltd. provided technical support and consultancy services to the Group, and the Group paid service fees in return. For the years ended 31 December 2018, 2019 and 2020, the amounts of the technical support and consultancy service fees paid to Tuotuo Digital Technology (Beijing) Co., Ltd. were nil, nil and approximately USD862,000, respectively.

(v) Providing advertising and promotion services to a related party

The Group provided advertising and promotion services to Tuotuo Digital Technology (Beijing) Co., Ltd. in respect of its financial products on the Group’s platform. In return for these advertising and promotion services, Tuotuo Digital Technology (Beijing) Co., Ltd. paid service fees to the Group. For the years ended 31 December 2018, 2019 and 2020, the Group recognised the advertising and promotion service fees of nil, nil and approximately USD79,000, respectively.

(vi) Business development services provided by a related party

Xcommerces GateWay, Inc provided business development and marketing services in the US to the Group. For the years ended 31 December 2018, 2019 and 2020, the marketing service fees paid by the Group were nil, nil and approximately USD948,000, respectively.

(vii) Subleasing building to a related party

The Group entered into a one-year agreement of subleasing part of buildings to Tuotuo Digital Technology (Beijing) Co., Ltd. as its office in 2020. For the year ended 31 December 2020, the Group recognised rental income of approximately USD72,000.

(viii) Loaning employees to a related party

Some employees of the Group were temporarily loaned to Tuotuo Digital Technology (Beijing) Co., Ltd. in 2020. For the year ended 31 December 2020, the Group received approximately USD122,000 from Tuotuo Digital Technology (Beijing) Co., Ltd. for the use of paying the remuneration of these employees.

(ix) Selling office equipment to a related party

The Group sold office equipment to Tuotuo Digital Technology (Beijing) Co., Ltd. at a consideration of approximately USD18,000 for the year ended 31 December 2020.

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APPENDIX I ACCOUNTANTS’ REPORT

(x) Other transactions with related parties

(1) Ms. Wang Shutong guaranteed the Group’s bank and other loans during the Relevant Periods without consideration. Details are given in note 30.

(2) As disclosed in the section headed “Contractual Arrangements” in note 1 to the Historical Financial Information, the Contractual Arrangements constitute related party transactions between the Group and Ms. Wang Shutong.

(3) As disclosed in note 34(b), Heguang International (BVI) transferred 8,362,386 ordinary shares of DHgate Holding Limited to Everfine Global Limited for a cash consideration of USD836.2386.

(xi) Commitments with related parties

At the end of each of the Relevant Periods, the Group did not have any significant commitments with related parties.

The above related party transactions were conducted in accordance with the terms mutually agreed between the parties.

The Group had the following balances with related parties as at the end of each of the Relevant Periods:

As at 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Amounts due from related parties: Ms. Wang Shutong...... 6,042 5,264 5,628 Camel Bell Commercial Factoring (Guangzhou) Company Limited ...... 905 164 99 Camel Financial Service Technology (Guangzhou) Company Limited ...... 44 1,211 1,700 Camel International Trading Limited .... 78 96 103 Tuotuo Digital Technology (Beijing) Co., Ltd...... ——91 DHgate Holding Limited ...... 110—— 7,179 6,735 7,621

An amount due to a related party: Tuotuo Digital Technology (Beijing) Co., Ltd...... — — 108

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APPENDIX I ACCOUNTANTS’ REPORT

The above amounts are unsecured, non-interest-bearing and have one-year terms or no fixed due date.

(d) Compensation of key management personnel of the Group

Year ended 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Salaries, allowances and benefits in kind .. 527 584 849 Equity-settled share option expenses ...... 11 317 834 Pension scheme contributions ...... 26 29 6 564 930 1,689

Further details of directors’ and the chief executive’s emoluments are included in note 9 to the Historical Financial Information.

43. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant Periods are as follows:

31 December 2018

Financial assets

Financial assets at amortised cost USD’000 Other current financial assets ...... 729 Trade receivables ...... 975 Financial assets included in prepayments, other receivables and other assets.... 4,125 Amounts due from related parties ...... 7,179 Cash and cash equivalents...... 21,752 Pledged deposits ...... 291 Restricted cash ...... 6,503 Funds receivable ...... 44,038 85,592

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APPENDIX I ACCOUNTANTS’ REPORT

Financial liabilities

Financial liabilities at fair Financial value through liabilities at profit or loss amortised cost Total USD’000 USD’000 USD’000 Trade payables ...... — 877 877 Financial liabilities included in other payables and accruals ...... — 16,148 16,148 Advance from buyers ...... — 68,212 68,212 Payable to sellers ...... — 87,430 87,430 Interest-bearing bank and other borrowings. — 12,711 12,711 Preferred shares...... 86,611 — 86,611 86,611 185,378 271,989

31 December 2019

Financial assets

Financial assets at amortised cost USD’000 Financial assets included in prepayments, other receivables and other assets.... 10,314 Trade receivables ...... 1,285 Amounts due from related parties ...... 6,735 Cash and cash equivalents...... 76,266 Pledged deposits ...... 14 Restricted cash ...... 6,364 Funds receivable ...... 42,318 143,296

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APPENDIX I ACCOUNTANTS’ REPORT

Financial liabilities

Financial liabilities at fair Financial value through liabilities at profit or loss amortised cost Total USD’000 USD’000 USD’000 Trade payables ...... — 2,596 2,596 Financial liabilities included in other payables and accruals ...... — 15,519 15,519 Advance from buyers ...... — 80,423 80,423 Payable to sellers ...... — 109,859 109,859 Interest-bearing bank and other borrowings. — 12,438 12,438 Preferred shares...... 105,040 — 105,040 105,040 220,835 325,875

31 December 2020

Financial assets

Financial assets at amortised cost USD’000 Financial assets included in prepayments, other receivables and other assets.... 7,821 Trade receivables ...... 12,938 Amounts due from related parties ...... 7,621 Cash and cash equivalents...... 176,390 Pledged deposits ...... 17,870 Restricted cash ...... 4,447 Funds receivable ...... 52,997 280,084

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APPENDIX I ACCOUNTANTS’ REPORT

Financial liabilities

Financial liabilities at fair Financial value through liabilities at profit or loss amortised cost Total USD’000 USD’000 USD’000 Trade payables ...... — 15,303 15,303 Financial liabilities included in other payables and accruals ...... — 31,416 31,416 Advance from buyers ...... — 96,242 96,242 Payable to sellers ...... — 127,969 127,969 An amount due to a related party ...... — 108 108 Interest-bearing bank and other borrowings. — 60,659 60,659 Preferred shares...... 131,061 — 131,061 131,061 331,697 462,758

44. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and cash equivalents, pledged deposits, funds receivable, other current financial assets, financial assets included in prepayments, other receivables and other assets, amounts due from/to related parties, trade payables, financial liabilities included in other payables and accruals, advance from buyers, payable to sellers, interest-bearing bank and other borrowings and lease liabilities approximate to their carrying amounts largely due to the short term maturities of these instruments.

The Group’s finance department headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. At the end of each of the Relevant Periods, the finance department analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

There were no assets and liabilities measured at fair value except for preferred shares as at the end of each of the Relevant Periods. Details of the valuation techniques used and the key inputs to the valuation are given in note 32 to the Historical Financial Information.

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APPENDIX I ACCOUNTANTS’ REPORT

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:

Liabilities measured at fair value:

Fair value measurement using Quoted prices Significant Significant in active observable unobservable 31 December markets inputs inputs 2018 (Level 1) (Level 2) (Level 3) USD’000 USD’000 USD’000 USD’000 Preferred shares...... 86,611 — — 86,611

Fair value measurement using Quoted prices Significant Significant in active observable unobservable 31 December markets inputs inputs 2019 (Level 1) (Level 2) (Level 3) USD’000 USD’000 USD’000 USD’000 Preferred shares...... 105,040 — — 105,040

Fair value measurement using Quoted prices Significant Significant in active observable unobservable 31 December markets inputs inputs 2020 (Level 1) (Level 2) (Level 3) USD’000 USD’000 USD’000 USD’000 Preferred shares...... 131,061 — — 131,061

During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for financial liabilities.

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APPENDIX I ACCOUNTANTS’ REPORT

Below is a movement analysis of Level 3 financial liabilities measured at fair value during the Relevant Periods.

Year ended 31 December 2018 2019 2020 USD’000 USD’000 USD’000 Preferred shares...... At beginning of year ...... 78,049 86,611 105,040 Fair value losses recognised in profit or loss ...... 8,562 18,429 26,021 At end of year...... 86,611 105,040 131,061

The Company engages an independent third party valuer to evaluate at least once a year the fair values of the financial instruments using significant unobservable inputs (Level 3). The financial instruments of the Group whose fair value measurements use significant unobservable inputs include preferred shares.

Key inputs used in valuing financial instruments whose fair value measurements are categorised as Level 3 mainly include the long term growth rate, discount rate, DLOM and other assumptions. Please refer to note 32 to the Historical Financial Information for further details.

Liabilities for which fair values are disclosed

As at 31 December 2020

Fair value measurement using Quoted prices Significant Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total USD’000 USD’000 USD’000 USD’000 Interest-bearing bank and other borrowings included in non-current liabilities ...... — 37,875 — 37,875

45. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise interest-bearing bank and other borrowings, payable to sellers, advance from buyers and cash and cash equivalents. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as deposits and other receivables, other current financial assets and trade payables, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks which are summarised below.

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APPENDIX I ACCOUNTANTS’ REPORT

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s bank and other borrowings with floating interest rates. The interest rates of borrowings are disclosed in note 30. The Group have not exposed to material risks due to changes in market interest rates.

Foreign currency risk

The Group has transactional currency exposures. Such exposures arise from sales or purchases by operating units in currencies other than the units’ functional currencies. The Group has not used any derivative to hedge its exposure to foreign currency risk.

The following table indicates the approximate change in the Group’s profit before tax and the Group’s total equity in response to reasonably possible changes in the exchange rates to which the Group has significant exposure at the end of each of the Relevant Periods with all other variables held constant:

Increase/(decrease) Increase/(decrease) in profit before Increase/(decrease) in Euro rate tax in total equity* % USD’000 USD’000 2020 If the USD weakens against the Euro ..... 5 109 109 If the USD strengthens against the Euro ... (5) (109) (109) 2019 If the USD weakens against the Euro ..... 53939 If the USD strengthens against the Euro ... (5) (39) (39) 2018 If the USD weakens against the Euro ..... 54040 If the USD strengthens against the Euro ... (5) (40) (40)

Increase/(decrease) Increase/(decrease) in profit before Increase/(decrease) in GBP rate tax in total equity* % USD’000 USD’000 2020 If the USD weakens against the GBP ..... 59696 If the USD strengthens against the GBP ... (5) (96) (96) 2019 If the USD weakens against the GBP ..... 57979 If the USD strengthens against the GBP ... (5) (79) (79) 2018 If the USD weakens against the GBP ..... 57878 If the USD strengthens against the GBP ... (5) (78) (78)

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APPENDIX I ACCOUNTANTS’ REPORT

Increase/(decrease) Increase/(decrease) in profit before Increase/(decrease) in RMB rate tax in total equity* % USD’000 USD’000 2020 If the USD weakens against the RMB..... 5 614 339 If the USD strengthens against the RMB... (5) (614) (339) 2019 If the USD weakens against the RMB..... 5 (112) (212) If the USD strengthens against the RMB .. (5) 112 212 2018 If the USD weakens against the RMB..... 5 — (362) If the USD strengthens against the RMB... (5) — 362

* Including retained earnings.

Credit risk

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Generally, payment in advance is normally required.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, pledged deposits, amounts due from related parties and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

Maximum exposure and year-end staging

The tables below show the credit quality and the maximum exposure to credit risk based on the Group’s credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 31 December. The amounts presented are gross carrying amounts for financial assets and the exposure to credit risk for the financial guarantee contracts.

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APPENDIX I ACCOUNTANTS’ REPORT

As at 31 December 2018

12-month ECLs Lifetime ECLs

Simplified Stage 1 Stage 2 Stage 3 approach Total

USD’000 USD’000 USD’000 USD’000 USD’000 Trade receivables* ...... — — — 1,035 1,035 Contract assets* ...... — — — 76 76 Financial assets included in prepayments, other receivables and other assets — Normal** ..... 4,125 — — — 4,125 Amounts due from related parties — Normal** ... 7,179 — — — 7,179 Other current financial assets — Not yet past due .. 729 — — — 729 Funds receivable — Normal** ...... 44,038 — — — 44,038 Pledged deposits — Not yet past due ...... 291 — — — 291 Restricted cash — Not yet past due ...... 6,503 — — — 6,503 Cash and cash equivalents — Not yet past due ... 21,752 — — — 21,752 84,617 — — 1,111 85,728

As at 31 December 2019

12-month ECLs Lifetime ECLs

Simplified Stage 1 Stage 2 Stage 3 approach Total

USD’000 USD’000 USD’000 USD’000 USD’000 Trade receivables* ...... — — — 1,477 1,477 Contract assets* ...... — — — 189 189 Financial assets included in prepayments, other receivables and other assets — Normal** ..... 10,314 — — — 10,314 Amounts due from related parties — Normal** ... 6,735 — — — 6,735 Funds receivable — Normal** ...... 42,318 — — — 42,318 Pledged deposits — Not yet past due ...... 14 — — — 14 Restricted cash — Not yet past due ...... 6,364 — — — 6,364 Cash and cash equivalents — Not yet past due ... 76,266 — — — 76,266 142,011 — — 1,666 143,677

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APPENDIX I ACCOUNTANTS’ REPORT

As at 31 December 2020

12-month ECLs Lifetime ECLs

Stage 1 Stage 2 Stage 3 Simplified approach Total

USD’000 USD’000 USD’000 USD’000 USD’000 Trade receivables* ...... — — — 13,659 13,659 Contract assets* ...... — — — 802 802 Financial assets included in prepayments, other receivables and other assets — Normal** ...... 7,821 — — — 7,821 Amounts due from related parties — Normal** ...... 7,621 — — — 7,621 Funds receivable — Normal** ...... 52,997 — — — 52,997 Pledged deposits — Not yet past due ...... 17,870 — — — 17,870 Restricted cash — Not yet past due ...... 4,447 — — — 4,447 Cash and cash equivalents — Not yet past due ...... 176,390 — — — 176,390 267,146 — — 14,461 281,607

* For trade receivables and contract assets to which the Group applies the simplified approach for impairment, information is disclosed in notes 18 and 19 to the Historical Financial Information.

** The credit quality of amounts due from related parties, the financial assets included in prepayments, other receivables and other assets and funds receivable are considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered to be “doubtful”.

Liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets and projected cash flows from operations.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank and other loans.

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APPENDIX I ACCOUNTANTS’ REPORT

The tables below summarise the maturity profile of the Group’s financial liabilities at the end of each of the Relevant Periods based on contractual undiscounted payments.

Less than 1 On demand year 1 to 5 years Total

USD’000 USD’000 USD’000 USD’000 31 December 2018 Trade payables ...... — 877 — 877 Interest-bearing bank and other borrowings...... 11,248 1,497 — 12,745 Financial liabilities included in other payables and accruals ...... 16,148 — — 16,148 Advance from buyers ...... 68,212 — — 68,212 Payable to sellers ...... 87,430 — — 87,430 Lease liabilities ...... — 1,113 2,575 3,688 183,038 3,487 2,575 189,100

31 December 2019 Trade payables ...... — 2,596 — 2,596 Interest-bearing bank and other borrowings...... 12,438 — — 12,438 Financial liabilities included in other payables and accruals ...... 15,519 — — 15,519 Advance from buyers ...... 80,423 — — 80,423 Payable to sellers ...... 109,859 — — 109,859 Lease liabilities ...... — 2,873 9,465 12,338 218,239 5,469 9,465 233,173

31 December 2020 Trade payables ...... — 15,303 — 15,303 Interest-bearing bank and other borrowings...... — 24,977 46,278 71,255 Financial liabilities included in other payables and accruals ...... 31,416 — — 31,416 Advance from buyers ...... 96,242 — — 96,242 Payable to sellers ...... 127,969 — — 127,969 An amount due to a related party .... 108 — — 108 Lease liabilities ...... — 3,287 7,209 10,496 255,735 43,567 53,487 352,789

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APPENDIX I ACCOUNTANTS’ REPORT

The liquidity risk of preferred shares is the original issue price of preferred shares plus the respective predetermined interest (the “redemption amount”). The redemption rights will be terminated immediately before the date of submission of the listing application of the Company, and all other special rights will be terminated upon completion of the [REDACTED] in accordance with the terms of the [REDACTED] Shareholders’ Agreement dated 24 May 2021.

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit profile and healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes during the Relevant Periods.

The Group monitors capital using a gearing ratio, which is total liabilities divided by total assets. The gearing ratios as at the end of each of the Relevant Periods were as follows:

As at 31 December

2018 2019 2020

USD’000 USD’000 USD’000 Total liabilities ...... 302,040 371,135 515,192

Total assets ...... 97,091 162,815 309,107

Gearing ratio...... 311% 228% 167%

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APPENDIX I ACCOUNTANTS’ REPORT

46. EVENTS AFTER THE REPORTING PERIOD

(1) According to the [REDACTED] Shareholders’ Agreement dated 24 May 2021, the redemption right of preferred shares shareholder shall terminate immediately before the date of submission of the listing application of the Company.

(2) To eliminate the duplicate holding structure of the Company, on 24 May 2021, an aggregate of 80,725,119 ordinary shares were redesignated into preferred shares. DHgate Holding Limited repurchased an aggregate of 152,947,319 shares from its original shareholders, in consideration of which an aggregate of 152,947,319 shares (including preferred shares) of the Company were transferred from DHgate Holding Limited to the original shareholders. The Company repurchased an aggregate of 4,784,623 shares from DHgate Holding Limited, at a nominal consideration of USD478.4623. Upon the above-mentioned steps, DHgate Holding Limited ceased to be a shareholder of the Company.

(3) On 24 May 2021, the Company adopted a restricted share unit scheme (“RSU Scheme”) to grant awards of restricted share units as incentives to directors, senior management and other selected personnel to the Company and its subsidiaries. The maximum number of shares in respect of which awards may be granted shall not exceed 4,784,623 shares.

47. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Company, the Group or any of its subsidiaries in respect of any period subsequent to 31 December 2020.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following information does not form part of the Accountants’ Report on the Historical Financial Information from Ernst & Young, Certified Public Accountants, Hong Kong, the Company’s reporting accountants, as set forth in Appendix I to this document, and is included herein for information purpose only.

A. UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

The following unaudited pro forma adjusted consolidated net tangible liabilities has been prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) for illustration purpose only, and is set out below to illustrate the effect of the [REDACTED] on our consolidated net tangible liabilities as of 31 December 2020 as if it had taken place on that date.

The unaudited pro forma adjusted consolidated net tangible liabilities attributed to the owners of the Company has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the [REDACTED] been completed as of 31 December 2020 or any future date. It is prepared based on the consolidated net tangible liabilities as at 31 December 2020 as set out in the Accountants’ Report, the text of which is set forth in Appendix I to this document, and adjusted as described below. The unaudited pro forma adjusted consolidated net tangible liabilities does not form part of the Accountants’ Report on the Historical Financial Information as set out in Appendix I to this document.

Unaudited pro forma adjusted Consolidated consolidated net net tangible tangible liabilities assets/(liabilities) attributable to Automatic attributable to Unaudited pro forma adjusted owners of the Estimated net conversion of owners of the consolidated net tangible assets Company as of [REDACTED] preferred Company as of /(liabilities) attributable to owners 31 December from the shares upon 31 December of the Company per Share as of 2020 [REDACTED] Listing 2020 31 December 2020

USD’000 USD’000 USD’000 USD’000 USD HK$ (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) Based on an [REDACTED] of [REDACTED] per Share ...... (206,113) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Based on an [REDACTED] of [REDACTED] per Share ...... (206,113) [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

Notes:

(1) The consolidated net tangible liabilities attributable to owners of the Company as of 31 December 2020 is extracted from the Historical Financial Information set out in Appendix I, which is based on the audited consolidated equity attributable to owners of the Company as of 31 December 2020 of approximately minus USD206,085,000 after deducting intangible assets attribute to owners of the Company of USD28,000.

(2) The estimated net [REDACTED] from the [REDACTED] (assuming that the [REDACTED] is not exercised and without taking into account Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme) are based on the [REDACTED] of [REDACTED] and [REDACTED] per Share, being the lower end price and higher end price of the stated [REDACTED] range, respectively, after deduction of the [REDACTED] fees and other related expenses payable by the Company.

(3) Upon the [REDACTED], the preferred shares will have been automatically converted into ordinary shares under which the carrying amount of the preferred shares recorded as a liability of the Company will be transferred to the Company’s equity. Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro forma adjusted net tangible assets attributable to owners of the Company as set out in the above table will be increased by [REDACTED] being the carrying amounts of the liabilities arising from such preferred shares.

(4) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the Company and the amounts per Share are arrived at after the adjustments referred to in the preceding paragraphs and on the basis that [REDACTED] Shares were in issue assuming that the Share Subdivision and the [REDACTED] had been completed on 31 December 2020 and the respective [REDACTED] of [REDACTED] and [REDACTED] per Share.

(6) No adjustment has been made to reflect any trading result or other transactions of our Group entered into subsequent to 31 December 2020.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the purpose of incorporation in this document, received from the reporting accountants, Ernst & Young, Certified Public Accountants, Hong Kong, in respect of the unaudited pro forma financial information.

[REDACTED]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

[REDACTED]

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

[REDACTED]

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

This Appendix contains a summary of the Memorandum and Articles of Association of our Company. As the information set out below is in summary form, it does not contain all of the information that may be important to potential investors. As stated in “Documents Delivered to the Registrar of Companies and Available for Inspection” in Appendix V, a copy of the Memorandum and Articles of Association is available for inspection.

SUMMARY OF THE CONSTITUTION OF THE COMPANY

1 MEMORANDUM OF ASSOCIATION

The Memorandum of Association of the Company was conditionally adopted on [•] and states, inter alia, that the liability of the members of the Company is limited, that the objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands.

The Memorandum of Association is available for inspection at the address specified in Appendix V in the section headed “2. Documents available for inspection”.

2 ARTICLES OF ASSOCIATION

The Articles of Association of the Company were conditionally adopted on [•] and include provisions to the following effect:

2.1 Classes of Shares

The share capital of the Company consists of ordinary shares. The capital of the Company at the date of adoption of the Articles is [REDACTED] divided into [REDACTED] shares of [REDACTED] each.

2.2 Directors

(a) Power to allot and issue Shares

Subject to the provisions of the Companies Act and the Memorandum and Articles of Association, the unissued shares in the Company (whether forming part of its original or any increased capital) shall be at the disposal of the Directors, who may offer, allot, grant options over or otherwise dispose of them to such persons, at such times and for such consideration, and upon such terms, as the Directors shall determine.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

Subject to the provisions of the Articles of Association and to any direction that may be given by the Company in general meeting and without prejudice to any special rights conferred on the holders of any existing shares or attaching to any class of shares, any share may be issued with or have attached thereto such preferred, deferred, qualified or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise, and to such persons at such times and for such consideration as the Directors may determine. Subject to the Companies Act and to any special rights conferred on any shareholders or attaching to any class of shares, any share may, with the sanction of a special resolution, be issued on terms that it is, or at the option of the Company or the holder thereof, liable to be redeemed.

(b) Power to dispose of the assets of the Company or any subsidiary

The management of the business of the Company shall be vested in the Directors who, in addition to the powers and authorities by the Articles of Association expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done or approved by the Company and are not by the Articles of Association or the Companies Act expressly directed or required to be exercised or done by the Company in general meeting, but subject nevertheless to the provisions of the Companies Act and of the Articles of Association and to any regulation from time to time made by the Company in general meeting not being inconsistent with such provisions or the Articles of Association, provided that no regulation so made shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made.

Payment to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must first be approved by the Company in general meeting.

(d) Loans to Directors

There are provisions in the Articles of Association prohibiting the making of loans to Directors or their respective close associates which are equivalent to the restrictions imposed by the Companies Ordinance.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

(e) Financial assistance to purchase Shares

Subject to all applicable laws, the Company may give financial assistance to Directors and employees of the Company, its subsidiaries or any holding company or any subsidiary of such holding company in order that they may buy shares in the Company or any such subsidiary or holding company. Further, subject to all applicable laws, the Company may give financial assistance to a trustee for the acquisition of shares in the Company or shares in any such subsidiary or holding company to be held for the benefit of employees of the Company, its subsidiaries, any holding company of the Company or any subsidiary of any such holding company (including salaried Directors).

(f) Disclosure of interest in contracts with the Company or any of its subsidiaries

No Director or proposed Director shall be disqualified by his office from contracting with the Company either as vendor, purchaser or otherwise nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company with any person, company or partnership of or in which any Director shall be a member or otherwise interested be capable on that account of being avoided, nor shall any Director so contracting or being any member or so interested be liable to account to the Company for any profit so realised by any such contract or arrangement by reason only of such Director holding that office or the fiduciary relationship thereby established, provided that such Director shall, if his interest in such contract or arrangement is material, declare the nature of his interest at the earliest meeting of the board of Directors at which it is practicable for him to do so, either specifically or by way of a general notice stating that, by reason of the facts specified in the notice, he is to be regarded as interested in any contracts of a specified description which may be made by the Company.

A Director shall not be entitled to vote on (nor shall be counted in the quorum in relation to) any resolution of the Directors in respect of any contract or arrangement or any other proposal in which the Director or any of his close associates (or, if required by the Listing Rules, his other associates) has any material interest, and if he shall do so his vote shall not be counted (nor is he to be counted in the quorum for the resolution), but this prohibition shall not apply to any of the following matters, namely:

(i) the giving to such Director or any of his close associates of any security or indemnity in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of the Company or any of its subsidiaries;

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

(ii) the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or any of his close associates has himself/themselves assumed responsibility in whole or in part and whether alone or jointly under a guarantee or indemnity or by the giving of security;

(iii) any proposal concerning an offer of shares, debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase where the Director or any of his close associates is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

(iv) any proposal or arrangement concerning the benefit of employees of the Company or any of its subsidiaries including:

(A) the adoption, modification or operation of any employees’ share scheme or any share incentive scheme or share option scheme under which the Director or any of his close associates may benefit; or

(B) the adoption, modification or operation of a pension or provident fund or retirement, death or disability benefits scheme which relates both to Directors, their close associates and employees of the Company or any of its subsidiaries and does not provide in respect of any Director or any of his close associates, as such any privilege or advantage not generally accorded to the class of persons to which such scheme or fund relates; and

(v) any contract or arrangement in which the Director or any of his close associates is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company.

(g) Remuneration

The Directors shall be entitled to receive by way of remuneration for their services such sum as shall from time to time be determined by the Directors, or the Company in general meeting, as the case may be, such sum (unless otherwise directed by the resolution by which it is determined) to be divided amongst the Directors in such proportions and in such manner as they may agree, or failing agreement, equally, except that in such event any Director holding office for less than the whole of the relevant period in respect of which the remuneration is paid shall only rank in such

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT division in proportion to the time during such period for which he has held office. Such remuneration shall be in addition to any other remuneration to which a Director who holds any salaried employment or office in the Company may be entitled by reason of such employment or office.

The Directors shall also be entitled to be paid all expenses, including travel expenses, reasonably incurred by them in or in connection with the performance of their duties as Directors including their expenses of traveling to and from board meetings, committee meetings or general meetings or otherwise incurred whilst engaged on the business of the Company or in the discharge of their duties as Directors.

The Directors may grant special remuneration to any Director who shall perform any special or extra services at the request of the Company. Such special remuneration may be made payable to such Director in addition to or in substitution for his ordinary remuneration as a Director, and may be made payable by way of salary, commission or participation in profits or otherwise as may be agreed.

The remuneration of an executive Director or a Director appointed to any other office in the management of the Company shall from time to time be fixed by the Directors and may be by way of salary, commission or participation in profits or otherwise or by all or any of those modes and with such other benefits (including share option and/or pension and/or gratuity and/or other benefits on retirement) and allowances as the Directors may from time to time decide. Such remuneration shall be in addition to such remuneration as the recipient may be entitled to receive as a Director.

(h) Retirement, appointment and removal

The Directors shall have power at any time and from time to time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors. Any Director so appointed shall hold office only until the next general meeting of the Company and shall then be eligible for re-election at that meeting, but shall not be taken into account in determining the number of Directors and which Directors are to retire by rotation at such meeting.

The Company may by ordinary resolution remove any Director (including a Managing Director or other executive Director) before the expiration of his period of office notwithstanding anything in the Articles of Association or in any agreement between the Company and such Director (but without prejudice to any claim for compensation or damages payable to him in respect of the termination of his appointment as Director or of any other appointment of office as a result of the termination of this appointment as Director). The Company may also by ordinary

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT resolution appoint another person in his place. Any Director so appointed shall hold office during such time only as the Director in whose place he is appointed would have held the same if he had not been removed.

The Company may also by ordinary resolution elect any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors. No person shall, unless recommended by the Directors, be eligible for election to the office of Director at any general meeting unless, during the period, which shall be at least seven days, commencing no earlier than the day after the despatch of the notice of the meeting appointed for such election and ending no later than seven days prior to the date of such meeting, there has been given to the Secretary of the Company notice in writing by a member of the Company (not being the person to be proposed) entitled to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected.

There is no shareholding qualification for Directors nor is there any specified age limit for Directors.

The office of a Director shall be vacated:

(i) if he resigns his office by notice in writing to the Company at its registered office or its principal office in Hong Kong;

(ii) if an order is made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs and the Directors resolve that his office be vacated;

(iii) if, without leave, he is absent from meetings of the Directors (unless an alternate Director appointed by him attends) for 12 consecutive months, and the Directors resolve that his office be vacated;

(iv) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors generally;

(v) if he ceases to be or is prohibited from being a Director by law or by virtue of any provision in the Articles of Association;

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

(vi) if he is removed from office by notice in writing served upon him signed by not less than three-fourths in number (or, if that is not a round number, the nearest lower round number) of the Directors (including himself) for the time being then in office; or

(vii) if he shall be removed from office by an ordinary resolution of the members of the Company under the Articles of Association.

At every annual general meeting of the Company one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest to, but not less than, one-third, shall retire from office by rotation, provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every three years. A retiring Director shall retain office until the close of the meeting at which he retires and shall be eligible for re-election thereat. The Company at any annual general meeting at which any Directors retire may fill the vacated office by electing a like number of persons to be Directors.

(i) Borrowing powers

The Directors may from time to time at their discretion exercise all the powers of the Company to raise or borrow or to secure the payment of any sum or sums of money for the purposes of the Company and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof.

(j) Proceedings of the Board

The Directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings and proceedings as they think fit in any part of the world. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairperson of the meeting shall have a second or casting vote.

2.3 Alteration to constitutional documents

No alteration or amendment to the Memorandum or Articles of Association may be made except by special resolution.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2.4 Variation of rights of existing shares or classes of shares

If at any time the share capital of the Company is divided into different classes of shares, all or any of the rights attached to any class of shares for the time being issued (unless otherwise provided for in the terms of issue of the shares of that class) may, subject to the provisions of the Companies Act, be varied or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. To every such separate meeting all the provisions of the Articles of Association relating to general meetings shall mutatis mutandis apply, but so that the quorum for the purposes of any such separate meeting and of any adjournment thereof shall be a person or persons together holding (or representing by proxy or duly authorized representative) at the date of the relevant meeting not less than one-third in nominal value of the issued shares of that class.

The special rights conferred upon the holders of shares of any class shall not, unless otherwise expressly provided in the rights attaching to or the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

2.5 Alteration of capital

The Company may, from time to time, whether or not all the shares for the time being authorized shall have been issued and whether or not all the shares for the time being issued shall have been fully paid up, by ordinary resolution, increase its share capital by the creation of new shares, such new capital to be of such amount and to be divided into shares of such respective amounts as the resolution shall prescribe.

The Company may from time to time by ordinary resolution:

(a) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares. On any consolidation of fully paid shares and division into shares of larger amount, the Directors may settle any difficulty which may arise as they think expedient and in particular (but without prejudice to the generality of the foregoing) may as between the holders of shares to be consolidated determine which particular shares are to be consolidated into each consolidated share, and if it shall happen that any person shall become entitled to fractions of a consolidated share or shares, such fractions may be sold by some person appointed by the Directors for that purpose and the person so appointed may transfer the shares so sold to the purchaser thereof and the validity of such transfer shall not be questioned, and so that the net proceeds of such sale (after deduction of the expenses of such sale) may either be distributed among the

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

persons who would otherwise be entitled to a fraction or fractions of a consolidated share or shares rateably in accordance with their rights and interests or may be paid to the Company for the Company’s benefit;

(b) cancel any shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so canceled subject to the provisions of the Companies Act; and

(c) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association, subject nevertheless to the provisions of the Companies Act, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as the Company has power to attach to unissued or new shares.

The Company may by special resolution reduce its share capital or any capital redemption reserve in any manner authorized and subject to any conditions prescribed by the Companies Act.

2.6 Special resolution — majority required

A “special resolution” is defined in the Articles of Association to have the meaning ascribed thereto in the Companies Act, for which purpose, the requisite majority shall be not less than three-fourths of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorized representatives or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given and includes a special resolution approved in writing by all of the members of the Company entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of such members, and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments (if more than one) is executed.

In contrast, an “ordinary resolution” is defined in the Articles of Association to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorized representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the Articles of Association and includes an ordinary resolution approved in writing by all the members of the Company aforesaid.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2.7 Voting rights

Subject to any special rights, privileges or restrictions as to voting for the time being attached to any class or classes of shares, at any general meeting on a poll every member present in person (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy shall have one vote for each share registered in his name in the register of members of the Company.

Where any member is, under the Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.

In the case of joint registered holders of any share, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register in respect of the relevant joint holding.

A member of the Company in respect of whom an order has been made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs may vote by any person authorized in such circumstances to do so and such person may vote by proxy.

Save as expressly provided in the Articles of Association or as otherwise determined by the Directors, no person other than a member of the Company duly registered and who shall have paid all sums for the time being due from him payable to the Company in respect of his shares shall be entitled to be present or to vote (save as proxy for another member of the Company), or to be reckoned in a quorum, either personally or by proxy at any general meeting.

At any general meeting a resolution put to the vote of the meeting shall be decided by way of a poll save that the chairperson of the meeting may allow a resolution which relates purely to a procedural or administrative matter as prescribed under the Listing Rules to be voted on by a show of hands.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorize such person or persons as it thinks fit to act as its proxy(ies) or representative(s) at any general meeting of the Company or at any general meeting of any class of members of the Company provided that, if more than one person is so authorized, the authorization shall specify the number and class of shares in respect of which each such person is so authorized. A person authorized pursuant to this provision shall be entitled to exercise the same rights and powers on behalf of the recognised clearing house (or its nominee(s)) which he represents as that recognised clearing house (or its nominee(s)) could exercise as if it were an individual member of the Company holding the number and class of shares specified in such authorization, including, where a show of hands is allowed, the right to vote individually on a show of hands.

2.8 Annual general meetings and extraordinary general meetings

The Company shall hold a general meeting as its annual general meeting each year, within a period of not more than 15 months after the holding of the last preceding annual general meeting (or such longer period as the Stock Exchange may authorize). The annual general meeting shall be specified as such in the notices calling it.

The board of Directors may, whenever it thinks fit, convene an extraordinary general meeting. General meetings shall also be convened on the written requisition of any one or more members holding together, as at the date of deposit of the requisition, shares representing not less than one-tenth of the paid up capital of the Company which carry the right of voting at general meetings of the Company. The written requisition shall be deposited at the principal office of the Company in Hong Kong or, in the event the Company ceases to have such a principal office, the registered office of the Company, specifying the objects of the meeting and the resolutions to be added to the meeting agenda, and signed by the requisitionist(s). If the Directors do not within 21 days from the date of deposit of the requisition proceed duly to convene the meeting to be held within a further 21 days, the requisitionist(s) themselves or any of them representing more than one-half of the total voting rights of all of them, may convene the general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the Directors provided that any meeting so convened shall not be held after the expiration of three months from the date of deposit of the requisition, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Directors shall be reimbursed to them by the Company.

2.9 Accounts and audit

The Directors shall cause to be kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to show and explain its transactions and otherwise in accordance with the Companies Act.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

The Directors shall from time to time determine whether, and to what extent, and at what times and places and under what conditions or regulations, the accounts and books of the Company, or any of them, shall be open to inspection by members of the Company (other than officers of the Company) and no such member shall have any right of inspecting any accounts or books or documents of the Company except as conferred by the Companies Act or any other relevant law or regulation or as authorized by the Directors or by the Company in general meeting.

The Directors shall, commencing with the first annual general meeting, cause to be prepared and to be laid before the members of the Company at every annual general meeting a profit and loss account for the period, in the case of the first account, since the incorporation of the Company and, in any other case, since the preceding account, together with a balance sheet as at the date to which the profit and loss account is made up and a Director’s report with respect to the profit or loss of the Company for the period covered by the profit and loss account and the state of the Company’s affairs as at the end of such period, an auditor’s report on such accounts and such other reports and accounts as may be required by law. Copies of those documents to be laid before the members of the Company at an annual general meeting shall not less than 21 days before the date of the meeting, be sent in the manner in which notices may be served by the Company as provided in the Articles of Association to every member of the Company and every holder of debentures of the Company provided that the Company shall not be required to send copies of those documents to any person of whose address the Company is not aware or to more than one of the joint holders of any shares or debentures.

2.10 Auditors

The Company shall at every annual general meeting appoint an auditor or auditors of the Company who shall hold office until the next annual general meeting. The removal of an auditor before the expiration of his period of office shall require the approval of an ordinary resolution of the members in general meeting. The remuneration of the auditors shall be fixed by the Company at the annual general meeting at which they are appointed provided that in respect of any particular year the Company in general meeting may delegate the fixing of such remuneration to the Directors.

2.11 Notice of meetings and business to be conducted thereat

An annual general meeting shall be called by not less than 21 days’ notice in writing and any extraordinary general meeting shall be called by not less than 14 days’ notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the time, place and agenda of the meeting, particulars of the resolutions and the general nature of the business to be considered at the meeting. The notice

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT convening an annual general meeting shall specify the meeting as such, and the notice convening a meeting to pass a special resolution shall specify the intention to propose the resolution as a special resolution. Notice of every general meeting shall be given to the auditors and all members of the Company (other than those who, under the provisions of the Articles of Association or the terms of issue of the shares they hold, are not entitled to receive such notice from the Company).

Notwithstanding that a meeting of the Company is called by shorter notice than that mentioned above, it shall be deemed to have been duly called if it is so agreed:

(a) in the case of a meeting called as an annual general meeting, by all members of the Company entitled to attend and vote thereat or their proxies; and

(b) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving that right.

If, after the notice of a general meeting has been sent but before the meeting is held, or after the adjournment of a general meeting but before the adjourned meeting is held (whether or not notice of the adjourned meeting is required), the Directors, in their absolute discretion, consider that it is impractical or unreasonable for any reason to hold a general meeting on the date or at the time and place specified in the notice calling such meeting, it may change or postpone the meeting to another date, time and place.

The Directors also have the power to provide in every notice calling a general meeting that in the event of a gale warning or a black rainstorm warning is in force at any time on the day of the general meeting (unless such warning is canceled at least a minimum period of time prior to the general meeting as the Directors may specify in the relevant notice), the meeting shall be postponed without further notice to be reconvened on a later date.

Where a general meeting is postponed:

(a) the Company shall endeavor to cause a notice of such postponement, which shall set out the reason for the postponement in accordance with the Listing Rules, to be placed on the Company’s website and published on the Stock Exchange’s website as soon as practicable, but failure to place or publish such notice shall not affect the automatic postponement of a general meeting due to a gale warning or black rainstorm warning being in force on the day of the general meeting;

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

(b) the Directors shall fix the date, time and place for the reconvened meeting and at least seven clear days’ notice shall be given for the reconvened meeting; and such notice shall specify the date, time and place at which the postponed meeting will be reconvened and the date and time by which proxies shall be submitted in order to be valid at such reconvened meeting (provided that any proxy submitted for the original meeting shall continue to be valid for the reconvened meeting unless revoked or replaced by a new proxy); and

(c) only the business set out in the notice of the original meeting shall be transacted at the reconvened meeting, and notice given for the reconvened meeting does not need to specify the business to be transacted at the reconvened meeting, nor shall any accompanying documents be required to be recirculated. Where new business is to be transacted at such reconvened meeting, the Company shall give a fresh notice for such reconvened meeting in accordance with the Articles of Association.

2.12 Transfer of shares

Transfers of shares may be effected by an instrument of transfer in the usual common form or in such other form as the Directors may approve which is consistent with the standard form of transfer as prescribed by the Stock Exchange.

The instrument of transfer shall be executed by or on behalf of the transferor and, unless the Directors otherwise determine, the transferee, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members of the Company in respect thereof. All instruments of transfer shall be retained by the Company.

The Directors may refuse to register any transfer of any share which is not fully paid up or on which the Company has a lien. The Directors may also decline to register any transfer of any shares unless:

(a) the instrument of transfer is lodged with the Company accompanied by the certificate for the shares to which it relates (which shall upon the registration of the transfer be canceled) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer;

(b) the instrument of transfer is in respect of only one class of shares;

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

(d) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four;

(e) the shares concerned are free of any lien in favor of the Company; and

(f) a fee of such amount not exceeding the maximum amount as the Stock Exchange may from time to time determine to be payable (or such lesser sum as the Directors may from time to time require) is paid to the Company in respect thereof.

If the Directors refuse to register a transfer of any share they shall, within two months after the date on which the transfer was lodged with the Company, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, on 10 business days’ notice (or on 6 business days’ notice in the case of a rights issue) being given by advertisement published on the Stock Exchange’s website, or, subject to the Listing Rules, by electronic communication in the manner in which notices may be served by the Company by electronic means as provided in the Articles of Association or by advertisement published in the newspapers, be suspended and the register of members of the Company closed at such times for such periods as the Directors may from time to time determine, provided that the registration of transfers shall not be suspended or the register closed for more than 30 days in any year (or such longer period as the members of the Company may by ordinary resolution determine provided that such period shall not be extended beyond 60 days in any year).

2.13 Power of the Company to purchase its own shares

The Company is empowered by the Companies Act and the Articles of Association to purchase its own shares subject to certain restrictions and the Directors may only exercise this power on behalf of the Company subject to the authority of its members in general meeting as to the manner in which they do so and to any applicable requirements imposed from time to time by the Stock Exchange and the Securities and Futures Commission of Hong Kong. Shares which have been repurchased will be treated as canceled upon the repurchase.

2.14 Power of any subsidiary of the Company to own shares

There are no provisions in the Articles of Association relating to the ownership of shares by a subsidiary.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2.15 Dividends and other methods of distribution

Subject to the Companies Act and the Articles of Association, the Company in general meeting may declare dividends in any currency but no dividends shall exceed the amount recommended by the Directors. No dividend may be declared or paid other than out of profits and reserves of the Company lawfully available for distribution, including share premium.

Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. For these purposes no amount paid up on a share in advance of calls shall be treated as paid up on the share.

The Directors may from time to time pay to the members of the Company such interim dividends as appear to the Directors to be justified by the profits of the Company. The Directors may also pay half-yearly or at other intervals to be selected by them any dividend which may be payable at a fixed rate if they are of the opinion that the profits available for distribution justify the payment.

The Directors may retain any dividends or other monies payable on or in respect of a share upon which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. The Directors may also deduct from any dividend or other monies payable to any member of the Company all sums of money (if any) presently payable by him to the Company on account of calls, installments or otherwise.

No dividend shall carry interest against the Company.

Whenever the Directors or the Company in general meeting have resolved that a dividend be paid or declared on the share capital of the Company, the Directors may further resolve: (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up on the basis that the shares so allotted are to be of the same class as the class already held by the allottee, provided that the members of the Company entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment; or (b) that the members of the Company entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Directors may think fit on the basis that the shares so allotted are to be of the same class as the class already held by the allottee. The Company may upon the recommendation of the Directors by ordinary resolution resolve in respect of any one particular dividend of the Company that notwithstanding

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT the foregoing a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid without offering any right to members of the Company to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to a holder of shares may be paid by cheque or warrant sent through the post addressed to the registered address of the member of the Company entitled, or in the case of joint holders, to the registered address of the person whose name stands first in the register of members of the Company in respect of the joint holding or to such person and to such address as the holder or joint holders may in writing direct. Every cheque or warrant so sent shall be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register of members of the Company in respect of such shares, and shall be sent at his or their risk and the payment of any such cheque or warrant by the bank on which it is drawn shall operate as a good discharge to the Company in respect of the dividend and/or bonus represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that any endorsement thereon has been forged. The Company may cease sending such cheques for dividend entitlements or dividend warrants by post if such cheques or warrants have been left uncashed on two consecutive occasions. However, the Company may exercise its power to cease sending cheques for dividend entitlements or dividend warrants after the first occasion on which such a cheque or warrant is returned undelivered. Any one of two or more joint holders may give effectual receipts for any dividends or other monies payable or property distributable in respect of the shares held by such joint holders.

Any dividend unclaimed for six years from the date of declaration of such dividend may be forfeited by the Directors and shall revert to the Company.

The Directors may, with the sanction of the members of the Company in general meeting, direct that any dividend be satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to subscribe securities of any other company, and where any difficulty arises in regard to such distribution the Directors may settle it as they think expedient, and in particular may disregard fractional entitlements, round the same up or down or provide that the same shall accrue to the benefit of the Company, and may fix the value for distribution of such specific assets and may determine that cash payments shall be made to any members of the Company upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Directors.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2.16 Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person who must be an individual as his proxy to attend and vote instead of him and a proxy so appointed shall have the same right as the member to speak at the meeting. A proxy need not be a member of the Company.

Instruments of proxy shall be in common form or in such other form as the Directors may from time to time approve provided that it shall enable a member to instruct his proxy to vote in favor of or against (or in default of instructions or in the event of conflicting instructions, to exercise his discretion in respect of) each resolution to be proposed at the meeting to which the form of proxy relates. The instrument of proxy shall be deemed to confer authority to vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall, unless the contrary is stated therein, be valid as well for any adjournment of the meeting as for the meeting to which it relates provided that the meeting was originally held within 12 months from such date.

The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney authorized in writing or if the appointor is a corporation either under its seal or under the hand of an officer, attorney or other person authorized to sign the same.

The instrument appointing a proxy and (if required by the Directors) the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, shall be delivered at the registered office of the Company (or at such other place as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case, in any document sent therewith) not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, not less than 48 hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of 12 months from the date named in it as the date of its execution. Delivery of any instrument appointing a proxy shall not preclude a member of the Company from attending and voting in person at the meeting or poll concerned and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2.17 Calls on shares and forfeiture of shares

The Directors may from time to time make calls upon the members of the Company in respect of any monies unpaid on their shares (whether on account of the nominal amount of the shares or by way of premium or otherwise) and not by the conditions of allotment thereof made payable at fixed times and each member of the Company shall (subject to the Company serving upon him at least 14 days’ notice specifying the time and place of payment and to whom such payment shall be made) pay to the person at the time and place so specified the amount called on his shares. A call may be revoked or postponed as the Directors may determine. A person upon whom a call is made shall remain liable on such call notwithstanding the subsequent transfer of the shares in respect of which the call was made.

A call may be made payable either in one sum or by installments and shall be deemed to have been made at the time when the resolution of the Directors authorizing the call was passed. The joint holders of a share shall be jointly and severally liable to pay all calls and installments due in respect of such share or other monies due in respect thereof.

If a sum called in respect of a share shall not be paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate, not exceeding 15% per annum, as the Directors may determine, but the Directors shall be at liberty to waive payment of such interest wholly or in part.

If any call or installment of a call remains unpaid on any share after the day appointed for payment thereof, the Directors may at any time during such time as any part thereof remains unpaid serve a notice on the holder of such shares requiring payment of so much of the call or installment as is unpaid together with any interest which may be accrued and which may still accrue up to the date of actual payment.

The notice shall name a further day (not being less than 14 days from the date of service of the notice) on or before which, and the place where, the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which such call was made or installment is unpaid will be liable to be forfeited.

If the requirements of such notice are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls or installments and interest due in respect thereof has been made, be forfeited by a resolution of the Directors to that

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT effect. Such forfeiture shall include all dividends and bonuses declared in respect of the forfeited shares and not actually paid before the forfeiture. A forfeited share shall be deemed to be the property of the Company and may be re-allotted, sold or otherwise disposed of.

A person whose shares have been forfeited shall cease to be a member of the Company in respect of the forfeited shares but shall, notwithstanding the forfeiture, remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of the shares, together with (if the Directors shall in their discretion so require) interest thereon at such rate not exceeding 15% per annum as the Directors may prescribe from the date of forfeiture until payment, and the Directors may enforce payment thereof without being under any obligation to make any allowance for the value of the shares forfeited, at the date of forfeiture.

2.18 Inspection of register of members

The register of members of the Company shall be kept in such manner as to show at all times the members of the Company for the time being and the shares respectively held by them. The register may, on 10 business days’ notice (or on 6 business days’ notice in the case of a rights issue) being given by advertisement published on the Stock Exchange’s website, or, subject to the Listing Rules, by electronic communication in the manner in which notices may be served by the Company by electronic means as provided in the Articles of Association or by advertisement published in the newspapers, be closed at such times and for such periods as the Directors may from time to time determine either generally or in respect of any class of shares, provided that the register shall not be closed for more than 30 days in any year (or such longer period as the members of the Company may by ordinary resolution determine provided that such period shall not be extended beyond 60 days in any year).

Any register of members kept in Hong Kong shall during normal business hours (subject to such reasonable restrictions as the Directors may impose) be open to inspection by any member of the Company without charge and by any other person on payment of a fee of such amount not exceeding the maximum amount as may from time to time be permitted under the Listing Rules as the Directors may determine for each inspection.

2.19 Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment, choice or election of a chairperson which shall not be treated as part of the business of the meeting.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

Two members of the Company present in person or by proxy shall be a quorum provided always that if the Company has only one member of record the quorum shall be that one member present in person or by proxy.

A corporation being a member of the Company shall be deemed for the purpose of the Articles of Association to be present in person if represented by its duly authorized representative being the person appointed by resolution of the directors or other governing body of such corporation or by power of attorney to act as its representative at the relevant general meeting of the Company or at any relevant general meeting of any class of members of the Company.

The quorum for a separate general meeting of the holders of a separate class of shares of the Company is described in paragraph 2.4 above.

2.20 Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles of Association concerning the rights of minority shareholders in relation to fraud or oppression.

2.21 Procedure on liquidation

If the Company shall be wound up, and the assets available for distribution amongst the members of the Company as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members of the Company in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively. If in a winding up the assets available for distribution amongst the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the members of the Company in proportion to the capital paid up at the commencement of the winding up on the shares held by them respectively. The foregoing is without prejudice to the rights of the holders of shares issued upon special terms and conditions.

If the Company shall be wound up, the liquidator may with the sanction of a special resolution of the Company and any other sanction required by the Companies Act, divide amongst the members of the Company in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members of the Company. The liquidator may, with the like sanction, vest the whole or any part of such assets in

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT trustees upon such trusts for the benefit of the members of the Company as the liquidator, with the like sanction and subject to the Companies Act, shall think fit, but so that no member of the Company shall be compelled to accept any assets, shares or other securities in respect of which there is a liability.

2.22 Untraceable members

The Company shall be entitled to sell any shares of a member of the Company or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or operation of law if: (a) all cheques or warrants, not being less than three in number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (b) the Company has not during that time or before the expiry of the three month period referred to in (d) below received any indication of the whereabouts or existence of the member; (c) during the 12 year period, at least three dividends in respect of the shares in question have become payable and no dividend during that period has been claimed by the member; and (d) upon expiry of the 12 year period, the Company has caused an advertisement to be published in the newspapers or subject to the Listing Rules, by electronic communication in the manner in which notices may be served by the Company by electronic means as provided in the Articles of Association, giving notice of its intention to sell such shares and a period of three months has elapsed since such advertisement and the Stock Exchange has been notified of such intention. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds it shall become indebted to the former member for an amount equal to such net proceeds.

SUMMARY OF CAYMAN ISLANDS COMPANY LAW AND TAXATION

1 Introduction

The Companies Act is derived, to a large extent, from the older Companies Acts of England, although there are significant differences between the Companies Act and the current Companies Act of England. Set out below is a summary of certain provisions of the Companies Act, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of corporate law and taxation which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

2 Incorporation

The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 13 April 2018 under the Companies Act. As such, its operations must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the size of its authorized share capital.

3 Share Capital

The Companies Act permits a company to issue ordinary shares, preference shares, redeemable shares or any combination thereof.

The Companies Act provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premia on those shares shall be transferred to an account called the “share premium account”. At the option of a company, these provisions may not apply to premia on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium. The Companies Act provides that the share premium account may be applied by a company, subject to the provisions, if any, of its memorandum and articles of association, in such manner as the company may from time to time determine including, but without limitation:

(a) paying distributions or dividends to members;

(b) paying up unissued shares of the company to be issued to members as fully paid bonus shares;

(d) writing-off the preliminary expenses of the company;

(e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; and

(f) providing for the premium payable on redemption or purchase of any shares or debentures of the company.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid the company will be able to pay its debts as they fall due in the ordinary course of business.

The Companies Act provides that, subject to confirmation by the Grand Court of the Cayman Islands, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorized by its articles of association, by special resolution reduce its share capital in any way.

Subject to the detailed provisions of the Companies Act, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorized by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder. In addition, such a company may, if authorized to do so by its articles of association, purchase its own shares, including any redeemable shares. The manner of such a purchase must be authorized either by the articles of association or by an ordinary resolution of the company. The articles of association may provide that the manner of purchase may be determined by the directors of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any member of the company holding shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and to act in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

4 Dividends and Distributions

With the exception of section 34 of the Companies Act, there are no statutory provisions relating to the payment of dividends. Based upon English case law which is likely to be persuasive in the Cayman Islands in this area, dividends may be paid only out of profits. In addition, section 34 of the Companies Act permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see paragraph 3 above for details).

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

5 Shareholders’ Suits

The Cayman Islands courts can be expected to follow English case law precedents. The rule in Foss v. Harbottle (and the exceptions thereto which permit a minority shareholder to commence a class action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority where the wrongdoers are themselves in control of the company, and (c) an action which requires a resolution with a qualified (or special) majority which has not been obtained) has been applied and followed by the courts in the Cayman Islands.

6 Protection of Minorities

In the case of a company (not being a bank) having a share capital divided into shares, the Grand Court of the Cayman Islands may, on the application of members holding not less than one-fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Grand Court shall direct.

Any shareholder of a company may petition the Grand Court of the Cayman Islands which may make a winding up order if the court is of the opinion that it is just and equitable that the company should be wound up.

Claims against a company by its shareholders must, as a general rule, be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.

The English common law rule that the majority will not be permitted to commit a fraud on the minority has been applied and followed by the courts of the Cayman Islands.

7 Disposal of Assets

The Companies Act contains no specific restrictions on the powers of directors to dispose of assets of a company. As a matter of general law, in the exercise of those powers, the directors must discharge their duties of care and to act in good faith, for a proper purpose and in the interests of the company.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

8 Accounting and Auditing Requirements

The Companies Act requires that a company shall cause to be kept proper books of account with respect to:

(a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;

(b) all sales and purchases of goods by the company; and

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

9 Register of Members

An exempted company may, subject to the provisions of its articles of association, maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as its directors may from time to time think fit. There is no requirement under the Companies Act for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection.

10 Inspection of Books and Records

Members of a company will have no general right under the Companies Act to inspect or obtain copies of the register of members or corporate records of the company. They will, however, have such rights as may be set out in the company’s articles of association.

11 Special Resolutions

The Companies Act provides that a resolution is a special resolution when it has been passed by a majority of at least two-thirds of such members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given, except that a company may in its articles of association specify that the required majority shall be a number greater than two-thirds, and may additionally so provide that such majority (being not less than two-thirds) may

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT differ as between matters required to be approved by a special resolution. Written resolutions signed by all the members entitled to vote for the time being of the company may take effect as special resolutions if this is authorized by the articles of association of the company.

12 Subsidiary Owning Shares in Parent

The Companies Act does not prohibit a Cayman Islands company acquiring and holding shares in its parent company provided its objects so permit. The directors of any subsidiary making such acquisition must discharge their duties of care and to act in good faith, for a proper purpose and in the interests of the subsidiary.

13 Mergers and Consolidations

The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of each constituent company and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

14 Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing 75% in value of shareholders or creditors, depending on the circumstances, as are present at a meeting called for such purpose and thereafter sanctioned by the

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

Grand Court of the Cayman Islands. Whilst a dissenting shareholder would have the right to express to the Grand Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Grand Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management and if the transaction were approved and consummated the dissenting shareholder would have no rights comparable to the appraisal rights (i.e. the right to receive payment in cash for the judicially determined value of his shares) ordinarily available, for example, to dissenting shareholders of United States corporations.

15 Take-overs

Where an offer is made by a company for the shares of another company and, within four months of the offer, the holders of not less than 90% of the shares which are the subject of the offer accept, the offeror may at any time within two months after the expiration of the said four months, by notice require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Grand Court of the Cayman Islands within one month of the notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Grand Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

16 Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

17 Liquidation

A company may be placed in liquidation compulsorily by an order of the court, or voluntarily (a) by a special resolution of its members if the company is solvent, or (b) by an ordinary resolution of its members if the company is insolvent. The liquidator’s duties are to collect the assets of the company (including the amount (if any) due from the contributories (shareholders)), settle the list of creditors and discharge the company’s liability to them, rateably if insufficient assets exist to discharge the liabilities in full, and to settle the list of contributories and divide the surplus assets (if any) amongst them in accordance with the rights attaching to the shares.

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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY AND CAYMAN ISLANDS COMPANIES ACT

18 Stamp Duty on Transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

19 Taxation

Pursuant to section 6 of the Tax Concessions Act (As Revised) of the Cayman Islands, the Company may obtain an undertaking from the Financial Secretary of the Cayman Islands:

(a) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations; and

(b) in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable:

(i) on or in respect of the shares, debentures or other obligations of the Company; or

(ii) by way of the withholding in whole or in part of any relevant payment as defined in section 6(3) of the Tax Concessions Act (As Revised).

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any double tax treaties that are applicable to any payments made by or to the Company.

20 Exchange Control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

21 General

Maples and Calder (Hong Kong) LLP, the Company’s legal advisers on Cayman Islands law, have sent to the Company a letter of advice summarizing aspects of Cayman Islands company law. This letter, together with a copy of the Companies Act, is available for inspection as referred to in the section headed “2. Documents available for inspection” in Appendix V. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he/she is more familiar is recommended to seek independent legal advice.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR GROUP

1. Incorporation of Our Company

We were incorporated in the Cayman Islands under Cayman Companies Act as an exempted company with limited liability on April 13, 2018. We have established a principal place of business in Hong Kong at 31/F., Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong and have been registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company under Part 16 of the Companies Ordinance on June 8, 2018. Ms. Szeto Kar Yee Cynthia has been appointed as the authorized representative of our Company for the acceptance of service of process and notices in Hong Kong.

As we were incorporated in the Cayman Islands, our corporate structure and Memorandum and Articles of Association are subject to the relevant laws and regulations of the Cayman Islands. A summary of the relevant laws and regulations of the Cayman Islands and of the Memorandum and Articles of Association is set out in “Summary of the Constitution of Our Company and Cayman Islands Companies Act” in Appendix III.

2. Changes in the Share Capital of Our Company

As of the date of incorporation of our Company, our Company had an authorized share capital of US$50,000, divided into 50,000 Shares of US$1 each.

The following changes in the share capital of our Company have taken place since the date of incorporation of our Company up to the date of this document:

• On April 13, 2018, our Company allotted and issued one share at par value of US$1 to Mapcal Limited as the initial subscriber, which was transferred to DHgate Holding on the same day;

• On June 22, 2018, our Company conducted a share subdivision pursuant to which each ordinary Share was subdivided into 10,000 ordinary Shares of par value of US$0.0001 each, following which the authorized share capital of our Company became US$50,000, divided into 500,000,000 ordinary shares of par value of US$0.0001 each;

• On June 22, 2018, our Company issued 157,721,942 ordinary Shares of par value of US$0.0001 each to DHgate Holding;

–IV-1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

• On March 20, 2019, our Company adopted the [REDACTED] Incentive Scheme pursuant to which options were granted to certain Directors, senior management and employees of our Company to subscribe for no more than 28,237,956 ordinary Shares. For details of the [REDACTED] Incentive Scheme, see “D. Share Incentive Schemes — 1. [REDACTED] Incentive Scheme” in this section;

• On May 24, 2021, in consideration of DHgate Holding having repurchased an aggregate of 152,947,319 shares from TDF China, TDF Advisors, CGC Dunhill, Heguang International (BVI), Everfine Global and Idea Edge, upon the re-designation of certain ordinary Shares by our Company into Preferred Shares pursuant to the Preferred Shares Conversion (as defined below), DHgate Holding transferred shares to TDF China, TDF Advisors, CGC Dunhill, Heguang International (BVI), Everfine Global and Idea Edge as particularized below:

Transferor Transferee Number and class of Shares DHgate Holding ...... Everfine 8,362,386 ordinary Shares Global

DHgate Holding ...... Idea Edge 63,859,814 ordinary Shares

DHgate Holding ...... Heguang 24,131,920 Series B Preferred Shares International (BVI)

DHgate Holding ...... TDF China 23,347,800 Series A Preferred Shares, 7,727,040 Series B Preferred Shares, 5,183,760 Series C-1 Preferred Shares, 2,879,870 Series C-2 Preferred Shares and 5,183,761 Series C-3 Preferred Shares

DHgate Holding ...... TDF Advisors 957,700 Series A Preferred Shares, 316,930 Series B Preferred Shares, 212,620 Series C-1 Preferred Shares, 118,120 Series C-2 Preferred Shares and 212,616 Series C-3 Preferred Shares

DHgate Holding ...... CGC Dunhill 10,452,982 Series D Preferred Shares

–IV-2– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

• On May 24, 2021, our Company repurchased 4,784,623 ordinary Shares from DHgate Holding; and

• On [•], our Company resolved to conduct the Share Subdivision pursuant to which each ordinary Share was subdivided into [REDACTED] ordinary Shares of par value of [REDACTED] each, following which the authorized share capital of our Company became [REDACTED], divided into [REDACTED] ordinary Shares of par value of [REDACTED] each.

Immediately following the completion of the Share Subdivision and the [REDACTED] but without taking into account any Shares which may be issued upon the exercise of the [REDACTED] and Shares which may be issued pursuant to the exercise of options under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme, the issued share capital of our Company will be [REDACTED], divided into [REDACTED] Shares of [REDACTED] each, all fully paid or credited as fully paid and [REDACTED] Shares of [REDACTED] each will remain unissued.

Save as disclosed above and in this document, there has been no alteration in the share capital of our Company since our incorporation.

3. Resolutions in Writing of the Shareholders of Our Company Passed on [•]

Pursuant to the written resolutions passed by the Shareholders on [•]:

(a) Immediately after the [REDACTED] Agreements becoming unconditional and in any event before the Listing:

(i) 24,305,500 Series A Preferred Shares, 32,175,890 Series B Preferred Shares, 5,396,380 Series C-1 Preferred Shares, 2,997,990 Series C-2 Preferred Shares, 5,396,377 Series C-3 Preferred Shares and 10,452,982 Series D Preferred Shares of par value of US$0.0001 each in our Company be converted into ordinary Shares with a par value of US$0.0001 in the share capital of our Company on a one to one basis (the “Preferred Shares Conversion”), such that after the Preferred Shares Conversion, the issued share capital of our Company shall be 152,947,319 Shares of US$0.0001 each;

(ii) upon completion of the Preferred Shares Conversion, our Directors be authorized to subdivide each of our issued and unissued Shares of par value of US$0.0001 each into [REDACTED] Shares of par value of [REDACTED] each, such that

–IV-3– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

following the Share Subdivision, the authorized share capital of our Company shall be [REDACTED], divided into [REDACTED] ordinary Shares of par value of [REDACTED] each; and

(b) [conditional on (1) the Listing Committee granting the listing of, and permission to deal in, the Shares in issue and to be issued as mentioned in this document, (2) the [REDACTED] being fixed on the [REDACTED] and (3) the obligations of the [REDACTED] under the [REDACTED] becoming unconditional and not being terminated in accordance with the terms therein or otherwise, in each case on or before such dates as may be specified in the [REDACTED] Agreements:

(i) the [REDACTED] was approved and our Directors were authorized to allot and issue the new Shares pursuant to the [REDACTED];

(ii) the granting of the [REDACTED] was approved;

(iii) the proposed Listing was approved and our Directors were authorized to implement the Listing;

(iv) a general unconditional mandate was granted to our Directors to allot, issue and deal with Shares or securities convertible into Shares or options, warrants or similar rights to subscribe for Shares or such convertible securities and to make or grant offers, agreements or options which would or might require the exercise of such powers, provided that the aggregate nominal value of Shares allotted or agreed to be allotted by our Directors other than pursuant to (a) a rights issue, (b) any scrip dividend scheme or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles of Association, (c) the exercise of options which may be granted under the [REDACTED] Incentive Scheme, (d) the exercise of any subscription or conversion rights attaching to any warrants or securities which are convertible into Shares or in issue prior to the date of passing the relevant resolution, or (e) a specific authority granted by the Shareholders in general meeting, shall not exceed the aggregate of (1) 20% of the total nominal value of the share capital of our Company in issue immediately following the completion of the Share Subdivision and the [REDACTED] (but excluding any Shares which may be issued pursuant to (i) the exercise of the [REDACTED], (ii) the exercise of options which may be granted under the [REDACTED] Incentive Scheme, or (iii) the RSU Scheme), and (2) the total nominal value of the share capital of our Company repurchased by our Company (if any) under the general mandate to repurchase Shares referred to in paragraph (v) below, such mandate to remain in effect during the period from

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

the passing of the resolution until the earliest of the conclusion of our next annual general meeting, the end of the period within which we are required by any applicable law or the Articles of Association to hold our next annual general meeting or the date on which the resolution is varied or revoked by an ordinary resolution of the Shareholders in general meeting (the “Applicable Period”);

(v) a general unconditional mandate was granted to our Directors to exercise all powers of our Company to repurchase on the Stock Exchange or on any other stock exchange on which the securities of our Company may be listed and which is recognized by the SFC and the Stock Exchange for this purpose Shares with a total nominal value of not more than 10% of the total nominal value of the share capital of our Company in issue immediately following completion of the Share Subdivision and the [REDACTED] (but excluding any Shares which may be issued pursuant to (i) the exercise of the [REDACTED], (ii) the exercise of options which may be granted under the [REDACTED] Incentive Scheme, or (iii) the RSU Scheme), such mandate to remain in effect during the Applicable Period;

(vi) the general unconditional mandate mentioned in paragraph (iv) above be extended by the addition to the aggregate nominal amount of the share capital of our Company which may be allotted or agreed conditionally or unconditionally to be allotted by our Directors pursuant to such general mandate of an amount representing the aggregate nominal amount of the share capital of our Company repurchased by our Company pursuant to the mandate to repurchase Shares referred to in paragraph (v) above, provided that such extended amount shall not exceed 10% of the aggregate nominal amount of our Company’s share capital in issue immediately following completion of the Share Subdivision and the [REDACTED]; and

(vii) our Company approved and adopted the Memorandum and Articles of Association subject to paragraph (a) having been effected and conditional upon Listing.

4. Our Reorganization

The companies comprising our Group underwent the Reorganization in preparation for the Listing. Please see “History, Reorganization and Corporate Structure” for further details.

–IV-5– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

5. Changes in the Share Capital of Our Subsidiaries

Our subsidiaries are referred to in the accountants’ report, the text of which is set out in Appendix I. Save for the subsidiaries mentioned in the accountants’ report, we do not have any other subsidiaries.

The following subsidiaries have been incorporated within two years immediately preceding the date of this document:

Place of Name of Subsidiary Incorporation Date of Incorporation Digitrading Technology Investment Limited Hong Kong November 26, 2019 (數字科技投資有限公司) ......

Tangshan Digitrading Information Technology Company PRC December 5, 2019 Limited (唐山數貿信息科技有限公司) ......

Bengbu Digitrading Technology Company Limited PRC March 23, 2020 (蚌埠數貿科技有限公司) ......

Digitrading Rich Palace Technology (Shenzhen) Company PRC April 13, 2020 Limited (數貿富軒科技(深圳)有限公司)(“Digitrading Shenzhen”) ......

Digitrading Technology (Shanghai) Company Limited PRC July 14, 2020 (數貿科技(上海)有限公司) ......

Digitrading Yunyou (Shanghai) Technology Development PRC August 24, 2020 Company Limited (數貿運優(上海)科技發展有限公司) .

Fuyue Technology Development (Shanghai) Company PRC September 11, 2020 Limited (富越科技發展(上海)有限公司) (“Fuyue Technology”) ......

Digitrading SAS...... France September 9, 2020

Dunhuang Digital Trade Technology Development PRC March 17, 2021 (Shenzhen) Company Limited (敦煌數貿科技發展(深圳) 有限公司)......

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

The following alterations in the share capital of our subsidiaries have taken place within the two years immediately preceding the date of this document:

Digitrading Shenzhen

On November 2, 2020, the registered capital of Digitrading Shenzhen was increased from RMB1,000,000 to RMB5,000,000.

Fuyue Technology

On April 7, 2021, Century Rich Palace transferred 5% equity interest in Fuyue Technology to Mr. Bai Peng, an Independent Third Party, at a consideration of RMB212,500.

On April 28, 2021, Century Rich Palace transferred 95% equity interest in Fuyue Technology to Digitrading Yunyou (Shanghai) Technology Development Company Limited (數貿運優(上海)科技發展有限公司), at a consideration of RMB4,057,500.

Save as disclosed above, there have been no alterations in the share capital of our subsidiaries within the two years immediately preceding the date of this document.

6. Repurchases of Our Own Securities

(a) Provisions of the Listing Rules

The Listing Rules permit companies with a primary listing on the Stock Exchange to repurchase their own securities on the Stock Exchange subject to certain restrictions, the more important of which are summarized below:

(i) Shareholders’ Approval

All proposed repurchases of securities (which must be fully paid up in the case of shares) by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of the shareholders in general meeting, either by way of general mandate or by specific approval of a particular transaction.

Pursuant to a resolution passed by our then Shareholders on [•], a general unconditional mandate (the “Repurchase Mandate”) was given to our Directors authorizing any repurchase by our Company of Shares on the Stock Exchange or on any other stock exchange on which the securities may be listed and which is recognized by the SFC and the Stock Exchange for this purpose, of not more than 10% of the aggregate nominal value of our Company’s share capital in

–IV-7– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION issue immediately following the completion of the Share Subdivision and the [REDACTED] (without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED]), such mandate to expire at the conclusion of our next annual general meeting, the date by which our next annual general meeting is required by the Cayman Companies Act or by our Articles of Association or any other applicable laws of the Cayman Islands to be held or when revoked or varied by an ordinary resolution of Shareholders in general meeting, whichever first occurs.

(ii) Trading Restrictions

The total number of shares which a listed company may repurchase on the Stock Exchange is the number of shares representing up to a maximum of 10% of the aggregate number of shares in issue. A company may not issue or announce a proposed issue of new securities for a period of 30 days immediately following a repurchase (other than an issue of securities pursuant to an exercise of warrants, share options or similar instruments requiring the company to issue securities which were outstanding prior to such repurchase) without the prior approval of the Stock Exchange. In addition, a listed company is prohibited from repurchasing its shares on the Stock Exchange if the purchase price is 5% or more than the average closing market price for the five preceding trading days on which its shares were traded on the Stock Exchange. The Listing Rules also prohibit a listed company from repurchasing its securities if the repurchase would result in the number of listed securities which are in the hands of the public falling below the relevant prescribed minimum percentage as required by the Stock Exchange. A company is required to procure that the broker appointed by it to effect a repurchase of securities discloses to the Stock Exchange such information with respect to the repurchase as the Stock Exchange may require.

(iii) Status of Repurchased Shares

All repurchased securities (whether effected on the Stock Exchange or otherwise) will be automatically delisted and the certificates for those securities must be canceled and destroyed.

(iv) Suspension of Repurchase

A listed company may not make any repurchase of securities at any time after inside information has come to its knowledge until the information has been made publicly available. In particular, during the period of one month immediately preceding the earlier of (a) the date of the board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of a listed company’s results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules) and (b) the deadline for publication of an announcement of a listed company’s results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing

–IV-8– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Rules), and ending on the date of the results announcement, the listed company may not repurchase its shares on the Stock Exchange other than in exceptional circumstances. In addition, the Stock Exchange may prohibit a repurchase of securities on the Stock Exchange if a listed company has breached the Listing Rules.

(v) Reporting Requirements

Certain information relating to repurchases of securities on the Stock Exchange or otherwise must be reported to the Stock Exchange not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the following business day. In addition, a listed company’s annual report is required to disclose details regarding repurchases of securities made during the year, including a monthly analysis of the number of securities repurchased, the purchase price per share or the highest and lowest price paid for all such repurchases, where relevant, and the aggregate prices paid.

(vi) Core Connected Persons

A listed company is prohibited from knowingly repurchasing securities on the Stock Exchange from a “core connected person”, that is, a director, chief executive or substantial shareholder of the company or any of its subsidiaries or their associates and a core connected person is prohibited from knowingly selling his securities to the company.

(b) Reasons for Repurchases

Our Directors believe that the ability to repurchase Shares is in the interests of our Company and the Shareholders. Repurchases may, depending on the market conditions, funding arrangement and other circumstances, result in an increase in the net assets and/or earnings per Share. Our Directors sought the grant of a general mandate to repurchase Shares to give our Company the flexibility to do so if and when appropriate. The number of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by our Directors at the relevant time having regard to the circumstances then pertaining. Repurchase of Shares will only be made when our Directors believe that such repurchases will benefit our Company and our Shareholders.

Repurchases must be funded out of funds legally available for the purpose in accordance with the Memorandum and the Articles of Association of our Company and the Listing Rules and the applicable laws of the Cayman Islands.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

A listed company may not repurchase its own securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange. Subject to the foregoing, any repurchases by our Company may be made out of the profits of our Company or out of a fresh issue of Shares made for the purpose of the repurchase or, subject to the Cayman Companies Act, out of capital and, in the case of any premium payable on the purchase, out of the profits of our Company or from sums standing to the credit of the share premium account of our Company or, subject to the Cayman Companies Act, out of capital.

There could be a material adverse impact on the working capital and/or gearing position of our Company (as compared with the position disclosed in this document) in the event that the Repurchase Mandate were to be carried out in full at any time during the share repurchase period. However, our Directors do not propose to exercise the general mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of our Company or the gearing levels which in the opinion of our Directors are from time to time appropriate for our Company.

(d) General

The exercise in full of the Repurchase Mandate, on the basis of [REDACTED] Shares in issue immediately following the completion of the Share Subdivision and the [REDACTED] and assuming the [REDACTED] is not exercised and without taking into account any Shares which may be issued pursuant to the exercise of any options which may be granted pursuant to the [REDACTED] Incentive Scheme and Shares which may be issued under the RSU Scheme, could accordingly result in up to approximately [REDACTED] Shares being repurchased by our Company during the period prior to:

(i) the conclusion of our next annual general meeting;

(ii) the end of the period within which we are required by any applicable law or our Articles of Association to hold our next annual general meeting; or

(iii) the date when the Repurchase Mandate is varied or revoked by an ordinary resolution of our Shareholders in general meeting, whichever is the earliest.

None of our Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their respective close associates currently intends to sell any Shares to our Company.

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

[Our Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules and the applicable laws in the Cayman Islands.]

No core connected person of our Company has notified our Company that he or she has a present intention to sell Shares to our Company, or has undertaken not to do so, if the Repurchase Mandate is exercised.

If, as a result of any repurchase of Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of our Company is increased, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert could obtain or consolidate control of our Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code. Save as aforesaid, our Directors are not aware of any consequences which would arise under the Takeovers Code as a consequence of any repurchases pursuant to the Repurchase Mandate.

Any repurchase of Shares that results in the number of Shares held by the public being reduced to less than 25% (or a higher percentage upon completion of the exercise of the [REDACTED]) of the Shares then in issue could only be implemented if the Stock Exchange agreed to waive the Listing Rules requirements regarding the public shareholding referred to above. It is believed that a waiver of this provision would not normally be given other than in exceptional circumstances.

B. FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of Material Contracts

The following contracts (not being contracts entered into in the ordinary course of business) were entered into by our Company or its subsidiaries within the two years preceding the date of this document and are or may be material:

(i) the [REDACTED] Shareholders’ Agreement;

(ii) the [REDACTED]; and

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

(iii) a deed of of indemnity dated May 16, 2021 executed by Ms. Wang in favor of Century Heguang (Beijing), Century Rich Palace and Digitrading Beijing (collectively, the “Indemnified Companies”), pursuant to which Ms. Wang agreed to indemnify the Indemnified Companies relating to any fines or payments resulting from certain non-compliances in respect of social insurance and house provident funds.

2. Our Material Intellectual Property Rights

As of the Latest Practicable Date, we have registered or have applied for the registration of the following intellectual property rights which are material in relation to our business.

(a) Trademarks

As of the Latest Practicable Date, we have registered the following trademarks which are material to our business:

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 1. 09 Digitrading PRC 7415969 December 28, December 27, Beijing 2010 2030

2. 35 Digitrading PRC 7415983 November 7, November 6, Beijing 2010 2030

3. 36 Digitrading PRC 7415982 October 28, October 27, Beijing 2010 2030

4. 38 Digitrading PRC 7415980 October 28, January 27, Beijing 2010 2031

5. 42 Digitrading PRC 7415996 January 28, January 27, Beijing 2011 2031

6. 36 Digitrading PRC 7415991 October 28, October 27, Beijing 2010 2030

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 7. 35 Digitrading PRC 7416006 November 7, November 6, Beijing 2010 2030

8. 38 Digitrading PRC 8306062 March 14, November 20, Beijing 2012 2030

9. 38 Digitrading PRC 8306063 December 21, December 20, Beijing 2011 2021

10. 35 Digitrading PRC 7473189 November 21, November 20, Beijing 2010 2030

11. 42 Digitrading PRC 6042969 July 14, 2010 July 13, 2030 Beijing

12. 35 Digitrading PRC 14054650A June 7, 2015 June 6, 2025 Beijing

13. 42 Digitrading PRC 14054664 August 28, August 27, Beijing 2015 2025

14. 35 Digitrading PRC 14054689A June 7, 2015 June 6, 2025 Beijing

15. 39 Digitrading PRC 14054716 March 28, March 27, Beijing 2015 2025

16. 35 Digitrading PRC 14054829 March 28, March 27, Beijing 2015 2025

17. 35 Digitrading PRC 16333970 March 28, March 27, Beijing 2016 2026

18. 36 Digitrading PRC 16334439 March 28, March 27, Beijing 2016 2026

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 19. 35 Digitrading PRC 17886507 January 7, January 6, Beijing 2017 2027

20. 35 Digitrading PRC 17886508 January 7, January 6, Beijing 2017 2027

21. 35 Digitrading PRC 17886509 January 7, January 6, Beijing 2017 2027

22. 35 Digitrading PRC 18159017 December 7, December 6, Beijing 2016 2026

23. 35 Digitrading PRC 18159033 February 14, February 13, Beijing 2017 2027

24. 35 Digitrading PRC 20429660 August 14, August 13, Beijing 2017 2027

25. 39 Digitrading PRC 21691246 February 7, February 6, Beijing 2018 2028

26. 39 Digitrading PRC 21691184 December 14, December 13, Beijing 2017 2027

27. 35 Digitrading PRC 22003351 January 7, January 6, Beijing 2018 2028

28. 35 Digitrading PRC 22919828 March 21, March 20, Beijing 2019 2029

29. 42 Digitrading PRC 22920504 March 14, March 13, Beijing 2018 2028

–IV-14– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 30. 9 Digitrading PRC 22919712 February 28, February 27, Beijing 2018 2028

31. 35 Digitrading PRC 22919835 February 28, February 27, Beijing 2018 2028

32. 36 Digitrading PRC 22920024 February 28, February 27, Beijing 2018 2028

33. 38 Digitrading PRC 22920265 February 28, February 27, Beijing 2018 2028

34. 42 Digitrading PRC 22920495 March 7, 2018 March 6, 2028 Beijing

35. 35 Digitrading PRC 23359788 March 21, March 20, Beijing 2018 2028

36. 41 Digitrading PRC 23361185 March 21, March 20, Beijing 2018 2028

37. 9 Digitrading PRC 25074046 September 14, September 13, Beijing 2018 2028

38. 9 Digitrading PRC 25062839 September 14, September 13, Beijing 2018 2028

39. 35 Digitrading PRC 26162603 September 7 September 6, Beijing 2018 2028

40. 35 Digitrading PRC 26162613 September 7 September 6, Beijing 2018 2028

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 41. 9, 35, 38 Digitrading Hong Kong 302827279 December 5, December 4, Beijing 2013 2023

42. 36 Digitrading HK 302932768 March 20, March 19, Beijing 2014 2024

43. 9, 16, 35, 38 Digitrading HK 304942116 May 29, 2019 May 28, 2029 Beijing

44. 9, 16, 35, 38 Digitrading HK 304942107 May 29, 2019 May 28, 2029 Beijing

45. 9 Heguang Brazil 907491537 November 1, November 1, International 2016 2026 (Cayman)

46. 35 Heguang Brazil 907491588 November 1, November 1, International 2016 2026 (Cayman)

47. 38 Heguang Brazil 907491596 November 1, November 1, International 2016 2026 (Cayman)

48. 36 Heguang Brazil 907491634 April 3, 2018 April 3, 2028 International (Cayman)

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APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 49. 39 Heguang Brazil 907491642 August 28, August 28, International 2018 2028 (Cayman)

50. 41 Digitrading Chile 1334791 December 11, December 11, Beijing 2020 2030

51. 35, 38, 42 Heguang European 015608524 November 10, July 4, 2026 International Union 2016 (Cayman)

52. 9, 35, 38 Heguang European 016394215 June 20, 2017 February 23, International Union 2027 (Cayman)

53. 9, 35, 36 Heguang European 16079626 June 21, 2019 November 24, International Union 2026 (Cayman)

54. 35, 41 Heguang European 016547069 July 31, 2017 March 31, International Union 2027 (Cayman)

55. 9, 35, 42 Heguang European 016761702 October 10, May 22, 2027 International Union 2017 (Cayman)

56. 9, 35,36, 42 Digitrading Japan 6323717 December 2, December 2, Beijing 2020 2030

–IV-17– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 57. 9, 35,36, 42 Digitrading Japan 6346012 January 28, January 28, Beijing 2021 2031

58. 9, 35,36, 42 Digitrading Japan 6346013 January 28, January 28, Beijing 2021 2031

59. 9, 35,36, 42 Digitrading Korea 40-1627204 July 22, 2020 July 22, 2030 Beijing

60. 9, 35,36, 42 Digitrading Korea 40-1627198 July 22, 2020 July 22, 2030 Beijing

61. 9, 35,36, 42 Digitrading Korea 40-1627203 July 22, 2020 July 22, 2030 Beijing

62. 41 Digitrading Mexico 2118708 July 13, 2020 July 13, 2030 Beijing

63. 9, 35, 38, 42 Heguang Russia 2014710668 October 13, April 4, 2024 International 2016 (Cayman)

64. 36 Heguang Russia 2014710666 February 10, April 4, 2024 International 2016 (Cayman)

65. 35, 38, 42 Digitrading Turkey 201866480 December 24, July 17, 2028 Beijing 2018

66. 35, 38, 42 Digitrading Turkey 201866484 November 19, July 17, 2028 Beijing 2018

–IV-18– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Registration No. Trademark Class Registered owner registration number Registration date Expiry date 67. 35, 38, 42 Digitrading Turkey 201866473 November 5, July 17, 2028 Beijing 2018

68. 9 Heguang United States 4611010 September 23, September 23, International of America 2014 2024 (Cayman)

69. 35 Heguang United States 4509838 April 8, 2014 April 8, 2024 International of America (Cayman)

70. 38 Heguang United States 4488243 February 25, February 25, International of America 2014 2024 (Cayman)

As of the Latest Practicable Date, we have applied for the registration of the following trademarks which are material in relation to our business:

Place of Application No. Trademark Class Applicant application number Application date 1. 35 Digitrading PRC 50966304 November 3, Beijing 2020

2. 42 Digitrading PRC 50962002 November 3, Beijing 2020

3. 35 Digitrading PRC 50961715 November 3, Beijing 2020

4. 42 Digitrading PRC 50958216 November 3, Beijing 2020

–IV-19– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Place of Application No. Trademark Class Applicant application number Application date 5. 42 Digitrading PRC 50940906 November 3, Beijing 2020

6. 42 Digitrading PRC 50933725 November 3, Beijing 2020

7. 35 Digitrading PRC 50933586 November 3, Beijing 2020

8. 39 Digitrading PRC 38420632 May 24, 2019 Beijing

9. 39 Digitrading PRC 38414079 May 24, 2019 Beijing

10. 39 Digitrading PRC 37831449 April 26, 2019 Beijing

11. 39 Digitrading PRC 37827874 April 26, 2019 Beijing

12. 39 Digitrading PRC 37817200 April 26, 2019 Beijing

–IV-20– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(b) Patents

As of the Latest Practicable Date, we have registered the following patents which are material in relation to our business:

Registration No. Patent name Registered owner Place of registration number Registration date Expiry date 1. 處理多服務器並發操作的方法及裝置 ...... Digitrading PRC 2016100066243 January 5, 2016 January 4, 2036 Beijing

2. 一種數據庫分錶分頁查詢辦法及系統 ...... Digitrading PRC 2014102877357 June 25, 2014 June 24, 2034 Beijing

3. 實現服務化的方法和裝置 ...... Digitrading PRC 2014101628944 April 22, 2014 April 21, 2034 Beijing

4. 國際信用卡支付的電商平台壞賬統計核算方法及系統 .. Digitrading PRC 2013106513834 December 9, December 8, Beijing 2013 2033

5. 一種矩陣式信息發布及訪問方法和系統 ...... Digitrading PRC 2013105055542 October 24, 2013 October 23, 2033 Beijing

6. 基于國際卡支付通道管理支付成功率的系統及方法 ... Digitrading PRC 2013103552339 August 15, 2013 August 14, 2033 Beijing

7. 一種基于用戶行為進行物品特徵標注的推薦系統及方法 . Digitrading PRC 2013103335750 August 2, 2013 August 1, 2033 Beijing

8. 一種基於hadoop的通用創建索引方法及系統 ...... Century Heguang PRC 2013107387190 December 26, December 25, (Beijing) 2013 2033

9. 開放平台模塊化的方法和裝置 ...... Century Heguang PRC 201410161868X April 22, 2014 April 21, 2034 (Beijing)

10. 通信方法、裝置、客戶端及計算機存儲介質 ...... Digitrading PRC 2017107259754 August 22, 2017 August 21, 2037 Beijing

11. 物流妥投時長分析方法及裝置 ...... Digitrading PRC 2017100946479 February 21, February 2037 Beijing 2017

–IV-21– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Patent name Registered owner Place of registration number Registration date Expiry date 12. 信用卡支付方法和裝置 ...... Digitrading PRC 2016111982046 December 22, December 21, Beijing 2016 2036

As of the Latest Practicable Date, we have applied for the following patents which are material in relation to our business:

No. Patent name Applicant Place of application Application number Application date 1. 信息搜索系統、方法、計算設備及計算機存儲 Digitrading PRC 2020111907304 October 30, 2020 介質 ...... Beijing

2. 一種用於B2B平台的商品信息處理方法及裝置 Digitrading PRC 2019104529873 May 28, 2019 Beijing

3. 數據記錄總數量獲取方法及裝置 ...... Digitrading PRC 2018113820859 November 20, Beijing 2018

4. 交易限額處理方法及裝置 ...... Digitrading PRC 201811382333X November 20, Beijing 2018

5. 數據源信息動態變更方法及裝置 ...... Digitrading PRC 201811294075X November 1, 2018 Beijing

6. 基于跨境支付平台的支付方式自動化運維方法 Digitrading PRC 2018112552716 October 26, 2018 及裝置 ...... Beijing

7. 基於應用Jar包文件的應用編排方法及裝置 ... Digitrading PRC 2018112552735 October 26, 2018 Beijing

8. 基於TF-IDF的URL生成方法及系統 ...... Digitrading PRC 2018112424243 October 24, 2018 Beijing

9. 跨線程調用鏈上下文的傳遞方法、裝置及電子 Digitrading PRC 2018112336702 October 23, 2018 設備 ...... Beijing

10. 基於多幣種的跨境支付場景下的定價方法及裝 Digitrading PRC 2018112337777 October 23, 2018 置 ...... Beijing

11. 退款處理方法、裝置及系統 ...... Digitrading PRC 201810029609X January 12, 2018 Beijing

–IV-22– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

No. Patent name Applicant Place of application Application number Application date 12. 對賬處理方法及裝置 ...... Digitrading PRC 2017111634841 November 21, Beijing 2017

13. 用于跨境即時通信的方法及系統 ...... Digitrading PRC 2017110770637 November 6, 2017 Beijing

14. 跨國貿易電子商務平台買家信用卡有效期更新 Digitrading PRC 2017100976328 February 22, 2017 方法及系統 ...... Beijing

15. 信用卡結算週期的優化方法及裝置 ...... Digitrading PRC 2017100288135 January 16, 2017 Beijing

16. 根據控制類目信息選擇支付網關的方法和裝置 Digitrading PRC 2016111904206 December 21, Beijing 2016

17. 轉賬處理方法及裝置 ...... Digitrading PRC 2016111914142 December 21, Beijing 2016

18. 提高外貿電商平台訂單成功率的方法及系統 .. Digitrading PRC 2016111624031 December 15, Beijing 2016

19. 產品價格數據采集方法及系統 ...... Digitrading PRC 2016102176642 April 8, 2016 Beijing

20. 一種網站平台對接系統和方法 ...... Digitrading PRC 2016100468167 January 22, 2016 Beijing

As of the Latest Practicable Date, we have registered the following copyrights which are material in relation to our business:

(i) Software (軟件)

Registration No. Copyright Version Owner number Registration date Place of registration 1. 中小企業出口第三方電子商務服務平台數據智囊系統 .. 1.0 Digitrading 2018SR817418 June 12, 2015 PRC Beijing

–IV-23– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Copyright Version Owner number Registration date Place of registration 2. 中小企業出口第三方電子商務服務平台VIP Club系統 .. 1.0 Digitrading 2018SR817393 June 29, 2015 PRC Beijing

3. 中小企業出口第三方電子商務服務平台供應商系統 ... 1.0 Digitrading 2018SR817398 September 20, PRC Beijing 2015

4. 中小企業出口第三方電子商務服務平台巴克萊本幣收單 1.0 Digitrading 2018SR817404 July 30, 2015 PRC 系統 ...... Beijing

5. 中小企業出口第三方電子商務服務平台商品競價系統 .. 1.0 Digitrading 2018SR817383 October 15, 2014 PRC Beijing

6. 中小企業出口第三方電子商務服務平台SEO詞庫系統 .. 1.0 Digitrading 2018SR817388 October 28, 2014 PRC Beijing

7. 中小企業出口第三方電子商務服務平台PPC自動競價系 1.0 Digitrading 2018SR828593 June 28, 2015 PRC 統 ...... Beijing

8. 中小企業出口第三方電子商務平台客戶關係管 1.0 Digitrading 2018SR828658 October 17, 2014 PRC 理(CRM)系統 ...... Beijing

9. 電子商務平台流量快車系統 ...... 1.0 Digitrading 2018SR828601 September 1, PRC Beijing 2014

10. 中小型企業出口第三方電子商務服務平台系統 ..... 1.0 Digitrading 2018SR833583 July 20, 2006 PRC Beijing

11. 中小企業出口第三方電子商務服務平台內容管理髮 1.0 Digitrading 2018SR859004 June 18, 2014 PRC 布(CMS)系統 ...... Beijing

12. 中小企業出口第三方電子商務服務平台團購夥拼系統 .. 1.0 Digitrading 2018SR817410 September 7, PRC Beijing 2015

13. 中小企業出口第三方電子商務服務平台資金賬戶系統 .. 1.0 Digitrading 2018SR817632 October 24, 2014 PRC Beijing

14. 中小企業出口第三方電子商務服務平台Cooby系統 ... 1.0 Digitrading 2018SR817560 October 20, 2014 PRC Beijing

–IV-24– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Copyright Version Owner number Registration date Place of registration 15. 中小企業出口第三方電子商務服務平颱風控系統產品化 1.0 Digitrading 2018SR817536 November 3, PRC &買賣家登陸監控項目系統 ...... Beijing 2013

16. 中小企業出口第三方電子商務服務平台義烏網貨中心系 1.0 Digitrading 2018SR817572 November 6, PRC 統 ...... Beijing 2013

17. 中小企業出口第三方電子商務服務平台敦煌幣系統 ... 1.0 Digitrading 2018SR817624 November 1, PRC Beijing 2012

18. 中小企業出口第三方電子商務服務平台金槍魚外貿交易 1.0 Digitrading 2018SR817459 November 2, PRC 系統 ...... Beijing 2012

19. 中小企業出口第三方電子商務服務平台開放平台(DOP)系 1.0 Digitrading 2018SR817516 November 1, PRC 統 ...... Beijing 2013

20. 中小企業出口第三方電子商務服務平台移動平台交易系 1.0 Digitrading 2018SR817543 November 2, PRC 統 ...... Beijing 2012

21. 中小企業出口第三方電子商務服務平台矩陣工具系統 .. 1.0 Digitrading 2018SR817614 June 9, 2011 PRC Beijing

22. 中小企業網上銷售平台系統 ...... 1.0 Digitrading 2018SR817592 December 1, PRC Beijing 2008

23. 中小企業出口第三方電子商務服務平台面向服務架構開 1.0 Digitrading 2018SR817434 April 13, 2011 PRC 發平台系統 ...... Beijing

24. 中小企業出口第三方電子商務服務平台留言與站內信優 1.0 Digitrading 2018SR817364 November 2, PRC 化系統 ...... Beijing 2012

25. 中小企業出口第三方電子商務服務平台企業運營(EOS)系 1.0 Digitrading 2018SR817369 November 6, PRC 統 ...... Beijing 2013

26. 中小企業出口第三方電子商務服務平台糾紛處理系統 .. 1.0 Digitrading 2018SR817466 November 2, PRC Beijing 2012

27. 中小企業出口第三方電子商務服務平台商品發布(SYI)系 1.0 Digitrading 2018SR817639 November 7, PRC 統 ...... Beijing 2013

–IV-25– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Copyright Version Owner number Registration date Place of registration 28. 中小企業出口第三方電子商務服務平台促銷系統&活動 1.0 Digitrading 2018SR817583 November 4, PRC 系統 ...... Beijing 2013

29. 中小企業出口第三方電子商務服務平台cross promotion 1.0 Digitrading 2018SR817619 April 20, 2011 PRC 系統 ...... Beijing

30. 中小企業出口第三方電子商務服務平台產品治理系統 .. 1.0 Digitrading 2018SR817645 November 2, PRC Beijing 2012

31. 中小企業出口第三方電子商務服務平台買家APP系統 .. 1.0 Digitrading 2018SR817577 November 8, PRC Beijing 2013

32. 中小企業出口第三方電子商務服務平台DHsocial合夥人 1.0 Digitrading 2018SR1024150 October 17, 2018 PRC 買家系統 ...... Beijing

33. 中小企業出口第三方電子商務平台大貿交易在綫收結匯 1.0 Digitrading 2018SR1024849 September 11, PRC 系統 ...... Beijing 2018

34. 中小企業出口第三方電子商務服務平台DHgate在綫發貨 1.0 Digitrading 2018SR1029362 July 26, 2018 PRC 系統 ...... Beijing

35. 中小企業出口第三方電子商務服務平台跨貿雲ERP系統 . 1.0 Digitrading 2018SR1029372 July 15, 2018 PRC Beijing

36. 中小企業出口第三方電子商務服務平台DHsocial合夥人 1.0 Digitrading 2018SR1078095 October 17, 2018 PRC 系統 ...... Beijing

37. 中小企業出口第三方電子商務平台SEO智能引流系統 .. 1.0 Digitrading 2018SR1078101 September 10, PRC Beijing 2018

38. 中小企業出口第三方電子商務服務平台一網萬店系統 .. 1.0 Century Heguang 2016SR404806 December 1, PRC (Beijing) 2016

39. 中小企業出口第三方電子商務服務平台移動端一鍵支付 1.0 Century Heguang 2016SR404721 December 3, PRC 系統 ...... (Beijing) 2016

40. 中小企業出口第三方電子商務服務平台知識產權系統 .. 1.0 Century Heguang 2016SR403748 December 3, PRC (Beijing) 2016

–IV-26– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Copyright Version Owner number Registration date Place of registration 41. 社交分享 — Socialshops Reseller&Consumer系統 ... 1.0 Century Heguang 2017SR712242 October 30, 2017 PRC (Beijing)

42. 糾紛系統V1.0 ...... 1.0 Century Heguang 2017SR719224 July 30, 2016 PRC (Beijing)

43. 中小企業出口第三方電子商務服務平台廣告系統 .... 2.0 Digitrading 2018SR817656 November 2, PRC Beijing 2012

44. 中小企業出口第三方電子商務服務平台B2B購物車營銷 1.0 Century Heguang 2016SR400860 December 2, PRC 系統 ...... (Beijing) 2016

45. 中小企業出口第三方電子商務服務平台外綜平台系統 .. 1.0 Century Heguang 2016SR400580 December 3, PRC (Beijing) 2016

46. 中小企業出口第三方電子商務服務平台銀企直連繫統 .. 1.0 Century Heguang 2016SR402973 December 4, PRC (Beijing) 2016

47. 中小企業出口第三方電子商務服務平台DHlink海外倉系 1.0 Century Heguang 2016SR076365 September 11, PRC 統 ...... (Beijing) 2014

48. DHport出口外綜服務平台 ...... 1.0 Century Heguang 2017SR712346 July 15, 2016 PRC (Beijing)

49. 回款寶交易金融服務系統 ...... 1.0 Century Heguang 2017SR715365 November 30, PRC (Beijing) 2016

50. B2B跨境電子商務移動平台系統 ...... 3.0 Century Heguang 2017SR715820 January 1, 2017 PRC (Beijing)

51. 結匯服務系統 ...... 1.0 Century Heguang 2017SR716121 December 28, PRC (Beijing) 2016

52. 中小企業出口第三方電子商務平台敦煌網商戶App ... 1.0 Century Heguang 2018SR1082856 January 4, 2018 PRC (Beijing)

53. 中小企業出口第三方電子商務服務平台DHGATE交易下 1.0 Century Rich 2018SR1020895 December 28, PRC 發系統 ...... Palace 2017

–IV-27– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Registration No. Copyright Version Owner number Registration date Place of registration 54. 中小企業出口第三方電子商務平台交易服務一體化服務 1.0 Century Rich 2018SR1022822 September 11, PRC 系統 ...... Palace 2018

55. 中小企業出口第三方電子商務平台大貿采樣系統 .... 1.0 Century Rich 2018SR1023356 September 11, PRC Palace 2018

56. 中小企業出口第三方電子商務服務平台DH買賣家溝通平 1.0 Century Rich 2018SR1024879 October 19, 2018 PRC 台 ...... Palace

57. 中小企業出口第三方電子商務服務平台智能推薦系統 .. 1.0 Century Rich 2018SR1025219 March 5, 2018 PRC Palace

58. 中小企業出口第三方電子商務服務平台駱駝客CPS返傭 1.0 Century Rich 2018SR1025992 July 31, 2018 PRC 系統 ...... Palace

59. 中小企業出口第三方電子商務服務平台財務對賬核算系 1.0 Century Rich 2018SR1026001 December 30, PRC 統 ...... Palace 2017

60. 中小企業出口第三方電子商務服務平台支付系統 .... 1.0 Century Heguang 2018SR817669 November 20, PRC (Beijing) 2009

61. 中小企業出口第三方電子商務服務平台產品曝光管理系 1.0 Century Heguang 2018SR817452 March 16, 2011 PRC 統 ...... (Beijing)

62. 中小企業出口第三方電子商務服務平台搜索系統 .... 2.0 Century Heguang 2018SR817549 November 1, PRC (Beijing) 2012

63. 中小型企業出口第三方電子商務服務平台廣告系統 ... 1.0 Century Heguang 2018SR817662 November 28, PRC (Beijing) 2008

64. 中小企業出口第三方電子商務服務平台D1數據挖掘系統 1.0 Century Heguang 2018SR817650 November 2, PRC (Beijing) 2012

65. 中小企業出口第三方電子商務服務平台訂單管理系統 .. 1.0 Century Rich 2020SR0745357 July 7, 2019 PRC Palace

66. 中小企業出口第三方電子商務服務平台DHLink物流自動 1.0 Century Rich 2020SR0744791 March 27, 2019 PRC 化系統 ...... Palace

–IV-28– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(ii) Works (作品)

No. Copyright Owner Registration number Registration date Place of registration 1. 敦煌網吉祥物一表情系列 ...... Digitrading Beijing Guo Zuo Deng December 11, 2018 PRC Zi-2018-F-00659193

2. 敦煌網吉祥物 ...... Digitrading Beijing Guo Zuo Deng December 18, 2018 PRC Zi-2018-F-00659213

3. 敦煌網吉祥物之二 ...... Digitrading Beijing Guo Zuo Deng December 18, 2018 PRC Zi-2018-F-00659214

4. 敦煌網吉祥物一表情系列之二 ...... Digitrading Beijing Guo Zuo Deng January 2, 2019 PRC Zi-2019-F-00691292

5. Channel Marketing V3; CRM V3; Cross Border Digitrading Beijing Guo Zuo Deng June 13, 2018 PRC E-commerce Ecosystem Introduction — Final; Zi-2018-L-00510530 Cross-Border Payment V3; Data Analysis Trilogy V2; DHgate Buyers Guide-Importing from China V3; Global Logistics V2; Internet Finance V4; Novoshops Hands on Training V3; Product Selection V2; Trust&Safety V2 ......

6. 敦煌網全球夢想合夥人(DHgate Global Dream Digitrading Beijing Guo Zuo Deng December 26, 2019 PRC Partners) ...... Zi-2019-F-00899390

7. 買全球，賣全球(Buy Globally, Sell Globally) ... Digitrading Beijing Guo Zuo Deng November 4, 2019 PRC Zi-2019-F-00832102

(d) Domain Names

As of the Latest Practicable Date, we have registered the following domain names which are material in relation to our business:

No. Domain name Registrant Filing number Registration date Expiry date 1. dhsocial.com ...... Digitrading 京ICP備18054285 July 26, 2018 July 26, 2022 Beijing 號-1

2. dhmember.cn ...... Digitrading 京ICP備18054285 July 26, 2018 July 26, 2022 Beijing 號-1

–IV-29– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

No. Domain name Registrant Filing number Registration date Expiry date 3. dhmember.com ...... Digitrading 京ICP備18054285 July 26, 2018 July 26, 2022 Beijing 號-1

4. dhgate.cn ...... Century Rich 京ICP備16060083 June 10, 2005 June 10, 2022 Palace 號-10

5. dhport.com ...... Century Rich 京ICP備16060083 May 16, 2008 May 16, 2022 Palace 號-13

6. dherp.com ...... Century Rich 京ICP備16060083 March 29, 2017 March 29, 2022 Palace 號-16

7. apecgvc.org...... Century Rich 京ICP備16060083 July 21, 2017 July 21, 2021 Palace 號-18

8. dhdatacenter.com ...... Century Rich 京ICP備16060083 November 15, November 15, Palace 號-19 2017 2021

9. dhsocket.com ...... Century Rich 京ICP備16060083 December 5, 2017 December 5, 2021 Palace 號-20

10. dhlink.com ...... Century Rich 京ICP備16060083 October 24, 2008 October 24, 2021 Palace 號-21

11. dhtalker.com ...... Century Rich 京ICP備16060083 August 21, 2018 August 21, 2022 Palace 號-22

12. dhpay.cn ...... Century Rich 京ICP備16060083 September 7, September 7, Palace 號-6 2007 2022

13. dhgate.com.cn ...... Century Rich 京ICP備16060083 June 6, 2005 June 6, 2022 Palace 號-7

14. selleredm.com ...... Century Rich 京ICP備16060083 June 30, 2007 June 30, 2022 Palace 號-8

15. dhgate.com ...... Century Rich 京ICP備16060083 September 21, September 21, Palace 號-9 2004 2022

16. dhlink.cn ...... Century Rich 京ICP備16060083 November 18, November 18, Palace 號-21 2013 2021

–IV-30– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

No. Domain name Registrant Filing number Registration date Expiry date 17. dhlink.com.cn ...... Century Rich 京ICP備16060083 November 18, November 18, Palace 號-21 2013 2021

18. dhport.cn ...... Century Rich 京ICP備16060083 May 21, 2008 May 21, 2022 Palace 號-5

19. dherp.cn ...... Century Rich 京ICP備16060083 March 29, 2017 March 29, 2022 Palace 號-16

20. dhpay.com ...... Century Rich 京ICP備16060083 September 6, September 6, Palace 號-12 2007 2023

21. selleredm.net ...... Century Rich 京ICP備16060083 March 7, 2008 September 6, Palace 號-8 2021

22. dhimport.com...... Century Rich 京ICP備16060083 December 26, December 26, Palace 號-17 2016 2021

23. global-wholesale.com ...... Century Rich 京ICP備16060083 June 25, 2002 June 25, 2021 Palace 號-1

24. myystatic.com ...... Century Rich 京ICP備16060083 July 20, 2020 July 20, 2021 Palace 號-23

25. dhexpo.com...... Century Rich 京ICP備16060083 May 14, 2014 May 14, 2022 Palace 號-14

26. dhstatics.com ...... Century Rich 京ICP備16060083 August 10, 2010 August 10, 2023 Palace 號-11

27. dhresource.com...... Century Rich 京ICP備16060083 August 12, 2010 August 12, 2023 Palace 號-15

28. socialshops.com ...... Century Rich 京ICP備16060083 March 14, 2005 March 14, 2024 Palace 號-2

29. myyshop.com...... Century Rich 京ICP備16060083 May 20, 2020 May 20, 2022 Palace 號-24

–IV-31– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Save as aforesaid, as at the Latest Practicable Date, there were no other intellectual property rights which were material in relation to our Group’s business.

C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

1. Disclosure of Interests

(a) Interests of our Directors and the Chief Executive of Our Company

Immediately following the completion of the Share Subdivision and the [REDACTED] and without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares that may be issued pursuant to the exercise of options which may be granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme, the interests or short positions of our Directors and chief executive of our Company in the shares, underlying shares and debentures of our Company or our associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, to be notified to our Company and the Stock Exchange, once the Shares are listed, will be as follows:

(i) Interest in our Company

Immediately following the completion of the Share Subdivision and the [REDACTED]

Approximate percentage of Number of Shares shareholding Name of Director Nature of Interest held (Note 1) interest (Note 2) Ms. Wang (Note 3) .... Interest in controlled corporation [REDACTED] [REDACTED] and founder of a discretionary trust

Notes:

1. All interests stated are long positions.

–IV-32– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

2. The calculation is based on the total number of [REDACTED] Shares in issue immediately following the completion of the Share Subdivision and the [REDACTED] and without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or any Shares that may be issued pursuant to the exercise of options which may be granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme.

3. Assuming the Series B Preferred Shares are converted into Shares on a one-for-one basis, Heguang International (BVI), a company which is wholly owned by Ms. Wang, shall hold [REDACTED] Shares. Further, [REDACTED] Shares were directly held by Idea Edge, a company wholly owned by New Element Holdings Limited, which is in turn wholly owned by Silkroad Enterprise Limited, the holding vehicle used by Cantrust (Far East) Limited, the trustee of the Silkroad Family Trust, a discretionary trust established by Ms. Wang. Therefore, Ms. Wang is deemed under the SFO to be interested in these [REDACTED] Shares held by Heguang International (BVI) and Idea Edge.

(ii) Interest in associated corporations of our Company

Approximate Name of associated percentage of Name of Director corporation Nature of interest Registered Capital shareholding interest Ms. Wang ..... Century Rich Beneficial Owner RMB4,000,000 80% Palace

(b) Interests of the Substantial Shareholders

Save as disclosed in “Substantial Shareholders”, immediately following the completion of the [REDACTED] and without taking into account any Shares which may be issued pursuant to the exercise of the [REDACTED] or the exercise of any options which may be granted pursuant to the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme, our Directors or chief executive are not aware of any other person (other than a Director or chief executive of our Company) who will have an interest or short position in the Shares or the underlying Shares which would fall to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or are, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of our Company:

So far as our Directors are aware, as at the Latest Practicable Date, the following persons (excluding us) are directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of our Group:

Approximate % Name of subsidiary Name of shareholder Registered capital of interest Century Rich Palace...... Ms. Liu RMB1,000,000 20%

–IV-33– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

2. Directors’ Service Contracts and Letters of Appointment

Each of our executive Directors has entered into a service contract with our Company on [•], and we have issued letters of appointment to our non-executive Director and each of our independent non-executive Directors. The service contracts with each of our executive Directors and the letter of appointment with our non-executive Director are for an initial fixed term of three years commencing from [•]. The letters of appointment with each of our independent non-executive Directors are for an initial fixed term of three years. The service contracts and the letters of appointment are subject to termination in accordance with their respective terms. The service contracts may be renewed in accordance with our Articles of Association and the applicable Listing Rules.

Save as disclosed above, none of our Directors has entered, or has proposed to enter, a service contract with any member of our Group (other than contracts expiring or determinable by the employer within one year without the payment of compensation (other than statutory compensation)).

3. Directors’ Remuneration

The aggregate remuneration (including fees, salaries, contributions to pension schemes, housing allowances and other allowances and benefits in kind and discretionary bonuses) paid to our Directors for the years ended December 31, 2018, 2019 and 2020 was approximately USD564,000, USD920,000 and USD740,000, respectively.

Save as disclosed above, no other payments have been made or are payable, in respect of the years ended December 31, 2018, 2019 and 2020, by any of member of the Group to any of our Directors.

Under the arrangements currently in force, we estimate the aggregate remuneration, excluding discretionary bonus, of our Directors for the year ending December 31, 2021 to be approximately USD470,500.

4. Directors’ Competing Interests

None of our Directors are interested in any business apart from our Group’s business which competes or is likely to compete, directly or indirectly, with the business of our Group.

–IV-34– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

5. Disclaimers

Save as disclosed in this document:

(a) none of our Directors or chief executive of our Company has any interests or short positions in the shares, underlying shares and debentures of our Company or our associated corporations (within the meaning of Part XV of the SFO) which will be required to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be entered in the register referred to in that section, or which will be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to our Company and the Stock Exchange, once the Shares are listed on the Stock Exchange;

(b) so far as is known to any Director or chief executive of our Company, no person has an interest or short position in the Shares and underlying Shares which would fall to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of our Group;

(c) none of our Directors nor any of the persons listed in “— E. Other Information — 5. Qualification of Experts” below is interested in the promotion of, or in any assets which have been, within the two years immediately preceding the issue of this document, acquired or disposed of by or leased to any member of our Group, or are proposed to be acquired or disposed of by or leased to any member of our Group;

(d) none of our Directors nor any of the persons listed in “— E. Other Information — 5. Qualification of Experts” below is materially interested in any contract or arrangement with our Group subsisting at the date of this document which is unusual in its nature or conditions or which is significant in relation to the business of our Group as a whole

(e) save in connection with [REDACTED] Agreement, none of the persons listed in “— E. Other Information — 5. Qualification of Experts” below has any shareholding in any member of our Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of our Group;

–IV-35– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(f) none of our Directors has entered or has proposed to enter into any service agreements with our Company or any member of our Group (other than contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation); and

(g) so far as is known to any Director or chief executive of our Company, none of our Directors, their respective associates (as defined under the Listing Rules), or Shareholders who are interested in more than 5% of the issued share capital of our Company has any interest in our Company’s five largest customers and five largest suppliers.

D. SHARE INCENTIVE SCHEMES

1. [REDACTED] Incentive Scheme

The following is a summary of the principal terms of the [REDACTED] Incentive Scheme approved and adopted by our then sole Shareholder on March 20, 2019 (the “Adoption Date”). The purpose of the [REDACTED] Incentive Scheme is to promote the success and enhance the value of the Company by linking the personal interests of the officers, directors, employees of, and consultants to the Group to those of the Shareholders and by providing such individual with an incentive for outstanding performance to generate superior returns to the Shareholders.

(a) Who may participate

The Board or any committee appointed by the Board pursuant to the rules of the [REDACTED] Incentive Scheme (the “Administrator”) may, at its discretion, grant options (the “Option(s)”) to an officer, director or employee of, and consultants to any member of the Group (“Eligible Participant(s)”) pursuant to the terms of the [REDACTED] Incentive Scheme.

(b) Grant of Options

An Option shall be granted to an Eligible Participant by delivery of a grant letter (the “Grant Letter”), specifying the number of shares and any other terms and conditions (including, without limitation, any attainment of performance milestones upon which the exercise of the option shall be conditional) on which it is granted. The Grant Letter shall serve as evidence of the grant of the Option to the Eligible Participant (the “Grantee”), and all Options shall be granted and vested in accordance with the terms of the rules of the [REDACTED] Incentive Scheme.

–IV-36– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

The maximum aggregate number of Shares which may be issued upon exercise of all Options is 28,237,956 Shares. Such maximum number of Shares will be adjusted in the event of any alteration in the capital structure of our Company whilst any Option remains exercisable, to proportionally reflect any capitalization of profits or reserves, rights issue, sub-division, or consolidation of shares or reduction of share capital of our Company.

(d) Acceptance of an offer of Options

An offer shall be deemed to have been accepted when the duplicate letter comprising acceptance of the offer is duly signed by the Grantee, together with a remittance in favor of the Company of RMB1.00 (receipt of which shall be deemed to be acknowledged by the Company upon receipt of the duplicate letter comprising acceptance of the Grant Letter duly signed by the Grantee) by way of consideration for the grant, is received by the Company. Such remittance shall not be refundable.

(e) Exercise price

Subject to the rules of the [REDACTED] Incentive Scheme, the exercise price in respect of any Options granted shall be determined by the Administrator and set out in the Grant Letter.

(f) Duration of the [REDACTED] Incentive Scheme

The [REDACTED] Incentive Scheme shall be valid and effective for the period of time commencing on the Adoption Date and expiring on the day immediately prior to the earlier of:

(i) the Listing Date;

(ii) the date which is ten years after the Adoption Date; or

(iii) the Company by resolution of the Shareholders, or the Board, may at any time terminate the operation of this Scheme, after which period, no further Options will be granted but the provisions of the [REDACTED] Incentive Scheme shall remain in force to the extent necessary to give effect to the exercise of any Options which are granted during the life of the [REDACTED] Incentive Scheme or otherwise as may be required in accordance with the provisions of the [REDACTED] Incentive Scheme.

–IV-37– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(g) Vesting Schedule and exercise of Options

The Options to be granted to any Grantee under the [REDACTED] Incentive Scheme shall be subject to the vesting schedule as set out in the Grant Letter. Each Option shall expire not more than 10 years after its date of grant. Any exercisable Option will be deemed to be exercised when our Company receives written notice of such exercise from the Eligible Participant (on a form and in such manner as may be required by the Administrator), together with any required payment.

Subject to the terms and conditions on which the Option was granted, Options vested may be exercised by the Grantee at any time during the Option Period, provided that, among others, our Company has been listed and the Shares have commenced trading on the Stock Exchange.

(h) Ranking of the Shares

The Shares to be allotted and issued upon the exercise of an Option will be subject to the provisions of the Articles of Association and will rank pari passu with the fully paid Shares in issue as from the date of exercise of the Option and in particular will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of exercise of the Option subject to the rules of the [REDACTED] Incentive Scheme.

(i) Transfer of Options

An Option shall be personal to the Grantee and shall not be assignable or transferable. No Grantee shall in any way sell, transfer, charge, mortgage, encumber or otherwise dispose of or create any interest (legal or beneficial) in favor of any third party over, except for

(i) the transmission of an Option on the death of the Grantee to his personal representatives(s) according to the terms of this Scheme, or

(ii) the transfer of any Option to any trustee, acting in its capacity as such trustee, of any trust of which the Grantee is a beneficiary.

Any breach of the foregoing by a Grantee shall entitle the Company to cancel any Option granted to such Grantee to the extent not already exercised without incurring any liability on the part of the Company.

–IV-38– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(j) Rights on termination of employment

Unless otherwise provided in the Grant Letter and subject to the rules of the [REDACTED] Incentive Scheme, if a Grantee’s employment by or service to our Company or any of our affiliates terminates for any reason other as a result of the Grantee’s death or total disability, the Grantee shall be entitled to exercise the Option up to the vested entitlement of such Grantee as at the date of such termination (to the extent he is entitled to exercise at the date of termination but not already exercised pursuant to the terms of this Scheme and the terms of grant) within a period of 30 days from the date of termination, failing which it will lapse.

(k) Rights on death or disability

Unless otherwise provided in the Grant Letter and subject to the rules of the [REDACTED] Incentive Scheme, if a Grantee’s employment by or service to our Company or any of our affiliates terminates as a result of the Grantee’s death or total disability, the Grantee or his personal representative(s) shall be entitled to exercise the Option up to the vested entitlement of such Grantee as at the date of such incapacitation or death (to the extent he is entitled to exercise at the date of incapacitation or death but not already exercised), pursuant to the terms of the [REDACTED] Incentive Scheme and the terms of grant.

(l) Effect of alteration to share capital

Upon (or, as may be necessary to effect the adjustment, immediately prior to) any alteration to share capital by way of capitalization of profits or reserves, rights issue, sub-division or consolidation of Shares or reduction of share capital of the Company, but excluding, for the avoidance of doubt, any alteration in the capital structure of the Company as a result of an issue of Shares or other securities of the Group as consideration in a transaction to which the Company is a party, the auditors or the financial advisors engaged by the Company for such purpose shall determine what adjustment is required to be made to: (i) the number of Shares subject to any unexercised Option; (ii) the exercise price; and/or (iii) the method of exercise of the Options, and the auditors or such financial advisors shall certify in writing to the Board that such adjustments are in their/his opinion fair and reasonable.

Any such adjustments shall give each Grantee the same proportion of the equity capital of the Company for which such Grantee was entitled to subscribe for prior to such adjustments and any adjustments to the advantage of the Grantees to the exercise price or to the number of Shares subject to the Options must be approved by the Shareholders. No adjustment may be made to the extent that Shares would be issued at less than their nominal value.

–IV-39– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(m) Change in control

If a general offer by way of voluntary offer, takeover or otherwise (other than by way of scheme of arrangement) is made to all the holders of Shares (or all such holders other than the offeror, any person controlled by the offeror and any person acting in association or concert with the offeror) and such offer becomes or is declared unconditional prior to the expiry date of the relevant Option, the Company shall forthwith give notice thereof to the Grantee and the Grantee shall be entitled to exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company at any time within such period as shall be notified by the Company.

Further, if a general offer for Shares by way of scheme of arrangement is made to all the holders of Shares and has been approved by the necessary number of holders of Shares at the requisite meetings, the Company shall forthwith give notice thereof to the Grantee and the Grantee may at any time thereafter (but before such time as shall be notified by the Company) exercise the Option to its full extent or, if the Company shall give the relevant notification, to the extent notified by the Company.

(n) Alteration of the [REDACTED] Incentive Scheme

The Board may at any time amend, suspend or terminate the [REDACTED] Incentive Scheme provided, however, that no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by applicable laws or if such amendment would change certain provisions of the [REDACTED] Incentive Scheme.

(o) Outstanding Options granted under the [REDACTED] Incentive Scheme

As of the Latest Practicable Date, Options to subscribe for an aggregate of 23,504,864 Shares have been granted to a total of 189 Eligible Participants by our Company at a consideration of US$3,558,133 under the [REDACTED] Incentive Scheme, representing [REDACTED] of the total issued Shares of our Company immediately after the completion of the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised, the Options granted under the [REDACTED] Incentive Scheme are exercised and no Shares are issued pursuant to the RSU Scheme). The Company will not grant further Options under the [REDACTED] Incentive Scheme after the Listing.

–IV-40– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Below are the details of Options granted to our Directors, senior management and a connected person of the Company since the Adoption Date, representing Options to subscribe for an aggregate of 7,540,864 Shares under the [REDACTED] Incentive Scheme which are outstanding:

Approximate percentage of enlarged issued share capital of our Company immediately after completion of the Number of Share Subdivision Exercise Price outstanding Shares and the Position/connected (US$/per Date of grant under the Options [REDACTED] Grantee relationship Option) (Note 1) Option period granted (Note 2) (Note 3) Vesting date/period Exercise period Directors

Mr. Liu Sijun . Executive Director 0.01 March 31, 2010 May 20, 2019 to 820,864 [REDACTED] May 20, 2019 Listing Date to May May 20, 2022 20, 2022

0.37 December 31, 2020 December 31, 2020 400,000 [REDACTED] December 31, 2021 December 31, 2021 to December 31, to December 31, to December 31, 2030 2024 2030

1,220,864 [REDACTED]

Mr. Hou Executive Director 0.19 March 31, 2010 May 20, 2019 to 510,000 [REDACTED] May 20, 2019 Listing Date to May Jianchen .. May 20, 2022 20, 2022

0.36 May 31, 2011 May 20, 2019 to 310,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

0.37 May 20, 2019 May 20, 2019 to 600,000 [REDACTED] May 20, 2020 to Listing Date to May May 20, 2029 May 20, 2023 20, 2029

0.37 December 31, 2020 December 31, 2020 200,000 [REDACTED] December 31, 2021 December 31, 2021 to December 31, to December 31, to December 31, 2030 2024 2030

1,620,000 [REDACTED]

–IV-41– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Ms. Ho Yip Chief strategy officer 0.37 April 30, 2020 April 30, 2020 to 700,000 [REDACTED] April 30, 2021 April 30, 2021 to Betty ... April 30, 2030 April 30, 2030

0.37 April 30, 2021 April 30, 2021 to 700,000 [REDACTED] April 30, 2022 April 30, 2022 to April 30, 2031 April 30, 2031

1,400,000 [REDACTED]

Mr. Liu Vice president of 0.19 March 31, 2010 May 20, 2019 to 370,000 [REDACTED] May 20, 2019 Listing Date to May Wentao .. technology center May 20, 2022 20, 2022

0.36 May 31, 2011 May 20, 2019 to 190,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

0.37 May 20, 2019 May 20, 2019 to 400,000 [REDACTED] May 20, 2020 to Listing Date to May May 20, 2029 May 20, 2023 20, 2029

960,000 [REDACTED]

Mr. Zhang Chief financial 0.37 April 30, 2020 April 30, 2020 to 600,000 [REDACTED] April 30, 2022 to April 30, 2022 to Peng ... officer April 30, 2030 April 30, 2024 April 30, 2030

600,000 [REDACTED]

Ms. Liu Deputy manager of 0.19 March 31, 2010 May 20, 2019 to 736,000 [REDACTED] May 20, 2019 Listing Date to May Fengrong .. organization May 20, 2022 20, 2022 development and human resource 0.36 January 31, 2014 May 20, 2019 to 124,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

0.37 May 20, 2019 May 20, 2019 to 60,000 [REDACTED] May 20, 2020 to Listing Date to May May 20, 2029 May 20, 2023 20, 2029

0.37 December 31, 2020 December 31, 2020 200,000 [REDACTED] December 31, 2021 December 31, 2021 to December 31, to December 31, to December 31, 2030 2024 2030

0.37 April 30, 2021 April 30, 2021 to 80,000 [REDACTED] April 30, 2022 to April 30, 2022 to April 30, 2031 April 30, 2025 April 30, 2031

1,200,000 [REDACTED]

–IV-42– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Ms. Liu ... Sister-in-law of Ms. 0.19 March 31, 2010 May 20, 2019 to 540,000 [REDACTED] May 20, 2019 Listing Date to May Wang May 20, 2022 20, 2022

540,000 [REDACTED]

Notes:

(1) Options granted prior to the Adoption Date (being March 20, 2019) were granted under our previous share option scheme. The previous share option scheme has been terminated and replaced upon the adoption of the [REDACTED] Incentive Scheme, such that the exercise price of these Options were based on the options granted under the previous share option scheme.

(2) Excluding Options forfeited or canceled.

(3) Calculated based on [REDACTED] Shares in issue immediately after the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised, the Options granted under the [REDACTED] Incentive Scheme are not exercised and no Shares are issued pursuant to the RSU Scheme).

As of the Latest Practicable Date, other than the seven members of our Directors, senior management and connected person disclosed above, no Options were granted to any other Directors, senior management or connected persons of the Group under the [REDACTED] Incentive Scheme.

–IV-43– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Save as the seven Grantees disclosed above, 182 Eligible Participants who are not members of our Directors, senior management or other connected persons of the Company have been granted Options to subscribe for an aggregate of 15,964,000 Shares at a consideration of US$2,519,227 under the [REDACTED] Incentive Scheme, representing [REDACTED] of the total issued Shares of our Company immediately after the completion of the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised, the Options granted under the [REDACTED] Incentive Scheme are exercised and no Shares are issued pursuant to the RSU Scheme). Please refer to below table for details:

Approximate percentage of enlarged issued share capital of our Company immediately after completion of the Range of Number of Share Subdivision outstanding Shares Exercise Price outstanding Shares and the under Options Total number (US$/per Date of grant under the Options [REDACTED] granted of Grantees Option) (Note 1) Option period granted (Note 2) (Note 3) Vesting date/period Exercise period 1 to 200,000 Shares. 22 0.19 March 31, 2010 May 20, 2019 to 846,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2022 20, 2022

6 0.36 May 31, 2011 May 20, 2019 to 240,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

1 0.36 July 31, 2012 May 20, 2019 to 150,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

30 0.36 January 31, 2014 May 20, 2019 to 1,534,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

1 0.36 May 31, 2015 May 20, 2019 to 100,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

2 0.01 May 20, 2019 May 20, 2019 to 200,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2029 20, 2029

32 0.37 May 20, 2019 May 20, 2019 to 2,420,000 [REDACTED] Note 4 Note 4 May 20, 2029

8 0.37 July 31, 2019 July 31, 2019 to 780,000 [REDACTED] Note 4 Note 4 July 31, 2029

2 0.37 April 30, 2020 April 30, 2020 to 300,000 [REDACTED] Note 4 Note 4 April 30, 2030

32 0.37 December 31, 2020 December 31, 2020 1,400,000 [REDACTED] Note 4 Note 4 to December 31, 2030

93 0.37 April 30, 2021 April 30, 2021 to 2,404,000 [REDACTED] Note 4 Note 4 April 30, 2031

10,374,000 [REDACTED]

–IV-44– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Approximate percentage of enlarged issued share capital of our Company immediately after completion of the Range of Number of Share Subdivision outstanding Shares Exercise Price outstanding Shares and the under Options Total number (US$/per Date of grant under the Options [REDACTED] granted of Grantees Option) (Note 1) Option period granted (Note 2) (Note 3) Vesting date/period Exercise period 200,001 to 400,000 2 0.19 March 31, 2010 May 20, 2019 to 610,000 [REDACTED] May 20, 2019 Listing Date to May Shares ..... May 20, 2022 20, 2022

1 0.01 May 31, 2011 May 20, 2019 to 380,000 [REDACTED] May 20, 2019 Listing Date to May May 20, 2024 20, 2024

4 0.37 May 20, 2019 May 20, 2019 to 1,400,000 [REDACTED] Note 4 Note 4 May 20, 2029

1 0.37 April 30, 2020 April 30, 2020 to 400,000 [REDACTED] Note 4 Note 4 April 30, 2030

1 0.37 April 30, 2021 April 30, 2021 to 280,000 [REDACTED] Note 4 Note 4 April 30, 2031

3,070,000 [REDACTED]

400,001 to 600,000 1 0.01 May 20, 2019 May 20, 2019 to 600,000 [REDACTED] Note 4 Note 4 Shares ..... May 20, 2029

2 0.37 December 31, 2020 December 31, 2020 1,000,000 [REDACTED] Note 4 Note 4 to December 31, 2030

1,600,000 [REDACTED]

More than 600,000 1 0.01 March 31, 2010 May 20, 2019 to 920,000 [REDACTED] May 20, 2019 Listing Date to May Shares ..... May 20, 2022 20, 2022

920,000 [REDACTED]

Notes:

(2) Excluding Options forfeited or canceled.

–IV-45– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(4) These Options granted pursuant to the [REDACTED] Incentive Scheme are vested and exercisable as follows:

(i) Options granted after the Adoption Date to Grantees who have worked for more than two years shall be vested and exercisable one year after the relevant date of grant or the Listing Date, whichever is later, and exercisable until the expiration date of the Option period; and

(ii) Options granted after the Adoption Date to Grantees who have worked for less than two years shall be vested and exercisable two years after the relevant date of grant or the Listing Date, whichever is later, and exercisable until the expiration date of the Option period.

Assuming the full exercise of the Options granted under the [REDACTED] Incentive Scheme, the shareholding of the Shareholders immediately after the completion of the Share Subdivision and the [REDACTED] (assuming the [REDACTED] is not exercised, the Options granted under the [REDACTED] Incentive Scheme are exercised and no Shares are issued pursuant to the RSU Scheme) would be diluted by approximately [REDACTED]. Further, there was no dilutive impact of the Options on the earnings per Share for the years ended December 31, 2018, 2019 and 2020.

Application has been made to the Stock Exchange for the listing of and permission to deal in the 23,504,864 Shares that will be allotted and issued pursuant to the Options granted under the [REDACTED] Incentive Scheme.

2. RSU Scheme

The following is a summary of the principal terms of the RSU Scheme approved and adopted by our Board on May 24, 2021. The RSU Scheme is not subject to the provisions of Chapter 17 of the Listing Rules as the RSU Scheme does not involve the grant of options by our Company to subscribe new Shares.

(a) Purpose of the RSU Scheme

The purpose of the RSU Scheme is to incentivize Directors (excluding independent non-executive Directors), senior management and other selected personnel for their contribution to our Group, to attract, motivate and retain skilled and experienced personnel to strive for the future development and expansion of our Group by providing them with the opportunity to own equity interests in our Company.

(b) RSUs

A RSU gives a participant in the RSU Scheme (the “RSU Participant”) a conditional right when the RSU vests to obtain either Shares or an equivalent value in cash with reference to the market value of the Shares on or about the date of exercise of the RSUs, less any tax, stamp duty and other charges applicable, as determined by our Board in its absolute discretion. Each RSU represents one underlying Share. A RSU may include, if so specified by our Board in its entire discretion, cash and non-cash income, dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions in respect of those Shares.

–IV-46– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Persons eligible to receive RSUs under the RSU Scheme are existing directors (whether executive or non-executive, but excluding independent non-executive directors), senior management or officers of our Company or any of our subsidiaries (“RSU Eligible Persons”). Our Board selects the RSU Eligible Persons to receive RSUs under the RSU Scheme at its discretion.

(d) Term of the RSU Scheme

The RSU Scheme will be valid and effective for a period of ten (10) years, commencing from the Listing Date (unless it is terminated earlier in accordance with its terms) (the “RSU Scheme Period”), after which no further RSUs shall be granted or accepted, but the provisions of the RSU Scheme shall remain in full force and effect in order to give effect to the vesting of RSUs granted and accepted prior to the expiration of the RSU Scheme Period.

(e) Grant and acceptance

(i) Making an offer

An offer to grant a RSU will be made to a RSU Eligible Person selected by our Board (“RSU Selected Person”) by a letter, in such form as our Board may determine (“RSU Grant Letter”). The RSU Grant Letter will specify the manner of acceptance of the RSU, the number of RSUs granted and the number of underlying Shares represented by the RSUs, the vesting criteria and conditions, the vesting schedule, the exercise price of the RSUs (where applicable) and such other details as our Board considers necessary, and will require the RSU Selected Person to undertake to hold the RSU on the terms on which it is granted and to be bound by the provisions of the RSU Scheme. Our Company may (i) allot and issue new Shares to a trustee (the “RSU Trustee”) to satisfy the RSUs granted to RSU Selected Persons who are not connected persons of our Company upon exercise and/or (ii) direct and procure the RSU Trustee to receive existing Shares from any Shareholder or purchase existing Shares (either on-market or off-market) to satisfy the RSUs granted to any RSU Selected Persons (including connected or non-connected grantees) upon exercise.

(ii) Acceptance of an offer

A RSU Selected Person may accept an offer of the grant of RSUs in such manner as set out in the RSU Grant Letter. Once accepted, the RSUs are deemed granted from the date of the RSU Grant Letter (“RSU Grant Date”).

–IV-47– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(iii) Restrictions on grants

Our Board may not grant any RSUs to any RSU Selected Persons in any of the following circumstances:

(a) the securities laws or regulations require that a document or other [REDACTED] documents be issued in respect of the grant of the RSUs or in respect of the RSU Scheme, unless our Board determines otherwise;

(b) where granting the RSUs would result in a breach by our Company, our subsidiaries or any of their directors of any applicable securities laws, rules or regulations; or

(c) after a price sensitive event in relation to our securities has occurred or a price sensitive matter in relation to our securities has been the subject of a decision, until an announcement of such inside information has been duly published in accordance with the Listing Rules; or

(d) within the period commencing one month immediately preceding the earlier of:

(1) the date of the meeting of our Board (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of our results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules); and

(2) the deadline to publish an announcement of our results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the results announcement; or

(e) where such grant of any RSUs would result in a breach of the limits of the RSU Scheme (as set out in paragraph (f) below).

(iv) Grants to Directors

Where any RSU is proposed to be granted to a Director, it shall not be granted on any day on which our financial results are published and during the period of:

(a) 60 days immediately preceding the publication date of our annual results or, if shorter, the period from the end of our relevant financial year up to the publication date of our results; and

(b) 30 days immediately preceding the publication date of our quarterly results (if any) and half-year results or, if shorter, the period from the end of our relevant quarterly or half-year period up to the publication date of our results.

–IV-48– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(v) Grants to Connected Persons

Before making any grant to a Director, chief executive or substantial shareholder of the Company, or any of their respective associates, all of our independent non-executive Directors must approve the grant of the RSU, and such grants shall otherwise be subject to compliance with the Listing Rules.

(f) Maximum number of RSUs under the RSU Scheme

The maximum number of RSUs that may be granted under the RSU Scheme in aggregate (excluding RSUs that have lapsed or been canceled in accordance with the Scheme Rules) shall be 9,569,246 Shares or 2.35% of the total issued Shares at the adoption date of the RSU Scheme (whichever is higher) such number of Shares held or to be held by the Trustee for the purpose of the RSU Scheme from time to time.

(g) Rights attached to RSUs

A RSU Participant does not have any contingent interest in any Shares underlying the RSUs unless and until such Shares are actually transferred to the RSU Participant. Further, a RSU Participant may not exercise voting rights in respect of the Shares underlying the RSUs prior to their exercise and, unless otherwise specified by our Board in its entire discretion in the RSU Grant Letter to the RSU Participant, nor do they have any rights to any cash or non-cash income, dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions from any Shares underlying the RSUs.

(h) Rights attached to Shares

Any Shares transferred to a RSU Participant in respect of any RSUs will be subject to all the provisions of the Articles and will rank pari passu with the fully paid Shares in issue on the date of the transfer or, if that date falls on a day when the register of members of the Company is closed, the first day of the reopening of the register of members, and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of transfer or, if that date falls on a day when the register of members of the Company is closed, the first day of the reopening of the register of members.

–IV-49– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(i) Assignment of RSUs

The RSUs granted pursuant to the RSU Scheme are personal to each RSU Participant, and are not assignable. RSU Participants are prohibited from selling, transferring, assigning, charging, mortgaging, encumbering, hedging or creating any interest in favor of any other person over or in relation to any property held by the RSU Trustee on trust for the RSU Participants, the RSUs, or any interest or benefits therein.

(j) Vesting of RSUs

The Board may determine the vesting criteria, conditions and the time schedule when the RSUs will vest and such criteria, conditions and time schedule shall be stated in the Grant Letter.

Within a reasonable time after the vesting criteria, conditions and time schedule have been reached, fulfilled, satisfied or waived, the Board shall send a vesting notice (the “Vesting Notice”) to each of the relevant RSU Participants. The Vesting Notice will confirm the extent to which the vesting criteria, conditions and time schedule have been reached, fulfilled, satisfied or waived, and the number of Shares (and, if applicable, the cash or non-cash income, dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions in respect of those Shares) involved.

(k) Appointment of RSU Trustee

Our Company may appoint the RSU Trustee to assist with the administration and vesting of RSUs granted pursuant to the RSU Scheme. Our Company may (i) allot and issue Shares to the RSU Trustee to be held by the RSU Trustee and which will be used to satisfy the RSUs upon exercise, such Shares to be held by the RSU Trustee will be counted towards the public float of our Company and/or (ii) direct and procure the RSU Trustee to receive existing Shares from any shareholder of our Company or purchase existing Shares (either on-market or off-market) to satisfy the RSUs upon exercise. Our Company shall procure that sufficient funds are provided to the RSU Trustee by whatever means as the Board may in its absolute discretion determine to enable the RSU Trustee to satisfy its obligations in connection with the administration of the RSU Scheme.

(l) Exercise of RSUs

RSUs held by a RSU Participant that are vested as evidenced by the Vesting Notice may be exercised (in whole or in part) by the RSU Participant serving an exercise notice in writing on the RSU Trustee and copied to our Company. Any exercise of RSUs must be in respect of a board lot of [REDACTED] Shares each or an integral multiple thereof (except where the number of RSUs which remains unexercised is less than one board lot). Upon receipt of an exercise notice, our

–IV-50– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Board may decide at its absolute discretion to: (a) direct and procure the RSU Trustee to, within a reasonable time, transfer the Shares underlying the RSUs exercised (and, if applicable, the cash or non-cash income, dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions in respect of those Shares) to the RSU Participant which our Company has allotted and issued to the RSU Trustee as fully paid up Shares or which the RSU Trustee has either acquired by purchasing existing Shares or by receiving existing Shares from any Shareholder, subject to the RSU Participant paying the exercise price (where applicable) and all tax, stamp duty, levies and charges applicable to such transfer to the RSU Trustee or as the RSU Trustee directs; or (b) pay, or direct and procure the RSU Trustee to, within a reasonable time, pay, to the RSU Participant in cash an amount which represents the value of the Shares underlying the RSUs exercised on or about the date of exercise (and, if applicable, the cash or non-cash income, dividends or distributions and/or the sale proceeds of non-cash and non-scrip distributions in respect of those Shares) less any exercise price (where applicable) and after deduction of any tax, levies, stamp duty and other charges applicable to the sale of any Shares to fund such payment and in relation thereto.

(m) Rights on a takeover

If a general offer to acquire the Shares (whether by takeover offer, merger, or otherwise in a like manner) is made to all of our Shareholders (or Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in concert with the offeror) and the general offer to acquire the Shares is approved and the offer becomes or is declared unconditional in all respects, a RSU Participant’s RSUs will vest immediately, even if the vesting period has not yet commenced.

(n) Rights on a compromise or arrangement

If a compromise or arrangement between our Company and our Shareholders or creditors is proposed in connection with a scheme for the reconstruction of our Company or its amalgamation with any other company or companies and a notice is given by our Company to our Shareholders to convene a general meeting to consider and if thought fit approve such compromise or arrangement and such Shareholders’ approval is obtained, a RSU Participant’s RSUs will vest immediately, even if the vesting period has not yet commenced.

(o) Rights on voluntary winding-up

If an effective resolution is passed during the RSU Scheme Period for the voluntary winding-up of the Company (other than for the purposes of a reconstruction, amalgamation or scheme of arrangement), all outstanding RSUs shall be treated as having vested immediately. No

–IV-51– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Shares will be transferred, and no cash alternative will be paid, to the RSU Participant, but the RSU Participant will be entitled to receive out of the assets available in liquidation on an equal basis with our Shareholders such sum as they would have received in respect of the RSUs.

(p) Lapse of RSUs

(i) Full lapse of RSU

Any unvested RSU will automatically lapse immediately where:

(a) such RSU Participant’s employment or service terminates for any reason, except (i) the employment or service is terminated by reason of death, retirement or disability; (ii) where the employment is terminated involuntarily without cause; (iii) where the company employing the RSU Participant ceases to be one of our subsidiaries; or (iv) any other incident occurs as the Board may at its discretion specify; or

(b) the RSU Participant makes any attempt or takes any action to sell, transfer, assign, charge, mortgage, encumber, hedge or create any interest in favor of any other person over or in relation to any RSUs or any interests or benefits pursuant to the RSUs.

(ii) Partial Lapse of RSU

A RSU Participant’s unvested RSU will lapse on a proportional basis based on the proportion that (i) the time between the RSU Grant Date and the occurrence of the following relevant event bears to; and (ii) the entire vesting period set out in the RSU Participant’s RSU Grant Letter if:

(a) the RSU Participant’s employment or service is terminated because of the RSU Participant’s death, retirement or disability;

(b) the RSU Participant’s employment or service is terminated involuntarily without cause;

(d) any other incident occurs as our Board may at its discretion specify, provided that the performance criteria set out in the RSU Grant Letter have been fully satisfied and fulfilled, if capable of being satisfied or fulfilled, with reference to the date of occurrence of that event.

–IV-52– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(iii) If at any time, a RSU Participant:

(a) ceases to be an employee as a result of termination of his employment with our Group for cause. For the purpose of this paragraph (p), “cause” means the RSU Participant is in breach of his contract of employment with or any other obligation to the Group;

(b) fails, during the course of his employment, to devote the whole of his time and attention to the business of our Group or to use his best endeavors to develop the business and interests of our Group;

(c) is concerned during the course of his employment with our Group (without the prior written consent of our Company) with any (competitive or other) business other than that of our Group; and/or

(d) is in breach of his contract of employment with or any other obligation to our Group, then all vested and unvested RSUs shall automatically lapse and such RSU Participant shall have no claim whatsoever in respect of the RSUs or the underlying Shares.

(q) Cancellation of RSUs

Our Board may at its discretion cancel any RSU that has not vested or lapsed, provided that: (i) our Company or our subsidiaries pay to the RSU Participant an amount equal to the fair value of the RSU at the date of the cancellation as determined by our Board, after consultation with our auditors or an independent financial advisor appointed by our Board; (ii) our Company or our relevant subsidiary provides to the RSU Participant a replacement award (or a grant or option under any other restricted share unit scheme, share option scheme or share-related incentive scheme) of equivalent value to the RSUs to be canceled; or (iii) our Board makes any arrangement as the RSU Participant may agree in order to compensate him/her for the cancellation of the RSUs.

(r) Reorganization of capital structure

In the event of any capitalization issue, rights issue, consolidation, sub-division or reduction of the share capital of the Company, our Board may, but is not obliged to, make such equitable adjustments, designed to protect the RSU Participants’ interests, to the number of Shares underlying the outstanding RSUs or to the amount of the equivalent value, as it may deem appropriate at its absolute discretion.

–IV-53– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

(s) Amendment of the RSU Scheme

Save as provided in the RSU Scheme, our Board may alter any of the terms of the RSU Scheme at any time. Written notice of any amendment to the RSU Scheme shall be given to all RSU Participants. Any alterations to the terms and conditions of the RSU Scheme which are of a material nature or any changes to the terms of the RSUs granted which shall operate to affect materially adversely any subsisting rights of any RSU Participant shall be subject to the consent of the RSU Participants amounting to three-fourths in nominal value of all underlying RSUs so held by the RSU Participants on the date of the relevant resolution passed by our Board in approving the amendment of the RSU Scheme or the terms of the RSUs granted (as the case may be), except where the alterations or changes take effect automatically under the existing terms of the RSU Scheme. Our Board’s determination as to whether any proposed alteration to the terms and conditions of the RSU Scheme or the terms of the RSUs granted (as the case may be) is material shall be conclusive.

(t) Termination of the RSU Scheme

Our Board may terminate the RSU Scheme at any time before the expiry of the RSU Scheme Period. The provisions of the RSU Scheme shall remain in full force and effect in respect of RSUs which are granted pursuant to the rules of the RSU Scheme prior to the termination of the operation of the RSU Scheme. Our Company or our relevant subsidiary shall notify the RSU Trustee and all RSU Participants of such termination and of how any property held by the RSU Trustee on trust for the RSU Participants (including, but not limited to, any Shares held) and the outstanding RSUs shall be dealt with.

(u) Administration of the RSU Scheme

Our Board has the power to administer the RSU Scheme, including the power to construe and interpret the rules of the RSU Scheme and the terms of the RSUs granted under it. Our Board may delegate the authority to administer the RSU Scheme to a committee of our Board. Our Board may also appoint one or more independent third party contractors (including the RSU Trustee) to assist in the administration of the RSU Scheme and delegate such powers and/or functions relating to the administration of the RSU Scheme as our Board thinks fit.

Our Board’s determinations under the RSU Scheme need not be uniform and may be made by it selectively with respect to persons who are granted, or are eligible to be granted, RSUs under it. If a Director is a RSU Participant he may, notwithstanding his/her own interest and subject to our Articles, vote on any Board resolution concerning the RSU Scheme (other than in respect of his/her own participation in it), and may retain RSUs under it.

–IV-54– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

Each RSU Participant waives any right to contest, amongst other things, the value and number of RSUs or Shares or equivalent value of cash underlying the RSUs or Shares and our Board’s administration of the RSU Scheme.

(v) General

An application has been made to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, new Shares underlying the RSUs which may be granted pursuant to the RSU Scheme.

As the RSU Scheme will become effective from the Listing Date, no RSUs have been granted under the RSU Scheme as at the Latest Practicable Date. Details of the RSU Scheme will be disclosed in our future annual reports, including, among others, (i) the terms of the RSU Scheme; (ii) the fair value of the Shares issued pursuant to the RSU Scheme for the following financial year and the potential maximum dilution effect on the Shareholders as a result.

E. OTHER INFORMATION

1. Estate duty and Tax Indemnity

Our Directors have been advised that no material liability for estate duty is likely to fall on our Company or any of our subsidiaries.

2. Litigation

As of the Latest Practicable Date, save as disclosed in “Business — Legal Proceedings and Non-compliance”, no member of our Group was engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance was known to our Directors to be pending or threatened by or against our Group, that would have a material adverse effect on its business, financial condition or results of operations.

3. Sole Sponsor

The Sole Sponsor has made an application on behalf of our Company to the Listing Committee for the listing of, and permission to deal in, the Shares in issue, the Shares to be issued pursuant to the [REDACTED] (including the additional Shares which may be issued pursuant to the exercise of the [REDACTED]), and the Shares to be issued pursuant to the exercise of options which may be granted under the [REDACTED] Incentive Scheme or pursuant to the RSU Scheme. All necessary arrangements have been made to enable such Shares to be admitted into [REDACTED].

–IV-55– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules. Please refer to “[REDACTED] — Independence of the Sole Sponsor” for details regarding the independence of the Sole Sponsor.

The fees payable to the Sole Sponsor are US$1,000,000 and are payable by our Company.

4. No Material Adverse Change

Our Directors confirm that there has been no material adverse change in the financial or trading position or prospects of our Group since December 31, 2020 (being the date to which the latest audited consolidated financial statements of our Group were prepared).

5. Qualification of Experts

The following are the qualifications of the experts (as defined under the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance) who have given opinions or advice which are contained in this document:

Name Qualification China Merchants Securities (HK) Licensed corporation under the SFO to conduct type 1 Co., Limited (dealing in securities), type 2 (dealing in future contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) as defined under the SFO

Ernst & Young Certified Public Accountants and Registered Public Interest Entity Auditor

Commerce & Finance Law Offices Legal advisors as to PRC law

Maples and Calder (Hong Kong) Legal advisors as to Cayman Islands law LLP

Hogan Lovells Legal advisors as to International Sanctions law and with respect to certain Hong Kong law

Shanghai iResearch Co., Ltd., China Industry consultant

Protiviti Shanghai Co., Ltd. Internal control consultant

–IV-56– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

6. Consents of Experts

Each of the experts as referred to in “— E. Other Information — 5. Qualification of Experts” in this Appendix has given and has not withdrawn their respective written consents to the issue of this document with the inclusion of their reports and/or letters and/or legal opinion (as the case may be) and references to their names included in the form and context in which it respectively appears.

None of the experts named above has any shareholding interests in our Company or any of our subsidiaries or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in our Company or any of our subsidiaries.

7. Promoter

Our Company has no promoter for the purpose of the Listing Rules. Save as disclosed in this document, within the two years immediately preceding the date of this document, no cash, securities or other benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to any promoters in connection with the [REDACTED] and the related transactions described in this document.

8. Preliminary Expenses

The preliminary expenses incurred by our Company were approximately US$4,551.20 and were payable by us.

9. Binding Effect

This document shall have the effect, if an application is made in pursuance of this document, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance insofar as applicable.

10. Bilingual Document

The English language and Chinese language versions of this document are being published separately, in reliance upon the exemption provided by Section 4 of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the laws of Hong Kong).

–IV-57– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX IV STATUTORY AND GENERAL INFORMATION

11. Miscellaneous

(a) Save as disclosed in this document, within the two years immediately preceding the date of this document:

(i) neither we nor any of our subsidiaries has issued or agreed to issue any share or loan capital fully or partly paid up either for cash or for a consideration other than cash;

(ii) no share or loan capital of our Company or any of our subsidiaries is under option or is agreed conditionally or unconditionally to be put under option;

(iii) no commissions, discounts, brokerage or other special terms have been granted in connection with the issue or sale of any shares or loan capital of any member of our Group;

(iv) no commission has been paid or payable (except commission to sub-underwriters) to any persons for subscription, agreeing to subscribe, procuring subscription or agreeing to procure subscription of any shares of our Company or any of our subsidiaries;

(v) no founder, management or deferred shares of our Company or any of our subsidiaries have been issued or agreed to be issued; and

(vi) there is no arrangement under which future dividends are waived or agreed to be waived.

(b) Our Directors confirm that:

(i) since December 31, 2020 (being the date on which the latest audited consolidated financial statements of our Group were made up), there has been no material adverse change in our financial or trading position or prospects;

(ii) there has not been any interruption in the business of our Company which may have or have had a material adverse effect on the financial position of our Company in the 12 months immediately preceding the date of this document; and

(iii) our Company has no outstanding convertible debt securities or debentures.

–IV-58– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

The documents attached to a copy of this document and delivered to the Registrar of Companies in Hong Kong for registration were:

(a) a copy of the [REDACTED];

(b) copies of each of the material contracts referred to in “Statutory and General Information — B. Further Information About Our Business — 1. Summary of Material Contracts” in Appendix IV; and

(c) the written consents referred to in “Statutory and General Information — E. Other Information — 6. Consents of Experts” in Appendix IV.

2. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Miao & Co. (in association with Han Kun Law Offices), Rooms 3901-05, 35/F., Edinburgh Tower, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours up to and including the date which is 14 days from the date of this document:

(a) the Memorandum and Articles of Association of our Company;

(b) the accountants’ report and the report on the unaudited pro forma financial information prepared by Ernst & Young, the texts of which are set out in Appendices I and II, respectively;

(d) the legal opinions issued by Commerce & Finance Law Offices, our PRC Legal Advisor, dated [REDACTED] in respect of certain aspects of our Group and the property interests of our Group;

(e) the letter of advice prepared by Maples and Calder (Hong Kong) LLP, our Cayman legal advisor, summarizing certain aspects of the Cayman Companies Act referred to in Appendix III;

–V-1– THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION “WARNING” ON THE COVER OF THIS DOCUMENT.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES AND AVAILABLE FOR INSPECTION

(f) the legal memorandums issued by Hogan Lovells, legal advisors to our Company as to International Sanctions law and with respect to certain Hong Kong law.

(g) the industry report issued by Shanghai iResearch Co., Ltd., China;

(h) the review report prepared by Protiviti Shanghai Co., Ltd., our internal control consultant;

(i) the material contracts referred to in “Statutory and General Information — B. Further Information About Our Business — 1. Summary of Material Contracts” in Appendix IV;

(j) the written consents referred to in “Statutory and General Information — E. Other Information — 6. Consents of Experts” in Appendix IV;

(k) service contracts and letters of appointment referred to in “Statutory and General Information — C. Further Information about Our Directors and Substantial Shareholders — 2. Directors’ Service Contracts and Letters of Appointment” in Appendix IV;

(l) the rules of the [REDACTED] Incentive Scheme;

(m) the full list of all the grantees who have been conditionally granted share options to subscribe for the Shares under the [REDACTED] Incentive Scheme, containing all the details as required under the Listing Rules and Companies (Winding Up and Miscellaneous Provisions) Ordinance;

(n) the rules of the RSU Scheme; and

(o) the Cayman Islands Companies Act.

–V-2–