Hong Kong IPO disclosure precedents · 287 companies, 291 items
General disclosure of the proportion of revenue generated through distributors/dealers and the number of distributors, including additions, terminations, expansion or streamlining of the network.
During these years, revenue from distributors amounted to RMB402.9 million, RMB421.4 million and RMB642.1 million, representing 69.4%, 65.2% and 58.1% of our total revenue for the respective periods.
Business · p. 157
In 2023, 2024 and 2025, we engaged nine, four and 16 new distributors, respectively.
Business · p. 159
This enables us to monitor actual sales, track logistics, and mitigate risks such as channel stuffing and cannibalization among distributors.
As of December 31, 2023, 2024 and 2025, we had nil, 33 and 98 distributors, respectively.
Business · p. 140
For the years ended December 31, 2023, 2024 and 2025, revenue generated from our distributors amounted to nil, RMB85.2 million and RMB372.9 million, respectively, representing nil, 68.6% and 71.4% of our total revenue for the corresponding years.
Business · p. 140
We operate primarily on a made-to-order basis, with production and delivery scheduled after receiving relevant purchase orders and deposits.
As of the Latest Practicable Date, we had five distributors.
Business · p. 238
We require distributors to make full prepayment for the purchase of our products, which is specified in the sales contract.
Business · p. 238
During the Track Record Period, we ceased our distributorship arrangements with three distributors and did not renew our distribution agreement after expiration with one distributor, mainly as a result of their lower-than-expected marketing efforts put on our product after our assessment.
As of December 31, 2025, we had a total of 816 distributors, among which 785 and 31 were located in China and overseas, respectively.
Business · p. 146
The decrease in the number of distributors each year was primarily because (i) certain distributors exited from the coronary interventional medical devices market due to the adoption of the centralized procurement and two-invoice schemes, see ‘‘— Recent Development in Our Regulatory Environment — Centralized Procurement’’; and (ii) our distribution agreements with certain distributors expired and we decided not to renew such agreements due to commercial reasons, such as the distributors’ unsatisfactory sales performance or change of business focus.
Business · p. 146
We have implemented the following measures to minimize the risk of channel stuffing. We believe that our sales to distributors during the Track Record Period reflected genuine market demand and that the risk of channel stuffing was relatively low.
During the Track Record Period, nearly all of our revenue from the overseas markets was generated through our expanding distribution network.
Business · p. 118
For domestic distributors, we generally require payment prior to delivery, while granting credit terms based on their scale, creditworthiness, and cooperation history.
Business · p. 121
In 2023, 2024, and 2025, the amount of returns from our distributors to us was RMB0.01 million, RMB2.7 million, and RMB1.0 million, respectively.
This distribution approach remains at an early and experimental stage, as evidenced by the immaterial revenue contribution (accounting for only 0.9%, 0.8% and 0.9% of our total revenue from continuing operations for the years ended December 31, 2023, 2024 and 2025, respectively) and the limited number of distributors maintained throughout the Track Record Period.
Business · p. 118
Our distributors may distribute our products to both end users and sub-distributors in the designated sales territories.
Business · p. 119
We believe the risk of channel stuffing is low in relation to our sales with trading partners and distributors for the following reasons: (i) we generally require payment before delivery; (ii) we generally do not allow returns or replacements of products, unless there are product quality issues caused by us.
During the Track Record Period, we observed a slowdown in the growth of both the number of distributor-operated stores and distributors.
Business · p. 120
We strive to minimize the channel stuffing risks associated with our distributors through the following measures: (i) determining reasonable purchase amount requirement based on the specific customer level considering factors such as their scale of operations and financial resources, (ii) we generally do not allow returns of products sold to distributors unless there are product defects and other causes that are not attributable to the distributors, a return policy that is in line with the industry norms and (iii) from time to time communicate with distributors about the inventory status and conduct ad hoc store inspection to gain insights on their daily management sales conditions.
During the Track Record Period, our product sales primarily focused on ethanol and microbial protein, and we adopted a dual sales model combining direct sales and distributorships to serve different customer segments.
Business · p. 133
Our Directors believes that the risk of “channel stuffing” in our distribution model is minimal due to several factors: (i) before selling products to distributors, we assess transaction history, sales volume in the region, and payment history of the distributors to evaluate the reasonableness of sales amounts
As of December 31, 2025, our distribution network comprised 116 distributors across over 31 provincial-level regions in China.
Business · p. 158
There were no sub-distributors during the Track Record Period, and our distributors typically place purchase orders with us only after receiving confirmed medication orders from end-customers.
Business · p. 159
Based on the above, our Directors believe that there was no unreasonable accumulation of inventories by our distributors during the Track Record Period.
During the Track Record Period, we collaborated with 754, 1,705 and 2,458 regional sales partners and reached over 293,000, 292,000 and 258,000 dispensing terminals in 2023, 2024 and 2025, respectively.
Business · p. 143
The significant increase in 2024 is primarily due to the new regional sales partners we collaborated through our subsidiaries in the PRC, as we leveraged our sales network and strategically moved to expand customer coverage, deepen market penetration and enhance both the depth and breadth of our market presence in the PRC.
Business · p. 144
We also implemented internal control measures to prevent channel stuffing.
Distributors purchase our productized GJ AI workforce solutions for promotion and resale the same to end users leveraging their local marketing resources, expertise in specific industry verticals and experience in introducing AI solutions to the local market.
Business · p. 143
We did not renew our agreements with such distributors upon expiration, based on our evaluation of their market potential and our future business strategies.
Business · p. 143
Demand-driven procurement and sales network structure inherently eliminates financial motivation for distributors to overstock offerings procured from us.
The revenue generated from our Type A distributors accounted for over 80% of the overall revenue generated from our distribution channel in each year during the Track Record Period.
Business · p. 161
Upon engagement, type A distributors are required to conduct monthly inventory checks and submit monthly PSI reports to us, which include stock levels, changes in inventory, and alerts on potential overstocking or stockouts.
Business · p. 164
We aim to minimize cannibalization among the distributors and sales channels, including sales carried out by distributors outside their designated geographic areas and sales across different sales channels without our prior authorization.
As of December 31, 2025, we were working with 126 distributors and did not rely on any single or a few distributors.
Business · p. 137
The number of distributors terminated increased during the Track Record Period, primarily because (i) we continued to establish our overseas sales network and reduced our reliance on distributors; and (ii) we refined our distribution network to phase out certain underperforming distributors.
Business · p. 139
In light of the foregoing, we believe that our sales reflect actual demand from our end customers, thereby minimizing the risk of channel stuffing and cannibalization within the distribution network.
As of December 31, 2023, 2024 and 2025, we had 212, 156 and 67 channel partners covering all the provinces in China, respectively.
Business · p. 150
The significant decrease in the number of our channel partners during the Track Record Period resulted from a deliberate and proactive strategy to optimize our distribution network.
Business · p. 150
We incurred channel marketing expenses of RMB64.5 million, RMB70.9 million and RMB68.3 million in 2023, 2024 and 2025, respectively, accounting for 40.4%, 46.4% and 38.8% of our selling and marketing expenses during the same periods, respectively.
In addition to selling our products to display panel manufacturers directly, we also sell our products to display panel manufacturers through distributors primarily for shorter cash collection cycle and better capital management.
Business · p. 162
In 2023, 2024 and 2025, sales to our distributors amounted to RMB506.1 million, RMB656.7 million and RMB736.2 million, accounting for 70.3%, 73.7% and 66.6% of our total revenue in the respective years.
Business · p. 163
During the Track Record Period, the Group has been dependent on a limited number of distribution channels to market its products.
As of December 31, 2025, our distribution network comprised over 330 distributors across 19 countries and regions.
Business · p. 188
We operate a seller-buyer model with our distributors, where they take ownership of the drug products upon delivery — assuming all associated risks, including unsold stock — and are not entitled to return the sold products unless in cases of product defects.
Business · p. 187
The additions and terminations of distributors during the Track Record Period were primarily due to (i) the adjustment of our distribution arrangements for oseltamivir phosphate capsules, where we consolidated our network into a smaller number of key distributors to better manage pricing and oversee our distribution channels, resulting in the termination of distributors, and (ii) the addition of new distributors in connection with newly launched products.
During the Track Record Period, a majority of our revenue was generated from distributorship.
Business · p. 122
We added 1,280, 1,513 and 1,654 new distributors in 2023, 2024 and 2025, respectively, primarily based on the ordinary needs arising from our sales operations.
Business · p. 123
To mitigate channel stuffing risks in our distributorship model, we have implemented a series of control measures designed to further align distributor purchases with actual market demand.
As of the Latest Practicable Date, we had 12 distributors in China, including (i) five distributors that had entered into distribution agreements with us, (ii) four distributors that had recorded sales of AxiLona EL-100, and (iii) three distributors that had recorded sales of both AxiLona EL-100 and AxiLona AXP-100, and we currently do not have any sub-distributors.
Business · p. 199
We require the distributor to pay 100% payment before shipment.
Business · p. 200
Our Directors confirmed that there was no material breach of distribution agreements and sales and purchase agreements that caused the termination of such agreements during the Track Record Period.
In addition to the sales to Amazon under the Vendor Central program, we also sell our branded products through retailers who signed distribution agreements with us, with amounts of RMB4.6 million, RMB7.7 million and RMB11.2 million in FY2023, FY2024 and FY2025, respectively, accounting for 1.3%, 1.7% and 2.3% of our total revenue for the same periods, respectively.
Business · p. 160
They shall neither distribute our branded products outside of the designated channels nor further distribute our branded products to sub-distributors without our prior approval.
Business · p. 160
This strict policy precludes them from returning unsold inventory of our branded products.