经销模式

The inventory turnover days of the Respondent Distributors were 258.1 days, 293.8 days, 375.0 days and 537.0 days during each year/period of the Track Record Period, respectively.

The inventory turnover days of Respondent Distributors further increased from 375.0 days in 2022 to 537.0 days in the six months ended June 30, 2023, primarily due to a higher ending inventory balance as of June 30, 2023 because distributors increased purchase amount out of optimism in light of (1) the market sentiment from the expected recovery over the pandemic, and (2) the resumption of our normal business operations and marketing activities such as Journey Home after the alleviation of the pandemic.

Therefore, our Directors are of the view that our distributors’ unsold inventory level for products purchased from us was reasonable during the Track Record Period.

In 2020, 2021, 2022 and the five months ended May 31, 2022 and 2023, the revenue generated from our sales to offline distributors was RMB409.8 million, RMB509.9 million, RMB477.5 million, RMB198.7 million and RMB208.6 million, respectively, representing 70.8%, 69.0%, 60.3%, 59.5% and 59.0% of our revenue generated from offline channels, respectively.

We believe that the risk of channel stuffing on our distributors is low, based on the following facts and observations: (1) our relationship with offline distributors is a buyer and seller relationship and we generally require payments before delivery; (2) we do not accept returns of our products and only allow exchanges of our products under limited circumstances such as quality defects or damages during transportation; (3) our online distributors generally do not maintain an inventory as we typically receive orders from such distributors and ship products in the manner mandated by the order (i.e., usually to retail customers directly); and (4) our offline distributors generally maintain a relatively low level of inventory and frequently make procurement from us to replenish their inventory.

We do not rely on any single distributor or a few distributors.

The number of our pig dealers decreased from 1,951 as at 31 December 2020 to 1,318 as at 31 December 2021, and further to 1,090 as at 31 December 2022.

The number of dealers decreased during the Track Record Period primarily as a result of our efforts to continuously streamline our dealer base.

Once our pigs are sold to pig dealers, we recognise the revenue, and the ownership and risks of the pigs are transferred the pig dealers.

Due to the non-performing asset ratio of our finance lease agreements through this channel was higher than that of our self-operated sales outlets, we ceased to work with any agents to promote our passenger vehicles under our automobile retail and finance business in 2021.

For the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023, there were 137, 84, 70 and 14 agency agreements with the e-hailing vehicle agents, respectively, discontinued in view of the unsatisfactory performance of certain e-hailing vehicle agents.

We also conduct assessments on their performance from time to time and monitor the non-performing asset ratio in relation to the customers referred by the respective agents.

During the Track Record Period, we derived substantially all of our revenue from the sales of our proprietary brand products primarily comprising hotpot and barbecue products to our franchisees, who operate franchised stores under our brand and sell our products to consumers.

Generally, franchisees pay for products procured from us in advance of shipment.

As such our Directors are of the view that franchisees have little incentive or ability to maintain an unreasonably high level of inventory and thus the risk of channel stuffing by our franchisees is low.

In 2020, 2021 and 2022 and the four months ended April 30, 2022 and 2023, revenue generated from offline channels was RMB1,664.8 million, RMB2,771.7 million, RMB4,245.0 million, RMB1,057.5 million and RMB1,455.7 million, respectively, representing 70.7%, 82.4%, 89.8%, 92.3% and 89.3% of our revenue from sales of products for the same periods.

As of April 30, 2023, we cooperated with 1,314 offline distributors in mainland China who controlled over 11,400 retail outlets in 319 cities across 30 provincial-level administrative regions in mainland China.

As such, we believe that our sales to distributors correspond to actual end-customer demand and therefore our products are at low risk of channel stuffing in our distribution network.

As of March 31, 2023, we had 553 distributors.

In 2020, 2021, 2022 and the three months ended March 31, 2022 and 2023, we generated revenue of RMB103.6 million, RMB170.5 million, RMB240.8 million, RMB33.2 million and RMB64.9 million from distributors, respectively, representing 4.5%, 4.7%, 5.3%, 3.6% and 6.0% of our revenue during the same period, respectively.

In 2020, 2021, 2022 and the three months ended March 31, 2023, we terminated cooperation with 26, 25, 52 and 96 distributors, respectively.

we purchased a small amount of healthcare products from suppliers starting in 2020 and sold to a total of 13 Chinese distributors, who then resold such healthcare products to several medical institutions that collaborated with us in building and operating cardiology consortiums.

As such, we were deemed to be acting as an agent in the arrangement, and only the surcharge was recognized as our revenue. In 2020, revenue generated from such arrangement was RMB0.8 million, accounting for approximately 0.6% of the revenue from our smart healthcare products and approximately 0.2% of our total revenue in 2020.

We expect to continue such arrangement in a small size going forward, and believe that its impact on our financial results remained insignificant due to its limited size.

As of 31 March 2023, our Tuhu workshop network consisted of 160 self-operated stores and 4,610 franchised Tuhu workshops under the management of 2,298 franchisees.

The majority of our products and services revenue is generated through Tuhu workshops.

In addition, we focuses on controlling the supply chain, inventory, store finance, operation and technicians of stores to ensure consistent service quality and product authenticity.

We had 12, 44, 69 and 82 wholesale customers as at December 31, 2019, 2020, 2021 and 2022, respectively.

In general, our wholesale customers are allowed to refund excess inventory, slow-selling products, defects and products returned within seven days upon the receipt of their retail customers.

JD.com, our largest wholesale customer, contributed revenue of RMB36.2 million, RMB63.8 million, RMB163.3 million and RMB141.1 million in 2019, 2020, 2021 and 2022, respectively, and is not subject to minimum sales targets or minimum price requirements.

Distributor A is our sole distributor for our magazines and travel guidebooks mainly to newsstands and specified convenience stores and supermarkets in Hong Kong and Macau, whereas Distributor B is our sole distributor of the Madame Figaro Magazine and travel guidebooks mainly to bookstores in Hong Kong and Macau and online bookstores.

The Distributors are required to pay our Group regardless of whether they receive settlement from the retail points.

Our Directors confirmed that it is industry norm in Hong Kong for publishers to engage distributors for sales of magazines and books and regard distributors as customers of the publisher and they believe that the aforesaid revenue recognition policy is in line with industry practice.

During the Track Record Period, we generated a substantial portion of revenue from sale of our products under the new retail segment through a network of distributors and sub-distributors.

For the year ended December 31, 2019, 2020, 2021 and 2022, our revenue attributable to Kunshan Tingshe under the Distribution Agent Assisted Distribution Model amounted to RMB71.0 million, RMB340.8 million, RMB254.3 million and RMB167.7 million, respectively.

For the years ended December 31, 2019, 2020, 2021 and 2022, one, 29, 118 and 46 distributors and 97, 1,936, 3,900 and 5,372 sub-distributors, respectively, ceased to be our distributors or sub-distributors (where applicable).

As of the Latest Practicable Date, we had five distributors, all of which are Independent Third Parties.

We generally do not have minimum purchase requirements, deposit and sales and performance targets to our distributors.

We believe that our sales are driven by the actual consumer demand and therefore we are subject to minimal risk of channel stuffing in our distribution network, primarily because (i) we generally grant a short credit period to distributors; (ii) we only allow returns of products sold to distributors in certain circumstances; and (iii) we do not set minimum purchase requirements for distributors.

Number of distributor customers increased from 14 for FY2020 to 127 for FY2022.

Initially, with an aim to enhance sales of products through digital channels, certain of our brand owner customers have paid the subscription fees of our digitalised tool(s) for use by distributors.

Therefore, our Directors expect that we would be able to reduce our reliance on brand owner customers and diversify our customer base by procuring more distributor customers.

As of December 31, 2022, we collaborated with 6,618 distributors in 31 provincial areas across China to promote and sell our baijiu products.

In 2020, 2021 and 2022, revenue generated from our distribution network represented 88.1%, 88.8% and 88.8% of our total revenue, respectively.

In 2020, 2021 and 2022, revenue from distribution partners accounted for 69.7%, 64.0% and 59.2%, respectively, of our total revenue during the periods.

The number of the departing distribution partners, as a percentage of the total number of distribution partners as of the beginning of each year, increased from 16.7% in 2020 to 21.8% in 2021 and further to 25.3% in 2022.

our Directors do not believe these discontinued partnerships would cause a material adverse impact on our business and results of operations.

We discontinued our partnership with an aggregate number of 13, 89 and 247 store partners in 2020, 2021 and 2022, respectively, primarily due to such store partners’ sub-optimal performance, violation of our contractual arrangements, and/or discontinuation of their business.

As of December 31, 2020, 2021 and 2022 and January 31, 2023, unsold inventory held by our distribution partners amounted to RMB62.6 million, RMB153.6 million, RMB165.9 million and RMB154.5 million, respectively.

We have taken various steps to monitor the inventory level of our distributors.

During the Track Record Period, we did not identify any material discrepancies in sales records across our internal accounting system and our QR code system.