无自有产能全数外包

Our suppliers adopt an OEM model to manufacture and/or affix labels of our brands on our nutritional products.

During the Track Record Period, we procured our algal oil DHA and probiotics products from our direct suppliers that are established in the PRC, Hong Kong and the U.S., and we require our suppliers for our algal oil DHA and probiotics products to use the principal raw materials supplied by DSM Group and the Probiotics Raw Material Supplier, respectively.

As such, Frost & Sullivan is of the view that our Group’s procurement and production arrangement aligns with established industry norms, leveraging external processing expertise to ensure product quality and efficiency.

The majority of our suppliers include manufacturing partners who primarily provide OEM services based in the PRC and logistics services providers.

Our cost of sales for sales of goods primarily consists of (i) procurement costs paid for OEM manufacturing services; (ii) logistics costs, mainly including costs of last-mile fulfillment services for delivering from overseas warehouses to individual consumers and costs of first-mile international freight services for transport of goods from vendors to ports of entry of imports; and (iii) write-down of inventories, reflecting the difference between the net realizable value and the book value of inventories not sold by the end of the year/period.

We regularly evaluate our suppliers' performance to guarantee the consistency and quality of our supplies, and we replace any suppliers who do not meet our standards and requirements.

We engage an industry-leading multinational semiconductor manufacturer (“Supplier A”) as the manufacturer of our processing hardware.

Our Group operates the business as a whole, focusing on research and development of proprietary software and hardware and providing automotive solutions for passenger vehicles and non-automotive solutions, and does not maintain manufacturing facilities or develop manufacturing capacity by ourselves.

Our suppliers are only entitled to use underlying intellectual properties for the purpose of manufacturing, assembling and testing the processing hardware we have requested.

While we previously relied on a combination of outsourced manufacturing by qualified contract manufacturers and in-house production, we transitioned to a fully outsourced, asset-light model from February 2022 to meet the rising demands for greater production capacity and efficiency.

Under this outsourcing model, our contract manufacturers produce products for us primarily on an OEM basis.

We have also entered into tripartite agreements with suppliers of our molds and contract manufacturers.

We currently engage TSMC to manufacture all of our SoCs.

Though we do not have any supply commitment from TSMC directly or indirectly, there was no indications that our cooperation with TSMC might be disrupted as of the Latest Practicable Date.

We also engage contract manufacturers to produce our devices such as driver fatigue alert system, in order to focus our resources on technology innovation, product design, sales and customer support.

services which were handled by our own staff at our self-operated warehouses, all components of our supply chain solutions were provided by third-party services providers.

During the Track Record Period, our Group/Shenzhen EDA Group had a large portfolio of carefully selected third-party logistics service providers, comprising over 60 third-party warehouse providers, 300 international freight forwarding service providers, ocean carriers and air carriers and 80 local “last mile” fulfillment service providers.

We also carefully select our service providers based on a variety of factors, including industry experience, geographic location, financial condition, management skills and risk control procedures.

Unlike the IDM model where companies perform design, manufacturing, packaging and testing of IC products, companies operating with a fabless model focus on the design process, and outsource the IC manufacturing to foundries.

Although we currently do not operate any manufacturing facilities, we have a number of policies in place to select and continuously evaluate the foundries and ensure compliance with the relevant requirements.

We evaluate the selected foundries periodically to ensure that they are in continuous compliance with our internal control requirements and provide qualified supplies in a timely manner.

For 2020, 2021, 2022 and the five months ended 31 May 2022 and 2023, revenue from the sale of pigs and yellow-feathered broilers raised under the family farm models amounted to RMB7,347.4 million, RMB7,884.6 million, RMB12,884.9 million, RMB3,841.3 million and RMB5,434.6 million, representing 90.2%, 79.6%, 85.7%, 83.8% and 85.4% of our total revenue during the same periods, respectively.

On one hand, the family farm models allow us to defer the manual labour processes of pig and poultry production to farm owners and reduce our capital input.

We maintain close supervision throughout all stages of farm owners’ operations to ensure they comply with our standards.

Our top five suppliers in each year or period during the Track Record Period in aggregate accounted for 13.7%, 21.7%, 26.4% and 38.3% of our total purchases in 2020, 2021, 2022 and in the three months ended March 31, 2023, respectively.

Our five largest suppliers shifted from a mix of hardware vendors and development service providers in 2020 to consisting entirely development service providers in 2021, primarily because of our increased demand for third party technology services driven by our enhanced research and development efforts and the expansion of our business.

We are entitled to all copyrights in relation to the R&D projects, including but not limited to the technical materials, documents, source codes and applications.

We outsource and subcontract the manufacturing of our products to multiple contract manufacturers located in China. We believe that outsourcing the manufacturing of our products enables greater scale and flexibility at lower costs than establishing our own manufacturing facilities.

Although we generally do not restrict our outsourcing and subcontracting partners to supply fitness products to other parties, they are required to supply exclusively to us the fitness products that are protected under our intellectual properties, such as smart fitness devices and certain fitness gear collections.

Although we do not have employees stationed at the facilities of our outsourcing and subcontracting partners, our quality control team performs sampling inspection to ensure that our outsourcing and subcontracting partners fully adhere to our quality standards.

Our products are manufactured by selected third-party manufacturers in China that specialize in the manufacturing of skincare products or nutritional food.

We from time to time enter into OEM cooperation framework agreements with OEM manufacturers in relation to the production of various products.

We are entitled to check and inspect Hangzhou Hengmei’s factories and quality control system.