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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022.

OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report_________________

For the transition period from__________to____________

Commission file number: 001-38649

Viomi Technology Co., Ltd

(Exact Name of Registrant as Specified in Its Charter)

N/A

(Translation of Registrant’s Name Into English)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

Wansheng Square, Rm 1302 Tower CXingang East RoadHaizhu District

Guangzhou, Guangdong510220

People’s Republic of China

(Address of Principal Executive Offices)

Xiaoping Chen , Chief Executive Officer

Wansheng Square, Rm 1302 Tower CXingang East RoadHaizhu District

Guangzhou, Guangdong510220

People’s Republic of China

Phone: +86 20 8930 9496

Email: chenxp@viomi.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading
Symbol

Name of Each Exchange On Which Registered

American depositary shares, each representing three Class A ordinary shares

VIOT

The Nasdaq Stock Market LLC
(The Nasdaq Global Select Market)

Class A ordinary shares, par value US$0.00001 per share*

The Nasdaq Stock Market LLC
(The Nasdaq Global Select Market)

*Not for trading, but only in connection with the listing on the Nasdaq Stock Market of American depositary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2022, there were 207,394,013 ordinary shares issued and outstanding, being the sum of (i) 104,539,463 Class A ordinary shares, par value US$0.00001 per share (excluding 19,037,118 Class A ordinary shares that were issued to our depositary bank and reserved for future grants under our share incentive plans), and (ii) 102,854,550 Class B ordinary shares, par value US$0.00001 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes     No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes    No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Emerging growth company 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. 

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.     Yes    No

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP 

International Financial Reporting Standards as issued by the International Accounting Standards Board 

Other 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17     Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes     No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes     No

TABLE OF CONTENTS

INTRODUCTION

1

FORWARD-LOOKING STATEMENTS

2

Part I

3

Item 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

3

Item 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

3

Item 3.

KEY INFORMATION

3

Item 4.

INFORMATION ON THE COMPANY

69

Item 4A.

UNRESOLVED STAFF COMMENTS

100

Item 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

100

Item 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

121

Item 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

129

Item 8.

FINANCIAL INFORMATION

132

Item 9.

THE OFFER AND LISTING

133

Item 10.

ADDITIONAL INFORMATION

133

Item 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

144

Item 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

145

Part II

147

Item 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

147

Item 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

147

Item 15.

CONTROLS AND PROCEDURES

147

Item 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

149

Item 16B.

CODE OF ETHICS

150

Item 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

150

Item 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

150

Item 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

150

Item 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

151

Item 16G.

CORPORATE GOVERNANCE

151

Item 16H.

MINE SAFETY DISCLOSURE

151

Item 16I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

152

Item 16J.

INSIDER TRADING POLICIES

152

Part III

153

Item 17.

FINANCIAL STATEMENTS

153

Item 18.

FINANCIAL STATEMENTS

153

Item 19.

EXHIBITS

153

i

INTRODUCTION

Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to:

“ADRs” are to the American depositary receipts that evidence our ADSs;
“ADSs” are to our American depositary shares, each of which represents three Class A ordinary shares of par value US$0.00001 each;
“China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;
“Class A ordinary shares” refers to our Class A ordinary shares of par value US$0.00001 per share;
“Class B ordinary shares” refers to our Class B ordinary shares of par value US$0.00001 per share;
“household users” as of a specified date are to households where at least one of our IoT products was connected to the internet;
“IoT” are to the Internet of Things, an interconnected network of devices, or “things,” that can communicate with one another through the internet;
our “IoT @ Home platform” are to our ecosystem of innovative IoT-enabled smart home products, together with a suite of complementary consumable products and value-added businesses, powered by advanced AI, proprietary software and data analytics systems;
our “IoT-enabled smart home products” and our “IoT products” are to our portfolio of smart home products with internet or Bluetooth interconnectivity and communication capabilities, including our smart water purification systems, smart kitchen products and other smart products (such as smart water kettles);
“ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.00001 per share;
“our VIEs” are to Foshan Yunmi Electric Appliances Technology Co., Ltd., or Foshan Viomi, and Beijing Yunmi Technology Co., Ltd., or Beijing Viomi;
“Viomi,” “we,” “us,” “our Company” and “our” are to Viomi Technology Co., Ltd, our Cayman Islands holding company and its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs and the subsidiaries of our VIEs in China;
“our WFOE I” are to Lequan Technology (Beijing) Co., Ltd., or Lequan Technology;
“our WFOE II” are to Yunmi Hulian Technology (Guangdong) Co., Ltd., or Yunmi Hulian, and together with our WFOE I, “our WFOEs”;
“RMB” and “Renminbi” are to the legal currency of China;
“US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; and
“Xiaomi” are to Xiaomi Corporation, an internet company and a principal shareholder of our Company as of the date of this annual report, and/or any of its affiliates.

1

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements that relate to our current expectations and views of future events. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigations Reform Act of 1995.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

our mission and strategies;
our future business development, financial conditions and results of operations;
the expected growth of the IoT-enabled smart home products market and the home appliances market in China;
the expected development of our overseas business;
the expected growing application of AI technology in smart home products;
our expectations regarding our relationships with our ecosystem partners;
our expectations regarding the success of our sales channel expansion and optimization;
competition in our industry; and relevant government policies and regulations relating to our industry or any aspect of our operations.

You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect. Other sections of this annual report discuss factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

2

PART I

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.KEY INFORMATION

Our Holding Company Structure and VIE Contractual Arrangements

Viomi Technology Co., Ltd is not a Chinese operating company but rather a Cayman Islands holding company that does not conduct business directly and has no equity ownership in our VIEs. We conduct our operations in China through (i) our WFOEs and (ii) our VIEs with which we have maintained contractual arrangements. PRC laws and regulations restrict and impose conditions on foreign investment in internet and other related businesses in China. According to the Special Administrative Measures (Negative List) for Foreign Investment Access, our provision of internet information services falls within the restricted category and the equity ratio of foreign investment in the enterprises operating the business under the restricted category is subject to the cap of 50%. In addition, although our provision of e-commerce services falls within the permitted category, foreign investments in this business are still restricted by other requirements under related regulations in China. Accordingly, we operate this business in China through our VIEs, and rely on contractual arrangements among our WFOEs, our VIEs and the nominee shareholders of the VIEs to control the business operations of our VIEs. Our VIEs are consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by our VIEs accounted for 99.4%, 91.6% and 86.8% of our total revenues for the years ended December 31, 2020, 2021 and 2022, respectively. As used in this annual report, “we,” “us,” “our company,” “our,” or “Viomi” refers to Viomi Technology Co., Ltd, its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs in China, including Foshan Yunmi Electric Appliances Technology Co., Ltd., or Foshan Viomi and Beijing Yunmi Technology Co., Ltd., or Beijing Viomi. Investors in our ADSs are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

A series of contractual agreements have been entered into by and among our WFOEs, our VIEs and their respective shareholders, including (i) shareholder voting proxy agreements and equity pledge agreements, which provide us with effective control over our VIEs in China, (ii) exclusive consultation and service agreements, which allow us to receive economic benefits from our VIEs in China, (iii) exclusive option agreements, which provide us with the option to purchase the equity interests in, and assets of, our VIEs, and (iv) equity pledge agreements, under which the shareholders of our VIEs have pledged 100% equity interests in our VIEs to our WFOEs to secure shareholders’ obligations under the exclusive option agreements, the shareholder voting proxy agreements and the equity pledge agreements. Terms contained in each set of contractual arrangements with our VIEs and their respective shareholders are substantially similar. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with Our VIEs and Their Shareholders.”

3

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs and we may incur substantial costs to enforce the terms of the arrangements. All of the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes arising from these contracts would be resolved in accordance with PRC legal procedures. These arrangements have not been tested in arbitral tribunals or courts. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States, and the uncertainties involved in it could limit our ability to enforce these contractual arrangements. Further, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with our VIEs and their respective shareholders for substantially all of our business operation, which may not be as effective as direct ownership in providing operation control” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Any failure by our VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business, financial condition and results of operations.”

There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with our VIEs and its nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or if adopted, what they would provide. If we or any of our VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. If the PRC government deems that our contractual arrangements with our VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our WFOEs and VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and their subsidiaries and our company as a whole. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.”

4

We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of inspection by the Public Company Accounting Oversight Board, or the PCAOB, on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchange. Pursuant to the Holding Foreign Companies Accountable Act, or HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC its determinations that it is unable to inspect or investigate completely registered public accounting firms headquartered in Mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of this annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in China, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors —Risks Related to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.”

Cash Flows through Our Organization

Viomi Technology Co., Ltd is a holding company with no operations of its own. We conduct our operations in China primarily through our subsidiaries and VIEs in China. As a result, although other means are available for us to obtain financing at the holding company level, Viomi Technology Co., Ltd.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and license and service fees paid by our VIEs.

5

If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Viomi Technology Co., Ltd. In addition, our PRC subsidiaries are permitted to pay dividends to Viomi Technology Co., Ltd only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and VIEs and their subsidiaries are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company Structure.” For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—Risk Factors—Risks Related to Our Corporate Structure— We may rely on dividends paid by our PRC subsidiaries to fund any cash and financing requirements we may have. Any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.”

Under PRC laws and regulations, our PRC subsidiaries and our VIEs are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by our PRC subsidiaries out of Mainland China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE, and declaration and payment of withholding tax. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of our consolidated variable interest entities in which we have no legal ownership. Our PRC subsidiaries, our VIEs and their subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us. In addition, under the Enterprise Income Tax Law of the PRC, or the EIT Law, and its implementation rules, undistributed profits earned by foreign-invested enterprises, or FIEs, prior to January 1, 2008 are exempted from any withholding tax, while profits of a FIE generated in or after 2008 that are distributed to its immediate holding company outside Mainland China are subject to withholding tax at a rate of 10%, unless the foreign holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. For example, a holding company in Hong Kong, subject to approval of the PRC local tax authority, will be eligible to a 5% withholding tax rate under the Arrangement Between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital if such holding company is considered to be a non-PRC resident enterprise and holds at least 25% of the equity interests in the PRC FIE distributing the dividends. However, if the Hong Kong holding company is not considered to be the beneficial owner of such dividends under applicable PRC tax regulations, such dividend will remain subject to withholding tax at a rate of 10%. See also “Item 3. Key Information—D. Risk Factors— Risks Related to Doing Business in China— Governmental control of currency conversion may limit our ability to utilize our cash balance effectively and affect the value of your investment,” and “Item 5. Operating And Financial Review And Prospects—B. Liquidity and Capital Resources—Holding Company Structure.”

Under PRC law, Viomi Technology Co., Ltd and its offshore subsidiaries may provide funding to our PRC subsidiaries only through capital contributions or loans, and to our VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. In the years ended December 31, 2020, 2021 and 2022, Viomi Technology Co., Ltd extended loans with outstanding principal amount of RMB358.9 million, RMB350.7 million and RMB383.1 million (US$55.0 million), respectively, to our VIEs.

Our VIEs may transfer cash to our relevant WFOEs by paying service fees according to the exclusive consultation and service agreements. Our VIEs agree in the respective exclusive consultation and service agreements to pay our WFOEs an annual service fee at an amount that is equal to 100% of their respective annual net income or the amount which is adjusted in accordance with our relevant WFOE’s sole discretion for the relevant year as well as the mutually agreed amount for certain other technical services, both of which should be paid within three months after the end of the relevant calendar year. Our WFOEs have the exclusive ownership of all the intellectual property rights created as a result of the performance of the exclusive consultation and service agreement, to the extent permitted by applicable PRC laws. In 2020, 2021 and 2022, our WFOE did not collect service fees from our VIEs in China under the exclusive consultation and service agreements.

For asset/cash flows other than the cash flows discussed above transferred through our organization in the years ended December 31, 2020, 2021 and 2022, please refer to “Item 3. Key Information—A. Selected Financial Data—Selected Financial Information Related to the VIEs —Selected Condensed Consolidated Cash Flows Data.”

6

In the year ended December 31, 2020, 2021 and 2022, no dividends or distributions were made to U.S. investors. We do not intend to have any of its subsidiaries located in PRC distribute any undistributed earnings of such subsidiaries in the foreseeable future, but rather expects that such earnings will be reinvested by such subsidiaries in their operations or transferred by such subsidiaries to our VIEs and their subsidiaries for their operations.

For the years ended December 31, 2020, 2021 and 2022, no dividend or distribution was made to Viomi Technology Co., Ltd or its offshore subsidiaries by our PRC subsidiaries. Accordingly, no withholding tax was recorded in the corresponding period. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.”

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within Mainland China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future:

    

Taxation Scenario(1)

 

(Statutory Tax and Standard Rates)

 

Hypothetical pre-tax earnings(2)

 

100

%

Tax on earnings at statutory rate of 25%(3)  

 

(25)

%

Net earnings available for distribution

 

75

%

Withholding tax at standard rate of 10%(4)  

 

(7.5)

%

Net distribution to Parent/Shareholders

 

67.5

%

Notes:

(1)For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China.
(2)Under the terms of the contractual arrangements between our PRC subsidiaries, our VIEs and shareholders of our VIEs, our PRC subsidiaries may charge our VIEs for services provided. These fees shall be recognized as expenses of our VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The fees paid are recognized as a tax deduction by our VIEs and as income by our PRC subsidiaries and are tax neutral.
(3)Certain of our subsidiaries and VIEs qualifies for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.
(4)The EIT Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of Mainland China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with Mainland China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied.

The table above has been prepared under the assumption that all profits of our VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of our VIEs exceed the fees paid to our PRC subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities), our VIEs could, as a matter of last resort, make a non-deductible transfer to our PRC subsidiaries for the amounts of the stranded cash in our VIEs. This would result in such transfer being non-deductible expenses for our VIEs but still taxable income for the PRC subsidiaries. Such a transfer and the related tax burdens would reduce our after-tax income to approximately 50.6% of the pre-tax income. Our management believes that there is only a remote possibility that this scenario would happen.

7

Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiaries and VIEs and their subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and VIEs and their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, our PRC subsidiaries and our VIEs in China, including, among others, the business licenses, the hygiene permits for products related to hygiene and safety of potable water and the VATS License. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.”

Furthermore, we and our VIEs may be required to obtain permissions from or complete filings with the China Securities Regulatory Commission, or the CSRC, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, in case of any future issuance of securities to foreign investors. Any failure to obtain or delay in obtaining such approval or completing such procedures would subject us to sanctions by the CSRC, CAC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required if we were to conduct offshore offerings in the future, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

A.Selected Financial Data

Our Selected Consolidated Financial Data

The following selected consolidated statements of operations and selected consolidated statements of cash flows data for the years ended December 31, 2019, 2020, 2021 and 2022 and selected consolidated balance sheets data as of December 31, 2020, 2021 and 2022 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. Our selected consolidated balance sheets data as of December 31, 2018 and 2019 and the selected consolidated statements of operations and selected consolidated statements of cash flows data for 2018 have been derived from our audited consolidated financial statements not included in this annual report. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read this Selected Consolidated Financial Data and Selected Operating Data section together with our consolidated financial statements and the related notes in conjunction with “Item 5. Operating and Financial Review and Prospects” below.

8

The following table presents our selected consolidated statements of comprehensive income data for the years ended December 31, 2018, 2019, 2020, 2021 and 2022.

    

For the Year Ended December 31,

2018

2019

2020

2021

2022

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands, except for share and per share data)

Selected Consolidated Statements of Comprehensive Income Data:

Net revenues(1)

 

2,561,229

 

4,647,513

 

5,825,624

 

5,303,835

 

3,232,731

 

468,702

Cost of revenues

 

(1,843,432)

 

(3,565,109)

 

(4,742,668)

 

(4,105,767)

 

(2,495,638)

 

(361,834)

Gross profit

 

717,797

 

1,082,404

 

1,082,956

 

1,198,068

 

737,093

 

106,868

Operating expenses(2):

Research and development expenses(2)

 

(124,230)

 

(204,942)

 

(265,680)

 

(311,786)

 

(299,950)

 

(43,489)

Selling and marketing expenses(2)

 

(379,554)

 

(529,212)

 

(597,176)

 

(751,011)

 

(614,887)

 

(89,150)

General and administrative expenses(2)

 

(135,532)

 

(73,061)

 

(68,914)

 

(97,730)

 

(121,702)

 

(17,645)

Total operating expenses

 

(639,316)

 

(807,215)

 

(931,770)

 

(1,160,527)

 

(1,036,539)

 

(150,284)

Other income, net

 

1,829

 

35,880

 

32,795

 

27,128

 

22,135

 

3,209

Income/(loss) from operations

 

80,310

 

311,069

 

183,981

 

64,669

 

(277,311)

 

(40,207)

Interest income and short-term investment income, net

 

8,846

 

26,109

 

31,968

 

28,589

 

10,368

 

1,503

Income/(loss) before income tax expenses

 

89,411

 

339,020

 

217,767

 

94,630

 

(264,456)

 

(38,343)

Income tax expenses

 

(24,061)

 

(45,190)

 

(43,321)

 

(5,739)

 

(18,174)

 

(2,635)

Net Income/(loss)

 

65,350

 

293,830

 

174,446

 

88,891

 

(282,630)

 

(40,978)

Net income/(loss) attributable to the Company

 

65,358

 

292,170

 

173,324

 

88,605

 

(275,515)

 

(39,946)

Net income/(loss) attributable to ordinary shareholders of the Company

 

50,544

 

292,170

 

173,324

 

88,605

 

(275,515)

 

(39,946)

Net income/(loss) per ordinary share—basic

 

0.70

 

1.40

 

0.83

 

0.42

 

(1.32)

 

(0.19)

Net income/(loss) per ordinary share—diluted

 

0.64

 

1.35

 

0.80

 

0.40

 

(1.32)

 

(0.19)

Weighted average number of ordinary shares used in computing net income per share:

 

  

 

  

 

  

 

  

 

  

 

  

Ordinary shares—basic

 

71,771,033

 

208,156,507

 

208,812,049

 

209,551,821

 

208,341,011

 

208,341,011

Ordinary shares—diluted

 

79,590,780

 

215,855,577

 

215,623,773

 

220,735,997

 

208,341,011

 

208,341,011

Notes:

(1)Included RMB1,311.9 million, RMB2,112.2 million, RMB2,889.4 million, RMB2,295.6 million and RMB1,403.4 million (US$203.5 million) from sales to Xiaomi for the year ended December 31, 2018, 2019, 2020, 2021 and 2022, respectively.
(2)Share-based compensation expenses were allocated as follows:

    

For the Year Ended December 31,

2018

2019

2020

2021

2022

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

General and administrative expenses

 

93,718

 

7,282

 

11,303

 

9,130

 

4,415

 

640

Research and development expenses

 

14,476

 

23,564

 

49,996

 

32,609

 

14,645

 

2,123

Selling and marketing expenses

 

8,417

 

12,322

 

10,904

 

5,666

 

500

 

72

Total

 

116,611

 

43,168

 

72,203

 

47,405

 

19,560

 

2,835

9

The following table presents our selected consolidated balance sheet data as of December 31, 2018, 2019, 2020, 2021 and 2022.

    

As of December 31,

2018

2019

2020

2021

2022

    

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

Selected Consolidated Balance Sheet Data:

 

  

 

  

 

  

 

  

 

  

 

  

Current assets:

 

  

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

 

940,298

 

972,438

 

504,108

 

586,955

 

737,139

 

106,875

Amounts receivable from a related party, net

 

260,984

 

707,947

 

609,094

 

320,939

 

360,497

 

52,267

Short-term investments

 

168,993

 

316,201

 

696,051

 

828,867

 

197,058

 

28,571

Total current assets(1)

 

1,902,728

 

2,907,615

 

2,931,899

 

2,945,773

 

2,494,977

 

361,738

Total assets(1)

 

1,923,068

 

3,022,473

 

3,179,519

 

3,276,714

 

2,885,694

 

418,387

Total current liabilities(1)

 

851,685

 

1,632,840

 

1,634,107

 

1,594,528

 

1,326,942

 

192,389

Total liabilities(1)

 

852,203

 

1,648,026

 

1,649,200

 

1,625,787

 

1,456,531

 

211,178

Class A ordinary shares

 

5

 

6

 

6

 

6

 

6

 

1

Class B ordinary shares

 

7

 

6

 

6

 

6

 

6

 

1

Total shareholders’ equity

 

1,070,865

 

1,374,447

 

1,530,319

 

1,650,927

 

1,429,163

 

207,209

Note:

(1)After we issued the press release to report our unaudited financial results for the fourth quarter and the full year of 2022, as furnished to the SEC as Exhibit 99.1 on our current report on Form 6-K (File No.: 001-38649) on March 27, 2023, we made adjustments to correct the amount of input value-added tax (VAT) deductible as of December 31, 2022 during the audit of our consolidated financial statements for the year ended December 31, 2022. In particular, such adjustments as compared to the corresponding financial information in that press release include (i) a decrease in the prepaid expenses and other current assets of RMB84.4million (US$12.2 million), (ii) a decrease in the accounts and notes payable of RMB85.3million (US$12.3million), and (iii) an increase in accrued expenses and other liabilities of RMB0.9million (US$0.1million), each as of December 31, 2022. No adjustment was made with respect to our unaudited consolidated statements of comprehensive income/(loss) and on other items of our unaudited consolidated balance sheet on that press release.

The following table presents our selected consolidated cash flow data for the years ended December 31, 2018, 2019, 2020, 2021 and 2022.

    

For the Year Ended December 31,

2018

2019

2020

2021

2022

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

Selected Consolidated Cash Flow Data:

Net cash provided by/(used in) operating activities

 

222,269

 

245,484

 

185,196

 

308,968

 

(284,169)

 

(41,202)

Net cash (used in)/provided by investing activities

 

(151,821)

 

(268,956)

 

(433,083)

 

(265,321)

 

314,547

 

45,604

Net cash provided by/(used in) financing activities

 

604,975

 

48,542

 

(146,375)

 

17,133

 

113,563

 

16,465

Effect of exchange rate changes on cash and cash equivalents

 

14,473

 

8,087

 

(34,034)

 

(12,703)

 

46,482

 

6,739

Net increase/(decrease) in cash and cash equivalents and restricted cash

 

689,896

 

33,157

 

(428,296)

 

48,077

 

190,423

 

27,606

Cash and cash equivalents and restricted cash at the beginning of the year

 

279,952

 

969,848

 

1,003,005

 

574,709

 

622,786

 

90,295

Cash and cash equivalents and restricted cash at the end of the year

 

969,848

 

1,003,005

 

574,709

 

622,786

 

813,209

 

117,901

We present our financial results in RMB. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of December 30, 2022.

10

Selected Financial Information Related to the VIEs

Set forth below are the condensed consolidated schedule showing the financial position as of December 31, 2020, 2021 and 2022, and results of operations and cash flows for the years ended December 31, 2020, 2021 and 2022 for (i) Viomi Technology Co., Ltd, or the Company; (ii) our WFOEs (which are the primary beneficiary of the VIEs) and WFOEs’ subsidiary; (iii) our other equity subsidiaries (excluding our WFOEs and their subsidiary); (iv) the VIEs and their subsidiaries; (v) eliminating adjustments; and (vi) consolidated totals.

Selected Condensed Consolidated Statements of Operations Data

    

For the Year Ended December 31, 2022

Primary

Beneficiaries

of VIEs and

VIEs and

The 

Equity 

their

their

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiaries

    

Eliminations

    

Consolidated

(RMB in thousands)

Inter-company revenues(1)

946,656

378,286

220,607

(1,545,549)

Related-party and third-party revenues

418,093

9,081

2,805,557

3,232,731

Total revenues

1,364,749

387,367

3,026,164

(1,545,549)

3,232,731

Cost of revenues

(1,099,769)

(364,926)

(2,405,077)

1,374,134

(2,495,638)

Research and development expenses

 

 

(62,955)

 

(47,255)

 

(189,740)

 

 

(299,950)

Selling and marketing expenses(1)

 

 

(193,743)

 

(41,241)

 

(551,575)

 

171,672

 

(614,887)

General and administrative expenses

 

(6,601)

 

(12,447)

 

(3,653)

 

(99,001)

 

 

(121,702)

Total operating expenses

 

(6,601)

 

(269,145)

 

(92,149)

 

(840,316)

 

171,672

 

(1,036,539)

Other income

 

 

4,928

 

1,781

 

15,426

 

 

22,135

Equity in gain/(loss) of subsidiaries/VIEs(3)

 

(288,409)

 

(291,876)

 

(230,240)

 

 

810,525

 

Income from operations

 

(295,010)

 

(291,113)

 

(298,167)

 

(203,803)

 

810,782

 

(277,311)

Interest income/ (expenses) and short-term investment income-net(4)

 

18,438

 

(6,842)

 

6,197

 

(5,993)

 

(1,432)

 

10,368

Other non-operating income/(loss)

 

2,488

 

 

 

(1)

 

 

2,487

Income before income tax expenses

 

(274,084)

 

(297,955)

 

(291,970)

 

(209,797)

 

809,350

 

(264,456)

Income tax expenses/(credit)

 

 

9,546

 

 

(27,720)

 

 

(18,174)

Net income

 

(274,084)

 

(288,409)

 

(291,970)

 

(237,517)

 

809,350

 

(282,630)

Less: Net income attributable to the non-controlling interest shareholders

 

 

 

 

(7,115)

 

 

(7,115)

Net income attributable to the Company

 

(274,084)

 

(288,409)

 

(291,970)

 

(230,402)

 

809,350

 

(275,515)

11

    

For the Year Ended December 31, 2021

Primary

Beneficiaries

of VIEs and

VIEs and

The

Equity

their

their

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiaries

    

Eliminations

    

Consolidated

(RMB in thousands)

Inter-company revenues(1)

1,217,576

241,923

131,379

(1,590,878)

Related-party and third-party revenues

444,421

4,859,414

5,303,835

Total revenues

1,661,997

241,923

4,990,793

(1,590,878)

5,303,835

Cost of revenues

(1,304,955)

(225,445)

(4,162,277)

1,586,910

(4,105,767)

Research and development expenses(2)

 

 

(66,340)

 

(26,497)

 

(222,065)

 

3,116

 

(311,786)

Selling and marketing expenses

 

 

(77,071)

 

(27,188)

 

(646,752)

 

 

(751,011)

General and administrative expenses

 

(6,306)

 

(10,645)

 

(2,900)

 

(77,879)

 

 

(97,730)

Total operating expenses

 

(6,306)

 

(154,056)

 

(56,585)

 

(946,696)

 

3,116

 

(1,160,527)

Other income

 

 

3,878

 

1,727

 

21,523

 

 

27,128

Equity in gain/(loss) of subsidiaries/VIEs(3)

 

78,366

 

(101,065)

 

(61,780)

 

 

84,479

 

Income from operations

 

72,060

 

105,799

 

(100,160)

 

(96,657)

 

83,627

 

64,669

Interest (expenses)/income and short-term investment income-net(4)

 

14,280

 

(3,782)

 

(640)

 

18,886

 

(155)

 

28,589

Other non-operating income/(loss)

 

2,421

 

 

 

(1,049)

 

 

1,372

Income before income tax expenses

 

88,761

 

102,017

 

(100,800)

 

(78,820)

 

83,472

 

94,630

Income tax expenses/(credit)

 

 

(23,651)

 

 

17,912

 

 

(5,739)

Net income

 

88,761

 

78,366

 

(100,800)

 

(60,908)

 

83,472

 

88,891

Less: Net income attributable to the non-controlling interest shareholders

 

 

 

 

286

 

 

286

Net income attributable to the Company

 

88,761

 

78,366

 

(100,800)

 

(61,194)

 

83,472

 

88,605

12

    

For the Year Ended December 31, 2020

Primary

Beneficiaries

of VIEs and

VIEs and

The

Equity

their

their

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiaries

    

Eliminations

    

Consolidated

(RMB in thousands)

Inter-company revenues (1)

185,166

30,643

25,994

(241,803)

Related-party and third-party revenues

27,515

7,634

5,790,475

5,825,624

Total revenues

212,681

38,277

5,816,469

(241,803)

5,825,624

Cost of revenues

(178,054)

(34,020)

(4,770,877)

240,283

(4,742,668)

Research and development expenses(2)

 

 

(14,788)

 

(6,248)

 

(246,163)

 

1,519

 

(265,680)

Selling and marketing expenses

 

 

(1,376)

 

(3,544)

 

(592,256)

 

 

(597,176)

General and administrative expenses

 

(6,183)

 

(486)

 

(2,106)

 

(60,139)

 

(68,914)

 

Total operating expenses

 

(6,183)

 

(16,650)

 

(11,898)

 

(898,558)

 

1,519

 

(931,770)

Other income/(expenses)

 

188

 

(5)

 

32,612

 

32,795

 

 

Equity in gain of subsidiaries/VIEs(3)

 

156,823

 

142,630

 

151,786

 

 

(451,239)

 

Income from operations

 

150,640

 

160,795

 

144,140

 

179,646

 

(451,240)

 

183,981

Interest income/(expenses) and short-term investment income-net(4)

 

20,364

 

(3,665)

 

(1,501)

 

16,761

 

9

 

31,968

Other non-operating income/(loss)

 

2,312

 

(494)

 

1,818

 

 

 

Income before income tax expenses

 

173,316

 

157,130

 

142,639

 

195,913

 

(451,231)

 

217,767

Income tax expenses

 

 

(307)

 

(9)

 

(43,005)

 

(43,321)

 

Net income

 

173,316

 

156,823

 

142,630

 

152,908

 

(451,231)

 

174,446

Less: Net income attributable to the non-controlling interest shareholders

 

 

 

 

1,122

 

 

1,122

Net income attributable to the Company

 

173,316

 

156,823

 

142,630

 

151,786

 

(451,231)

 

173,324

Notes:

(1)It represents the elimination of inter-company transactions among the VIEs and our subsidiaries.

VIEs sell certain products and provide marketing services to other subsidiaries. For the years ended 31 December, 2020, 2021 and 2022, the inter-company sales recognized by VIEs to equity subsidiaries are RMB12.6 million, RMB131.3 million and RMB195.8 million, respectively. Additionally, the inter-company sales recognized by VIEs to primary beneficiaries of VIEs and their subsidiaries for the year ended 31 December, 2020, 2021 and 2022 are RMB13.4 million, RMB0.1 million and RMB24.8 million, respectively.

In 2020, 2021 and 2022, primary beneficiaries of VIEs and their subsidiaries did not charge any service fee from our VIEs in China under the exclusive consultation and service agreements.

(2)WFOE I collected research and development fees from our VIEs in China and recognized as revenue in amounts of RMB1.5 million, RMB3.1 million and RMB nil for the year ended December 31, 2020, 2021 and 2022 respectively, under the research and development agreements. No amount of such transaction is unsettled.
(3)It represents the elimination of the investment in VIEs and subsidiaries by the Company.
(4)It represents the elimination of finance costs of loans among the Company, the VIEs and our subsidiaries charged at the consolidation level.

13

Selected Condensed Consolidated Balance Sheets Data

    

For the Year Ended December 31, 2022

Primary

Beneficiaries

of VIEs and

VIEs and

The 

Equity 

their

their

    

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiaries

    

Eliminations

    

Consolidated

(RMB in thousands)

Assets

  

  

  

  

  

  

Cash and cash equivalents

90,775

222,784

88,104

335,476

737,139

Short-term investments

7,431

352

189,275

197,058

Accounts receivable from third parties

85,544

5,422

150,686

241,652

Accounts receivable from a related party

 

 

 

 

360,497

 

 

360,497

Inventories

 

 

176,787

 

44,450

 

281,649

 

(595)

 

502,291

Amounts due from Group companies(1)

 

659,249

 

692,497

 

54,864

 

707,458

 

(2,114,068)

 

Investments in subsidiaries (2)

 

766,287

 

708,660

 

 

 

(1,474,947)

 

Investments in VIEs (2)

 

 

 

684,277

 

 

(684,277)

 

Other assets

 

13,043

 

110,640

 

295,776

 

427,598

 

 

847,057

Total assets

 

1,529,354

 

2,004,343

 

1,173,245

 

2,452,639

 

(4,273,887)

 

2,885,694

Liabilities

 

  

 

  

 

  

 

  

 

  

 

  

Accounts and notes payable

 

 

458,924

 

7,295

 

377,839

 

 

844,058

Accrued expenses and other liabilities

 

13,028

 

41,385

 

31,352

 

231,325

 

 

317,090

Amounts due to Group companies (1)

 

83,570

 

698,024

 

289,417

 

1,043,056

 

(2,114,067)

 

Other liabilities

 

 

39,723

 

136,349

 

119,311

 

 

295,383

Total Liabilities

 

96,598

 

1,238,056

 

464,413

 

1,771,531

 

(2,114,067)

 

1,456,531

Total equity attributable to shareholders of the Company

 

1,432,756

 

766,287

 

708,832

 

684,701

 

(2,159,820)

 

1,432,756

Non-controlling interests

 

 

 

 

(3,593)

 

 

(3,593)

Total shareholders’ equity

 

1,432,756

 

766,287

 

708,832

 

681,108

 

(2,159,820)

 

1,429,163

Total liabilities and shareholders’ equity

 

1,529,354

 

2,004,343

 

1,173,245

 

2,452,639

 

(4,273,887)

 

2,885,694

14

    

For the Year Ended December 31, 2021

Primary

Beneficiaries

of VIEs and

VIEs and

The 

Equity 

their

their

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiaries

    

Eliminations

    

Consolidated

(RMB in thousands)

Assets

Cash and cash equivalents

11,021

137,910

84,470

353,554

586,955

Short-term investments

8,158

365

820,344

828,867

Accounts receivable from third parties

97,522

45

204,769

302,336

Accounts receivable from a related party

 

 

 

 

320,939

 

 

320,939

Inventories

 

 

180,017

 

34,800

 

362,385

 

(851)

 

576,351

Amounts due from Group companies(1)

 

609,099

 

460,457

 

14,819

 

232,203

 

(1,316,578)

 

Investments in subsidiaries (2)

 

1,041,107

 

974,511

 

 

 

(2,015,618)

 

Investments in VIEs (2)

 

 

 

888,489

 

 

(888,489)

 

Other assets

 

1,433

 

72,391

 

203,873

 

383,569

 

 

661,266

Total assets

 

1,662,660

 

1,930,966

 

1,226,861

 

2,677,763

 

(4,221,536)

 

3,276,714

Liabilities

Accounts and notes payable

 

 

522,015

 

1,127

 

545,966

 

 

1,069,108

Accrued expenses and other liabilities

 

10,501

 

34,252

 

36,135

 

292,388

 

 

365,249

Amounts due to Group companies (1)

 

4,754

 

289,188

 

198,332

 

824,304

 

(1,316,578)

 

Other liabilities

 

 

44,404

 

16,491

 

122,508

 

 

191,430

Total Liabilities

 

15,255

 

889,859

 

252,085

 

1,785,166

 

(1,316,578)

 

1,625,787

Total equity attributable to shareholders of the Company

 

1,647,405

 

1,041,107

 

974,776

 

889,075

 

(2,904,958)

 

1,647,405

Non-controlling interests

 

 

 

 

3,522

 

 

3,522

Total shareholders’ equity

 

1,647,405

 

1,041,107

 

974,776

 

892,597

 

(2,904,958)

 

1,650,927

Total liabilities and shareholders’ equity

 

1,662,660

 

1,930,966

 

1,226,861

 

2,677,763

 

(4,221,536)

 

3,276,714

 

For the Year Ended December 31, 2020

Primary

Beneficiaries

of VIEs and

VIEs and

The 

Equity 

their

their

    

Company

    

Subsidiaries

    

Subsidiaries

    

Subsidiarie

    

Eliminations

    

Consolidated

 

(RMB in thousands)

Assets

Current assets

 

  

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents

 

9,126

 

129,489

 

26,745

 

338,748

 

 

504,108

Short-term investments

 

 

116,594

 

 

579,457

 

 

696,051

Accounts receivable from third parties

 

 

13,004

 

2,230

 

412,118

 

 

427,352

Accounts receivable from a related party

 

 

 

 

609,094

 

 

609,094

Inventories

 

 

43,316

 

3,485

 

392,574

 

 

439,375

Amounts due from Group companies (1)

 

626,421

 

103,071

 

18,317

 

106,956

 

(854,765)