Full Truck Alliance Co. Ltd. [YMM] Filings

20-F 1 d425402d20f.htm FORM 20-F Form 20-F

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

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

For the fiscal year ended December 31, 2022.

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

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

For the transition period from

Commission file number

001-40507

Full Truck Alliance Co. Ltd.

(Exact name of Registrant as specified in its charter)

Cayman Islands

(Jurisdiction of incorporation or organization)


6 Keji Road Huaxi District, Guiyang Guizhou 550025 People’s Republic of China		Wanbo Science and Technology Park, 20 Fengxin Road Yuhuatai District, Nanjing Jiangsu 210012 People’s Republic of China

(Address of principal executive offices)

Contact Person: Simon Chong Cai

Chief Financial Officer

Telephone:

+86-25-6692-0156

Email:

IR@amh-group.com

At the address of the Company set forth above

(Name, Telephone,

E-mail

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(s)	Name of each exchange on which registered
American Depositary Shares, each representing 20 Class A ordinary shares	YMM	New York Stock Exchange

Class A ordinary shares, US$0.00001 par value per share*		New York Stock Exchange

*	Not for trading, but only in connection with the registration of American Depositary Shares representing such Class A ordinary shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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.


Title of class		Number of shares outstanding
Class A ordinary shares were outstanding as of December 31, 2022		19,091,365,934
Class B ordinary shares were outstanding as of December 31, 2022		2,317,044,668

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

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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. ☒

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		Other ☐
	by the International Accounting Standards Board	☐

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 Section 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


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			74
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			124
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			148
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			159
ITEM 8. FINANCIAL INFORMATION			163
ITEM 9. THE OFFER AND LISTING			164
ITEM 10. ADDITIONAL INFORMATION			165
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			172
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			173
PART II			175
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			175
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			175
ITEM 15. CONTROLS AND PROCEDURES			175
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT			177
ITEM 16B. CODE OF ETHICS			177
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES			178
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			179
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			179
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT			179
ITEM 16G. CORPORATE GOVERNANCE			179
ITEM 16H. MINE SAFETY			179
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS			179
PART III			180
ITEM 17. FINANCIAL STATEMENTS			180
ITEM 18. FINANCIAL STATEMENTS			180
ITEM 19. EXHIBIT INDEX			180

Conventions That Apply to This Annual Report on Form 20-F

Unless we indicate otherwise, references in this annual report on Form 20-F to:

•

“active shippers” are to the aggregate number of registered shipper accounts on the FTA platform that have posted at least one shipping order on the FTA platform during a given period; some shippers may use more than one account, and/or may share the same account with other shippers;

•

“ADSs” are to American depositary shares, each of which represents 20 Class A ordinary shares in our Company;

•

“China” and the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region;

•

“commissioned GTV” are to the amount of GTV relating to shipping orders that were subject to commissions for online transaction service in a given period;

•

“consolidated affiliates” are to the Group VIEs and their respective subsidiaries;

•

“FTA platform” are to a digital, standardized and smart freight platform that connects shippers and truckers, currently providing services under the brands of Yunmanman, Huochebang and Shengsheng;

•

“fulfilled orders” are to all shipping orders matched through the FTA platform during a given period but exclude (i) shipping orders that are subsequently canceled, and (ii) shipping orders for which platform users failed to specify any freight prices as there are substantial uncertainties as to whether the shipping orders are fulfilled;

•

“Group” are to Full Truck Alliance Co. Ltd., the Group VIEs and their respective subsidiaries;

•

“Group VIEs” are to the variable interest entities, or VIEs, that are 100% owned by PRC citizens and hold certain business operation licenses or approvals, and generally operate businesses in which foreign investment is restricted, and are consolidated into the Group’s consolidated financial statements in accordance with U.S. GAAP;

•

“GTV” or “gross transaction value” are to the aggregate freight prices specified by platform users for all fulfilled orders on the FTA platform during the period without deducting any commission or service fee charged by us; we make downward adjustments to unreasonably high freight prices specified by users that are apparently due to clerical errors;

•

“Hong Kong dollar(s)” or “HK dollar(s)” or “HK$” or “HKD” are to Hong Kong dollars, the lawful currency of Hong Kong;

•

“Huochebang” are to the brand of Huochebang or the Huochebang platform, which was a leading digital freight platform providing services under the brand of Huochebang and integrated into the FTA platform following the establishment of our Company, as the context requires;

•

“ordinary shares” are to Class A ordinary shares, US$0.00001 par value per share in our Company, and Class B ordinary shares, US$0.00001 par value per share in our Company; each Class A ordinary share is entitled to one vote; each Class B ordinary share is entitled to 30 votes;

•

“RMB” or “Renminbi” are to the legal currency of China;

•

“road transportation industry” or “road transportation market” are to the market of transportation services for raw material, semi-finished goods and finished goods by trucks on roads;

•

“shipper MAUs” are to the number of active shippers in a given month; “average shipper MAUs” in a given period are calculated by dividing (i) the sum of shipper MAUs for each month of such period, by (ii) the number of months in such period;

•

“US$,” “U.S. dollars,” or “dollars” are to the legal currency of the United States;

•

“we,” “us,” “our Company,” “our,” or “FTA” are to Full Truck Alliance Co. Ltd. and/or its subsidiaries, as the context requires; and

•

“Yunmanman” are to the brand of Yunmanman or the Yunmanman platform, which was a leading digital freight platform providing services under the brand of Yunmanman and integrated into the FTA platform following the establishment of our Company, as the context requires.

This annual report contains translations between Renminbi and U.S. dollars for the convenience of the reader. The 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 Federal Reserve Board on December 30, 2022. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

This annual report includes our audited consolidated financial statements for the years ended December 31, 2020, 2021 and 2022.

Our ADSs are listed on the New York Stock Exchange under the ticker symbol “YMM.”

FORWARD-LOOKING INFORMATION

This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect the Group’s financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to:

•

our goal and strategies;

•

our expansion plans;

•

our future business development, financial condition and results of operations;

•

expected changes in the Group’s revenues, costs or expenses;

•

industry landscape of, and trends in, China’s road transportation market;

•

competition in our industry;

•

our expectations regarding demand for, and market acceptance of, the Group’s services;

•

our expectations regarding the Group’s relationships with shippers, truckers and other ecosystem participants;

•

our ability to protect our systems and infrastructures from cyber-attacks;

•

PRC laws, regulations, and policies relating to the road transportation market;

•

the impact of any regulatory action taken against us;

•

the impact of COVID-19 pandemic, extreme weather conditions and production constraints brought by electricity rationing measures; and

•

general economic and business conditions.

We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Item 3.D. Key Information—Risk Factors.” Those risks are not exhaustive. We operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on the Group’s business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not required.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not required.

ITEM 3.

KEY INFORMATION

Our Corporate Structure

Full Truck Alliance Co. Ltd. is not a Chinese operating company but a Cayman Islands holding company with operations primarily conducted (i) through contractual arrangements with certain variable interest entities, or the Group VIEs, in China and (ii) by our subsidiaries in China. Under the PRC laws and regulations, the provision of value-added telecommunication services and certain financial services in the PRC is subject to foreign investment restrictions and license requirements. Therefore, we operate such business in China through the Group VIEs, and rely on contractual arrangements among our PRC subsidiaries, the Group VIEs and their respective individual shareholders to control the business operations of the Group VIEs. Investors in our ADSs do not hold equity interest in the Group’s operating entities in China, but instead hold an equity interest in Full Truck Alliance Co. Ltd., a Cayman Islands holding company. As used in this annual report, “FTA,” “we,” “us,” “our Company” or “our” refers to Full Truck Alliance Co. Ltd. and/or its subsidiaries, “the Group” refers to Full Truck Alliance Co. Ltd., the Group VIEs and their respective subsidiaries, and “the consolidated affiliates” refers to the Group VIEs and their respective subsidiaries.

Prior to the fourth quarter of 2021, our Group VIEs were Shanghai Xiwei Information Consulting Co., Ltd., or Shanghai Xiwei, Beijing Manxin Technology Co., Ltd, or Beijing Manxin (formerly known as Beijing Yunmanman Technology Co., Ltd., or Beijing Yunmanman), and Guizhou FTA Logistics Technology Co., Ltd., or Guizhou FTA. In the fourth quarter of 2021, in order to enhance corporate governance, we underwent a reorganization of the holding structure of our onshore subsidiaries and the consolidated affiliates, or the Reorganization. The Reorganization mainly involved (i) changing the Group VIEs and (ii) changing certain subsidiaries of the Group VIEs to wholly-owned or partly-owned subsidiaries of our Company, to the extent permitted under the relevant PRC laws and regulations. The Reorganization was completed on January 1, 2022. In May 2022, Nanjing Manyun Cold Chain Technology Co., Ltd., or Manyun Cold Chain, which was a majority-owned subsidiary of Jiangsu Manyun Software Technology Co., Ltd., or Manyun Software, was transferred to nominee shareholders. Yixing Manxian Information Technology Co., Ltd., or Yixing Manxian, our PRC subsidiary, gained control over Manyun Cold Chain through a series of contractual arrangements with Manyun Cold Chain and its shareholders. Currently, the Group VIEs are (i) Manyun Software, (ii) Guiyang Shan’en Technology Co., Ltd., or Shan’en Technology, and (iii) Manyun Cold Chain.

The following diagram illustrates our corporate structure with our principal subsidiaries as of December 31, 2022. Certain entities that are immaterial to our results of operations, business and financial condition are omitted. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%.

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(1)	Smart Logistics Information Limited also wholly owns one insignificant subsidiary.

(2)	Besides Jiangsu Manyun Logistics Information Co., Ltd., or Jiangsu Manyun, Lucky Logistics Information Limited wholly owns two insignificant subsidiaries incorporated in the PRC.

(3)

Besides Full Truck Alliance Information Technology Co., Ltd. (formerly known as Full Truck Alliance Information Consulting Co., Ltd.), or FTA Information, FTA HK’s subsidiaries include two insignificant subsidiaries incorporated in the PRC that are wholly-owned by FTA HK and one insignificant subsidiary incorporated in the British Virgin Islands that is wholly-owned by FTA HK.

(4)	Include two insignificant subsidiaries that are wholly-owned by FTA.

(5)	Manyun Software, Tianjin Zhihui Yunli Management Consulting Partnership (Limited Partners), or Tianjin Zhihui, Mr. Peter Hui Zhang and Mr. Wenjian Dai hold 77.5%, 10.0%, 7.5% and 5.0% of equity interest in Manyun Cold Chain, respectively.

(6)	Mr. Peter Hui Zhang and Ms. Guizhen Ma hold 70% and 30% equity interest, respectively, in Manyun Software. Manyun Software and its subsidiaries are primarily involved in operating the Yunmanman apps and Shengsheng apps and providing freight matching services.

(7)	Include eight insignificant subsidiaries that are wholly-owned by Jiangsu Manyun.

(8)	In March 2021, Guizhou FTA became a Group VIE. On January 1, 2022, FTA Information acquired Guizhou FTA from its shareholders and it became a wholly-owned subsidiary of FTA Information.

(9)	Include two insignificant subsidiaries that are wholly owned by FTA Information.

(10)	Mr. Peter Hui Zhang and Ms. Guizhen Ma hold 70% and 30% equity interest, respectively, in Shan’en Technology. Shan’en Technology and its subsidiaries are primarily involved in operating the Huochebang apps and providing freight matching services and insurance brokerage services.

(11)	Include nine insignificant subsidiaries that are wholly-owned by Manyun Software and one insignificant subsidiary that are majority-owned by Manyun Software.

(12)

Previously, Guiyang Huochebang Technology Co., Ltd., or Guiyang Huochebang, was a Group VIE. In March 2021, as directed by FTA Information, Guizhou FTA, a newly established entity, acquired 100% of equity interest in Guiyang Huochebang for a nominal price from the shareholders of Guiyang Huochebang, and FTA Information gained control over Guizhou FTA through a series of contractual arrangements with Guizhou FTA and its shareholders. As a result, Guizhou FTA became a Group VIE, and Guiyang Huochebang became a subsidiary of Guizhou FTA.

(13)	Guiyang Huochebang and FTA Information hold 83.8% and 16.2% of equity interest in Guizhou Huochebang Internet Information Service Co., Ltd., respectively.

(14)	Include 15 insignificant subsidiaries that are wholly-owned by Guiyang Huochebang.

(15)	Include two insignificant subsidiaries that are wholly-owned by Chengdu Yunli.

The contractual arrangements among our PRC subsidiaries, the Group VIEs and their respective individual shareholders collectively enable us to:

•

exercise effective control over our Group VIEs and their subsidiaries;

•

receive substantially all the economic benefits of our Group VIEs; and

•

have an exclusive option to purchase all or part of the equity interests in all or part of the assets when and to the extent permitted by PRC law.

These contractual arrangements generally include equity interest pledge agreements, spousal consent letters, power of attorney, loan agreements, exclusive service agreement and exclusive option agreement, as the case may be. As a result of the contractual arrangements, we are considered the primary beneficiary of these companies for accounting purposes, and we have consolidated the financial results of these companies in the Group’s consolidated financial statements. However, we do not own equity interest in the Group VIEs. Furthermore, Full Truck Alliance Co. Ltd., as our holding company, does not conduct operating activities other than holding investment in certain of our equity investees.

The individual nominee shareholders of the Group VIEs are current or former directors and/or members of senior management of our Company. We consider such individuals suitable to act as the nominee shareholders of the Group VIEs because of, among other considerations, their contribution to the Group, their competence and their length of service with and loyalty to the Group. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the Group VIEs.”

We are subject to risks associated with our contractual arrangements with the Group VIEs. Our Company and its investors may never have a direct ownership interest in the businesses that are conducted by the Group VIEs. The contractual arrangements may not be as effective as direct ownership in providing us with control over the Group VIEs. If the Group VIEs or their shareholders fail to perform their respective obligations under these contractual arrangements, we could be limited in our ability to enforce these contractual arrangements. There are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law. If we are unable to maintain effective control, we would not be able to continue to consolidate the financial results of these entities in the Group’s financial statements. See “—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the Group VIEs and their shareholders to conduct a substantial part of the Group’s operations in China, which may not be as effective as direct ownership in providing operational control and otherwise have a material adverse effect as to our business” and “—D. Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of the Group VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.”

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 the Group VIEs and their nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the Group 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 in accordance with the applicable laws and regulations to take action in dealing with such violations or failures. The majority of the Group’s assets, along with several material licenses to conduct business in China, are held by the Group VIEs. In addition, the majority of the Group’s revenues are generated by the Group VIEs. An event that results in the deconsolidation of the Group VIEs would have a material effect on the Group’s operations and cause the value of the securities of our Company to diminish substantially or even become worthless. See “—D. Risk Factors—Risks Relating to Our Corporate Structure— If the PRC government deems that the contractual arrangements in relation to the Group 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.”

The Group also faces various legal and operational risks and uncertainties associated with being based in or having its operations primarily in China and the country’s complex and evolving laws and regulations. For example, the Group faces risks associated with regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, the use of the Group VIEs, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact the Group’s ability to conduct certain businesses, accept foreign investments, or list on a U.S. or other foreign exchange outside of China. These risks could result in a material adverse change in the Group’s operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline. See “—D. Risks Factors— Risks Relating to Doing Business in China.”

Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, was signed into law on December 18, 2020 and amended pursuant to the Consolidated Appropriations Act, 2023 on December 29, 2022. Under the HFCA Act and the rules issued by the SEC and the PCAOB thereunder, if we have retained a registered public accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with the SEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F), that includes an audit report issued by such accounting firm; and if we were to be identified as an SEC-identified issuer for two consecutive years, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong, including our auditor, Deloitte Touche Tohmatsu Certified Public Accountants LLP. After we filed our annual report on Form 20-F for the fiscal year ended December 31, 2021 that included an audit report issued by Deloitte Touche Tohmatsu Certified Public Accountants LLP on April 25, 2022, the SEC conclusively identified us as an SEC-identified issuer on May 26, 2022.

Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, Deloitte Touche Tohmatsu Certified Public Accountants LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein. As such, we do not expect to be identified as an SEC-identified issuer again in 2023. However, the PCAOB may change its determinations under the HFCA Act at any point in the future. See “—D. Risks Factors— Risks Relating to Doing Business in China—If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment.”

Licenses, Permits and Approvals

We conduct our business primarily through (i) our Group VIEs and their subsidiaries in China and (ii) our subsidiaries in China. Our operations in China are governed by PRC laws and regulations. The Group has received all material permissions that are, or may be, required for its operations in China, including the operations of the Group VIEs. See “Item 4. Information on the Company—B. Business Overview— Licenses, Permits and Approvals.” for more details.

No material permission has been denied from us by relevant authorities in China. To enhance the experience of shippers, truckers and other ecosystem participants, we offer various auxiliary functions, content and value-added services through the FTA platform. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practices by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for these functions, content and services. See “—D. Risk Factors—Risks Relating to Our Business and Industry— If we fail to obtain or maintain licenses, permits or approvals applicable to the Group’s business, we may become subject to significant penalties and other regulatory proceedings or actions.”

In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and our Group VIEs, (i) are not required to obtain permissions from the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority. However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, and we cannot assure you that the relevant PRC government authorities will reach the same conclusion. The Cybersecurity Review Office of the CAC announced the initiation of a cybersecurity review of the Yunmanman apps and Huochebang apps on July 5, 2021. During the cybersecurity review, the Yunmanman and Huochebang apps were required to suspend new user registration. Based on notification by the CRO, we have resumed new user registration on the Yunmanman and Huochebang apps since June 29, 2022. For more details, see “—D. Risk Factors—Risks Relating to Our Business and Industry— The Group’s business is subject to complex and evolving PRC laws and regulations relating to cybersecurity and data security” and —D. Risk Factors—Risks Relating to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and its implementing rules and how they may impact the Group’s business, financial condition and results of operations.”

Cash Transfers within Our Corporate Structure

Full Truck Alliance Co. Ltd. is a Cayman Islands holding company with operations primarily conducted (i) through the consolidated affiliates in China and (ii) by our subsidiaries in China. Full Truck Alliance Co. Ltd.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries.

In 2020, 2021 and 2022, no assets other than cash were transferred within our organization. The following diagram summarizes how funds are transferred among our Company, our subsidiaries and the consolidated affiliates.

LOGO

(1)

Our PRC subsidiaries, Jiangsu Manyun, FTA Information and Yixing Manxian, entered into contractual arrangements with the Group VIEs. Jiangsu Manyun, FTA Information and Yixing Manxian are our wholly foreign owned entities, or WFOEs. Shanghai Xiwei and Beijing Manxin were Group VIEs from the beginning of the periods presented below to November 2021. Guiyang Huochebang was a Group VIE from the beginning of the periods presented below to March 2021. In March 2021, Guizhou FTA became a Group VIE, and Guiyang Huochebang became a subsidiary of Guizhou FTA. Shanghai Xiwei and Beijing Manxin ceased to be the Group VIEs and became indirectly wholly-owned subsidiaries of Manyun Software in November 2021. We acquired Shanghai Xiwei and Beijing Manxin from Manyun Software and they became indirectly wholly-owned subsidiaries of Jiangsu Manyun on January 1, 2022. Guizhou FTA ceased to be a Group VIE following the completion of the Reorganization on January 1, 2022. Manyun Software, Shan’en Technology and Manyun Cold Chain are currently the Group VIEs. See “Item 4. Information on the Company—C. Organizational Structure.”

The following table sets forth a summary of the cash flows that occurred between our Company, our subsidiaries, and the consolidated affiliates.


	For the Years Ended December 31,
	2020		2021		2022
	RMB		RMB		RMB		US$

	(in thousands)
Intercompany Cash Flow Data:
Transfer from our Company to our subsidiaries		724,248		2,103,259		2,050,687		297,322
Transfer from our Company to the consolidated affiliates		—		—		488,159		70,776
Transfer from our subsidiaries to the consolidated affiliates		1,858,922		6,323,470		3,075,366		445,886
Transfer from the consolidated affiliates to our subsidiaries		2,031,374		4,637,600		4,002,115		580,252

Our Company made cash transfers to our subsidiaries primarily in the form of capital contribution in 2020, 2021 and 2022.

Our Company made cash transfers to the consolidated affiliates in the form of intercompany loans in 2022 to finance the consolidated affiliates’ operations.

Our subsidiaries made cash transfers to the consolidated affiliates primarily in the form of intercompany loans in 2020, 2021 and 2022 to finance the consolidated affiliates’ operations.

The consolidated affiliates made cash transfers to our subsidiaries primarily in the form of loan repayments in 2020, 2021 and 2022.

The Group VIEs did not pay any service fee under the exclusive service agreements in 2020, 2021 and 2022.

Since inception, we have not declared or paid any dividends on our shares. We do not have any present plan to declare or pay any dividends on our shares or ADSs in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand the Group’s business.

Restrictions on Transfer of Funds

In 2020, 2021 and 2022, no dividends or distributions were made to our Company by our subsidiaries. Our ability to pay dividends, if any, to the shareholders and ADSs investors and to service any debt we may incur will depend upon dividends paid by our PRC subsidiaries. Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets offshore to us. In particular, under PRC laws, rules and regulations, each of our subsidiaries incorporated in China is required to set aside at least 10% of its net income each year to fund certain statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital. These reserves, together with the registered capital, are not distributable as cash dividends.

Furthermore, we are subject to restrictions on currency exchange. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our PRC subsidiaries. Currently, our PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant PRC governmental authorities. Since a significant amount of our future revenues and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our ADSs, and may limit our ability to obtain foreign currency through debt or equity financing for our onshore subsidiaries. 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 us. For certain Cayman Islands, PRC and United States federal income tax considerations of an investment in the ADSs, see “Item 10. Additional Information — E. Taxation.”

Summary Financial Information Related to the Consolidated Affiliates

The following condensed consolidated financial statement information presents information related to Full Truck Alliance Co. Ltd., or the Parent, which is a Cayman holding company, the consolidated affiliates and our subsidiaries as of December 31, 2020, 2021 and 2022 and for the years ended 2020, 2021 and 2022. The consolidated affiliates in the following refer to Shanghai Xiwei, Guizhou FTA and Beijing Manxin and their respective subsidiaries in 2020 and 2021 and refer to Manyun Software, Shan’en Technology and Manyun Cold Chain and their respective subsidiaries in 2022. See “Item 4. Information on the Company—C. Organizational Structure.”

The following tables presents the condensed consolidated schedule of results of operation data for the periods indicated.


	For the Years Ended December 31,
	2020															2021
	Parent			Consolidated affiliates			Subsidiaries			Eliminating Entries			Total			Parent			Consolidated affiliates			Subsidiaries			Eliminating Entries			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB

	(in thousands)
Freight Matching Services		—			1,947,016			—			—			1,947,016			—			3,946,882			—			—			3,946,882
Freight brokerage		—			1,365,207			—			—			1,365,207			—			2,497,779			—			—			2,497,779
Freight listings		—			538,665			—			—			538,665			—			753,031			—			—			753,031
Transaction commission		—			43,144			—			—			43,144			—			696,072			—			—			696,072
Value-added services⁽¹⁾		—			606,519			205,693			(178,408	)		633,804			—			1,141,867			1,056,488			(1,488,218	)		710,137
Credit solutions		—			472,841			—			—			472,841			—			517,776			2,310			—			520,086
Other value-added services		—			133,678			205,693			(178,408	)		160,963			—			624,091			1,054,178			(1,488,218	)		190,051
Net Revenues		—			2,553,535			205,693			(178,408	)		2,580,820			—			5,088,749			1,056,488			(1,488,218	)		4,657,019
Operating expenses:
Cost of revenues ⁽¹⁾		(7,842	)		(1,278,717	)		(39,557	)		10,099			(1,316,017	)		(3,740	)		(2,949,238	)		(39,434	)		452,414			(2,539,998	)
Sales and marketing expenses⁽¹⁾		(94,640	)		(267,003	)		(125,525	)		32,825			(454,343	)		(56,973	)		(495,510	)		(309,066	)		24,248			(837,301	)
General and administrative expenses⁽¹⁾		(3,583,893	)		(293,715	)		(75,580	)		14,623			(3,938,565	)		(3,849,809	)		(821,435	)		(150,883	)		550,975			(4,271,152	)
Research and development expenses⁽¹⁾		(42,680	)		(387,287	)		(103,126	)		119,724			(413,369	)		(48,777	)		(829,404	)		(304,249	)		452,762			(729,668	)
Provision for loans receivable		—			(91,688	)		(2,472	)		—			(94,160	)		—			(31,780	)		(65,878	)		—			(97,658	)
Total operating expenses		(3,729,055	)		(2,318,410	)		(346,260	)		177,271			(6,216,454	)		(3,959,299	)		(5,127,367	)		(869,510	)		1,480,399			(8,475,777	)
Other operating income		—			19,193			1,838			—			21,031			—			16,905			5,910			—			22,815
(Loss) income from operations		(3,729,055	)		254,318			(138,729	)		(1,137	)		(3,614,603	)		(3,959,299	)		(21,713	)		192,888			(7,819	)		(3,795,943	)
Other (expense) income
Interest income⁽²⁾		93,897			56,880			92,347			(33,292	)		209,832			153,749			49,713			42,497			(11,308	)		234,651
Interest expenses⁽²⁾		—			(43,488	)		(169	)		35,290			(8,367	)		—			(11,788	)		(237	)		11,985			(40	)
Foreign exchange loss		—			(7,383	)		(13,893	)		—			(21,276	)		(2,917	)		(661	)		(11,890	)		—			(15,468	)
Investment income (loss)		—			3,321			—			—			3,321			(379	)		647			28,049			—			28,317
Unrealized gains from fair value changes of short term investments and derivative assets		—			11,798			6,342			—			18,140			18,333			—			5,634			—			23,967
Other (expenses) income, net		—			(7,356	)		1,797			—			(5,559	)		2,277			11,305			(6,515	)		—			7,067
Impairment loss		—			(22,030	)		—			—			(22,030	)		(43,708	)		(66,953	)		(906	)		—			(111,567	)
Share of loss in equity method investees		(10,975	)		(79	)		—			—			(11,054	)		(5,696	)		(4,613	)		(1,012	)		—			(11,321	)
Total other income (loss)		82,922			(8,337	)		86,424			1,998			163,007			121,659			(22,350	)		55,620			677			155,606
Net (loss) income before income tax		(3,646,133	)		245,981			(52,305	)		861			(3,451,596	)		(3,837,640	)		(44,063	)		248,508			(7,142	)		(3,640,337	)
Income tax (expense) benefits		—			(22,032	)		(7,854	)		10,550			(19,336	)		(14,090	)		(7,956	)		7,855			—			(14,191	)
Equity in gains of subsidiaries, and consolidated affiliates⁽³⁾		175,661			—			—			(175,661	)		—			197,282			—			—			(197,282	)		—
Net (loss) income from continuing operations		(3,470,472	)		223,949			(60,159	)		(164,250	)		(3,470,932	)		(3,654,448	)		(52,019	)		256,363			(204,424	)		(3,654,528	)
Net income from discontinued operations, net of tax		—			—			452			—			452			—			—			—			—			—
Net (loss) income		(3,470,472	)		223,949			(59,707	)		(164,250	)		(3,470,480	)		(3,654,448	)		(52,019	)		256,363			(204,424	)		(3,654,528	)
Less: Net loss attributable to noncontrolling interests		—			(8	)		—			—			(8	)		—			(80	)		—			—			(80	)
Net (loss) income attributable to Full Truck Alliance Co. Ltd.		(3,470,472	)		223,957			(59,707	)		(164,250	)		(3,470,472	)		(3,654,448	)		(51,939	)		256,363			(204,424	)		(3,654,448	)
Deemed dividend to convertible redeemable preferred shares		(120,086	)		—			—			—			(120,086	)		(518,432	)		—			—			—			(518,432	)
Net (loss) income attributable to ordinary shareholders		(3,590,558	)		223,957			(59,707	)		(164,250	)		(3,590,558	)		(4,172,880	)		(51,939	)		256,363			(204,424	)		(4,172,880	)


	For the Year Ended December 31, 2022
	Parent						Consolidated affiliates						Subsidiaries						Eliminating Entries						Total
	RMB			US$			RMB			US$			RMB			US$			RMB			US$			RMB			US$

	(in thousands)
Freight Matching Services		—			—			5,549,537			804,607			107,114			15,530			—			—			5,656,651			820,137
Freight brokerage		—			—			3,360,313			487,200			—			—			—			—			3,360,313			487,200
Freight listings		—			—			745,266			108,053			107,114			15,530			—			—			852,380			123,583
Transaction commission		—			—			1,443,958			209,354			—			—			—			—			1,443,958			209,354
Value-added services⁽¹⁾		—			—			118,323			17,155			2,644,932			383,480			(1,686,262	)		(244,485	)		1,076,993			156,150
Credit solutions		—			—			23,941			3,471			772,415			111,990			—			—			796,356			115,461
Other value-added services		—			—			94,382			13,684			1,872,517			271,490			(1,686,262	)		(244,485	)		280,637			40,689
Net Revenues		—			—			5,667,860			821,762			2,752,046			399,010			(1,686,262	)		(244,485	)		6,733,644			976,287
Operating expenses:
Cost of revenues⁽¹⁾		(6,406	)		(929	)		(3,208,063	)		(465,125	)		(395,532	)		(57,347	)		95,450			13,839			(3,514,551	)		(509,562	)
Sales and marketing expenses⁽¹⁾		(39,771	)		(5,766	)		(489,127	)		(70,917	)		(517,400	)		(75,016	)		144,029			20,882			(902,269	)		(130,817	)
General and administrative expenses⁽¹⁾		(923,383	)		(133,878	)		(1,646,542	)		(238,726	)		(294,057	)		(42,634	)		1,446,049			209,657			(1,417,933	)		(205,581	)
Research and development expenses⁽¹⁾		(63,884	)		(9,262	)		(187,766	)		(27,224	)		(663,001	)		(96,125	)		500			72			(914,151	)		(132,539	)
Provision for loans receivable		—			—			—			—			(194,272	)		(28,167	)		—			—			(194,272	)		(28,167	)
Total operating expenses		(1,033,444	)		(149,835	)		(5,531,498	)		(801,992	)		(2,064,262	)		(299,289	)		1,686,028			244,450			(6,943,176	)		(1,006,666	)
Other operating income		—			—			34,884			5,058			12,646			1,833			—			—			47,530			6,891
(Loss) income from operations		(1,033,444	)		(149,835	)		171,246			24,828			700,430			101,554			(234	)		(35	)		(162,002	)		(23,488	)
Other (expense) income
Interest income⁽²⁾		326,699			47,367			52,183			7,566			106,080			15,380			(1,304	)		(189	)		483,658			70,124
Interest expenses⁽²⁾		—			—			(1,557	)		(225	)		—			—			1,382			200			(175	)		(25	)
Foreign exchange (loss) gain		(1,646	)		(239	)		2,427			353			14,267			2,068			—			—			15,048			2,182
Investment income (loss)		23,405			3,393			(46	)		(7	)		(17,948	)		(2,601	)		—			—			5,411			785
Unrealized losses from fair value changes of short term investments and derivative assets		(39,131	)		(5,673	)		(9	)		(1	)		(24,250	)		(3,517	)		—			—			(63,390	)		(9,191	)
Other income (expenses) income, net		228,955			33,196			1,689			244			(13	)		(2	)		—			—			230,631			33,438
Share of loss in equity method investees		—			—			(21	)		(3	)		(1,225	)		(178	)		—			—			(1,246	)		(181	)
Total other income		538,282			78,044			54,666			7,927			76,911			11,150			78			11			669,937			97,132
Net (loss) income before income tax		(495,162	)		(71,791	)		225,912			32,755			777,341			112,704			(156	)		(24	)		507,935			73,644
Income tax (expense) benefits		(96,032	)		(13,923	)		(1,982	)		(288	)		1,979			287			—			—			(96,035	)		(13,924	)
Equity in gain of subsidiaries and consolidated affiliates ⁽³⁾		997,956			144,689			—			—			—			—			(997,956	)		(144,689	)		—			—
Net income		406,762			58,975			223,930			32,467			779,320			112,991			(998,112	)		(144,713	)		411,900			59,720
Less: Measurement adjustment attributable to redeemable non-controlling interests		—			—			—			—			4,599			667			—			—			4,599			667
Less: Net income attributable to noncontrolling interests		—			—			3,267			474			—			—			(2,728	)		(396	)		539			78
Net income attributable to ordinary shareholders		406,762			58,975			220,663			31,993			774,721			112,324			(995,384	)		(144,317	)		406,762			58,975

The following tables presents the condensed consolidated schedule of balance sheets data as of the dates indicated.


	As of December 31,
	2020											2021
	Parent		Consolidated affiliates		Subsidiaries		Eliminating Entries			Total		Parent		Consolidated affiliates		Subsidiaries		Eliminating Entries			Total
	RMB		RMB		RMB		RMB			RMB		RMB		RMB		RMB		RMB			RMB

	(in thousands)
Cash and cash equivalents		7,025,967		2,226,218		808,206		—			10,060,391		1,032,540		2,948,946		302,805		—			4,284,291
Restricted cash—current		—		84,076		2,201		—			86,277		—		63,294		2,528		—			65,822
Short-term investments		6,270,302		238,000		2,222,893		—			8,731,195		17,866,528		550,000		3,218,114		—			21,634,642
Accounts receivable, net		—		33,751		978		—			34,729		—		28,734		405		—			29,139
Amounts due from related parties		—		—		—		—			—		—		7,075		—		—			7,075
Loans receivable, net		—		1,312,283		1,674		—			1,313,957		—		1,774,038		3,629		—			1,777,667
Prepayments and other current assets		13,762		421,371		21,669		—			456,802		113,595		849,323		136,689		—			1,099,607
Intercompany receivables ⁽⁴⁾		—		92,413		250,069		(342,482	)		—		—		526,865		681,611		(1,208,476	)		—
Total current assets		13,310,031		4,408,112		3,307,690		(342,482	)		20,683,351		19,012,663		6,748,275		4,345,781		(1,208,476	)		28,898,243
Restricted cash—non-current		—		13,500		—		—			13,500		—		13,500		—		—			13,500
Property and equipment, net		—		36,922		2,062		—			38,984		—		100,931		1,227		—			102,158
Investment in and amount due from subsidiaries, and consolidated affiliates⁽³⁾		9,675,404		—		—		(9,675,404	)		—		11,885,179		—		—		(11,885,179	)		—
Investments in equity investees		522,672		297,628		54,905		—			875,205		1,007,361		670,110		880		—			1,678,351
Intangible assets, net		—		15,275		476,004		—			491,279		—		119,298		437,718		—			557,016
Goodwill		—		—		2,865,071		—			2,865,071		—		283,256		2,841,572		—			3,124,828
Deferred tax assets		—		18,966		—		—			18,966		—		20,492		—		—			20,492
Other non-current assets		—		147,000		—		—			147,000		—		3,836		11		—			3,847
Intercompany receivables ⁽²⁾		—		—		5,692,605		(5,692,605	)		—		—		—		7,533,695		(7,533,695	)		—
Total non-current assets		10,198,076		529,291		9,090,647		(15,368,009	)		4,450,005		12,892,540		1,211,423		10,815,103		(19,418,874	)		5,500,192
Total assets		23,508,107		4,937,403		12,398,337		(15,710,491	)		25,133,356		31,905,203		7,959,698		15,160,884		(20,627,350	)		34,398,435
Short-term loans		—		—		—		—			—		—		9,000		—		—			9,000
Accounts payable		—		23,839		—		—			23,839		42		29,077		262		—			29,381
Amounts due to related parties		172,779		—		—		—			172,779		179,859		—		—		—			179,859


	As of December 31,
	2020													2021
	Parent			Consolidated affiliates		Subsidiaries		Eliminating Entries			Total			Parent		Consolidated affiliates		Subsidiaries		Eliminating Entries			Total
	RMB			RMB		RMB		RMB			RMB			RMB		RMB		RMB		RMB			RMB

	(in thousands)
Payable to investors of the consolidated trusts		—			31,400		—		—			31,400			—		—		—		—			—
Prepaid for freight listing fees and other service fees		—			319,156		768		—			319,924			—		383,153		83		—			383,236
Income tax payable		—			23,554		2,370		—			25,924			9,084		21,573		881		—			31,538
Other tax payable		—			446,610		229		—			446,839			250,008		566,479		78,105		—			894,592
Accrued expenses and other current liabilities		283,524			620,828		37,290		—			941,642			10,765		1,045,484		149,930		—			1,206,179
Intercompany payables⁽⁴⁾		—			250,069		483,907		(733,976	)		—			—		681,525		859,272		(1,540,797	)		—
Total current liabilities		456,303			1,715,456		524,564		(733,976	)		1,962,347			449,758		2,736,291		1,088,533		(1,540,797	)		2,733,785
Deferred tax liabilities		—			—		118,783		—			118,783			—		26,415		109,349		—			135,764
Total non-current liabilities		—			—		118,783		—			118,783			—		26,415		109,349		—			135,764
Total liabilities		456,303			1,715,456		643,347		(733,976	)		2,081,130			449,758		2,762,706		1,197,882		(1,540,797	)		2,869,549
Total mezzanie equity		31,535,947			—		—		—			31,535,947			—		—		—		—			—
Total (deficit) equity		(8,484,143	)		3,221,947		11,754,990		(14,976,515	)		(8,483,721	)		31,455,445		5,196,992		13,963,002		(19,086,553	)		31,528,886
Total liabilities, mezzanie equity and (deficit) equity		23,508,107			4,937,403		12,398,337		(15,710,491	)		25,133,356			31,905,203		7,959,698		15,160,884		(20,627,350	)		34,398,435


	As of December 31, 2022
	Parent				Consolidated affiliates				Subsidiaries				Eliminating Entries						Total
	RMB		US$		RMB		US$		RMB		US$		RMB			US$			RMB		US$

	(in thousands)
Cash and cash equivalents		273,112		39,598		2,474,166		358,720		2,390,034		346,522		—			—			5,137,312		744,840
Restricted cash—current		—		—		12,095		1,754		71,664		10,390		—			—			83,759		12,144
Short-term investments		16,581,019		2,404,022		—		—		4,506,070		653,319		—			—			21,087,089		3,057,341
Accounts receivable, net		—		—		8,577		1,244		4,438		643		—			—			13,015		1,887
Loans receivable, net		—		—		—		—		2,648,449		383,989		—			—			2,648,449		383,989
Prepayments and other current assets		193,771		28,094		1,604,354		232,609		236,302		34,261		—			—			2,034,427		294,964
Intercompany receivables⁽⁴⁾		—		—		706,633		102,453		211,609		30,680		(918,242	)		(133,133	)		—		—
Total current assets		17,047,902		2,471,714		4,805,825		696,780		10,068,566		1,459,804		(918,242	)		(133,133	)		31,004,051		4,495,165
Property and equipment, net		—		—		18,449		2,675		90,375		13,103		—			—			108,824		15,778
Investment in and amount due from subsidiaries, and consolidated affiliates⁽³⁾		15,678,895		2,273,226		—		—		—		—		(15,678,895	)		(2,273,226	)		—		—
Investments in equity investees		1,100,407		159,544		—		—		686,313		99,506		(12,450	)		(1,805	)		1,774,270		257,245
Intangible assets, net		—		—		106,928		15,503		395,730		57,375		(237	)		(34	)		502,421		72,844
Goodwill		—		—		283,256		41,068		2,841,572		411,989		—			—			3,124,828		453,057
Deferred tax assets		—		—		6,570		953		34,920		5,062		—			—			41,490		6,015
Operating lease right-of-use assets and land use rights		—		—		74,820		10,848		57,180		8,290		—			—			132,000		19,138
Other non-current assets		—		—		5,960		864		2,467		358		—			—			8,427		1,222
Intercompany receivables⁽²⁾		—		—		—		—		2,679,400		388,476		(2,679,400	)		(388,476	)		—		—
Total non-current assets		16,779,302		2,432,770		495,983		71,911		6,787,957		984,159		(18,370,982	)		(2,663,541	)		5,692,260		825,299
Total assets		33,827,204		4,904,484		5,301,808		768,691		16,856,523		2,443,963		(19,289,224	)		(2,796,674	)		36,696,311		5,320,464
Accounts payable		2		0		6,374		924		21,577		3,129		—			—			27,953		4,053
Amounts due to related parties		122,152		17,710		—		—		—		—		—			—			122,152		17,710
Prepaid for freight listing fees and other service fees		—		—		436,806		63,331		25,274		3,664		—			—			462,080		66,995
Income tax payable		18,303		2,654		8,082		1,172		25,848		3,747		—			—			52,233		7,573
Other tax payable		—		—		682,030		98,885		39,567		5,737		—			—			721,597		104,622
Operating lease liabilities—current		—		—		39,649		5,749		4,941		716		—			—			44,590		6,465
Accrued expenses and other current liabilities		29,514		4,280		883,965		128,161		387,681		56,208		—			—			1,301,160		188,649
Intercompany payables⁽⁴⁾		—		—		649,768		94,208		880,706		127,690		(1,530,474	)		(221,898	)		—		—
Total current liabilities		169,971		24,644		2,706,674		392,430		1,385,594		200,891		(1,530,474	)		(221,898	)		2,731,765		396,067


	As of December 31, 2022
	Parent				Consolidated affiliates				Subsidiaries				Eliminating Entries						Total
	RMB		US$		RMB		US$		RMB		US$		RMB			US$			RMB		US$

	(in thousands)
Deferred tax liabilities		—		—		23,358		3,387		98,253		14,245		—			—			121,611		17,632
Operating lease liabilities—non current		—		—		34,036		4,935		1,895		275		—			—			35,931		5,210
Total non-current liabilities		—		—		57,394		8,322		100,148		14,520		—			—			157,542		22,842
Total liabilities		169,971		24,644		2,764,068		400,752		1,485,742		215,411		(1,530,474	)		(221,898	)		2,889,307		418,909
Total mezzanie equity		—		—		—		—		149,771		21,715		—			—			149,771		21,715
Total equity		33,657,233		4,879,840		2,537,740		367,939		15,221,010		2,206,837		(17,758,750	)		(2,574,776	)		33,657,233		4,879,840
Total liabilities, mezzanie equity and equity		33,827,204		4,904,484		5,301,808		768,691		16,856,523		2,443,963		(19,289,224	)		(2,796,674	)		36,696,311		5,320,464

The following tables presents the condensed consolidated schedule of cash flow data for the periods indicated.


	For the Years Ended December 31,
	2020															2021
	Parent			Consolidated affiliates			Subsidiaries			Eliminating Entries			Total			Parent			Consolidated affiliates			Subsidiaries			Eliminating Entries			Total
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB

	(in thousands)
Net cash (used in) provided by operating activities		(12,505	)		551,586			(195,362	)		231,023			574,742			(187,969	)		(286,501	)		263,051			—			(211,419	)
Net cash used in investing activities		(2,593,765	)		(72,390	)		(429,184	)		404,444			(2,690,895	)		(14,562,068	)		(815,721	)		(2,864,575	)		3,843,391			(14,398,973	)
Net cash provided by (used in) financing activities		9,213,148			(977,481	)		724,248			(635,467	)		8,324,448			8,859,414			1,804,168			2,081,323			(3,843,391	)		8,901,514


	For the Year Ended December 31, 2022
	Parent						Consolidated affiliates						Subsidiaries						Eliminating Entries						Total
	RMB			US$			RMB			US$			RMB			US$			RMB			US$			RMB			US$

	(in thousands)
Net cash provided by (used in) operating activities		310,343			44,996			(1,262,444	)		(183,037	)		936,581			135,793			—			—			(15,520	)		(2,248	)
Net cash provided by (used in) investing activities		295,993			42,915			(1,146,063	)		(166,163	)		(947,424	)		(137,362	)		3,928,715			569,610			2,131,221			309,000
Net cash (used in) provided by financing activities		(1,392,367	)		(201,874	)		1,869,028			270,984			2,121,879			307,643			(3,928,715	)		(569,610	)		(1,330,175	)		(192,857	)

(1)	Represents intercompany provision of services, primarily technical services and promotion services provided by our subsidiaries to the consolidated affiliates. The related revenue and costs/expenses were eliminated upon consolidation.

(2)

Represents intercompany entrusted loans from our PRC subsidiaries to the consolidated affiliates to fund their operations. As the entrusted loans are of a long-term investment nature, they are included in equity of the consolidated affiliates. The loan balances were eliminated against the consolidated affiliates’ equity upon consolidation.

(3)

Represents the Parent’s investments in subsidiaries and the consolidated affiliates, including share of gain or loss from such investments under the equity method of accounting, and the amounts due from subsidiaries and consolidated affiliates, which were eliminated upon consolidation. To align with the line item in the condensed balance sheets of the Parent, amounts due form subsidiaries and consolidated affiliates are not included in intercompany receivables.

(4)	Represents the intercompany balances among the Parent, our subsidiaries, and the consolidated affiliates, which were eliminated upon consolidation.

A.	[Reserved]

B.	Capitalization and Indebtedness

Not required.

C.	Reasons for the Offer and Use of Proceeds

Not required.

D.	Risk Factors

Summary of Risk Factors

Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in the ADSs. Below please find a summary of the principal risks we face, organized under relevant headings:

Risks Relating to Our Business and Industry

Risks and uncertainties relating to our business and industry include, but are not limited to, the following:

•

The Group’s historical financial and operating performance may not be indicative of its future prospects and results of operations due to the limited operating history of some of the Group’s business lines, evolving business model and changing market;

•

The Group’s operations have grown substantially since inception. We may not be able to effectively manage the Group’s growth, control the Group’s expenses or implement the Group’s business strategies;

•

The Group’s business may be affected by fluctuations in China’s road transportation market;

•

If we are unable to attract or maintain a critical mass of shippers and truckers in a cost-effective manner, whether as a result of competition or other factors, transaction activities on the FTA platform and the Group’s financial results would be adversely impacted;

•

The Group’s business is subject to complex and evolving PRC laws and regulations relating to cybersecurity and data security;

•

We may not succeed in continuing to maintain, protect and strengthen the Group’s brands, and any negative publicity about the Group, its business, its management, its ecosystem participants or the road transportation market in general, may materially and adversely affect the Group’s reputation, business, results of operations and growth;

•

If the Group’s solutions and services do not achieve and maintain sufficient market acceptance or provide the expected benefits to ecosystem participants, its financial condition, results of operations and competitive position will be materially and adversely affected;

•

If the Group’s users, other ecosystem participants or their employees engage in, or are subject to, criminal, violent, fraudulent, inappropriate or dangerous activities, the Group’s reputation, business, financial condition, and operating results may be adversely impacted;

•

The profitability of the Group’s freight brokerage service has been and is expected to continue to be reliant upon, among others, grants provided by local government authorities. If the Group cannot continue to receive such grants, its freight brokerage service and its contribution to the Group’s financial performance may be materially and adversely affected;

•

If we fail to effectively match truckers with shipments and optimize our pricing models, the Group’s business, financial condition and results of operations could be adversely affected;

•

We cannot guarantee that our monetization strategies or the Group’s business initiatives will be successfully implemented or generate sustainable profit;

•

The Group has incurred, and in the future may continue to incur, net losses; and

•

The Group may be required to write down goodwill and other identifiable intangible assets.

Risks Relating to Our Corporate Structure

Risks and uncertainties relating to our corporate structure include, but are not limited to, the following:

•

If the PRC government deems that the contractual arrangements in relation to the Group 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations;

•

Our contractual arrangements with the Group VIEs may result in adverse tax consequences to us;

•

We rely on contractual arrangements with the Group VIEs and their shareholders to conduct a substantial part of the Group’s operations in China, which may not be as effective as direct ownership in providing operational control and otherwise have a material adverse effect as to our business; and

•

The shareholders of the Group VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

Risks Relating to Doing Business in China

We are subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following:

•

Changes in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies;

•

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations;

•

The audit report included in this annual report is prepared by an auditor which the U.S. Public Company Accounting Oversight Board was unable to inspect and investigate completely before 2022 and, as such, our investors have been deprived of the benefits of such inspections in the past, and may be deprived of the benefits of such inspections in the future;

•

If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment; and

•

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China, based on the United States or other foreign laws, against us, our directors, executive officers or the expert named in this annual report. Therefore, you may not be able to enjoy the protection of such laws in an effective manner.

Risks Relating to Our ADSs

Risks relating to our ADSs, include, but not limited to, the following:

•

The trading price of our ADSs has been and is likely to continue to be volatile, which could result in substantial losses to holders of our ADSs;

•

We may fail to meet our publicly announced guidance or other expectations about the Group’s business, which could cause our stock price to decline;

•

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about the Group’s business, the market price for our ADSs and their trading volume could decline; and

•

Because we do not expect to pay cash dividends in the foreseeable future, you may not receive any return on your investment unless you sell your ADSs for a price greater than that which you paid for them.

Risks Relating to Our Business and Industry

The Group started its business in 2011 by providing freight listing service through QQ and WeChat groups. The FTA platform is a leading digital freight platform in China, and the Group facilitated GTV of RMB261.1 billion (US$37.9 billion) in 2022. The Group has limited experience in certain key aspects of its business operations, such as freight matching and pricing, offering value-added services, as well as developing and maintaining long-term relationships with a wide range of ecosystem participants. It is difficult to accurately predict the Group’s future revenues and budget for its costs and expenses, and the evaluation of the Group’s business and prediction about its future performance may not be as accurate as they would be if the Group had a longer operating history. In the event that actual results differ from the investors’ expectations, the market price of our ADSs could decline.

As the Group’s business develops or in response to competition, the Group may continue to introduce new services, make adjustments to its existing services, its business model or its operations in general. For example, the Group began to monetize its online transaction service by collecting commissions from truckers for matching selected types of shipping orders originating from certain cities in China in the second half of 2020. We cannot assure you that this new business model will be successful or generate results that meet our expectations. Any significant change to the Group’s business model or failure to achieve the intended business results may have a material and adverse impact on the Group’s business and results of operations. We also face challenges to successfully develop new platform features and expand the Group’s service offerings to enhance the experience of shippers and truckers. Therefore, it may be difficult to effectively assess the Group’s future prospects. Furthermore, the road transportation and internet service industries in China are undergoing constant change. The laws and regulations governing the road transportation and internet service industries in China are also subject to further changes and interpretation. As the market, the regulatory environment or other conditions evolve, the Group’s existing solutions and services may not continue to deliver the expected business results.

You should consider the Group’s business and prospects in light of the risks and challenges it encounters or may encounter given the limited operating history of some of the Group’s business lines, as well as its evolving business model and changes in the market in which the Group operates. These risks and challenges include the Group’s ability to, among other things:

•

continue to maintain, protect and strengthen the Group’s brands and reputation;

•

attract or maintain a critical mass of shippers and truckers;

•

continue to provide superior experience to shippers and truckers;

•

keep up with the technological developments and implementation of advanced technologies;

•

effectively match truckers with shipments and optimize the related pricing models;

•

capture monetization opportunities on the FTA platform;

•

maintain and expand cooperative relationships or strategic partnerships with other ecosystem participants;

•

improve the Group’s operational efficiency;

•

attract, retain and motivate talented employees, particularly sales and marketing and research and development personnel to support the Group’s business growth;

•

navigate economic conditions and fluctuations;

•

implement the Group’s business strategies, including the offering of new services; and

•

comply with complex and evolving laws, regulations, policies and guidelines and resolve legal actions and regulatory actions.

The Group’s operations have grown substantially since inception, which placed significant strain on our management and resources. There can be no assurance that the Group’s level of revenue growth will be sustainable or achieved at all in the future. We believe that the Group’s growth and expansion will depend on its ability to attract and retain shippers and truckers on the FTA platform, to increase engagement and transaction activities of users on the FTA platform, monetize the Group’s services, and leverage its scale of business to manage operating costs and expenses. There can be no assurance that the Group will achieve any of the above.

To manage the Group’s growth and expansion, we anticipate that we will need to implement a variety of new and upgraded operational systems, procedures and controls, including improving the Group’s technology infrastructure as well as internal management systems. Expanding into new businesses and developing and adopting new technologies will require the Group to incur additional costs, such as compensation, benefit costs and office rental expenses. We may also need to further expand, train, manage and motivate the Group’s workforce and manage its relationships with ecosystem participants. All of these endeavors involve risks and will require substantial management efforts and skills and significant additional expenditures. The Group’s further expansion may divert its management, operational or technological resources from the Group’s existing business operations. In addition, the Group’s expansion may require it to adjust its existing offerings or enter into new market segments, and we may have difficulty in satisfying market demands and regulatory requirements. We cannot assure you that we will be able to successfully maintain the Group’s growth rate or implement its future business strategies effectively, and failure to do so may materially and adversely affect its business, financial condition, results of operations and future prospects.

The Group’s business may be affected by fluctuations in China’s road transportation market.

We are sensitive to changes in overall economic conditions that impact cargo volumes and truck capacity. China’s road transportation market historically has experienced cyclical fluctuations due to economic slowdowns, downturns in business cycles of shippers, volatility in energy price, pandemic, electricity rationing measures, shortages of raw materials, rising commodity prices and other economic factors beyond our control. Deterioration in the economic environment would subject the Group’s business to various risks, including the following that may have a material and adverse impact on the Group’s operating results and cause it not to achieve growth or profitability:

•

a reduction in overall cargo volumes reduces the Group’s revenue and opportunities for growth; in addition, a decline in the volume of cargo shipped due to a downturn in shippers’ business cycles or other factors generally results in decreases in order pricing, as truckers compete for shipping orders to maintain truck productivity, which will affect the Group’s monetization opportunities;

•

a number of truckers may go out of business and the Group may be unable to have sufficient truckers to meet shippers’ demand when the market recovers; and

•

the Group may not be able to appropriately adjust its expenses to changing platform activities. In periods of rapid change, it is more difficult to match the Group’s staffing levels to its business needs. In addition, the Group has other expenses that are fixed for a period of time, and it may not be able to adequately adjust them in a period of rapid change in platform activities.

Furthermore, China’s road transportation market may experience changes as a result of new technologies. For example, new energy vehicles may become prevalent in the future, which could change the supply structure of heavy-duty trucks and potentially reshape the competitive landscape. Similarly, the development of autonomous driving technologies may affect the vehicle and labor costs of the road transportation market, which may change the market landscape. If the Group were unable to adapt to changes in China’s road transportation market, its business, results of operations and financial condition would be materially and adversely affected.

The Group’s success significantly depends on its ability to maintain and increase the scale of its network by attracting additional shippers and truckers to the FTA platform in a cost-effective manner. If shippers choose not to use the FTA platform, the Group may lack sufficient opportunities for truckers to find shipments, which may reduce the perceived utility of the FTA platform. Similarly, if truckers choose not to offer their services through the FTA platform, the Group may lack a sufficient supply of truckers to attract shippers to the FTA platform. An insufficient supply of shippers or truckers would adversely affect the Group’s revenue and financial results. Although we may benefit from having a larger network of shippers and truckers than our competitors, the network effects of the FTA platform may not result in sufficient competitive advantages or may be overcome by our competitors. Maintaining a balance between shipper demand and trucker supply for any given route at any given time and the Group’s ability to execute operationally may be more important to service quality than the absolute size of the network. If the Group’s service quality diminishes or our competitors’ services achieve greater market adoption, our competitors may be able to grow at a quicker rate than we do and may diminish the Group’s network effects. Additionally, if we fail to cater to the needs and preferences of shippers and truckers, control the Group’s costs in doing so or fail to deliver superior user experience, we may not be able to attract additional shippers and truckers in a cost-effective manner, and the Group’s business, financial condition and results of operations may be materially and adversely affected.

Transaction activities on the FTA platform may decline materially or fluctuate as a result of many factors, including, among other things, dissatisfaction with the operation of the FTA platform, the price of shipping orders, dissatisfaction with the quality of service provided by the truckers on the FTA platform, quality of platform user support, negative publicity related to the Group’s brands, including as a result of safety incidents, dissatisfaction with the Group’s services and offerings in general or regulatory restrictions on its services. If the Group fails to provide high-quality support, or introduce new or upgraded service offerings, or features that truckers, shippers, as well as ecosystem participants recognize as valuable or if the Group cannot otherwise attract and retain a large number of shippers and truckers, the Group’s fulfilled orders and revenue would decline, and its business would suffer. In addition, new features and functions on the FTA platform that may be received positively by one category of users may be viewed as negative to another category of users. For example, some truckers may be dissatisfied with the “tap and go” feature, which allows a shipper to post shipping order with a fixed price and is intended to replace price negotiation and streamline the transaction process between shippers and truckers, because such feature may result in lower prices for certain transactions. Furthermore, although we aim to increase truckers’ truck utilization, earnings potential, as well as profitability through smarter and more efficient freight matching, some truckers may view the increased efficiency in overall freight price discovery and negotiation on the FTA platform as a negative to their gross earnings. Dissatisfied truckers may lodge complaints with regulators, which, regardless of their veracity, may result in possibly heightened attention from regulators, the public and the media. In addition, we may introduce additional new features and functions, including pricing mechanisms to automate and minimize negotiations and improve the overall transaction efficiency on the FTA platform. We are committed to protecting interests of all of the FTA platform users and adjusting features and functions on the FTA platform based on user feedback. However, we cannot assure you that we will not experience user dissatisfaction or receive negative reactions from platform users. Any complaints and negative comments resulting from user dissatisfaction may cause government inquiries or substantial harm to the Group’s brand, reputation and operations.

Shippers and truckers on the FTA platform may engage in unethical or fraudulent behaviors that harm the interests of their counterparties. For example, shippers may misrepresent cargo information or refuse to pay shipping fees to truckers; and truckers may raise shipping fees after picking up cargos. We have implemented rules that are designed to protect the interests of shippers and truckers on the FTA platform and promote honest dealings, but there can be no assurance as to the effectiveness of such rules. Shippers and truckers may feel dissatisfied towards the FTA platform due to the unethical behaviors of other ecosystem participants. Any decline in the number of shippers or truckers using the FTA platform or their activity level on the FTA platform would reduce the value of the Group’s network and would harm its future operating results.

The Group’s business is subject to complex and evolving PRC laws and regulations relating to cybersecurity and data security.

Regulatory authorities in China have enhanced regulatory requirements to cybersecurity, data security and personal information protection, and the PRC government may adopt other rules and restrictions in the future. As we generate and process a large amount of data through the FTA platform, we face risks inherent in handling and protecting large volumes of data, including protecting the data hosted in our system, detecting and prohibiting unauthorized data share and transfer, preventing attacks on our system by outside parties or fraudulent behavior or improper use by our employees, and maintaining and updating our database. Any privacy or data security breach or failure to comply with these laws and regulations could have a material adverse impact on the Group’s reputation, brand, business and results of operations.

In April 2020, the Cyberspace Administration of China, or CAC, and eleven other regulatory authorities of the PRC jointly promulgated the Rules on Cybersecurity Review. Pursuant to the Rules on Cybersecurity Review, if an operator of critical information infrastructure purchases internet products and services that implicate or may implicate national security, such operator should be subject to cybersecurity review by the Cybersecurity Review Office of the CAC, or CRO.

The CRO announced the initiation of a cybersecurity review of the Yunmanman and Huochebang apps on July 5, 2021. During the cybersecurity review, the Yunmanman and Huochebang apps were required to suspend new user registration. The Group fully cooperated with the CRO to facilitate its review process. Based on notification by the CRO, we have resumed new user registration on the Yunmanman and Huochebang apps since June 29, 2022.

On July 10, 2021, the CAC and other related authorities released the draft amendment to the Rules on Cybersecurity Review for public comments through July 25, 2021. On December 28, 2021, the CAC and certain other government authorities promulgated the Revised Cybersecurity Review Measures that replaced the last version and took effect from February 15, 2022. Pursuant to the Revised Cybersecurity Review Measures, online platform operator holding over one million users’ information must apply for a cybersecurity review before listing abroad, and operators of “critical information infrastructure” that intend to purchase internet products and services that will or may affect national security must apply for a cybersecurity review. Furthermore, the competent government authorities may also initiate a cybersecurity review against the relevant operators where the authorities believe that the network product or service or data processing activities affect or may affect national security.

On November 14, 2021, the CAC published the Draft Regulations on Network Data Security Management, which provides that data processors conducting the following activities shall apply for cybersecurity reviews: (i) merger, reorganization or division of internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests, which affects or may affect national security; (ii) listing abroad of data processors that process over one million users’ personal information; (iii) listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security. The CAC has solicited comments on this draft until December 13, 2021, but there is no definite timetable as to when it will be enacted. As such, substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation of such measures. We cannot predict the impact of the Draft Regulations on Network Data Security Management, if any, at this stage, and we will closely monitor and assess future development in the rule-making process. If the enacted versions of the Draft Regulations on Network Data Security Management mandate clearance of cybersecurity review and other specific actions to be completed by China-based companies listed on a U.S. stock exchange, including us, we face uncertainties as to whether such clearance can be timely obtained, or at all.

On July 30, 2021, the PRC State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to such regulations, critical information infrastructure, or the CII, refers to any important network facilities or information systems of the important industry or field, such as public communication and information service, energy, transportation, water conservancy, finance, public services, e-government affairs and national defense science, which may endanger national security, people’s livelihood and public interest in the case of damage, function loss or data leakage. Relevant administration departments of each critical industry and sector are required to formulate detailed guidance to recognize the CII in the respective sectors, and a critical information infrastructure operator, or a CIIO, must take the responsibility to protect the security of CII by performing certain prescribed obligations. As of the date of this annual report, no detailed implementation rules have been formally issued by the relevant governmental authorities. However, as this regulation was newly issued, the relevant governmental authorities may formulate further detailed rules or explanations with respect to the interpretation and implementation of this regulation. As of the date of this annual report, we have not been informed by any governmental authority that we are a critical information infrastructure operator.

On August 23, 2022, the PRC Ministry of Transport published the Administrative Measures for the Security Protection of Highway and Waterway Critical Information Infrastructure (Draft for comments), or the Draft Measures, which stipulates that the Ministry of Transport shall formulate and improve the rules for identification of highway and waterway critical information infrastructure, considering following factors: (i) the degree of importance of network facilities and information systems for key core business of highway and waterway; (ii) the possible degree of harm in the event of destruction or disfunction of network facilities and information systems, or data leakage; and (iii) the relevant impact to other industries and fields. As of the date of this annual report, the Draft Measures were released for public comment only and it is still uncertain when the final versions of these new provisions and measures will be issued and take effect, how they will be enacted, interpreted or implemented, and whether they will affect us. As of the date of this annual report, we have not been informed by relavant governmental authority that we are a highway and waterway critical information infrastructure operator.

On July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, or the Security Assessment Measures, effective from September 1, 2022, to regulate outbound data transfer activities, protect the rights and interests of personal information, safeguard national security and social public interests, and promote the cross-border security and free flow of data. The Security Assessment Measures requires the data processor providing data overseas and falling under certain circumstances to apply for the security assessment of cross-border data transfer with the local provincial-level counterparts of the national cybersecurity authority. For details, see “Item 4. Information on the Company. — B. Business Overview — Regulatory Matters — Regulations Related to Internet Security and Privacy Protection.” As of the date of this annual report, we believe the Group is not involved in outbound data transfers in its daily operations, and therefore, we do not currently expect the Security Assessment Measures to have a material impact on the Group’s daily operations. However, if we engage in any capital markets transaction in overseas markets in the future, we may need to transfer certain data outside of the PRC, and such outbound data transfer may be subject to the restrictions under the Security Assessment Measures. Moreover, given the Security Assessment Measures were recently promulgated, there are substantial uncertainties as to the interpretation of such measures, and the PRC government authorities have discretion in the interpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be required to report any security assessment for cross-border data transfers to the CAC.

Non-compliance with cybersecurity and personal information protection laws and regulations could result in administrative penalties, such as warnings, fines, service suspension, removal of the Group’s apps from the relevant app stores, revocation of relevant business permits and/or licenses, or penalties of other nature that may cause a material adverse impact on the Group’s business, results of operations and financial condition.

Enhancing the recognition and reputation of the Group’s brands is critical to its business and competitiveness. Factors that are vital to this objective include but are not limited to the Group’s ability to:

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maintain the quality and reliability of services offered on the FTA platform;

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maintain and develop relationships with shippers, truckers and other ecosystem participants;

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provide prospective and existing shippers and truckers with superior experiences;

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effectively manage and resolve user complaints; and

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effectively protect personal information and privacy of, and any sensitive data received from, shippers and truckers.

Any malicious or inadvertent negative allegations made by the media or other parties about the foregoing or other aspects of the Group, including but not limited to its management, business, regulatory compliance, financial condition or prospects, whether with merit or not, could severely hurt the Group’s reputation and harm its business and results of operations.

As the road transportation market in China is under constant development and the regulatory framework for this market is subject to changes and developments, negative publicity about this industry may arise from time to time. Negative publicity about the road transportation market in general may also have a negative impact on the Group’s reputation, regardless of whether we have engaged in any inappropriate activities. Any actual or perceived failure of other digital freight platforms to detect or prevent illegal activities or provide high-quality services could compromise the Group’s image, undermine the trust and credibility we have established and have a negative impact on the Group’s ability to attract new shippers, truckers and other ecosystem participants. Negative developments in the road transportation market, such as fraudulent or illegal behavior by industry participants, may also lead to tightened regulatory scrutiny of the sector and limit the scope of permissible business activities that may be conducted by us. If any of the foregoing takes place, the Group’s business and results of operations could be materially and adversely affected.

The Group collaborates with various road transportation industry participants in providing its solutions and services. Such participants include financial institutions, insurance companies, gas station operators and other business partners. Negative publicity about such counterparties, including any failure by them to adequately protect the information of shippers and truckers, to comply with applicable laws and regulations or to otherwise meet required quality and service standards could harm the Group’s reputation.

The Group has incurred and will continue to incur expenses to develop, adjust and market existing or new solutions and services for shippers and truckers. For example, we plan to establish and expand dedicated teams to design and develop user experiences and operations for intra-city and LTL services to better serve the unique user needs of these industry verticals. Adjusted or new solutions and services must achieve high levels of market acceptance in order for us to recoup the Group’s investment in developing, acquiring and bringing them to market.

The Group’s existing or new solutions and services and changes to the FTA platform could fail to maintain or achieve sufficient market acceptance for many reasons, including but not limited to:

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our failure to predict market demand accurately and supply solutions and services that meet this demand in a timely fashion;

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ecosystem participants may not like, find useful or agree with the functions and features of the Group’s solutions and/or services, fees charged for the Group’s solutions and/or services, or any changes we make;

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our failure to properly price new solutions and services;

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negative publicity about the Group’s solutions and services or the FTA platform’s performance or effectiveness;

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the Group’s failure to satisfy the expectations of the quality or reliability of its solutions and/or services;

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views taken by regulatory authorities that the Group’s solutions and services or platform changes do not comply with PRC laws, rules or regulations applicable to us; and

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the introduction or anticipated introduction of competing solutions and services by our competitors, particularly in the intra-city and LTL segments.

If the Group’s existing solutions and services do not maintain market acceptance, or its new solutions and services do not achieve adequate acceptance in the market or provide the expected benefits to ecosystem participants, the level of user engagement and transaction activities on the FTA platform may decrease and the Group’s market share and profitability may be negatively affected, which could materially and adversely affect its business, financial condition, results of operations and prospects, as well as its reputation and brands. In addition, the Group may incur higher cost and expenses as a result of adjusted or new solutions and services. New solutions and services may also subject the Group to additional regulatory or licensing requirements. Failure by the Group to comply with any such new regulatory or licensing requirements could materially and adversely affect its business and results of operations.

We are not able to control or predict the actions of shippers, truckers and other ecosystem participants, either during their use of the FTA platform or otherwise, and we may be unable to protect or provide a safe environment for ecosystem participants and other third parties as a result of certain actions by shippers, truckers and other ecosystem participants. Such actions may result in accidents, injuries, loss of cargo, truck damage, leakage of sensitive personal information, business interruption, or damages to the Group’s financial condition, brands and reputation. The Group’s users may also suffer damages due to false or misleading information posted on the FTA platform. Although the Group administers certain qualification measures for shippers and truckers, including requiring identity information from shippers and truckers in the user registration process, these qualification measures may not provide the Group with all potentially relevant information. Furthermore, if the Group fails to duly verify the requisite qualifications or licenses of shippers, truckers or other ecosystem participants, it may be subject to fines, penalties or other regulatory actions. In addition, as an online platform, the Group does not inspect the cargos that truckers carry, and such cargos may contain unsafe, prohibited or restricted items. The Group also does not independently test truckers’ driving skills. Consequently, the Group expects to continue to receive complaints from shippers, and it may become subject to actual or threatened legal action related to truckers’ conduct.

Due to the large number of transactions on the FTA platform, we may not be able to identify every incident of inappropriate, illegal or fraudulent activities involving the FTA platform, or prevent all such activities from occurring. For example, if truckers engage in criminal activities, fraud or misconduct, such as speeding, drowsy driving and other traffic violations, operating beyond licensed scope, or use the FTA platform as a conduit for criminal or fraudulent activities, shippers may not consider the Group’s service offerings safe, and we may receive negative press coverage or regulatory inquiries as a result of the Group’s business relationships with such truckers, which would adversely impact the Group’s brands, reputation, and business. On the other hand, if shippers engage in criminal or fraudulent activities, such as issuing invoice with false amount, or other misconducts while using the FTA platform, truckers may be unwilling to continue using the FTA platform. We cannot assure you the Group’s safety measures against potential criminal activities and safety incidents will be effective. If any of these happens, the Group’s ability to attract platform users may be harmed, and its business and financial results could be adversely affected. In such event, claims may also be brought against us for civil or criminal liabilities. In response to allegations of illegal, fraudulent or inappropriate activities conducted through the FTA platform, relevant governmental authorities may also intervene and hold the Group liable for non-compliance with applicable laws and regulations and subject the Group to penalties. Defending or attending to such actions could be costly and require significant time and attention of our management and other resources, which would materially and adversely affect the Group’s business.

Public reporting or disclosure of safety incidents reportedly occurring on or related to the FTA platform, whether generated by us or third parties such as media or regulators, may adversely impact the Group’s business and financial results. Furthermore, we may be subject to claims of significant liability based on traffic accidents, deaths, injuries, or other incidents that are caused by truckers or shippers while using the FTA platform, or even when shippers or truckers are not actively using the FTA platform. In addition, regulators may decide to hold us liable for incidents caused by shippers or truckers, despite the Group’s status as a platform that facilitates transactions between shippers and truckers. Even if these claims or regulatory proceedings do not result in liability or penalties on the Group, it could incur significant costs in investigating and defending against them or suffer significant reputational damage, which could have a material and adverse effect on the Group’s prospects and future growth, including its ability to attract and retain shippers and truckers.

The consolidated affiliates pay a significant amount of VAT to local tax authorities in connection with the Group’s freight brokerage service. As online freight brokers, the consolidated affiliates enter into contracts with shippers to sell shipping service and platform service and also enter into contracts with truckers to purchase shipping service pursuant to relevant PRC regulations. The difference between the amount the consolidated affiliates collect from shippers and the amount they pay to truckers represents the FTA platform service fee and the Group’s net revenue. The consolidated affiliates assume the legal obligation to pay VAT assessed on the entire selling price of the shipping service and platform service pursuant to their contracts with shippers and truckers.

The gross amount of VAT related to freight brokerage services that the consolidated affiliates were obliged to pay exceeded the Group’s net revenues from such services in 2020, 2021 and 2022 and we expect such situation to continue. Nevertheless, the Group was able to generate gross profit from the freight brokerage service in 2020, 2021 and 2022 because the consolidated affiliates received grants from local government authorities. For details regarding government grants, see “Item 5. Operating and Financial Review and Prospects – Components of Results of Operations – Cost of Revenues”. The Group’s VAT obligations net of the government grants were recorded in its cost of revenues for freight brokerage service.

We take into consideration the VAT obligation the consolidated affiliates assume under their contracts with shippers and truckers, the estimated amount of grants that they expect to receive from local government authorities, as well as other relevant factors when setting the rate of the FTA platform service fee. As such, the profitability of the freight brokerage service significantly depends upon the amount of grants provided by local government authorities, which are not guaranteed, as well as our pricing strategy and other factors.

Whether the consolidated affiliates can obtain such government grants in a particular province in the PRC is subject to the policy of the local government authority and the negotiation between such local government authority and the relevant consolidated affiliates. While the consolidated affiliates are currently entitled to government grants based on cooperation agreements with the local government authorities, we cannot assure you that the consolidated affiliates will be able to continue to receive such government grants on similar terms, or at all. For the years ended December 31, 2020, 2021 and 2022, the gross amounts of VAT costs amounted to RMB1,832.6 million, RMB3,510.7 million and RMB4,518.9 (US$655.2 million), respectively, and the government grants amounted to RMB938.7 million, RMB1,559.8 million and RMB1,979.6 (US$287.0 million), respectively. During the years ended December 31, 2020, 2021 and 2022, we did not experience any material reduction or cancelation of, or delay in receiving, government grants that we are entitled to. In the event that the government grants are reduced or canceled, we may have to adjust the rate of the FTA platform service fee, which could make the freight brokerage service less attractive to shippers and truckers and the Group’s business could be materially and adversely affected. We cannot assure you that we will always be able to pass on any increased VAT costs due to reduction or elimination of related government grants through adjustment of the rate of platform service fee either, in which case, the Group may incur gross loss for the freight brokerage service and its results of operations and financial condition could be materially and adversely affected. In addition, any significant delay in the payment of government grants may also have a material and adverse impact on the Group’s results of operations and financial condition.

If we fail to effectively match truckers with shipments and optimize our pricing models, the Group’s business, financial condition and results of operations could be adversely affected.

We offer shippers and truckers a digital freight platform that matches them efficiently. The Group’s ability to attract shippers and truckers to use, and build trust in, the FTA platform is significantly dependent on its ability to match suitable shipping orders to reliable truckers. In order to recommend or present suitable shipping orders to truckers, our matching algorithms compare the labels of cargos with those of the trucker and predict the probability for the trucker to accept each shipping order. If the quantity or quality of data available to us for analysis is unsatisfactory, or if our matching algorithms have deficiencies, our matching may not be effective, resulting in fewer transactions on the FTA platform, which in turn would materially and adversely affect the Group’s business, financial condition, results of operations and prospects.

In addition, we apply freight pricing models in our “tap and go” feature for shippers and, in certain circumstances, commission-charging for online transaction service. Our system generates a recommended price based on the prices of historical comparable shipping orders for shippers to determine the actual price for their shipping orders. In addition, in certain circumstances, such as when the order prices are not available to us, the Group’s commissions for online transaction service are based on fair market prices estimated by our freight pricing models. The pricing methodology depends on the availability of comparable historical transaction data. If our freight pricing models are flawed or ineffective or the data we accumulate are incorrect or outdated, our price recommendation or estimate could be adversely affected. Shippers may not use our “tap and go” feature if our price recommendation fails to serve as a meaningful reference. With respect to the Group’s commissions for online transaction service, underestimation of the fair market price would reduce the amount of commissions paid by truckers to us, and overestimation of such price would result in trucker dissatisfaction. As a result of such flawed pricing, the Group’s business, brands, reputation, results of operations and financial condition may be materially and adversely affected.

We cannot guarantee that our monetization strategies or the Group’s business initiatives will be successfully implemented or generate sustainable profit.

We are at an early stage of monetizing the FTA platform services and our monetization model is evolving. We cannot assure you that we can successfully implement the Group’s existing business model to generate sustainable profit. If the Group’s existing business model fails to maintain market acceptance or we fail to develop or implement new monetization strategies, we may not be able to maintain or increase the Group’s revenue or effectively manage any associated costs. In addition, we are exploring and will continue to explore new business initiatives that we believe are important to the Group’s long-term success and future growth, but they may have the effect of increasing the Group’s costs, reducing its revenue and lowering its margins and profit, and this effect may be significant in the short term and potentially over longer periods.

Furthermore, we may introduce new products and services or increase investments in products and services for which we have limited scale or operating experience. For example, we plan to establish and expand dedicated teams to design and develop user experiences and operations for intra-city and LTL services to better serve the unique user needs of these industry verticals. The Group’s services in these segments may be less profitable than other services. If these new products or services fail to meet our expectations or are unable to attract or engage shippers and truckers or other ecosystem participants, as the case may be, we may fail to diversify the Group’s revenue streams or generate sufficient revenues to justify its investments and costs, and the Group’s business and operating results may suffer as a result.

The Group has incurred, and in the future may continue to incur, net losses.

The Group has incurred significant losses in the past. It incurred net losses of RMB3,470.5 million and RMB3,654.5 million in 2020 and 2021, respectively. We will need to generate and sustain increased revenue levels and effectively manage expenses in future periods to achieve profitability, and even if we do, we may not be able to maintain or increase profitability. In 2022, the Group recorded net income of RMB411.9 million (US$59.7 million). However, there is no guarantee that the Group will continue to record or increase net income in the future.

We focus on long-term success and future growth. We have in the past and will continue to invest in efforts to serve more shippers and truckers, enhance their user experience, and expand the capabilities and scope of the FTA platform. We believe these efforts are important to the Group’s long-term success and future growth, but they may have the effect of increasing the Group’s costs, reducing its revenue and/or increasing its net losses, and this effect may be significant in the short term and potentially in the long term. These efforts may also prove more expensive than we anticipate, and we may not succeed in increasing the Group’s revenue sufficiently to offset these expenses. For example, we may aggressively expand the Group’s market share in the intra-city and LTL verticals, and we may incur substantial costs in connection with such efforts. In addition, as part of the Group’s future growth strategy, we may decide to lower the Group’s service fees for freight brokerage service to serve more shippers and drive their engagement, which would result in lower revenue from freight brokerage service in the near term. Furthermore, many of our efforts to generate revenue are new and unproven, and any failure to adequately increase revenue or contain the related costs could prevent us from attaining or increasing profitability. The Group’s strategic investments and acquisitions may also adversely affect its results of operations. For example, our investment in PlusAI Corp, or Plus, may have the effect of increasing the Group’s net losses in the future. Plus is a developer of automated driving systems for trucks, and it has incurred significant losses and may not become profitable in the near future or at all. As such, we may not be able to achieve, maintain or increase profitability in the future.

We face risks associated with the cargo transported using the freight brokerage service and vicarious liability for vehicles registered with the Group.

The consolidated affiliates handle a large volume of cargos through the freight brokerage service, and face challenges with respect to the safety of these cargos. Cargos may be stolen, damaged or lost for various reasons, and the consolidated affiliates may be perceived or found liable for such incidents. Although the consolidated affiliates only assume liability for cargo damages up to RMB20,000 per shipment under their shipping agreements, we may need to expend resources on responding to and defending against claims arising out of these incidents. Furthermore, there can be no assurance that the consolidated affiliates will be able to limit our liability to RMB20,000 per shipment in every instance. In addition, the consolidated affiliates do not inspect cargos for unsafe, prohibited or restricted items. Unsafe items, such as flammables and explosives, toxic or corrosive items and radioactive materials, may damage other cargos, injure recipients, harm truckers, damage properties or cause serious accidents. Furthermore, if truckers on the FTA platform transport and deliver prohibited or restricted items, the consolidated affiliates may be subject to administrative or criminal penalties, and if any personal injury or property damage takes place, the consolidated affiliates may be subject to civil liabilities.

Historically, we allowed a number of truckers to register their vehicles with our transportation companies to satisfy their compliance and financing needs in connection with our legacy financial leasing business. Although we have ceased offering financial leases and stopped registering new vehicles, our transportation companies may continue to face vicarious liability for traffic accidents, deaths, injuries, cargo damage or other incidents that are caused by vehicles registered with us. The Group’s auto insurance and general liability insurance policies may not cover all potential claims to which we are exposed, and may not be adequate to indemnify us for all potential liabilities. These incidents may also subject us to negative publicity, which could adversely affect the Group’s business, operating results, and future prospects.

The COVID-19 outbreak has adversely affected, and may continue to adversely affect the Group’s results of operations.

In an effort to halt the COVID-19 outbreaks, the PRC government placed significant restrictions on travel within China and closed certain businesses during certain periods from January 2020 to December 2022. While the Group has resumed normal business operations, it experienced certain disruptions in its operations as a result of the government imposed suspensions and waves of COVID-19 infections due to the COVID-19 outbreaks in China. A substantial number of the Group’s offices were closed for certain periods in February and March of 2020. The Group’s offices in Nanjing also implemented work-from-home arrangements for certain periods in July and August 2021. There have been additional COVID-19 outbreaks in China since July 2021. The COVID-19 outbreaks, together with other factors, contributed to sequential decreases in the number of fulfilled orders in the third and fourth quarters of 2021 from the respective previous quarters, and a sequential decrease in GTV in the third quarter of 2021 from the second quarter of 2021. In addition, due to lock downs during the COVID-19 pandemic, the Group experienced year-on-year declines in both GTV and fulfilled orders in 2022.

Since December 2022, the PRC government has largely lifted pandemic-related restrictions on travel and business operations. Nonetheless, any future COVID-19 outbreaks in China may adversely affect the Group’s business, results of operations, financial position and cash flows.

Any financial or economic crisis, or perceived threat of such a crisis may materially and adversely affect the Group’s business, prospects, financial condition and results of operation.

Any prolonged slowdown in the Chinese or global economy may have a negative impact on the Group’s business, financial condition and results of operations. In particular, general economic factors and conditions in China or worldwide may affect the road transportation industry. The global macroeconomic environment is facing challenges, such as the conflicts in Ukraine and the ongoing global trade disputes and tariffs. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, such as the continuously rising U.S. interest rate. Economic conditions in China are sensitive to global economic conditions. Any prolonged slowdown in China’s economic development might lead to tighter credit markets, increased market volatility, sudden drops in business and consumer confidence and dramatic changes in business and consumer behaviors. These adverse economic effects could negatively affect the road transportation industry, resulting in reduced cargo volumes and truck capacity on the FTA platform and as well as financial difficulty among shippers and truckers, which would negatively impact their ability to repay loans facilitated by us or otherwise materially and adversely affect the Group’s business, results of operations and financial condition. Furthermore, continued turbulence in the international markets may adversely affect our ability or plan to access the capital markets.

We could be adversely affected by political tensions between the United States and China.

Political tensions between the United States and China have escalated in recent years due to, among other things, the trade war between the two countries since 2018, the COVID-19 outbreak, the PRC National People’s Congress’ passage of Hong Kong national security legislation, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong Special Administrative Region by the U.S. government, and the imposition of sanctions on certain individuals from the U.S. by the Chinese government, various executive orders issued by former U.S. President Donald J. Trump, such as the one issued in August 2020 that prohibits certain transactions with ByteDance Ltd., Tencent Holdings Limited and the respective subsidiaries of such companies, the executive order issued in November 2020 that prohibits U.S. persons from transacting publicly traded securities of certain “Communist Chinese military companies” named in such executive order, as well as the executive order issued in January 2021 that prohibits such transactions as are identified by the U.S. Secretary of Commerce with certain “Chinese connected software applications,” including Alipay and WeChat Pay, as well as the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by the MOFCOM on January 9, 2021, which apply to Chinese individuals or entities that are purportedly barred by a foreign country’s law from dealing with nationals or entities of a third country. In October 2022, the U.S. government implemented comprehensive export controls to restrict the export of advanced semiconductors and the equipment required to manufacture them to China. Rising political tensions between China and the U.S. could reduce levels of trades, investments, technological exchanges and other economic activities between the two major economies, which would have a material adverse effect on global economic conditions and the stability of global financial markets. The measures taken by the U.S. and Chinese governments may have the effect of restricting the Group’s ability to transact or otherwise do business with entities within or outside of China and may cause investors to lose confidence in Chinese companies and counterparties, including us. If the Group was unable to conduct its business as it is currently conducted as a result of such regulatory changes, the Group’s business, results of operations and financial condition would be materially and adversely affected.

Furthermore, there have been recent media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets, and delisting China-based companies from U.S. national securities exchanges. In January 2021, after reversing its own delisting decision, the NYSE ultimately resolved to delist China Mobile, China Unicom and China Telecom in compliance with the executive order issued in November 2020, after receiving additional guidance from the U.S. Department of Treasury and its Office of Foreign Assets Control. These delistings have introduced greater confusion and uncertainty about the status and prospects of Chinese companies listed on the U.S. stock exchanges. If any further such deliberations were to materialize, the resulting legislation may have a material and adverse impact on the stock performance of China-based issuers listed in the United States such as us, and we cannot assure you that we will always be able to maintain the listing of our ADSs on a national stock exchange in the U.S., such as the NYSE or the Nasdaq Stock Market, or that you will always be allowed to trade our ADSs.

If we fail to keep up with the technological developments and implementation of advanced technologies, the Group’s business, results of operations and prospects may be materially and adversely affected.

We apply technologies to serve the Group’s ecosystem participants more efficiently and bring them better user experience. The Group’s success will in part depend on its ability to keep up with the changes in technologies and the continued successful implementation of advanced technology, including AI, data analytics and autonomous driving. If we fail to adapt the FTA platform and services to changes in technological developments in an effective and timely manner, the Group’s business operations may suffer. Changes in technologies may require substantial expenditures in research and development as well as in modification of the Group’s services, which may be disruptive to its business and can be time-consuming and expensive, and may increase management responsibilities and divert management attention. Hurdles in implementing technological advances may result in the Group’s services becoming less attractive to ecosystem participants, which, in turn, may materially and adversely affect its business, results of operations and prospects.

We are subject to the evolving laws and regulations governing the road transportation, internet service and insurance industries in the PRC. Heightened regulatory scrutiny may lead to frequent regulatory communications, inquiries or investigations that could materially and adversely affect the Group’s business model, results of operations and prospects.

The Group’s business is subject to a variety of laws and regulations in the PRC governing the rapidly evolving road transportation, internet service and insurance industries. The application and interpretation as to certain of these laws and regulations are currently ambiguous and evolving, and may be interpreted and administered inconsistently between the different government authorities and local bureaus.

As of the date of this annual report, the Group had not been involved in any non-compliance incident which, individually or in the aggregate, have had or are reasonably likely to have a material and adverse impact on the Group’s business, financial condition or results of operations. However, if the PRC government continues to tighten its regulatory framework for the road transportation and internet service industries in the future, and subject industry participants such as the Group to new or specific requirements, such as licensing or additional user protection requirments, or require us to adjust the Group’s existing business practices, the Group’s business, financial condition and prospects would be materially and adversely affected. For instance, since 2021, the PRC Ministry of Transport has issued several guidances which repeatedly mentioned the concept of ensuring truck drivers’ reasonable income and restriction of commission fees and membership fees. However, there are substantial uncertainties regarding the interpretation and application of these guidances and there is no further detailed rules or requirements that have been issued by such authority currently. The PRC Ministry of Transport or other regulatory authorities may from time to time issue new guidances or take further actions in the future to strengthen this aspect. We, together with several other industry players, were requested to attend certain regulatory guidance meetings in the past. During these meetings, the relevant regulators emphasized the industry players’ responsibilities to manage safety risks, set appropriate shipping prices and charges, avoid unfair competition, maintain adequate internal processes and protect user (particularly trucker) rights, among other requirements. In connection with these meetings, we were also from time to time requested to furnish materials regarding our business practices with respect to the relevant topics. Going forward, we may continue to be required to attend similar meetings or become subject to regulatory inquiries or investigations with PRC regulators. There is no guarantee that such regulatory communications would not result in substantial penalties or orders that require us to adjust the Group’s existing business practices in ways that may materially and adversely affect its growth and results of operations. Compliance with existing and future rules, laws and regulations can be costly and if the Group’s practices are deemed to violate any existing or future rules, laws and regulations, the Group may face injunctions, including orders to cease non-compliant activities, and may be exposed to other penalties as determined by the relevant government authorities as well. We may also suffer reputational damages, if the Group or its business partners are deemed to violate any existing or future rules, laws and regulations.

Under PRC laws and regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet or wireless networks content that, among other things, violates the principle of the PRC constitution, laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent or defamatory. If any of the content posted or displayed on the FTA platform is deemed by the PRC government to violate any content restrictions, we could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect the Group’s business, financial condition and results of operations.

In addition, the insurance brokerage business of Shan’en Insurance has been and will continue to be subject to regular and ad hoc regulatory inspections and actions by China Banking and Insurance Regulatory Commission, or the CBIRC, and other authorities regarding its compliance with applicable rules and regulations. We were subject to an inspection from July to September 2021 by a local counterpart of CBIRC, who, upon completion of the inspection, required us to rectify our archive management and disclosure policy. As of the date of this annual report, we have taken the rectification actions as well as measures to enhance internal control, and paid an immaterial amount of fine. There can be no assurance that the regulatory authorities will not identify non-compliance incidents regarding Shan’en Insurance’s operations in the future. Regulatory actions against Shan’en Insurance may materially and adversely affect the Group’s business, financial condition and results of operations.

The Group may from time to time develop new solutions and services, which may also subject the Group or its business partners to additional regulatory or licensing requirements. Failure by the Group or its business partners to comply with any such new regulatory or licensing requirements could materially and adversely affect the Group’s business and results of operations.

The Group’s business generates, collects, stores and processes a large amount of data, which include sensitive personal information and may include data that may be deemed core data or material data. The improper processing of such data by the Group, its employees or business partners could materially and adversely affect the Group’s reputation, business, results of operations and financial condition.

We face risks inherent in handling and protecting a large amount of data that the Group’s business generates and processes from the significant number of transactions the FTA platform facilitates, and such data include sensitive personal information and may include data that may be deemed core data or material data. In particular, we face a number of challenges relating to data from transactions and other activities on the FTA platform, including:

•

protecting the data in and hosted on the Group’s system, including against attacks on its system by external parties or misbehavior by its employees;

•

addressing concerns related to privacy, security and other factors; and

•

complying with applicable laws, rules and regulations relating to the processing and security of data that include personal information and data that may be deemed core data or material data, including any requests from regulatory and government authorities relating to such data.

In particular, if we fail to secure platform users’ sensitive personal information, such as their addresses and contact information, platform users may be vulnerable to harassments, and their assets may also be put at risk due to data leakages. As a result, we may be held liable for these incidents, and platform users may feel insecure and cease to use the Group’s services. In addition, any system or technological failure or compromise of our technology system that results in unauthorized access to or release of any personal data of platform users or proprietary information of the Group’s business operations could significantly harm the Group’s reputation and/or result in litigation, regulatory investigations and penalties against us.

We are subject to various data privacy and protection laws and regulations in China, including without limitation, the PRC Cybersecurity Law. Under the Cyber Security Law of China, the owners and administrators of networks and network service providers have various personal information security protection obligations, including restrictions on the collection and use of personal information of users, and they are required to take steps to prevent personal data from being divulged, stolen, or tampered with. See “Item 4. Information on the Company — B. Business Overview — Regulatory Matters—Regulations Related to Internet Security and Privacy Protection” for details. We cannot assure you that the governmental authorities will not interpret or implement the laws or regulations in ways that negatively affect us. Moreover, different regulatory bodies in China, including the MIIT, the CAC, the Ministry of Public Security and State Administration of Market Regulation, or the SAMR, have enforced data privacy and protection laws and regulations with various standards and applications. These various standards in enforcing data privacy and protection laws may create difficulties in ensuring full compliance and increase the Group’s operating cost, as we need to spend time and resources to deal with various inspections for compliance.

While we have adopted a rigorous and comprehensive policy for the collection, processing, storage and other aspects of data use and privacy and taken necessary measures to comply with all applicable data privacy and protection laws and regulations, we cannot guarantee the effectiveness of these policies and measures undertaken by us, or business partners on the FTA platform. In the past, we received notices from regulatory authorities that identified certain compliance defects in our data privacy and protections practices, requiring us to rectify our data privacy measures. We have adopted several remedial measures in response to such notices and submitted our rectification reports to the relevant governmental authorities. Despite the absence of any material cybersecurity breach and our continuous efforts to comply with our internal policies as well as applicable laws and regulations, any failure or perceived failure to comply with all applicable data privacy and protection laws and regulations, any failure or perceived failure of the Group’s business partners to do so, or any failure or perceived failure of the Group’s employees to comply with internal control measures, may result in warning, negative publicity and legal proceedings or regulatory actions against the Group, and could result in fines, revocation of permits, licenses, suspension of business operations or other penalties or liabilities, which may in turn damage the Group’s reputation, discourage current and potential shippers and truckers from using the Group’s services, and subject the Group to fines and damages, which could have a material adverse effect on the Group’s business and results of operations.

Furthermore, the PRC regulatory and enforcement regime with regard to data security and data protection is still evolving. PRC regulators have been increasingly focused on regulation in the areas of data security and data protection. For example, on June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect on September 1, 2021. The PRC Data Security Law imposes data security and privacy protection obligations on entities and individuals which carry out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it might cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021. The Personal Information Protection Law provides the basic regulatory regime for personal information protection, including without limitation, stipulating an expanded definition of personal information, providing a long-arm jurisdiction in cross-border scenarios, emphasizing individual rights, and prohibiting rampant infringement of personal information, such as stealing, selling, or secretly collecting personal information. The Group provides services to individual shippers and truckers who may upload personal information to FTA platform when using the Group’s services, which may be deemed to be sensitive personal information under the Personal Information Protection Law. Any failure to comply with the Personal Information Protection Law may subject the Group to liabilities or administrative penalties, including but not limited to suspension or termination of the Group’s services. For further details, see “Item 4. Information on the Company — B. Business Overview — Regulatory Matters — Regulations Related to Internet Security and Privacy Protection.” Furthermore, on December 8, 2022, the MIIT published the Measures for the Administration of Data Security in the Field of Industry and Information Technology (for Trial Implementation), which became effective from January 1, 2023 and stipulates that telecom data processors (including telecom business operators with telecom business operation licenses) shall sort out data regularly, identify important and core data in accordance with relevant standards and develop their own specific catalogues to ensure data security in data collection, storage, use, processing, transmission, provision and disclosure. These newly promulgated laws and regulations reflect PRC government’s further attempts to strengthen the legal protection for personal information, as well as the security of national network and key information infrastructure.

The functional designs and interactive logic of the Group’s mobile apps may need to be adjusted from time to time in order to comply with evolving laws, regulations, norms and other applicable regulatory requirements, which could increase the Group’s compliance costs and may adversely affect its mobile apps’ user experience. We cannot assure you that relevant regulators will not interpret or implement the laws or regulations in ways that negatively affect the Group. In addition, the Group may become subject to additional or new laws and regulations in this regard, which may result in additional expenses to the Group and subject the Group to potential liability and risk of negative publicity. We expect that data security and protection will continue to receive significant public attention and scrutiny from regulators going forward, which could increase the Group’s compliance costs and subject the Group to heightened risks and challenges associated with data security and protection. If the Group were unable to manage these risks, it could become subject to penalties, fines, suspension of business and revocation of required permits or licenses, and the Group’s reputation and results of operations could be materially and adversely affected.

Regulatory uncertainties relating to, or failure to comply with, anti-monopoly and competition laws could adversely affect the Group’s business, financial condition, or operating results.

The PRC anti-monopoly enforcement agencies have in recent years strengthened enforcement under the PRC Anti-monopoly Law, including levying significant fines, with respect to concentration of undertakings and cartel activity, mergers and acquisitions, as well as abusive behavior by companies with market dominance. In March 2018, the SAMR was formed as a new governmental agency to take over, among other things, the anti-monopoly enforcement functions from the relevant departments under the MOFCOM, the National Development and Reform Commission of the PRC, or the NDRC, and State Administration of Industry and Commerce of the PRC, or the SAIC. The SAMR issued a new set of guidelines with respect to merger control review in September 2018, and issued the Notice on Anti-monopoly Enforcement Authorization on December 28, 2018, which grants authorizations to the SAMR’s provincial branches to enforce anti-monopoly laws within their respective jurisdictions. The SAMR has imposed several administrative penalties on various companies for failing to duly make filings as to their transactions subject to merger control review by the SAMR. The scope of the companies that were penalized is broad, and covers a variety of different industries.

Significant regulatory uncertainty existed as to whether prior filing of notification of concentration is required for business concentration involving variable interest entities prior to 2020. In November 2020, the Anti-monopoly Bureau of SAMR released the draft Guidelines on Anti-monopoly Issues in Platform Economy, or the Platform Economy Anti-monopoly Guidelines, for public comment and in February 2021, adopted the Platform Economy Anti-monopoly Guidelines, which for the first time specified that, any concentration made between the variable interest entities shall be regulated by the Anti-monopoly Law. In addition, the Platform Economy Anti-monopoly Guidelines set out detailed standards and rules in respect of the definition of relevant markets, typical types of cartel activities and abusive behaviors by online platform operators with market dominance, which provide further guidelines for enforcement of anti-monopoly laws against online platform operators. For instance, online platform operators that use technological advantages, such as data and algorithms, to eliminate or restrict competition or impose price restrictions or exclusivity requirements on users may be deemed to be abusing dominant market position.

Prior to the effectiveness of the Platform Economy Anti-monopoly Guidelines, the SAMR has already fined certain companies that acquired businesses using variable interest entities without obtaining merger control approval or without prior filing of notification of concentration, indicating its increased scrutiny over historical cases of concentration of undertakings involving companies using variable interest entities and heightened enforcement efforts over past failure to file prior notification of concentration of undertakings for such transactions. Since 2020, the SAMR has fined companies that acquired or merged with or cooperated with onshore or offshore entities, including those operated through variable interest entities, for failure to file prior notification before conducting the mergers or cooperation transactions.

Although we do not believe we were legally required to make a merger control review filing or obtain merger control approval in relation to the historical merger between Yunmanman and Huochebang in 2017, there can be no assurance that regulators will agree with us, particularly, in light of the enforcement actions since 2020. In addition, as there were few cases where companies using variable interest entities were investigated for failure to make filings in connection with concentration of undertakings prior to 2020, we did not file prior notification of concentration of undertakings for our historical business alliance or joint-investment transactions with our business partners. The SAMR issued a penalty decision on one transaction we made in 2020, for which we have paid an immaterial amount of penalty. There can also be no assurance that regulators will not initiate other anti-monopoly enquiry or investigation into, or take enforcement actions against, the historical merger between Yunmanman and Huochebang and/or our historical business alliance or joint-investment transactions or require us to submit filings in relation to such historical transactions. We may be subject to penalty in connection with any such enquiry or investigation, if we are determined by the SAMR to have failed to make the requisite filings, including fines up to RMB500,000 per case, and in extreme cases where any such transaction is determined by the SAMR to have constituted concentration of undertakings under the applicable PRC anti-monopoly law, the Group may be ordered to terminate the contemplated concentration, to dispose of the Group’s equity or asset within a prescribed period, or to transfer the Group’s business within a prescribed time or to take any other necessary measures to return to the pre-concentration status. We may also be subject to claims from our competitors or users, which could adversely affect the Group’s business and operations. Furthermore, any new requirements or restrictions, or proposed requirements or restrictions, could result in adverse publicity or fines against the Group.

On June 24, 2022, the Decision of the Standing Committee of the National People’s Congress to Amend the Anti-Monopoly Law of the People’s Republic of China was adopted and became effective on August 1, 2022, which stipulates that the State Council’s anti-monopoly enforcement agency may order business operators to cease illegal concentration, to dispose of shares, assets or businesses within a defined period of time, or to take other necessary measures to restore to the state before the concentration. The enforcement agency may also impose upon a business operator (i) a fine up to ten percent of the business operator’s sales revenue in the past year, if the concentration of undertakings has or may have an effect of excluding or limiting competition, or (ii) a fine up to RMB5 million if the concentration of undertakings does not have the effect of excluding or limiting competition. Stricter anti-monopoly and anti-unfair competition enforcement by the PRC regulatory authorities, especially enforcement actions focused on platform economy, may, among other things, prohibit the Group from future acquisitions, divestitures or combinations the Group plans to make, impose fines or penalties, require divestiture of certain of the Group’s assets, or impose other restrictions that limit or require the Group to modify its operations, including limitations on the Group’s contractual relationships with shippers and truckers or restrictions on the Group’s pricing or revenue models, which could materially and adversely affect the Group’s business, financial condition, results of operations and future prospects.

Furthermore, as we continue to navigate the evolving legislative environment and varied local implementation practices of anti-monopoly and competition laws and regulations in the PRC, we have attended and may continue to be required to attend administrative guidance meetings or other communications with regulators from time to time. We may continue to receive greater scrutiny and attention from regulators and more frequent and stringent investigations or reviews by regulators, which will increase the Group’s compliance costs. It could also be time-consuming to comply with the relevant regulations described above to complete future transactions and carry out the Group’s business operations. Heightened regulatory inquiries, investigations and other governmental actions and approval requirements from governmental authorities such as the SAMR may be uncertain and could delay or inhibit our ability to complete these transactions and carry out the Group’s business operations, which could affect the Group’s ability to expand its business, maintain its market share or otherwise achieve the goals of our acquisition strategy, divert significant management time and attention and the Group’s financial resources, bring negative publicity, subject the Group to liabilities or administrative penalties, and/or materially and adversely affect the Group’s financial conditions, operations and business prospects.

We may not be able to compete effectively, which could materially and adversely affect the Group’s business, financial condition, results of operations and prospects, as well as its reputation and brands.

The road transportation market is intensely competitive and characterized by fragmentation and shifting user preferences. We face competition from regional players in local markets and players that focus on certain segments of the road transportation market. We also compete with other companies for value-added services that cater to various essential needs of shippers and truckers. Players that focus on certain segments of the road transportation market may enter into new segments in which we operate and compete with us. Furthermore, large technology companies that have strong brand recognition, substantial financial resources and sophisticated technology capabilities may develop their own digital freight platforms in the future.

The Group operates as a digital freight marketplace, which is a relatively new business model. Our competitors may operate different business models, have different cost structures or participate selectively in different industry segments. They may ultimately prove to be more successful or more adaptable to customer demand and new regulatory, technological and other developments. Some of our current and potential competitors may have significantly more financial, technological, marketing and other resources than we do and may be able to devote greater resources to the development, promotion and support of their platforms and service offerings. Our competitors may also have longer operating history and greater brand recognition than us. Additionally, a current or potential competitor may acquire, or form a strategic alliance with, one or more of our other competitors. Our competitors may be better at developing new solutions and services, offering more attractive fees, responding more quickly to new technologies and undertaking more extensive and effective marketing campaigns. More players may enter the road transportation market and intensify the market competition.

In response to competition, we may have to lower and/or adjust the various fees that the Group charges to shippers and truckers or increase its operating expenses and capital expenditures to attract more shippers and truckers, which could materially and adversely affect its business, margins and results of operations. If the Group is not able to compete effectively, its ability to attract and retain shippers, truckers and other ecosystem participants may be adversely affected, the level of transaction activities and user engagement on the FTA platform may decrease and the Group’s market share may be negatively affected, which could materially and adversely affect the Group’s business, financial condition, results of operations and prospects, as well as its reputation and brands.

If we fail to obtain or maintain licenses, permits or approvals applicable to the Group’s business, the Group may become subject to significant penalties and other regulatory proceedings or actions.

The road transportation business in China is highly regulated by the PRC government. See also “Item 4. Information on the Company — B. Business Overview — Regulatory Matters—Regulations Related to Road Transportations.” In connection with the online operations of the FTA platform, the Group is also required to obtain value-added telecommunications service licenses, in order to provide relevant value-added telecommunication services. The consolidated affiliates have obtained value-added telecommunications service licenses for the operations of the mobile apps and websites.

To enhance the experience of shippers, truckers and other ecosystem participants, the Group offers various auxiliary functions, content and value-added services through the FTA platform. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practices by relevant government authorities, the Group may be required to obtain additional licenses, permits, filings or approvals for these functions, content and services. For example, it remains unclear whether the in-app message and voice call functions on the Group’s mobile apps would require a separate value-added telecommunications service authorization in relation to “instant interactive services” under the applicable PRC laws and regulations. Although we do not believe that a separate authorization is required because the Group’s mobile apps are not primarily communication software and such in-app message and voice call functions are only auxiliary functions to the Group’s main services. However, we cannot assure you that the relevant PRC government authorities would agree with our interpretation. If the Group were required to obtain additional authorization, it may not be able to do so in a timely manner, or at all.

Moreover, we cannot assure you that the Group will be able to maintain existing licenses and permits, or renew any of them when their current term expires, or update information (such as information related to the Group’s websites, mobile applications, legal representatives, business scopes or professional staff) filed with regulators in time due to procedural or substantive requirements. Under applicable PRC laws, rules and regulations, any failure to obtain, maintain and/or renew the licenses and permits, or any failure to update information filed with regulators in time, in each case required to conduct the Group’s business, may subject the Group to various penalties, including confiscation of revenues, imposition of fines, and restrictions on or termination of the business operation subject to such license or permit requirement. Any such disruption in the business operations of our PRC subsidiaries, the Group VIEs or consolidated affiliates could materially and adversely affect the Group’s business, financial condition and results of operations.

Furthermore, if the Group enters into new service categories or business lines, adopt new business models, or any of its current services are determined to be subject to new licensing requirements in the future, especially due to the evolving application or interpretation of relevant laws and regulations, it may be required to obtain licenses or permits that it does not currently have or to amend the licenses or permits it currently has. We will strive to obtain and amend the relevant licenses and permits but we cannot assure you that the Group will be able to obtain or amend such licenses and permits in a timely manner, or at all.

Regulatory uncertainties relating to online lending industry in China could harm the Group’s business, financial condition and results of operations.

The online lending industry in China is subject to evolving regulations. We cannot assure you that our existing or future credit solutions provided as part of our value-added services that cater to various essential needs of shippers and truckers would not be deemed by regulators to be in violation of any laws, regulations and rules in the future. In addition, new laws and regulations relating to the online lending industry may be adopted, and existing laws and regulations may be interpreted in ways that are inconsistent with our existing or future business practices, which, along with any possible changes needed to fully comply with any existing or new regulations, could require us to modify our business or operations. Compliance with such laws or regulations could force us to incur increased operating expenses, or modify our business models, which may have a material and adverse impact on the Group’s business, financial condition and results of operations.

The State Council promulgated the Regulations on the Administration of Financing Guarantee Companies, or the Financing Guarantee Rules, in 2017. According to the Financing Guarantee Rules, the establishment of financing guarantee companies shall be subject to the approval by the competent government authority, and unless otherwise stipulated, no entity may operate financing guarantee business without such approval. If any entity violates these regulations and operates financing guarantee business without approval, the entity may be subject to penalties including ban or suspension of business, fines of RMB500,000 to RMB1,000,000, confiscation of illegal gains if any, and if the violation constitutes a criminal offense, criminal liability in accordance with applicable laws.

We currently facilitate loans funded by third-party financial institutions that we collaborate with, and we guarantee such loans through our PRC subsidiaries. In some limited instances in the past, guarantees were provided by certain of the consolidated affiliates that did not have the required license to operate financial guarantee business. In addition, one of the consolidated affiliates provided guarantees during a period in which its license for financial guarantee business had expired, and it generated an immaterial amount of revenue during such period. We maintained routine reporting to the competent regulatory authority during such period and have subsequently renewed such license. If such past practices were found by the regulatory authorities to be in violation of the applicable regulations, we would be subject to penalties, such as confiscation of illegal gains and fines, which could have an adverse impact on the Group’s business, financial condition and results of operations. Furthermore, there can be no assurance that we will be able to renew our licenses for financial guarantee business when such licenses expire in the future.

In November 2020, the CBIRC and People’s Bank of China, or the PBOC, published the draft Interim Measures for the Administration of Online Small Loan Business, or the Draft Online Small Loan Measures. The Draft Online Small Loan Measures provide, among others, that an online small loan company must obtain the CBIRC’s approval before carrying out online small loan business across different provinces. Under the Draft Online Small Loan Measures, existing online small loan companies with businesses across provinces in China will have a three-year transition period to obtain the required approval and adjust their businesses as necessary to be in compliance with these measures. We have utilized our small loan company, which is one of our PRC subsidiaries, to fund a portion of the cash loans to shippers and truckers. The Draft Online Small Loan Measures, if enacted in substantially the form published for public comment, will, among other things, require our small loan company to obtain the CBIRC’s approval to be able to continue to operate our cash loan business across different provinces after the three-year transition period. We cannot assure you that we will be able to obtain the CBIRC’s approval in a timely manner, or at all. As of December 31, 2022, the total outstanding balance of the on-balance sheet loans, consisting of the total principal amounts and all accrued and unpaid interests (net of provisions) of the loans funded through our small loan company, was RMB2,648.4 million (US$384.0 million). Historically, we also funded loans through trusts established by us. Such arrangement was terminated in March 2022.

Furthermore, relevant regulatory and judicial authorities may change the private lending rate of interest that can be charged by non-financial institutions from time to time. On August 20, 2020, China’s Supreme People’s Court, or the SPC, announced its decision to lower the cap for such private lending rate in a revised judicial interpretation. Under the revised judicial interpretation, such total annual percentage rates (inclusive of any default rate, default penalty and any other fee) exceeding four times that of China’s benchmark one-year loan prime rate, or LPR, as published each month will not be legally protected. Based on the LPR of 3.7% as published on March 21, 2023, such cap would be 14.8%. According to a guidance letter issued by the SPC on December 29, 2020, clarifying the applicability of its revised judicial interpretation, the cap for private lending rate does not apply to small loan companies, financial guarantee companies, financial leasing companies, commercial factoring companies and certain other local financial organizations under the supervision of local financial regulatory authorities. However, uncertainties still exist with respect to the interpretation and implementation of existing and future laws and regulations governing small loan companies. For example, recent SPC guidance and judgment indicate that the portion of annualized interest rate, or APR, charged by financial institutions in excess of 24% per annum will not be supported in litigations. The APRs on our cash loans vary depending on borrowers’ credit profiles and may exceed 24% in some cases. The excess portion may not be enforceable should any dispute arise between us and the relevant borrowers. If the regulatory requirements for our licensed small loan company or financial guarantee companies are strengthened by any newly adopted, or by the application of any existing, laws, regulations or rulings, our licensed small loan company or financial guarantee companies may need to change their business models, which may have a material and adverse effect on the Group’s business, financial condition, results of operation and prospects.

The Group relies on commercial banks and third-party online payment service providers for payment processing services for certain of its services. If these payment services are restricted or curtailed in any way or become unavailable or unavailable on reasonable terms to the Group for any reason, its business may be materially and adversely affected.

The Group is not licensed to process payments and rely on commercial banks and third-party online payment service providers for payment processing services for certain of the Group’s services involving payments. If the quality, utility, convenience or attractiveness of these payment processing services declines, or we have to change the Group’s business arrangements with them for using these payment services for any reason, the attractiveness of the FTA platform could be materially and adversely affected.

The Group’s third-party online payment service providers and its relationship with them are subject to a number of risks that could materially and adversely affect their ability to provide payment processing and escrow services to the Group, including:

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dissatisfaction with these online payment services or decreased use of their services by shippers, truckers and other ecosystem participants;

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increasing competition, including from other established Chinese internet companies, payment service providers and companies engaged in other financial technology services;

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changes to rules or practices applicable to payment systems that third-party online payment service providers reply on;

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breach of users’ personal information and concerns over the use and security of information collected from users;

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service outages, system failures or failures to effectively scale the system to handle large and growing transaction volumes;

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increasing costs to third-party online payment service providers, including fees charged by commercial banks processing transactions through online payment channels, which could in turn be passed on to the Group and increase its costs of revenues; and

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failure to manage funds accurately or loss of funds, whether due to employee fraud, security breaches, technical errors or otherwise.

If any of the foregoing takes place, the Group’s third-party online payment service providers’ services may be restricted or curtailed or become unavailable or unavailable on reasonable terms to the Group, and its business and results of operations could be materially and adversely affected.

In addition, the commercial banks and third-party online payment service providers that we work with are subject to the supervision of the PBOC. The PBOC may publish rules, guidelines and interpretations from time to time regulating the operation of financial institutions and payment service providers that may in turn affect the business arrangements between such entities and the Group. For example, in November 2017, the PBOC published a notice, or the PBOC Notice, on the investigation and administration of illegal offering of settlement services by financial institutions and third-party payment service providers to unlicensed entities. The PBOC Notice intended to prevent unlicensed entities from using licensed payment service providers as a conduit for conducting the unlicensed payment settlement services, so as to safeguard the fund security and information security. As the laws and regulations in this area are still evolving and subject to interpretation, we cannot assure you that the PBOC or other governmental authorities will not scrutinize the Group’s business arrangements with commercial banks and third-party online payment service providers. For instance, the Group’s past settlement practices may give rise to the risk of the Group being deemed as inadvertently engaging in payment activity without the required license. The Group has adjusted its business arrangements in accordance with applicable laws and regulations. However, if its business arrangements were found by the regulatory authorities to be noncompliant, or if required by the PBOC or any new laws, rules or regulations, the Group’s payment service providers may decide to, among other things, suspend their services or be forced to adjust their business arrangements with the Group. As a result, the Group may incur additional expenses to find alternative payment service providers or adjust its business practices or invest considerable resources in complying with the requirements. Furthermore, if the PBOC or other governmental authorities deem the Group’s business arrangements with payment service providers to be noncompliant, the Group may be subject to regulatory action, investigations, fines and penalties, which could materially and adversely affect its business, results of operations and reputation.

If we fail to effectively manage the credit risks related to our credit solutions provided to truckers and shippers on the FTA platform, our business may be adversely affected.

We provide various credit solutions to shippers and truckers to meet their financial needs. We have primarily used our own capital to fund cash credit solutions for shippers and truckers. We also facilitate loans funded by third-party financial institutions, and we guarantee such loans. Historically, we also funded loans through trusts established by us. Such arrangement was terminated in March 2022. We believe our credit solutions create value for our ecosystem participants and enhance user engagement and transaction activities on the FTA platform. As of December 31, 2022, the total outstanding balance of the on-balance sheet loans, consisting of the total principal amounts and all accrued and unpaid interests (net of provisions) of the loans funded through our small loan company, was RMB2,648.4 million (US$384.0 million), and the total non-performing loan ratio for these loans was 2.0%. Our

Full Truck Alliance Co. Ltd. [YMM] Filings
20-F	[2023-04-19]
20-F	[2022-04-25]
F-1	[2021-05-27]