United States securities and exchange commission logo
September 29, 2021
Gloria Fan
Chief Financial Officer
BEST Inc.
2nd Floor, Block A, Huaxing Modern Industry Park
No. 18 Tangmiao Road, Xihu District, Hangzhou
Zhejiang Province 310013
People s Republic of China
Re: BEST Inc.
Form 20-F for the
Fiscal Year Ended December 31, 2020
Filed April 16,
2021
File No. 001-38198
Dear Ms. Fan:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2020
Item 3. Key Information
D. Risk Factors, page 5
1. We note you provide
risk factor disclosures under Risks Related to Our Corporate
Structure, starting
at page 22 and Risk Related to Doing Business in the People s
Republic of China,
starting at page 27. Please revise to present these disclosures more
prominently in your
filing by placing them towards the forepart of the Risk Factors
section. In addition,
expand your disclosure to specifically address the following risks:
Investors may
never directly hold equity interests in the Chinese operating company;
Gloria Fan
FirstName
BEST Inc. LastNameGloria Fan
Comapany 29,
September NameBEST
2021 Inc.
September
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Chinese regulatory authorities could disallow your VIE
structure, which would likely
result in a material change in the value of your ADSs, including
that it could cause
the value of such securities to significantly decline or become
worthless; and
Legal and operational risks associated with being based in
China could result in a
material change in the value of your ADSs or could significantly
limit or completely
hinder your ability to offer or continue to offer securities to
investors and cause the
value of such securities to significantly decline or be
worthless.
Risks arising from the legal system in China, including risks
and uncertainties
regarding the enforcement of laws and that rules and regulations
in China can change
quickly with little advance notice; and the risk that the Chinese
government may
intervene or influence your operations at any time, or may exert
more control over
offerings conducted overseas and/or foreign investment in
China-based issuers,
which could result in a material change in your operations and/or
the value of your
ADSs.
Risks that any actions by the Chinese government to exert more
oversight and control
over your securities that are listed overseas and/or foreign
investment in China-based
issuers could significantly limit or completely hinder your
ability to continue to offer
securities to investors and cause the value of such securities to
significantly decline or
be worthless.
2. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of your VIE structure do
not comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
shares may decline in value or become worthless if you are unable to
assert your
contractual control rights over the assets of your PRC subsidiaries
that conduct all or
substantially all of your operations.
3. Given recent statements by the Chinese government indicating an intent
to exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers, acknowledge the risk that any such action
could significantly limit
or completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of existing ADSs to significantly decline or be
worthless.
4. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China over data security, please revise your disclosure to explain how
this oversight
impacts your business and your ADSs and to what extent you believe
that you are
compliant with the regulations or policies that have been issued by
the CAC to date.
Gloria Fan
FirstName
BEST Inc. LastNameGloria Fan
Comapany 29,
September NameBEST
2021 Inc.
September
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Item 4. Information on the Company
C. Organizational Structure, page 79
5. We note you provide a corporate structure diagram here which is also
followed by your
disclosure of variable interest entity contractual arrangements.
Please address the
following:
Revise to present these disclosures more prominently in your
filing by placing them
towards the forepart of Item 4. Information on the Company;
Describe how this type of corporate structure may affect
investors and the value of
their investment, including how and why the contractual
arrangements may be less
effective than direct ownership and that the company may incur
substantial costs to
enforce the terms of the arrangements;
Revise your corporate structure diagram to include the other
two VIEs, Hangzhou
BEST IT and Hangzhou Baijia; and disclose your contractual
agreements with each
of them.
Item 5. Operating and Financial Review and Prospects
A. Operating Results, page 83
6. We note from page 80 that you generated 73% of your revenue from
continuing
operations through your VIEs for the year ended December 31, 2020 and
that consolidated
VIEs constitute a material part of your consolidated financial
statements. Please provide
in tabular form condensed consolidating schedule - depicting the
financial position, cash
flows and results of operations for the parent, the consolidated
variable interest entities,
and any eliminating adjustments separately - as of the same dates and
for the same periods
for which audited consolidated financial statements are required.
Highlight the financial
statement information related to the variable interest entity and
parent, so an investor may
evaluate the nature of assets held by, and the operations of, entities
apart from the variable
interest entity, which includes the cash held and transferred among
entities.
B. Liquidity and Capital Resources, page 105
7. We note from page 106 that [a]s a holding company with no material
operations of
[your] own, [you] are a corporation separate and apart from [your]
subsidiaries and [your]
VIEs and therefore, must provide for [your] own liquidity. Please
revise to address the
following:
Provide a clear description of how cash is transferred through
your organization and
disclose the amounts of cash and cash equivalent held by each of
your VIEs for the
periods reported. In addition disclose your intentions to settle
amounts owed under
Gloria Fan
FirstName
BEST Inc. LastNameGloria Fan
Comapany 29,
September NameBEST
2021 Inc.
September
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the VIE agreements;
Quantify for the periods reported any cash flows and transfers
of other assets by type
that have occurred between the holding companies, their
subsidiaries, and
consolidated VIEs, and direction of transfer;
Quantify any dividends or distributions that a subsidiary or
consolidated VIEs have
made to the holding companies and which entity made such
transfer, and their tax
consequences;
Describe any restrictions and limitations on your ability to
distribute earnings from
your businesses, including subsidiaries and/or consolidated VIEs,
to the parent
company and U.S. investors as well as the ability to settle
amounts owed under the
VIE agreements.
Consolidated Balance Sheets, page F-5
8. Please tell us if any of the assets of your consolidated VIEs, as
disclosed on page F-18,
can be used only to settle obligations of the consolidated VIEs. If
true, tell us why you do
not present these assets separately on the face of your consolidated
balance sheets
pursuant to ASC 810-10-45-25. If not, disclose the reasons why there
is no separate
reporting in your footnote disclosure.
9. We note from your consolidated balance sheets on pages F-5 and F-6
that you report the
aggregate amounts of current liabilities and non-current liabilities
of the consolidated
VIEs without recourse to the primary beneficiary. Please tell us the
amounts without
recourse of each line item of current and non-current liabilities
presented in the
consolidated balance sheets. In addition, tell us why reporting in
aggregate is appropriate.
Notes to the Consolidated Financial Statements
1. Organization and Basis of Presentation, page F-12
10. We note from page F-18 that you present the aggregate carrying amounts
of the assets,
liabilities and the results of operations of the VIEs. Please tell us
the quantitative and
qualitative information about the different risk and reward
characteristics of each VIE you
have considered to conclude that aggregation is appropriate. In
addition, disclose how
similar entities are aggregated pursuant to ASC 810-10-50-9. Also
refer to ASC 810-10-
50-10.
2. Summary of Significant Accounting Policies
Liquidity and Going Concern, page F-21
11. We note you describe conditions that indicate there is substantial
doubt about your ability
to continue as a going concern. We also note you describe your plans
to improve those
conditions. Please revise to disclose your evaluation of the
significance of those
Gloria Fan
BEST Inc.
September 29, 2021
Page 5
conditions in relations to your ability to meet your obligation and
how your plans are
specifically to mitigate those conditions that raise substantial doubt
about your ability to
continue as a going concern. Refer to ASC 205-40-50-13.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Joanna Lam at 202-551-3476 or Steve Lo at 202-551-3394
with any
questions.
FirstName LastNameGloria Fan Sincerely,
Comapany NameBEST Inc.
Division of
Corporation Finance
September 29, 2021 Page 5 Office of
Energy & Transportation
FirstName LastName