United States securities and exchange commission logo
July 26, 2023
Peng Zhang
Vice President of Finance
Yunji Inc.
15/F, South Building
Hipark Phase 2, Xiaoshan District
Hangzhou, Zhejiang, 310000
People s Republic of China
Re: Yunji Inc.
Form 20-F for
Fiscal Year Ended December 31, 2022
Filed April 26,
2023
File No. 001-38877
Dear Peng Zhang:
We have reviewed your filing 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 Fiscal Year Ended December 31, 2022
Item 3. Key Information
Our Holding Company Structure and Contractual Arrangements with the
VIEs, page 4
1. Please revise to
further discuss the risks associated with your corporate structure. Explain
whether the VIE
structure is used to provide investors with exposure to foreign investment
in China-based
companies where Chinese law prohibits direct foreign investment in the
operating companies,
and disclose that investors may never hold equity interests in the
Chinese operating
company. Your disclosure should acknowledge that Chinese regulatory
authorities could
disallow this structure, which would likely result in a material change in
your operations and/or
a material change in the value of your securities, including that it
could cause the value
of such securities to significantly decline or become worthless.
Peng Zhang
FirstName
Yunji Inc. LastNamePeng Zhang
Comapany
July NameYunji Inc.
26, 2023
July 26,
Page 2 2023 Page 2
FirstName LastName
2. Please revise to expand your disclosure about the legal and
operational risks associated
with being based in or having the majority of the company s
operations in China. Your
disclosure should include that these risks could cause the value of
your securities to
significantly decline or be worthless. Your disclosure should address
how recent
statements and regulatory actions by China s government, such as
those related to the use
of variable interest entities and data security or anti-monopoly
concerns, have or may
impact the company s ability to accept foreign investments, or list
on a U.S. or other
foreign exchange. Additionally, please revise your disclosure about
the Holding Foreign
Companies Accountable Act on page 7 to disclose the location of your
auditor s
headquarters.
3. Please ensure that you refrain from using terms such as we or
our when describing
activities or functions of a VIE. In this regard, we note your
disclosure that you will use
the term we, us, our company, our and Group
to refer to Yunji Inc., [y]our
Cayman Islands holding company and its subsidiaries, and, in the
context of describing
[y]our operations and consolidated financial information, including
the VIEs and the
subsidiaries of the VIEs.
4. We note that you exclude Hong Kong and Macau from your definition of
China or the
PRC." Please revise to clarify that all the legal and operational
risks associated with
having operations in the People s Republic of China also apply to
operations
in Hong Kong/Macau. Discuss any applicable laws and regulations in
Hong Kong and
Macau, where applicable throughout your filing, and the risks and
consequences to you
associated with those laws and regulations. As an example, disclose
how regulatory
actions related to data security or anti-monopoly concerns in Hong
Kong have or may
impact the company s ability to conduct its business, accept foreign
investment or list on a
U.S./foreign exchange. Include risk factor disclosure explaining
whether there are
laws/regulations in Hong Kong that result in oversight over data
security, how this
oversight impacts the company s business and the offering, and to
what extent the
company believes that it is compliant with the regulations or policies
that have been
issued.
5. We note your disclosure of a chart reflecting your corporate structure
and disclosure that
the "terms contained in each set of contractual arrangements with the
VIEs and their
respective shareholders are substantially similar." Please revise to
remove arrows in your
dashed lines that reflect relationships with the VIE. Describe all
contracts and
arrangements as a result of which you claim "[you]are able to direct
the activities of and
derive economic benefits from the VIEs. [You] are considered the
primary beneficiary of
the VIEs for accounting purposes, and [you] have consolidated the
financial results of the
VIEs in [y]our consolidated financial statements."
Permissions Required from the PRC Authorities for Our Operations, page 6
6. We note your disclosure on page 6 that [y]our PRC subsidiaries and
the VIEs have
obtained the requisite licenses and permits from the PRC government
authorities that are
Peng Zhang
FirstName
Yunji Inc. LastNamePeng Zhang
Comapany
July NameYunji Inc.
26, 2023
July 26,
Page 3 2023 Page 3
FirstName LastName
material for the business operations. State whether you have
received all requisite
permissions or approvals and whether any permissions or approvals have
been denied. In
this regard, the disclosure here should not be qualified by
materiality. Disclose each
permission or approval that you, your subsidiaries, or the VIEs are
required to obtain from
Chinese authorities to operate your business and to offer the
securities being registered to
foreign investors and state affirmatively whether you have received
all requisite
permissions or approvals and whether any permissions or approvals have
been denied.
Provide the basis for your conclusions. To the extent that you believe
such permissions or
approvals are not required, please disclose the basis on which you
made that
determination.
7. Please further expand your disclosure about the Overseas Listing Trial
Measures to
explain how the regulations apply to you and your ability to operate.
In this regard, we
note your disclosure that issuers that have already been listed in
an overseas market by
March 31, 2023, such as [y]our company, are not required to make any
immediate filing
and that such issuers will be required to complete certain filing
procedures with the
CSRC in connection with future securities offerings and listings
outside of mainland
China, including follow-on offerings
Cash Flows through Our Organization, page 7
8. Disclose your intentions to settle amounts owed under the VIE
agreements. Please further
revise the disclosure to discuss limitations applicable to Hong Kong,
given your Hong
Kong subsidiary. Please amend your disclosure here and in the summary
risk factors and
risk factors sections to state that, "to the extent cash in the
business is in the PRC/Hong
Kong or a PRC/Hong Kong entity, the funds may not be available to fund
operations or
for other use outside of the PRC/Hong Kong due to interventions in or
the imposition of
restrictions and limitations on the ability of you or your
subsidiaries by the PRC
government to transfer cash." State that there is no assurance the PRC
government will
not intervene in or impose restrictions on the ability of you, your
subsidiaries, and the
former VIEs to transfer cash. Provide cross-references to these other
discussions.
9. To the extent you have cash management policies that dictate how funds
are transferred
between you, your subsidiaries, the consolidated VIEs or investors,
summarize the
policies, and disclose the source of such policies (e.g., whether they
are contractual in
nature, pursuant to regulations, etc.); alternatively, state that you
have no such cash
management policies that dictate how funds are transferred.
D. Risk Factors
Risks Related to Our Business and Industry
Our and the VIEs' business generates and processes a large amount of data...,
page 21
10. In light of your disclosure here and throughout the document about
recent events
indicating greater oversight by the Cyberspace Administration of China
(CAC) over data
security, particularly for companies seeking to list on a foreign
exchange, please revise
Peng Zhang
FirstName
Yunji Inc. LastNamePeng Zhang
Comapany
July NameYunji Inc.
26, 2023
July 26,
Page 4 2023 Page 4
FirstName LastName
your disclosure to clarify to what extent you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date.
Risks Related to Our Corporate Structure
If the PRC government finds that the agreements that establish the
structure..., page 44
11. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of the VIE structure do not
comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
securities may decline in value or become worthless if the
determinations, changes.
Risks Related to Doing Business in China
The PRC government's significant oversight over our business operations...,
page 50
12. Given the significant oversight and discretion of the government of
the People s Republic
of China (PRC) over the operations of your business, please describe
any material impact
that intervention or control by the PRC government has or may have on
your business or
on the value of your securities. We remind you that, pursuant to
federal securities rules,
the term control (including the terms controlling,
controlled by, and under
common control with ) means the possession, direct or indirect,
of the power to direct or
cause the direction of the management and policies of a person,
whether through the
ownership of voting securities, by contract, or otherwise.
Our ADSs may be prohibited from trading in the United States under the
HFCAA..., page 53
13. We note your disclosure about the Holding Foreign Companies
Accountable Act. Please
expand your risk factors to disclose that the Holding Foreign
Companies Accountable Act,
as amended by the Consolidated Appropriations Act, 2023, decreases the
number of
consecutive non-inspection years from three years to two years,
and thus, reduces the
time before your securities may be prohibited from trading or
delisted. In addition, please
revise to explain why you were identified as a Commission-Identified
Issuer under the
HFCAA and provide any additional context necessary for investors to
understand the
meaning and significance to your operations of this determination.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections,
page 165
14. We note your statement that you reviewed your register of members and
public filings
made by your shareholders in connection with your required submission
under paragraph
(a). Please supplementally describe any additional materials that were
reviewed and tell us
whether you relied upon any legal opinions or third party
certifications such as affidavits
as the basis for your submission. In your response, please provide a
similarly detailed
discussion of the materials reviewed and legal opinions or third party
certifications relied
upon in connection with the required disclosures under paragraphs
(b)(2) and (3).
15. In order to clarify the scope of your review, please supplementally
describe the steps you
have taken to confirm that none of the members of your board or the
boards of your
Peng Zhang
FirstName
Yunji Inc. LastNamePeng Zhang
Comapany
July NameYunji Inc.
26, 2023
July 26,
Page 5 2023 Page 5
FirstName LastName
consolidated foreign operating entities are officials of the Chinese
Communist Party. For
instance, please tell us how the board members current or prior
memberships on, or
affiliations with, committees of the Chinese Communist Party factored
into your
determination. In addition, please tell us whether you have relied
upon third party
certifications such as affidavits as the basis for your disclosure.
16. We note that your disclosures pursuant to Items 16I(b)(2), (b)(3) and
(b)(5) are provided
for Yunji Inc. or the VIEs in China. We also note that your
disclosures on pages 71 and
108 and the list of subsidiaries in Exhibit 8.1 appear to indicate
that you have subsidiaries
in Hong Kong that are not included in your VIEs. Please note that Item
16I(b) requires
that you provide disclosures for yourself and your consolidated
foreign operating entities,
including variable interest entities or similar structures.
With respect to (b)(2), please supplementally clarify the
jurisdictions in which your
consolidated foreign operating entities are organized or
incorporated and provide the
percentage of your shares or the shares of your consolidated
operating entities owned
by governmental entities in each foreign jurisdiction in which
you have consolidated
operating entities in your supplemental response.
With respect to (b)(3) and (b)(5), please provide the information
required for you and
all of your consolidated foreign operating entities in your
supplemental response.
17. With respect to your disclosure pursuant to Item 16I(b)(5), we note
that you have included
language that such disclosure is to our knowledge. Please
supplementally confirm
without qualification, if true, that your articles and the articles of
your consolidated
foreign operating entities do not contain wording from any charter of
the Chinese
Communist Party.
General
18. If you have one or more directors, officers or members of senior
management located in
the PRC or Hong Kong, state that is the case and identify the relevant
individuals. Include
a separate Enforceability section and a risk factor addressing
the challenges of bringing
actions and enforcing liabilities against such individuals.
19. We note your disclosure throughout the document that the Cayman
Islands holding
company is the primary beneficiary of the VIE. Please refrain from
implying that the
contractual agreements are equivalent to equity ownership in the
business of the VIE. In
this regard, we note that your references to being the primary
beneficiary or to control or
benefits that accrue to you because of the VIE in the "Notes to the
Consolidated Financial
Statements" section do not include a clear description of the
conditions you have satisfied
for consolidation of the VIE under U.S. GAAP or state that you are the
primary
beneficiary of the VIE for accounting purposes. Additionally, please
also disclose, if true
that the VIE agreements have not been tested in a court of law, and
not just in "China
courts."
Peng Zhang
Yunji Inc.
July 26, 2023
Page 6
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.
Contact Tyler Howes at 202-551-3370 or Jennifer Gowetski at 202-551-3401
if you have
any questions about comments related to your status as a Commission-Identified
Issuer during
your most recently completed fiscal year.
You may contact Tatanisha Meadows at 202-551-3322 or Adam Phippen at
202-551-
3336 if you have questions regarding comments on the financial statements and
related
matters. Please contact Jennie Beysolow at 202-551-8108 or Dietrich King at
202-551-8071
with any other questions.
Sincerely,
FirstName LastNamePeng Zhang
Division of
Corporation Finance
Comapany NameYunji Inc.
Office of Trade &
Services
July 26, 2023 Page 6
cc: Shu Du, Esq.
FirstName LastName