Annual Report for Fiscal Year Ending December 31, 2024 (Form 20-F)

Operating and Financial Review and Prospects

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3. Key Information-D. Risk Factors" or in other parts of this annual report on Form 20-F.

A.	Operating Results

We operate a social e-commerce platform in China using a membership-based model that leverages the power of social interaction. We offer high-quality productsat attractive prices and incentivize our members to promote our platform and share our products with their social contacts. We generate our revenues mainly by selling the products on our platform to users, including members and non-member users, and earning commissions on the sales of products by third-party merchants on our platform under our marketplace business that launched in the first quarter of 2019.

Our total revenues were RMB1,154.1 million, RMB640.2 million and RMB417.7 million (US$57.2 million) in 2022, 2023 and 2024, respectively. We recorded net loss of RMB138.4 million in 2022, net loss of RMB165.1 million in 2023, and net loss of RMB123.1 million (US$16.9 million) in 2024.

Key Factors Affecting Our Results of Operations

Our results of operations and financial condition are affected by the general factors affecting China's retail industry, including, among others, China's overall economic growth, the increase in per capita disposable income, the growth in consumer spending and consumption upgrade, and the competitive environment in China. In addition, they are also affected by factors driving online retail in China, such as the growing number of online shoppers, the improved logistics infrastructure and the increasing adoption of mobile payments. Unfavorable changes in any of these general factors could materially and adversely affect our results of operations.

While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by company specific factors, including the following major factors:

Our ability to engage and retain members and users and increase their activities

Engaging and retaining users have been one of our key focuses since our inception. We measure our effectiveness in engaging and retaining users through the key performance indicator of average spending per buyer, which is calculated by dividing total GMV in that period by the number of buyers in the same period. We believe this metric more accurately reflects our ability to increase member and user activities and loyalty and bring value to members and users through carefully curated products, compared to other metrics we historically used such as number of buyers and number of orders fulfilled. Our average spending per buyer was RMB1,658, RMB1,195 and RMB901 in 2022, 2023 and 2024, respectively. Our average spending per buyer decreased from 2022 to 2023, primarily due to the negative impact of COVID-19 on the Chinese economy which led to a reduction in consumer demand, as individuals focused on stockpiling essential goods with lower unit prices. Over average spending per buyer decreased from RMB1,195 in 2023 to RMB901 in 2024, primarily due to soft consumer sentiment. Furthermore, the pandemic influenced consumer confidence and altered consumption habits.

Our ability to engage and retain users and increase user activities and loyalty depends on our ability to continue to offer carefully curated authentic products at attractive prices, provide superior shopping and social experience, and promote and enhance community value among members and other users. We rely on word-of-mouth referrals via our members' social networks and both online and offline interactive events to attract and retain users and members. Only when our members are satisfied with the products and experience on our platform, would they stay active on our platform, and in turn promote our productsand recommend platform to their family, friends and other social contacts. To keep our user base engaged, we have implemented a distinctive product offering strategy whereby we offer broad coverage of product categories with an aim of catering to the various daily needs of users and their households, but carefully select items within each category meeting the preferences of users with attractive pricing, and we design our sales formats to meet our members' evolving needs and preferences. We also facilitate communications among members based on geographical location or shared interest. Furthermore, we provide incentives and organize campaign activities to enhance user activities.

Our ability to manage product offerings and supply chain

Our results of operations are also affected by whether we can successfully implement our product selection strategy and manage our product offerings. We offer broad coverage of product categories to cater to the various daily needs of our users and their households, but provide carefully curated items within each category to meet the preferences of our users. In December 2024, we offered an average of 3,679 SPUs on our platform on a daily basis, including products of mainstream brands, emerging brands and our own brands. We review and continually monitor the performance of each SPU, supplier and third-party merchant, and carefully manage the mix of products we offer, based on a number of metrics such as the preferences of users, revenue contribution and margin.

We make continual efforts to maintain and improve an efficient cost structure and create incentives for our suppliers and third-party merchants to provide us and our members with competitive prices. We strive to obtain more favorable terms from suppliers, including pricing terms and volume-based rebates.

Our ability to manage our mix of product and service offerings

Our results of operations are also affected by the mix of products and services we offer. We commenced our e-commerce business by primarily selling products directly on our platform to users, including both members and non-members.

We launched our marketplace business in the first quarter of 2019 whereby third-party merchants can sell products on our platform and pay us commissions on their sales. We offer a wide range of products and services and aim to provide one-stop shopping to maximize our wallet share. Our mix of products and services also affects our gross margin. Revenues generated under the marketplace business were recognized on a net basis, while revenues generated under our merchandise sales business were recognized on a gross basis. The split between our merchandise sales business and our marketplace business thus has a major influence on our revenue and our gross margins.

Our ability to conduct sales and marketing efficiently

We leverage our members' social networking activities to conduct sales and marketing efficiently. We provide incentives to members for promoting our productsand inviting new members through their social networks, and the referral incentives are recorded as reduction of our revenues. We outsource some member services to third-party service companies, which select, hire andtrain service managers to provide the services. Most of the service managers are members. We pay member management fees to the third-party service companies for their product sales facilitation services. The member management fees have accounted for the substantial majority of our sales and marketing expenses.

Our ability to fulfill orders cost-effectively

Our results of operations depend in part on our ability to fulfill orders quickly and accurately, as it is an important part of a compelling customer experience. We provide centralized and comprehensive fulfillment and customer service to users primarily through collaboration with contracted third-party vendors. As of December 31, 2024, warehouse facilities in our fulfillment network included two central warehouse and six regional warehouses, with an aggregate gross floor area of approximately 15,000 square meters in eight cities. In the first quarter of 2019, we launched our marketplace business, allowing third-party merchants to sell their products on our platform and pay commissions on their sales to us. Unlike our merchandise sales business where we handle the fulfillment process for the products sold, substantially all of the third-party merchants under our marketplace business handle the fulfillment logistics for their products sold on our platform, thereby lessening the demand for our fulfillment services. We have primarily relied on third-party logistics service providers to operate the warehouses and provide last-mile delivery, and third-party online payment platforms to provide various payment options.

Key Components of Results of Operations

Revenues

Revenues are comprised of sale of merchandise, net, marketplace revenue and other revenues. The following table sets forth the components of our revenues byamounts and percentages of our total revenues for the periods presented:

		For the Year Ended December 31,
		2022								2023								2024
		RMB				%				RMB				%				RMB				US$				%
		(in thousands, except for percentages)
Revenues:
Sale of merchandise, net			965,796				83.7				500,651				78.2				330,535				45,283				79.1
Marketplace revenue			170,561				14.8				130,188				20.3				79,466				10,887				19.0
Other revenues(1)			17,757				1.5				9,370				1.5				7,650				1,048				1.8
Total			1,154,114				100.0				640,209				100.0				417,651				57,218				100.0

Notes:

(1)	Starting from 2021, revenue from membership program is combined into other revenues and is no longer a separate revenue line. Revenue breakdown for previous years presented in this annual report have been adjusted to be presented in the same manner.

Revenues generated from sales of most products on our platform are recorded as revenues from sale of merchandise, net of discounts, coupons, referral incentives provided to members, return allowances and VAT. We acquire products from suppliers and sell them to users. For our private label products, we acquire products from suppliers and sell them to users both on our platform and through external channels. We expect revenues generated from sale of merchandise will continue to account for a majority of our total revenues.

In the first quarter of 2019, we launched our marketplace business, allowing third-party merchants to sell their products on the platform and pay commissions on their sales to us. The revenues from the marketplace business are recognized on a net basis.

Other revenues include revenues from membership program and revenues earned on net basis from sales of certain products on our platform, such as air tickets. We earn membership fees from our members, who pay a fixed fee in exchange for (1) a package of selected products, (2) the right to receive member exclusive discounts for products sold on our flagship Yunji app, (3) access rights to our flagship Yunji app and its member-exclusive features, (4) the right to receive units of Yun-coin upon a successful new member referral, (5) member exclusive training, and (6) certain units of Yun-coin. Yun-coin can only be used as credits when making purchases on our platform, with one unit of Yun-coin representing RMB1.00. Yun-coins cannot be redeemed for cash. Members may transfer Yun-coins to others for free. Starting from March 2025, users can become a member by purchasing an RMB198 membership package, which is valid for one year. If their annual spending reaches a specified amount within the year, they can retain their membership for the following year.

Operating Cost and Expenses

Operating cost and expenses consist primarilyof cost of revenues, fulfillment expenses, sales and marketing expenses, research and development expenses, and general and administrative expenses. The following table sets forth the components of our operating expenses by amounts and percentages of total revenues for the periods presented:

		For the Year Ended December 31,
		2022								2023								2024
		RMB				%				RMB				%				RMB				US$				%
		(in thousands, except for percentages)
Operating Cost and Expenses:
Cost of revenues			651,578				56.5				332,774				52.0				211,311				28,949				50.6
Fulfillment			160,680				13.9				107,472				16.8				76,126				10,429				18.2
Sales and marketing			214,783				18.6				121,039				18.9				96,965				13,284				23.2
Technology and content			81,382				7.1				53,490				8.4				45,627				6,251				10.9
General and administrative			145,857				12.6				120,951				18.9				130,462				17,873				31.2
Total			1,254,280				108.7				735,726				114.9				560,491				76,786				134.2

Cost of revenues. Cost of revenues consists of purchase price of merchandise, inbound shipping charges, write-downs of inventory and member training costs. Inbound shipping charges to receive merchandise from suppliers are included in the inventories, and recognized as cost of revenues upon sale of the merchandise to the customers.

Fulfillment expenses. Fulfillment expenses represent packaging material costs and those costs incurred in outbound shipping, operating and staffing our fulfillment and customer service centers, including costs attributable to buying, receiving, inspecting and warehousing inventories, picking, packaging and preparing customer orders for shipment, processing payment and related transaction costs and responding to inquiries from customers, depreciation expenses, payroll costs including share-based compensationexpenses, and other daily expenses which are related to the purchasing functions. Fulfillment costs also contain third-party payment transaction fees, such as bank card processing and debit card processing fees.

Sales and marketing expenses. Sales and marketing expenses comprise primarily of member management fees, promotion expenses, marketplace coupons, payroll costs includingshare-based compensation expenses, depreciation expenses and other daily expenses which are related to the sales and marketing functions. We engage third-party vendors to provide member management services, which are ultimately performed by service managers who enter into employment contracts with the third-party vendors. Certain of our members (customers) have been engaged by third-party vendors to serve as service managers. We have concluded that the member management services provided by the service managers, including those who are also members, are for distinct services at fair value, and records the member management fees paid to the third-party vendors as sales and marketing expenses.

Technology and content expenses. Technology and content expenses are expensed as incurred and primarily consist of payroll costs including share-based compensation expenses, rental expenses, costs associated with the computing, storage and telecommunications infrastructure for internal use that support our system and the services of our apps and other expenses related to the technology and content functions, which are responsible for technology research and development and content editing. We account for internal use software development costs in accordance with guidance on intangible assets and internal use software. This requires capitalization of qualifying costs incurred during the software's application development stage and to expense costs as they are incurred during the preliminary project and post implementation/operation stages. Costs capitalized for developing such software application were not material for the periods presented in this annual report.

General and administrative expenses. General and administrative expenses consist of payroll costs including share-based compensation expenses and other expenses which are related to thegeneral corporate functions, including accounting, finance, tax, legal and human relations, costs associated with use by these functions of facilities and equipment, such as depreciation expenses, rental and other general corporate related expenses.

Taxation

Cayman Islands

The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciation. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or afterexecution brought within the jurisdiction of the Cayman Islands. There are no exchange control regulations or currency restrictions in the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.

Hong Kong

Our subsidiary incorporated in Hong Kong, Yunji Hong Kong Limited, is subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong. Under the Hong Kong tax laws, we are exempted from the Hong Kong income tax on our foreign-derived income. In addition, payments of dividends from our Hong Kong subsidiary to us are not subject to any Hong Kong withholding tax. No provision for Hong Kong profits tax was made as we had no estimated assessable profit that was subject to Hong Kong profits tax during 2016 and 2017.

PRC

In accordance with PRC Enterprise Income Tax Law, foreign-invested enterprises and domestic companies are subject to enterprise income tax on their taxable income at a statutory rate of 25%, subject to preferential tax treatments available to qualified enterprises in certain encouraged sectors of the economy. In accordance with the implementation rules of PRC Enterprise Income Tax Law, a qualified "High and New Technology Enterprise" is eligible for a preferential tax rate of 15%. The "High and New Technology Enterprise" certificate is effective for a period of three years. An entity may re-apply for the "High and New Technology Enterprise" certificate when the prior certificate expires.

Jishang Preferred obtained its "High and New Technology Enterprise" certificate on November 30, 2018. Therefore, Jishang Preferred is eligible to enjoy a preferential tax rate of 15% from 2018 to 2020 to the extent it has taxable income under the PRC Enterprise Income Tax Law, as long as it maintains the "High and New Technology Enterprise" qualification and duly conducts relevant tax filing procedures with the relevant tax authority. From July 2019, Jishang Preferred started to function as a procurement company within the Group and is not able to continue its status as an "High and New Technology Enterprise" to enjoy a preferential tax rate of 15% since 2019.

Our other PRC subsidiaries, the VIE and its subsidiariesare subject to the statutory income tax rate of 25%.

In accordance with the laws and regulations promulgated by the State Administration of Taxation effective from 2008 onwards, enterprises engaging in research and development activities are entitled to claim 150% of their qualified research and development expenses so incurred as tax deductible expenses when determining their assessable profits for the year. The additional deduction of 50% of qualified research and development expenses can only be claimed directly in the annual tax filing and subject to the approval from the tax authorities. Effective from 2018 onwards, enterprises engaging in research and development activities are entitled to claim 175% of their qualified research and development expenses so incurred as tax deductible expenses. The additional deduction of 75% of qualified research and development expenses can be directly claimed in the annual tax filing.

We are subject to value-added tax rate of 13% on our sales of products (which was 16% prior to April 1, 2019), and 6% on the services provided to members (such as technology support, product promotion consulting and support, online training, customer service and order fulfillment), in each case less any deductible value-added tax we have already paid or borne. While we generate a portion of our revenues by selling products to end users through member referrals, such referrals are treated as if selling products to members while the members being deemed as selling products to end users on a consignment basis under PRC tax law. We are also subject to surcharges on value-added tax payments in accordance with the PRC tax law.

Dividends paid by our WFOE to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. Effective from November 1, 2015, the above mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority. See "Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business."

If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a "resident enterprise" under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See "Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders."

Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenuesfor the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends.

		For the Year Ended December 31,
		2022				2023				2024
		RMB				RMB				RMB				US$
		(In thousands, except for per share data)
Consolidated Statements of Operations Data:
Revenues:
Sale of merchandise, net			965,796				500,651				330,535				45,283
Marketplace revenue			170,561				130,188				79,466				10,887
Other revenues(1)			17,757				9,370				7,650				1,048
Total revenues			1,154,114				640,209				417,651				57,218
Operating cost and expenses(2):
Cost of revenues			(651,578	)			(332,774	)			(211,311	)			(28,949	)
Fulfillment			(160,680	)			(107,472	)			(76,126	)			(10,429	)
Sales and marketing			(214,783	)			(121,039	)			(96,965	)			(13,284	)
Technology and content			(81,382	)			(53,490	)			(45,627	)			(6,251	)
General and administrative			(145,857	)			(120,951	)			(130,462	)			(17,873	)
Total operating cost and expenses			(1,254,280	)			(735,726	)			(560,491	)			(76,786	)
Other Operating Income(3)			21,599				14,898				6,544				896
Loss from operations			(78,567	)			(80,619	)			(136,296	)			(18,672	)
Financial (expense)/income, net			(14,356	)			(60,226	)			17,333				2,375
Foreign exchange (loss)/income, net			(15,697	)			(6,743	)			2,127				291
Other non-operating income/(loss), net			2,072				(2,405	)			785				108
Loss before income tax expense, and equity in income of affiliates, net of tax			(106,548	)			(149,993	)			(116,051	)			(15,898	)
Income tax expense			(24,791	)			(7,851	)			(2,009	)			(275	)
Equity in loss of affiliates, net of tax			(7,051	)			(7,276	)			(5,061	)			(693	)
Net loss			(138,390	)			(165,120	)			(123,121	)			(16,866	)

Notes:

(1)	Starting from 2021, revenue from membership program is combined into other revenues and is no longer a separate revenue line. Revenue breakdown for previous years presented in this annual report have been adjusted to be presented in the same manner.
(2)	Share-based compensation expenses were allocated as follows:

		For the Year Ended December 31,
		2022				2023				2024
		RMB				RMB				RMB				US$
		(In thousands)
Sales and marketing			539				(417	)			114				16
Technology and content			4,388				1,554				1,450				198
General and administrative			23,994				503				774				106
Fulfillment			1,229				(2,525	)			92				13
Total			30,150				(885	)			2,430				333

Year ended December 31, 2024 compared to year ended December 31, 2023

Revenues

Our revenues decreasedby 34.8% from RMB640.2 million in 2023 to RMB417.7 million (US$57.2 million) in 2024, primarily due to soft consumer confidence and our continued strategy to refine our product selection across all categories and optimize its selection of suppliers and merchants, which had a near-term impact on sales.

Our average spending per buyer decreased from RMB1,195 in 2023 to RMB901 in 2024, primarily due to soft consumer sentiment. Furthermore, the pandemic influenced consumer confidence and altered consumption habits.

	●	Revenue from sale of merchandise, net. Our revenue from sale of merchandise, net decreased by 34.0% from RMB500.7 million in 2023 to RMB330.5 million (US$45.3 million) in 2024, primarily due to soft consumer confidence and our continued strategy to refine our product selection across all categories and optimize our selection of suppliers and merchants, which had a near-term impact on sales.
	●	Revenue from marketplace business. Revenue from the marketplace business decreased by 38.9% from RMB130.2 million in 2023 to RMB79.5 million (US$10.9 million) in 2024, primarily due to our decision to upgrade our strategy to refine our product selection across all categories as well as the negative impact of soft consumer confidence.
	●	Other revenues. Other revenues decreased by 17.2% from RMB9.3 million in 2023 to RMB7.7 million (US$1.0 million) in 2024.

Operating cost and expenses

Our total operating cost and expenses decreased by 23.8% from RMB735.8 million in 2023 to RMB560.5 million (US$76.8 million) in 2024. This decrease was due to decreases in most of our operating cost and expenses line items.

	●	Cost of revenues. Our cost of revenues decreased by 36.5% from RMB332.8 million, representing 52.0% of our total revenues, in 2023 to RMB211.3 million (US$28.9 million), representing 50.6% of our total revenues, in 2024, which was mainly attributable to the change in merchandise sales, for which revenues and cost of revenues are recognized on a gross basis.
	●	Fulfillment expenses. Our fulfillment expenses decreased by 29.2% from RMB107.5 million, representing 16.8% of our total revenues, in 2023 to RMB76.1 million (US$10.4 million), representing 18.2% of our total revenues, in 2024. This decrease was primarily attributable to (i) reduced personnel costs as a result of staffing structure refinements, (ii) reduced warehousing and logistics expenses due to lower merchandise sales, and (iii) decreased service fees charged by third-party payment settlement platforms.
	●	Sales and marketing expenses. Our sales and marketing expenses decreased by 19.8% from RMB121.0 million, representing 18.9% of our total revenues, in 2023 to RMB97.0 million (US$13.3 million), representing 23.2% of our total revenues, in 2024. The decrease in sales and marketing expenses was primarily attributable to the reduction in member management fees.
	●	Technology and content expenses. Our technology and content expenses decreased by 14.8% from RMB53.5 million, representing 8.4% of our total revenues, in 2023 to RMB45.6 million (US$6.3 million), representing 10.9% of our total revenues, in 2024, primarily due to (i) the reduction in personnel costs as a result of staffing structure refinements, and (ii) reduced server costs.
	●	General and administrative expenses. Our general and administrative expenses increased by 7.9% from RMB121.0 million, representing 18.9% of our total revenues, in 2023 to RMB130.5 million (US$17.9 million), representing 31.2% of our total revenues, in 2024. The increase was primarily attributable to (i) an increase in severance pay as a result of staffing structure refinements, and (ii) an impairment of long-lived assets other than goodwill, partially offset by a decrease in an allowance for credit losses.

Loss from operations

Our loss from operations was RMB136.3 million (US$18.7 million) in 2024, compared to our loss from operations RMB80.6 million in 2023 as a result of a decrease in revenues, partially offset by improvements in our operating efficiency and increased gross margin.

Financial (expense)/income, net

Our financial income, net was RMB17.3 million (US$2.4 million) in 2024, compared to financial expense, net of RMB60.2 million in 2023 as a result of an increase in fair value changes of equity securities investments.

Foreign exchange (loss)/income, net

We recorded foreign exchange income, net of RMB2.1 million (US$0.3 million) in 2024, compared to foreign exchange loss, net of RMB6.7 million in 2023, as a result of fluctuations of the exchange rates of Renminbi against U.S. dollars.

Other non-operating income/(loss), net

We recorded other non-operating income, net of RMB0.8 million (US$0.1 million) in 2024, compared to other non-operating loss, net of RMB2.4 million in 2023.

Income tax expense

We recorded income tax expense of RMB2.0 million (US$0.3 million) in 2024, compared to income tax expense of RMB7.9 million in 2023, primarily due to the decrease in our income before income tax expense.

Net loss

As a result of the foregoing, we recorded net loss of RMB123.1 million (US$16.9 million) in 2024, compared to net loss of RMB165.1 million in 2023.

Year ended December 31, 2023 compared to year ended December 31, 2022

Revenues

Our revenues decreased by 44.5% from RMB1,154.1 million in 2022 to RMB640.2 million in 2023, primarily due to soft consumer confidence and our continued strategy to refine our product selection across all categories and optimize our selection of suppliers and merchants, which had a near-term impact on sales.

Our average spendingper buyer decreased from RMB1,658 in 2022 to RMB1,195 in 2023, primarily due to the negative impact of soft consumer confidence and consumers were more inclined to stock up on necessities with lower unit prices.

	●	Revenue from sale of merchandise, net. Our revenue from sale of merchandise, net decreased by 48.2% from RMB965.8 million in 2022 to RMB500.7 million in 2023, primarily due to our decision to upgrade our strategy to refine our product selection across all categories as well as the negative impact of soft consumer confidence.
	●	Revenue from marketplace business. Revenue from the marketplace business decreased by 23.7% from RMB170.6 million in 2022 to RMB130.2 million) in 2023, primarily due to our decision to upgrade our strategy to refine our product selection across all categories as well as the negative impact of soft consumer confidence.
	●	Other revenues. Other revenues decreased by 47.5% from RMB17.7 million in 2022 to RMB9.3 million in 2023.

Operating cost and expenses

Our total operating cost and expenses decreased by 41.3% from RMB1,254.3 million in 2022 to RMB735.8 million in 2023. This decrease was due to decreases in all of our operating cost and expenses line items.

	●	Cost of revenues. Our cost of revenues decreased by 48.9% from RMB651.6 million, representing 56.5% of our total revenues, in 2022 to RMB332.8 million, representing 52.0% of our total revenues, in 2023, which was mainly attributable to the change in merchandise sales, for which revenues and cost of revenues are recognized on a gross basis.
	●	Fulfillment expenses. Our fulfillment expenses decreased by 33.1% from RMB160.7 million, representing 13.9% of our total revenues, in 2022 to RMB107.5 million, representing 16.8% of our total revenues, in 2023. This decrease was primarily attributable to (i) reduced warehousing and logistics expenses due to lower merchandise sales, (ii) reduced personnel costs as a result of staffing structure refinements, and (iii) decreased service fees charged by third-party payment settlement platforms.
	●	Sales and marketing expenses. Our sales and marketing expenses decreased by 43.6% from RMB214.8 million, representing 18.6% of our total revenues, in 2022 to RMB121.0 million, representing 18.9% of our total revenues, in 2023. The decrease in sales and marketing expenses was primarily attributable to (i) a decrease in member management fees, and (ii) reduced business promotion expenses.
	●	Technology and content expenses. Our technology and content expenses decreased by 34.3% from RMB81.4 million, representing 7.1% of our total revenues, in 2022 to RMB53.5 million, representing 8.4% of our total revenues, in 2023, primarily due to (i) the reduction in personnel costs as a result of staffing structure refinements, and (ii) reduced server costs.
	●	General and administrative expenses. Our general and administrative expenses decreased by 17.1% from RMB145.9 million, representing 12.6% of our total revenues, in 2022 to RMB121.0 million, representing 18.9% of our total revenues, in 2023. The decrease was primarily attributable to the reduction in personnel costs as a result of staffing structure refinements and share-based compensation expenses, partially offset by an increase in the allowance for credit losses.

Loss from operations

Our loss from operations was RMB80.6 million in 2023, compared to RMB78.6 million in 2022 as a result of a decrease in revenues, partially offset by improvements in our operating efficiency and increased gross margin.

Financial (expense)/income, net

Our financial expense, net was RMB60.2 million in 2023, compared to RMB14.4 million in 2022 as a result of a decrease in fair value changes of equity securities investments.

Foreign exchange (loss)/income, net

We recorded foreignexchange loss, net of RMB6.7 million in 2023, compared to RMB15.7 million in 2022, as a result of fluctuations of the exchange rates of Renminbi against U.S. dollars.

Other non-operating income/(loss), net

We recorded other non-operating loss, net of RMB2.4 million in 2023, compared to other non-operating income, net of RMB2.1 million in 2022.

Income tax expense

We recorded income tax expense of RMB7.9 million in 2023, compared to income tax expense of RMB24.8 million in 2022, primarily due to the decrease in our income before income tax expense.

Net loss

As a result of the foregoing, we recorded net loss of RMB165.1 million in 2023, compared to RMB138.4 million in 2022.

Revenue recognition

We adopted ASC Topic606, "Revenue from Contracts with Customers," for all periods presented. Consistent with the criteria of Topic 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

To achieve that core principle, we apply the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We assess its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenue arrangements with multiple performance obligations are divided into separate distinct goods or services. We allocate the transaction price to each performance obligation based on the relative standalone selling price of the goods or services provided. Revenue is recognized upon the transfer of control of promised goods or services to a customer.

Revenue is recorded net of value-added tax.

Revenue recognition policies for each type of revenue steam are as follows:

Sales of merchandise

We primarily sell merchandise through its Yunji Apps. We present the revenue generated from its sales of merchandise on a gross basis as we have control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. In making this determination, we also assess whether it is primarily obligated in these transactions, is subject to inventory risk, has latitude in establishing prices, or has met several but not all of these indicators. The cash collected from the sales of merchandise is initially recorded in deferred revenue in the Consolidated Balance Sheets and subsequently recognized as revenue when the receipt of merchandise is confirmed by the customers, which is the point that the control of the merchandise is transferred to the customer. For products sold through independent distributors, or the distribution sales, control is transferred upon acceptance, based on the contract terms. The revenue is recorded net of value-added tax, discounts, coupons, incentives and return allowances. Return allowances are estimated based on historical experiences and updated at the end of each reporting period.

Marketplace

In 2019, we launched our marketplace business model, under which we operate our e-commerce platform, Yunji app, as a marketplace for third-party merchants to sell their merchandise to the users of Yunji app. When the transactions are completed on the Yunji app, we charge merchants commissions at their respective agreed percentage of the amount of merchandisesold by merchants. We act as an agent in these transactions and do not control the underlying merchandise provided by merchants before they are transferred to users, as we are not responsible for fulfilling the promise to provide the merchandise to users and have no inventory risk. In addition, we have no discretion in establishing prices of the merchandise provided by merchants. Revenues are recognized on a net basis to the extent of the commissions we earn at the point of users' acceptance of merchandise.

Remaining performance obligations

The remaining performance obligations associated with our sale of merchandise represent the cash collected upfront from the customers for their purchase of merchandise on our apps, but the underlying merchandise has not yet been received by the customers, which is included in the presentation of deferred revenue and are expected to be recognized as revenue when the receipt of merchandise is confirmed by the customers.

The remaining performance obligations associated with our marketplace revenue represents the portion of commissions included in the payment collected from the users for their purchase of merchandise on the Yunji app on behalf of the merchants, but the underlying merchandise has not yet been received by the users, which is included in the presentation of deferred revenue and are expected to be recognized as revenue when the transactions are completed.

Other businesses

We offer loans to qualified customers, including the merchants, and changes an interest based on the principal through factoring arrangements. We extend loans to merchants for their expected orders in addition to the loans to the same merchants who factored their accounts receivable generated from their transactions completed on Yunji app with recourse. We also extend loans to unrelated customers who factored their accounts receivable derived from their own business with recourse. We record factoring receivables, which is included in accounts receivable, when the cash is advanced to the customers. The interests are recognized over the term of loans, normally one year or less. From cash flow perspective, when we have legal rights to net settle the factoring receivables from merchants with its payable to merchants, we settle the factoring receivables with the payables to the same merchant respectively, provided by the legal rights as per agreement between the two parties.

We also provide technical services, advertising services and membership services to customers. The service revenues mainly represent the service fees from third parties that are recognized over the service period.

Users Incentive Programs

We grant certain units of Yun-coin and other coupons (collectively referred to as coupons), from time to time, to our customers at our discretion in different situations. Yun-coins are not redeemable for cash and can be used as a coupon for the customer's future purchase on our Yunji app. The coupons granted are not concurrent with a revenue transaction, thus not accounted for when they are granted and are recognized as a reduction of revenue when they are applied in future sales.

Starting from 2019, in order to promote our marketplace business, from time to time, we at our own discretion issues coupons in various forms to users without any concurrent transactions in place or any substantive action needed from the recipient. These coupons can be used in purchase of goods in a broad range of merchants as an immediate discount of their next purchase, some of which can only be used when the purchase amount exceeds pre-defined threshold. We settle with the merchants in cash for the coupons used by the users. As the users are required to make purchases of the merchants' merchandises to redeem the coupons, we recognize the amounts of redeemed coupons as sales and marketing expenses when the purchases are made.

Inventories, net

Inventories, consisting of products available for sale, are stated at the lower of cost and net realizable value. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. Write-downs of RMB4.8 million, RMB9.3 million and RMB12.7 million (US$1.7 million) are recorded in cost of revenues in the consolidated statements of comprehensive loss for the years ended December 31, 2022, 2023 and 2024, respectively.

Share-based Compensation

On December 19, 2017, we adopted the 2017 Share Incentive Plan, or the 2017 Plan, which allows the compensation committee to grant options and restricted share units to our directors and employees, and other personnel to acquire our ordinary shares at an exercise price as determined by the compensation committee at the time of grant. The 2017 Plan was amended and restated in its entirety in March 2019, and is referred to as the 2019 Plan. The awards granted and outstanding under the 2017 Plan survive the termination of the 2017 Plan and remain effective and binding under the 2019 Plan. See "Item 6. Directors, Senior Management and Employees-B. Compensation of Directors and Executive Officers-2019 Share Incentive Plan." Under the 2019 Plan, 227,401,861 ordinary shares were authorized and reserved for issuance.

Since adoption of the 2017 Plan, which was subsequently replaced by the 2019 Plan in March 2019, we granted options and restricted share units to our employees. All options and restricted share units granted have a contractual term of six years from the grant date, and vest over a period of four years of continuous service, half (1/2) of which vest upon the second anniversary of the stated vesting commencement date and one-fourth (1/4) of the remaining will vest upon the third and fourth anniversaries of the stated vesting commencement date. Under the 2017 Plan and the 2019 Plan, which replaced the 2017 plan in its entirety in March 2019, options are exercisable subject to the grantee's continuous service.

We accounted for the share based compensation costs on a straight-line bases over the requisite service period for the award based on the fair value on their respectivelygrant date.

On January 31, 2019, we granted 4,968,000 stock options and 14,925,000 restricted share units to our directors and employees.

On May 3, 2019, we granted 720,000 stock options to certain independent directors. In addition, on May 3, 2019, we were authorized by our board of directors to grant stock options and restricted share units to non-employees under the 2019 Plan, and granted options to purchase an aggregate of 10,409,050 Class A ordinary shares and 3,332,040 restricted share units to non-employees by batches during the year ended December 31, 2019.

On January 1 2020, we granted 356,210 and 49,964,000 restricted share units to two external consultants and our employees, respectively. In addition, on July 1, 2020, we granted 13,890,000 restricted share units to our directors and employees.

On January 1, 2021 and February 1, 2021, we granted 29,170,000 and 26,818,000 RSUs to our employees, respectively. In addition, on February 1, 2021, we modified the exercise price and vesting schedules of certain stock options.

On January 1, 2022 and August 1, 2022, we granted 8,690,000 and 1,160,000 RSUs to our employees, respectively.

On February 1, 2023 and July 1, 2023, we granted 400,000 and 7,500,000 RSUs to our employees, respectively.

On July 1, 2024, we granted 4,000,000 RSUs to our employees.

(a) Options

The following table sets forth the stock options activity for the years endedDecember 31, 2022, 2023 and 2024:

		Number of shares				Weighted-average exercise price				Weighted average remaining contractual term				Aggregate intrinsic value
							US$								000'US$
Outstanding as of December 31, 2022			61,091,820				0.22				0.89				-
Granted
Forfeited			(173,870	)			0.23
Exercised
Expired			(46,562,380	)			0.09
Outstanding as of December 31, 2023			14,355,570				0.61				0.27				-
Granted
Forfeited
Exercised
Expired			(3,265,030	)			0.37
Outstanding as of December 31, 2024			11,090,540				0.68				0.02				-
Vested and expected to vest as of December 31, 2024			11,090,540
Exercisable as of December 31, 2024			11,090,540

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the estimated fair value of the underlying stock at each reporting date (December 31, 2022: US$0.08, December 31, 2023: US$0.007, December 31, 2024: US$0.004).

Risk-free interest rate is estimated based on the yield curve of US Sovereign Bond as of the option valuation date. The expected volatility at the grant date and each option valuation date is estimated based on annualized standard deviation of daily stock price return of comparable companies with a time horizonclose to the expected expiry of the term of the options. We have never declared or paid any cash dividends on its capital stock, and we do not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options.

Share-based compensation expense is recorded on a straight-line basis over the requisite service period, which is generally four years from the date of grant. We recognized share-based compensation expenses of RMB1.8 million, share-based compensation benefits of RMB5.6 million and nil for share options granted under the 2017 Plan and the 2019 Plan, which replaced the 2017 Plan in its entirety in March 2019, in the consolidated statements of comprehensive loss for the years ended 2022, 2023 and 2024, respectively.

As of December 31, 2022, 2023 and 2024, there were RMB0.6 million, RMB1.0 thousand and nil, respectively, in total unrecognized compensation expense, related to unvested share options, which we expect to be recognized over a weighted average period of 0.4, 0.08 and nil years, respectively. The unrecognized compensation expense may be adjusted for future changes in actual forfeitures.

(b) Restricted share units

A summary of activitiesof the service-based restricted share units for the years ended December 31, 2022, 2023 and 2024 is presented below:

		Number of RSUs				Weighted- Average Grant- Date Fair Value
							US$
Unvested at December 31, 2022			24,922,100				0.45
Granted			7,900,000				0.02
Vested			(1,587,950	)
Forfeited			(11,609,400	)
Unvested at December 31, 2023			19,624,750				0.26
Granted			4,000,000				0.01
Vested			(3,837,500	)
Forfeited			(2,378,850	)
Unvested at December 31, 2024			17,408,400				0.27

The fair value of each restricted share units granted with service conditions is estimated based on the fair market value of the underlying our ordinary shares on the date of grant.

As of December 31, 2022, 2023 and 2024, 10,326,250 restricted share units, 1,587,950 restricted share units and 3,837,500 restricted share units were vested. For the years ended December 31, 2022, 2023 and 2024, our total share-based compensation expenses recognized for the restricted share units granted were RMB28.3 million, RMB4.7 million and RMB2.4 million, respectively.

As of December 31, 2022, 2023 and 2024, there were RMB14.6 million, RMB3.5 million and RMB0.6 million in total unrecognized compensation expense, related to unvested RSUs, which we expect to be recognized over a weighted average period of 1.87, 1.17 and 1.65 years, respectively.

Fair Value Measurements

As of December 31, 2023 and 2024, information about inputs into the fair value measurement of our assets and liabilities that are measured or disclosed at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:

		Fair value measurement at reporting date using
		Fair value as of December 31, 2023				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
			RMB				RMB				RMB				RMB
Description
Assets:
Short-term investments
Debt securities for trading			7,195				-				7,195				-
Long-term investments
Equity securities with readily determinable fair value			37,650				37,650				-				-
Equity securities accounted for under measurement alternative			220,981				-				220,981				-
Total assets			265,826				37,650				228,176				-

		Fair value measurement at reporting date using
		Fair value as of December 31, 2024				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
			RMB				RMB				RMB				RMB
Description
Assets:
Long-term investments
Equity securities with readily determinable fair value			46,576				46,576				-				-
Equity securities accounted for under alternative measurement			218,407				-				218,407				-
Total assets			264,983				46,576				218,407				-

When available, we use quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, we will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates. The following is a description of the valuation techniques that we use to measure the fair value of assets that we report in our consolidated balance sheets at fair value on a recurring basis:

Short-term investments. Short-term investment consists of wealth management products and time deposits, which are valued by us on a recurring basis. We value our short-term wealth management products investments held in certain banks using model-derived valuations based upon discounted cash flow, in which significant inputs, mainly including expected return, are observable or can be derived principally from, or corroborated by, observable market data, and accordingly, we classify the valuation techniques that use these inputs as Level 2. The expected return of the financial products were determined based on the prevailing interest rates in the market.

Long-term investments. Equity securities with readily determinable fair values are measured and recorded at fair value on a recurring basis with changes in fair value. We value these equity securities at its quoted prices in stock market, and accordingly we classify the valuation techniques that use these inputs as Level 1.

We use measurement alternative for recording equity investments without readily determinable fair values at cost, less impairment, adjusted for subsequent observable price changes. Based on ASU 2016-01, entities that elect the measurement alternative will report changes in the carrying value of the equity investments in current earnings. If measurement alternative is used, changes in the carrying value of the equity investment will be recognized whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer, and impairment charges will be recorded when any impairment indicators are noted and the fair value is lower than the carrying value. We classify the valuation techniques on investments that use similar identifiable transaction prices as Level 2 of fair value measurements.

Recently Issued Accounting Pronouncements

A list of recently issued accounting pronouncementsthat are relevant to us is included in note 2 of our consolidated financial statements included elsewhere in this annual report.

B.	Liquidity and Capital Resources

The following table sets forth a summaryof our cash flows for the periods presented:

		For the Year Ended December 31,
		2022				2023				2024
		RMB				RMB				RMB				US$
		(in thousands)
Summary Consolidated Cash Flow Data:
Net cash used in operating activities*			(167,111	)			(170,862	)			(126,082	)			(17,274	)
Net cash generated from/ (used in) investing activities			92,565				294,035				(166,330	)			(22,786	)
Net cash used in financing activities			(144,266	)			(42,733	)			(13,319	)			(1,825	)
Effect of exchange rate changes on cash and cash equivalents			45,823				7,528				3,852				528
Net (decrease)/increase in cash, cash equivalents and restricted cash			(172,989	)			87,968				(301,879	)			(41,357	)
Cash, cash equivalents and restricted cash at beginning of the year			629,732				456,743				544,711				74,625
Cash, cash equivalents and restricted cash at end of the year			456,743				544,711				242,832				33,268

* Certain prior period amounts have been reclassified to conform with the current period presentation. Theses reclassifications have no impact on our previously reported consolidated net loss.

To date, our primary sources of liquidity have been issuances of equity securities in our initial public offering and historical private placements. As of December 31, 2024, our cash, cash equivalents and restricted cash were RMB242.8 million (US$33.3 million). Our cash and cash equivalents consist of cash at banks. Cash held in accounts with third-party online payment platforms are recorded as other receivables. In March 2025, we entered into secured loan facility agreements with three commercial banks in the PRC, pursuant to which we are entitled to borrow a secured bank loan of up to RMB96 million using our office as the collateral. As of the date of this annual report, we drew down RMB15 million under the credit facility, bearing an interest rate of 2.4% per annum.

Our accounts payable include merchandise purchase payables, warehouse and logistics fees payables and payable to merchants representing the unpaid balances to the merchants of cash collected by us on behalf of the merchants for products sold on our platform when we are viewed as the agent in the sales arrangement. As of December 31, 2022, 2023 and 2024, our accounts payable amounted to RMB138.9 million, RMB96.8 million and RMB54.7 million (US$7.5 million), respectively. These changes were primarily contributed by the changes in merchandise purchase payables, which decreased from RMB87.5 million as of December 31, 2022 to RMB61.0 million as of December 31, 2023 and further decreased to RMB32.2 million (US$4.4 million) as of December 31, 2024. These decreases were primarily due to decreases in merchandise sales.

Our merchandise purchase payable turnover days were 65.7 days in 2022, 80.3 days in 2023, and 79.4 days in 2024. Merchandise purchase payable turnover days for a given period equal to average merchandise purchase payable at the beginning and the end of the period divided by cost of revenues during the period and then multiplied by the number of days during the period.

As of December 31, 2022, 2023 and 2024, our net inventories amounted to RMB54.7 million, RMB42.7 million and RMB29.4 million (US$4.0 million), respectively. These decreases were primarily due to decreases in merchandise sales. Our inventory turnover days were 38.4 days in 2022, 52.7 days in 2023, and 61.5 days in 2024.

Inventory turnover days for a given period equal to average inventory balances at the beginning and the end of the period divided by cost of revenues during the period and then multiplied by the number of days during the period. Our inventory balances will fluctuate over time due to a number of factors, including changes in our product mix. Our inventory balances typically increase when we prepare for special promotion events, such as the special promotional campaign on our founding anniversary May 16 and the online shopping festival on November 11.

We believe that our current cash and cash equivalents and our anticipated cash flows from operations and loan facility will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months from the date of this annual report. After this report, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

As of December 31, 2024, we had RMB242.8 million (US$33.3 million) in cash, cash equivalents and restricted cash, of which approximately 24.3% were held in Renminbi, 71.5% in U.S. dollars, and the remainder in other currencies.

Although we consolidate the results of the VIE and its subsidiaries, we only have access to the assets or earnings of the VIE and its subsidiaries through our contractual arrangements with the VIE and its shareholders. See "Item 4. Information on the Company-C. Organizational Structure-Contractual Arrangements with the VIE and Its Shareholders." For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see "Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Holding Company Structure."

A majority of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, Renminbi may be converted into foreign exchange for current account items, including profit distributions, interest payments and trade-and service-related foreign exchange transactions.

We expect that substantially all of our future revenues will be denominated in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future.

Operating activities

Net cash used in operating activities in 2024 was RMB126.1 million (US$17.3 million), as compared to net loss of RMB123.1 million (US$16.9 million) in the same period. In 2024, the principal items accounting for the difference between our net cash used in operating activities and our net loss were (i) a decrease in incentive payables to members of RMB58.9 million (US$8.1 million), and (ii) a decrease in accounts payable of RMB29.7 million (US$4.1 million), partially offset by (i) a non-cash impairment of long-lived assets other than goodwil of RMB26.1 million (US$3.6 million), (ii) a non-cash allowance for credit losses of RMB15.4 million (US$2.1 million), and (iii) a decrease in prepaid expenses and other current assets of RMB12.9 million (US$1.8 million). The decrease in incentive payables to members was primarily due to the derecognition of long-aged payables to inactive members. The decrease in accounts payable was primarily due to the decrease in merchandise sales.

Net cash used in operating activities in 2023 was RMB170.9 million, as compared to net loss of RMB165.1 million in the same period. In 2023, the principal items accounting for the difference between our net cash used in operating activities and our net loss were (i) a decrease in incentive payables to members of RMB82.4 million, (ii) a decrease in accounts payable of RMB24.7 million, (iii) a decrease in other payable and accrued liabilities of RMB41.0 million, and (iv) an increase in accounts receivable of RMB39.4 million, partially offset by (i) a non-cash changes in fair value for equity securities of RMB80.9 million, (ii) a non-cash allowance for credit losses of RMB37.1 million, and (iii) a decrease in prepaid expenses and other current assets of RMB32.5 million. The decrease in incentive payables to members was primarily due to the derecognition of long-aged payables to inactive members. The decrease in accounts payable was primarily due to the decrease in merchandise sales.

Net cash used in operating activities in 2022 was RMB167.1 million, as compared to net loss of RMB138.4 million in the same period. In 2022, the principal items accounting for the difference between our net cash used in operating activities and our net loss were (i) a decrease in accounts payable of RMB58.3 million, (ii) a decrease in deferred revenue of RMB84.0 million and (iii) a decrease in incentive payables to members of RMB58.3 million, partially offset by (i) a decrease in prepaid expenses and other current assets of RMB95.2 million and (ii) a non-cash changes in fair value for equity securities of RMB35.2 million. The decrease in accounts payable was primarily due to the decrease in merchandise sales. The decrease in deferred revenue was primarily due to the decrease in deferred merchandise revenue.

Investing activities

Net cash used in investing activities in 2024 was RMB166.3 million (US$22.8 million), primarily due to (i) cash paid to acquire the land use right of the Hangzhou Land Parcel for an aggregate consideration of approximately RMB176.6 million (US$24.2 million), partially offset by cash received from repayment of loans provided to third parties of RMB11.1 million (US$1.5 million).

Net cash generated from investing activities in 2023 was RMB294.0 million, primarily due to (i) cash received from maturity of short-term investmentsof RMB214.4 million, (ii) cash received from repayment of loans provided to third parties of RMB83.4 million, and (iii) cash received from factorings services of RMB50.7 million, partially offset by cash paid for long-term investments of RMB40.8 million.

Net cash generated from investing activities in 2022 was RMB92.6 million, primarily due to (i) cash received from maturity of short-term investmentsof RMB651.4 million and (ii) cash received from factorings services of RMB102.4 million, partially offset by cash paid for short-term investments of RMB465.2 million.

Financing activities

Net cash used in financing activities in 2024 was RMB13.3 million (US$1.8 million), primarily due to cash used in merchant settlement of RMB12.3 million (US$1.7 million).

Net cash used in financing activities in 2023 was RMB42.7 million, primarily due to cash paid for repurchase of common stocks of RMB21.0 million, cash used in merchant settlement of RMB17.4 million and cash paid for reverse stock splits expense of RMB4.3 million.

Net cash used in financing activities in 2022 was RMB144.3 million, primarily due to cash paid for repurchase of common stocks of RMB95.4 million and cash used in merchant settlement of RMB49.7 million.

Material Cash Requirements

Our material cash requirements as of December 31, 2024 and any subsequent interim period mainly include capital expenditures and contractual obligations.

Capital Expenditures

Our capital expenditures were RMB92.3 million, RMB12.4 million and RMB192.5 million (US$26.4 million) in 2022, 2023 and 2024, respectively. Our capital expenditures were principally incurred to purchase servers, computers and other office equipment, and to pay for leasehold improvementsfor our offices. In 2024, we acquired the land use right of the Hangzhou Land Parcel in cash for an aggregate consideration of approximately RMB176.6 million (US$24.2 million).

Contractual Obligations

Our operating lease obligationsrelate to our leases of offices and operation space. The following table sets forth our operating lease obligations as of December 31, 2024.

Payment Due by Period

Total

Less than 1 year

1-3 years

3-5 years

More than 5 years

(in RMB thousands)

Operating lease

13,322

5,056

8,266

-

-

Our capital commitments primarily relate to commitments on the construction of office buildings. In June 2024, we won the bid for a parcel of land located in Xiaoshan District, Hangzhou, China, covering approximately 10 thousand square meters, or the Hangzhou Land Parcel. We intend to construct a new office building on the Hangzhou Land Parcel to use it as our new headquarters and also lease offices to external parties.

Payment Due by Period

Total

Less than 1 year

1-3 years

3-5 years

More than 5 years

(in RMB thousands)

Capital commitments

241,726

124,865

109,976

6,885

-

We intend to fund our existing and future material cash requirements with our existing cash balance, loan facilities and cash flow from operating activities and financing activities. We will continue to make cash commitments, including capital expenditures, to support our business.

Other than as described above, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2024.

Holding Company Structure

Yunji Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries, the VIE and its subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and the VIE and its subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, our wholly foreign-owned subsidiaries in China may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and the VIE and its subsidiaries may allocate a portion of its after-tax profits based on PRC accounting standards to a surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

C.	Research and Development, Patents and Licenses, Etc.

See "Item 4. Information On the Company-B. Business Overview-Technology" and "Item 4. Information On the Company-B. Business Overview-Intellectual Property."

D.	Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2025 that are reasonably likely to have a material adverse effect on our net sales or revenues, income from continuingoperations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

E.	Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations relates to our consolidated financial statements, which have been prepared in accordance with United States of America generally accepted accounting principles, or the U.S. GAAP. The preparation of these financialstatements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to periodor use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

For a detailed discussion of our principal accounting policies and related judgments, please see "Note 2. Principal Accounting Policies" of our consolidated financial statements included elsewhere in this annual report. You should read the following description of critical accounting estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.

Allowance for credit losses - receivables from the distribution sales

Nature of Estimates Required. Effective January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires us to record the full amount of expected credit losses for the life of a financial asset at the time it is originated or acquired, and adjusted for changes in expected lifetime credit losses subsequently, which requires earlier recognition of credit losses.

Assumptions and Approach Used. We make periodic individual assessment on the recoverability based on historical settlement records and past experiences incorporating forward-looking information. Our management estimates the allowance for credit losses of receivables from the distribution sales on an individual basis. The key assumptions used in the process of estimating the provision for credit losses include non-performing loan ratio of commercial banks by industry and the forward-looking macroeconomic conditions, which are country specific and include variables such as consumer price index, producer price index, and gross domestic product.

As of December 31, 2024, the allowance for credit losses on receivables from the distribution sales was RMB2,599 thousand. For more information regarding expected credit losses and for additional information regarding the allowance for credit losses for receivables from the distribution sales, see "Note 5. Accounts Receivable, Net" and "Note 2. Principal Accounting Policies" in the accompanying notes to consolidated financial statements included in this annual report on Form 20-F.

Allowance for credit losses - unsecured loan receivables

Nature of Estimates Required. Effective January 1, 2020, we adopted Accounting Standards Update (ASU) No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires us to record the full amount of expected credit losses for the life of a financial asset at the time it is originated or acquired, and adjusted for changes in expected lifetime credit losses subsequently, which requires earlier recognition of credit losses.

Assumptions and Approach Used. We make periodic individual assessment on the recoverability based on historical settlement records and past experiences incorporating forward-looking information. Our management estimates the allowance for credit losses of unsecured loan receivables on an individual basis. The key assumption used in the process of estimating the provision for credit losses is probability-weighted scenarios which is used to model and compute the expected credit losses as per the forward-looking scenarios taking into account the most stressed and most favorable parameters and the probability of the outcome of such scenarios.

As of December 31, 2024, the allowance for credit losses on unsecured loan receivables was RMB41,200 thousand. For more information regarding expected credit losses and for additional information regarding the allowance for credit losses for unsecured loan receivables, see "Note 6. Prepaid Expenses and Other Current Assets, Net", "Note 11. Other Non-Current Assets" and "Note 2. Principal Accounting Policies" in the accompanying notes to consolidated financial statements included in this annual report on Form 20-F.