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Filed Pursuant to Rule 424(b)(4)
Registration No. 333-230082

10,000,000 American Depositary Shares

LOGO

Ruhnn Holding Limited

Representing 50,000,000 Class A Ordinary Shares

         This is the initial public offering of Ruhnn Holding Limited, or Ruhnn Holding.

         We are offering 10,000,000 American depositary shares, or ADSs. Each ADS represents five Class A ordinary shares, par value US$0.000000001 per share.

         Prior to this offering, there has been no public market for our ADSs or ordinary shares. The initial public offering price per ADS is US$12.50. Our ADSs have been approved for listing on the Nasdaq Global Select Market under the symbol "RUHN."

         An affiliate of Weibo Corporation has subscribed for, and has been allocated, 800,000 ADSs representing Class A ordinary shares in this offering at the initial public offering price and on the same terms as the other ADSs being offered.

         We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements.

         Investing in our ADSs involves risks. See "Risk Factors" beginning on page 18.

         Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
  Per ADS   Total
Initial public offering price   US$12.50   US$125,000,000
Underwriting discounts and commissions   US$0.875   US$8,750,000
Proceeds, before expenses(1), to us   US$11.625   US$116,250,000

(1)
We refer you to "Underwriting" beginning on page 188 of this prospectus for additional information regarding underwriting compensation.

         We and the selling shareholders have granted the underwriters the right to purchase up to an additional 1,500,000 ADSs to cover over-allotments at the initial public offering price, less underwriting discounts and commissions. We will not receive any proceeds from the sale of ADSs by the selling shareholders.

         Immediately prior to the completion of this offering, our outstanding share capital will be re-designated into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote; and each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. FENG Min, SUN Lei (Ray) and SHEN Chao (Eric), our founders, will beneficially own, in aggregate, 100% of our issued Class B ordinary shares. These Class B ordinary shares will constitute approximately 42.9% of our total issued and outstanding share capital and 88.2% of the aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their over-allotment option.

         The underwriters expect to deliver the ADSs against payment in U.S. dollars to purchasers on or about April 5, 2019.



Citigroup   UBS Investment Bank

Tiger Brokers

   

Prospectus dated April 2, 2019.


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Prospectus Summary

    1  

Risk Factors

    18  

Special Note Regarding Forward-Looking Statements

    57  

Use of Proceeds

    58  

Dividend Policy

    59  

Capitalization

    60  

Dilution

    62  

Exchange Rate Information

    64  

Enforcement of Civil Liabilities

    65  

Our History and Corporate Structure

    67  

Selected Combined and Consolidated Financial and Operating Data

    72  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    76  

Industry Overview

    100  

Business

    107  

Regulation

    131  

Management

    143  

Principal and Selling Shareholders

    151  

Related Party Transactions

    155  

Description of Share Capital

    156  

Description of American Depositary Shares

    167  

Shares Eligible for Future Sale

    179  

Taxation

    181  

Underwriting

    188  

Expenses Related to this Offering

    198  

Legal Matters

    199  

Experts

    199  

Where You Can Find More Information

    200  

Index to Financial Information

    F-1  

        This prospectus contains estimates and information concerning our industry, including market position, market size, and growth rates of the markets in which we participate, that are based on industry publications and reports. This prospectus contains statistical data and estimates published by Frost & Sullivan, an independent research firm, for which we paid a fee and which we refer to in this prospectus as the Frost & Sullivan Report. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the "Risk Factors" section. These and other factors could cause results to differ materially from those expressed in these publications and reports.

        No dealer, salesperson or other person is authorized to give any information or to represent as to anything not contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell, and we are seeking offers to buy, only the ADSs offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or any sale of the ADSs.

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        Neither we nor the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where other action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any free writing prospectus filed with the United States Securities and Exchange Commission, or SEC, must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States.

        Until April 27, 2019 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

        This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements, before making an investment decision.


Overview

        We are the largest internet key opinion leader, or KOL, facilitator in China as measured by revenue in 2018 according to the Frost & Sullivan report. We are also China's largest internet KOL facilitator in e-commerce as measured by GMV in 2018 and number of signed KOLs, fans and online stores as of December 31, 2018 according to the same source. As of December 31, 2018, we had 113 signed KOLs with an aggregate of 148.4 million fans across major social media platforms in China. Through our KOLs, we facilitated the sale of an aggregate GMV of RMB1.2 billion, RMB2.0 billion and RMB2.2 billion on various e-commerce platforms in fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, respectively.

        KOLs, also known as influencers, are individuals who have the power to engage and impact people within a specific community or field, such as fashion, culture, entertainment and gaming, and internet KOLs are KOLs who have gained their popularity through the internet. Our founders were among the earliest entrepreneurs in China to identify and capture the commercial opportunities created by the emergence of internet KOLs in China according to the Frost & Sullivan report and started to cooperate with KOLs in e-commerce in 2014. We created a KOL ecosystem in China by connecting a large number of KOLs and their fans to create a vast network and connecting this network to a large number of businesses, including brands, online retailers, designers, manufacturers and suppliers, based on existing e-commerce and social media platforms in China, to create value for participants in the ecosystem.

        According to the Frost & Sullivan report, we pioneered the commercialization of the KOL ecosystem through a full-service model whereby we integrate key steps of the e-commerce value chain, from product design and sourcing and online store operation to logistics and after sales services. Under this model, we own and operate online stores on third-party e-commerce platforms, a majority of which are opened in the name of our KOLs, and generate revenue through online sales of our self-designed products to consumers, especially the fans of our KOLs' social media accounts that we manage. We provide professional training and support to our KOLs and help them develop distinctive characters, enhance popularity and grow their fan bases. We also set up different brands for different KOLs and design and produce branded products based on each KOL's distinctive character to cater to the tastes of different KOLs' fan bases, while our KOLs endorse such products in their social media spaces.

        As we established our "Ruhnn" brand and attracted more talented KOLs, we launched our platform model in 2017 to provide KOL sales and advertising services to brands and other merchants. Under this model, we connect our KOLs with third-party online stores and merchants to promote products sold in third-party online stores or provide advertising services on KOLs' social media spaces to third-party merchants. This new model allows us to operate in a more asset-light manner and collaborate with a greater number and variety of KOLs and brands.

        We pride ourselves on our ability to identify and cultivate a large number of promising internet KOLs in an efficient and sustainable manner. The flexibility of our business and revenue model also enables us to work with a diversified KOL pool, including KOLs with different fashion styles, personalities and fan bases, and serve the different needs of various types of businesses. The number of our KOLs increased from 62 as of March 31, 2017 to 83 as of March 31, 2018, and further to 113 as of December 31, 2018, including three top-tier KOLs each with annual GMV of above RMB100.0 million and seven established KOLs each with annual GMV of between RMB30.0 million and

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RMB100.0 million in the past twelve months. One of our KOLs is among the top ten fashion internet KOLs in China as measured by number of fans according to the Frost & Sullivan report. As of December 31, 2018, we cooperated with 501 brands and 28 third-party online stores to promote their brands and products to consumers.

        Our KOLs have a large, young, active and loyal fan base. The aggregate number of our KOLs' fans increased from 52.1 million as of March 31, 2017 to 148.4 million as of December 31, 2018, which primarily included 111.1 million on Weibo, 30.7 million on Weitao and 6.7 million on WeChat. As of December 31, 2018, more than 80% of our KOLs' fans were millennials and more than 78% of them were female, fashion pursuers and frequent online shoppers. The interactions between our KOLs and their fans enable them to learn more about our products, which we believe have significantly increased the likelihood of their fans placing orders with us. We believe our KOLs' fans are also loyal customers and have strong emotional bonds with our KOL brands. Approximately 38% and 39% of customers of our online stores made two or more purchases with us in fiscal year 2018 and the first three quarters of fiscal year 2019, respectively. As we launched our platform model, we believe our KOLs' fan bases also help brands and third-party online retailers that use our KOL sales and advertising services to more effectively market and sell their products.

        We have utilized the latest technology to improve our operations and maintain competitiveness. We rely on data analysis and innovative technology to help our KOLs produce engaging content and more effectively interact with their fans to increase their popularity. We have also invested in companies that develop AI solutions relevant to our business, such as DeepFashion and Smart Fabric Detection, and implemented big data analytics to optimize our business and operation.

        We have two revenue streams. Revenues from our product sales through full-service model increased by 59.4% from RMB572.4 million for fiscal year 2017 to RMB912.5 million (US$132.7 million) for fiscal year 2018, and increased by 3.8% from RMB728.1 million for the first three quarters of fiscal year 2018 to RMB755.9 million (US$109.9 million) for the first three quarters of fiscal year 2019. Revenues from our services through platform model increased by approximately 5.4 times from RMB5.5 million for fiscal year 2017 to RMB35.1 million (US$5.1 million) for fiscal year 2018, and increased by approximately 3.4 times from RMB23.0 million for the first three quarters of fiscal year 2018 to RMB100.3 million (US$14.6 million) for the first three quarters of fiscal year 2019. We continue prioritizing our investment in growth and incurred a net loss of RMB40.1 million for fiscal year 2017 and RMB90.0 million (US$13.1 million) for fiscal year 2018, and a net loss of RMB26.1 million for the first three quarters of fiscal year 2018 and RMB57.5 million (US$8.4 million) for the first three quarters of fiscal year 2019.


Our KOL Ecosystem

        With the emergence of KOL economy, a new ecosystem centered around KOLs has formed and changed the manner in which businesses are connected to consumers. It is also transforming the online retail industry in China. As the largest China internet KOL facilitator in e-commerce, we help connect a large number of KOLs and their fans to create a vast network and connect this network to a large number of businesses, including brands, online retailers, designers, manufacturers and suppliers to

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create value for participants in the ecosystem. The diagram below illustrates the interactions among the key participants in the ecosystem:

GRAPHIC

        Our first-mover advantage in the KOL ecosystem enables us to partner with players in the new retail industry, integrating online, offline, supply chain and data. In the KOL ecosystem, KOLs replace traditional sales and marketing channels and enable two-way communication between businesses and consumers. Based on a deep understanding of the social relationship between KOLs and their fans, we are able to identify potential consumers, stimulate consumer needs and turn consumers into brand ambassadors who effectively co-create a brand with the respective KOLs. Moreover, we have developed a business model that brings online retail into a new era whereby consumers tell businesses what to produce and sell and businesses anticipate demand before production.


Our Market Opportunity

        China's internet KOL economy, which refers to all activities relating to the monetization of the KOLs' influence and impact on their fans, grew at a CAGR of 181.5% from 2013 to 2017. Driven by the evolvement of consumption habits, development of We-media, increase of digital marketing expenditure by brand owners and improvement in mobile internet technologies, China's internet KOL economy is expected to continue expanding at a CAGR of 41.8% from 2017 to 2022.

        China's social e-commerce, which involves social interaction and content creation, had a GMV of RMB609.9 billion in 2017 and is expected to grow at a CAGR of 35.5% to RMB2,782.6 billion in 2022. The GMV of internet KOL e-commerce in China was RMB32.9 billion in 2017. Driven by the continuing popularity of social media and decentralized commercial mode, the growth rate of GMV is expected to increase at a CAGR of 40.4% in the next five years.

        China's market for internet KOL facilitators, which identify and cultivate internet KOLs and help them monetize their social influence and handle related business operations, was RMB38.8 billion in 2017 in terms of revenue generated. Driven by the increasingly diversified monetization methods, better supply chain management and advanced technologies, the market size of internet KOL facilitators is expected to grow at a CAGR of 38.9% to RMB200.9 billion in 2022.

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        We believe that the following future trends will develop in China's internet KOL facilitator market: (i) closer collaboration with existing brand owners in offline channels; (ii) deeper engagement of fans in brand building and product design; and (iii) decentralization of the internet KOL community and increased focus on emerging KOLs.

        In addition, we believe that the key success factors of an internet KOL facilitator include having (i) a comprehensive incubation system; (ii) capabilities to identify and diversify monetization opportunities; (iii) strong supply chain management; and (iv) advanced data analytics.


Our Competitive Strengths

        As a leader in the internet KOL facilitator industry, we believe the following key competitive strengths have contributed to our success:

    leading market position, first-mover advantage and strong brand recognition;

    a wide and growing pool of KOLs empowered by our proven KOL grooming system;

    highly engaged and loyal fan base deeply influenced by our KOLs;

    end-to-end solutions across the e-commerce value chain with strong supply chain management capabilities;

    scalable, efficient and proven monetization channels;

    strong commitment to data-driven technology; and

    strong visionary management team.


Our Strategies

        To solidify our leading position in the internet KOL facilitator industry in China, we plan to continue the following strategies:

    continue expanding our KOL ecosystem through organic growth and potential acquisitions;

    expand and diversify our KOL pool, enlarge their fan base and improve fan engagement;

    continue diversifying monetization channels and enhance monetization capability;

    optimize cost structure to achieve profitability; and

    continue investing in technology, AI solutions and big data analytics.


Our Challenges

        Our business and successful execution of our strategies are subject to certain challenges, risks and uncertainties, including:

    our ability to maintain and optimize our KOL ecosystem;

    our limited operating history;

    a substantial portion of our GMV and revenue being generated from online stores opened in the names of a limited number of KOLs;

    net losses incurred in the past, and the possibility that we may continue to incur losses in the future;

    our ability to anticipate or influence changes in fans' buying preferences;

    our ability to attract new KOLs, retain existing KOLs and cultivate them;

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    our reliance on our top-tier KOLs, particularly online stores opened in the name of Zhang Dayi, for a substantial portion of our GMV and revenue in fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019;

    negative publicity about our KOLs or our products;

    our ability to manage our expansion; and

    our ability to diversify our monetization channels.

        In addition, we face risks and uncertainties related to our corporate structure and regulatory environment in China, including:

    regulatory risks related to the internet KOL facilitator industry and e-commerce industry in China;

    risks associated with our control over our variable interest entity, or VIE, in China, which is based on contractual arrangements rather than equity ownership; and

    changes in the political and economic policies of the PRC government.

        We also face other risks and uncertainties that may materially affect our business, financial condition, results of operations and prospectus. You should consider the risks discussed in the section headed "Risk Factors" and elsewhere in this prospectus before investing in our ADSs.


Our History and Corporate Structure

        In March 2016, Hanyi E-Commerce, was established in the PRC by Hangzhou Ruhnn Holdings Co., Ltd., or Hangzhou Ruhnn, which was owned by our founders, FENG Min, SUN Lei (Ray) and SHEN Chao (Eric) and several institutional investors. In preparation for this offering, our founders and the institutional investors of Hangzhou Ruhnn undertook a series of equity transactions as described below, or the Equity Restructuring, to re-domicile the holding entity of our business from the PRC to the Cayman Islands.

        In May 2018, our company was incorporated in the Cayman Islands as the proposed listing entity. In September 2018, Hangzhou Yihan Technology Co., Ltd., or Yihan Technology or the WFOE, was established in the PRC as an indirect wholly owned subsidiary of our company.

        On October 4, 2018, our company, our founders and the institutional investors of Hangzhou Ruhnn entered into a series of agreements whereby our company issued 319,406,660 ordinary shares to these founders and institutional shareholders at substantially identical ownership percentages as their existing indirect ownership in Hanyi E-Commerce. On the same date, we obtained 100% control over Hanyi E-Commerce through a series of contractual arrangements among the WFOE, Hanyi E-Commerce and its shareholders. These contractual agreements enabled the WFOE to have effective control over and receive the economic benefits of Hanyi E-Commerce. Accordingly, we are considered the primary beneficiary of Hanyi E-Commerce, and are able to consolidate Hanyi E-Commerce and its operating subsidiaries in our financial statements. For more details, please see "Our History and Corporate Structure—Contractual Arrangements with Our VIE and Its Shareholders." However, the shareholders of Hanyi E-Commerce, namely, FENG Min and Hangzhou Xinghui, which is wholly owned by FENG Min, may have actual or potential conflicts of interest with us. These shareholders may refuse to sign or breach, or cause Hanyi E-Commerce to breach, or refuse to renew, the existing contractual arrangements we have with them and Hanyi E-Commerce, which would have a material and adverse effect on our ability to effectively control Hanyi E-Commerce and receive economic benefits from Hanyi E-Commerce and its subsidiaries. For additional risks relating to our corporate structure, see "Risk Factors—Risks Relating to Our Corporate Structure."

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        In March 2019, in order to acquire the remaining ownership of Hangzhou Dayi E-Commerce Co., Ltd., or Hangzhou Dayi, and convert it from a 51%-owned subsidiary to a wholly owned subsidiary of Hanyi E-Commerce, we entered into the following agreements with ZHANG Yi, one of our top KOLs, and her affiliated entities: (i) an equity interest transfer agreement pursuant to which Hangzhou Wunai Yidui Trade Co., Ltd. agreed to transfer 49% equity interest in Hangzhou Dayi to Hanyi E-Commerce; and (ii) a share purchase agreement pursuant to which we agreed to issue 44,165,899 ordinary shares, which will be re-designated to Class A ordinary shares, to China Himalaya Investment Limited, a company wholly owned by ZHANG Yi. These transactions were completed in the same month. In connection with these transactions, ZHANG Yi also agreed to continue her exclusive cooperation with us in online sales of women apparel products until the later of five years after the completion of this offering or when her beneficial interests in our company fall below 5%.

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        The following diagram illustrates our corporate and shareholding structure with our significant subsidiaries and VIE and its subsidiaries as of the date of this prospectus.

GRAPHIC


(1)
Ruhnn1106 Investment Limited, wholly owned by FENG Min, one of our founders.

(2)
LEIYU Investment Limited, wholly owned by SUN Lei (Ray), one of our founders.

(3)
YangMing Investment Limited, wholly owned by SHEN Chao (Eric), one of our founders.

(4)
China Himalaya Investment Limited, wholly owned by ZHANG Yi, one of our top KOLs.

(5)
None of these pre-IPO investors beneficially owns more than 10% of our equity interest.

(6)
Representing ordinary shares held by Ruhnn Investment Limited, a limited liability company incorporated in the British Virgin Islands, wholly owned by Ruhnn Investment Trust. FENG Min is the sole member of the advisory committee of Ruhnn Investment Trust.

(7)
On October 4, 2018, as part of the Equity Restructuring, Hangzhou Ruhnn, the former parent of Hanyi E-Commerce transferred 1% equity interest in Hanyi E-Commerce to FENG Min for the purpose of creating a new nominee shareholder to enter into the contractual arrangements.

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(8)
Wholly owned by FENG Min. On October 4, 2018, as part of the Equity Restructuring, Hangzhou Ruhnn, the former parent of Hanyi E-Commerce transferred 99% equity interest in Hanyi E-Commerce to this entity for the purpose of creating a new nominee shareholder to enter into the contractual arrangements.

(9)
Exclusive Business Corporation Agreement, Exclusive Call Option Agreement, Power of Attorney and Equity Interest Pledge Agreement.

(10)
Exclusive Call Option Agreement, Power of Attorney, Equity Interest Pledge Agreement and Spousal Consent Letter.

(11)
Exclusive Call Option Agreement, Power of Attorney and Equity Interest Pledge Agreement.


Our Corporate Information

        Our principal executive offices are located at 4F, Building 1, Blue Collar Garment Industrial Park, 7-1 North Hong Pu Road, Yu Hang District, Hangzhou 311100, People's Republic of China. Our telephone number at this address is +86 571-2882 5222. Our registered office in the Cayman Islands is located at the offices of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9009, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above.

        Our corporate website is www.ruhnn.com. The information contained on our website is not a part of this prospectus.


Implications of Being an Emerging Growth Company

        As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company's initial control over financial reporting. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of the extended transition period for complying with new or revised accounting standards as required when they are adopted for public companies. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

        We will remain an emerging growth company until the earliest of (a) the last day of fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act, as amended, which would occur if the market value of our ADSs that are held by non-affiliated exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.


Conventions That Apply to This Prospectus

        Unless we indicate otherwise, references in this prospectus to:

    "ADRs" are to the American depositary receipts, which, if issued, evidence our ADSs;

    "ADSs" are to our American depositary shares, each of which represents five Class A ordinary shares;

    "AI" are to artificial intelligence;

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    "average visitor-to-paying customer conversion rate" are to the number of paying customers of an online store as a percentage of all visitors to the same store during a certain period;

    "CAGR" are to compound annual growth rate;

    "China" and the "PRC" are to the People's Republic of China, excluding, for the purposes of this prospectus only, Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region;

    "DeepFashion" are to an AI solution developed by one of our investee companies that improves fashion design process;

    "Equity Restructuring" are to a series of equity transactions that our company, our founders and the institutional shareholders of Hangzhou Ruhnn effected in October 2018 to re-domicile the holding entity of our business from the PRC to the Cayman Islands as described in more detail under "Our History and Corporate Structure" section of this prospectus;

    "fans" are to followers to KOLs on social media platforms and e-commerce platforms, and references to the number of fans in this prospectus are to the simple sum of the followers of the relevant KOL(s) on different social media platforms and e-commerce platforms, and therefore, a single fan may be included multiple times if the fan follows more than one KOL, follows the same KOL across multiple platforms, or both.

    "fiscal year" is to the period from April 1 of the previous calendar year to March 31 of the concerned calendar year;

    "GMV" is to gross merchandize value, which represents the aggregate value of merchandize ordered in our online stores and third-party online stores to which we provide KOL sales services (but not including online stores to which we only provide KOL advertising services), regardless of whether the merchandise is actually sold, delivered or returned. Our calculation of GMV includes shipping charges pair by buyers. GMV of third-party online stores to which we provide KOL sales services includes the GMV of all products ordered on such stores because we generally provide KOL sales services for all products sold on such stores;

    "Hangzhou Dayi Minority Interest Acquisition" are to the transactions completed in March 2019, whereby we acquired the remaining 49% of equity interests in Hangzhou Dayi from Hangzhou Wunai Yidui Trade Co., Ltd., a company wholly owned by ZHANG Yi, and issued 44,165,899 ordinary shares, which will be re-designated as Class A ordinary shares, to China Himalaya Investment Limited, a company wholly owned by ZHANG Yi;

    "Hangzhou Ruhnn" are to Hangzhou Ruhnn Holdings Co., Ltd., a joint stock limited liability company established under the laws of the PRC;

    "KOLs" are to key opinion leaders;

    "millennials" are to people born in the early 1980s to the early 2000s;

    "number of our KOLs' fans" are to the simple sum of fans of all of our KOLs on all major social media platforms and e-commerce platforms, and as a result, if an individual is a fan of more than one KOL or is a fan of a KOL on multiple social media platforms and e-commerce platforms, he or she will be counted multiple times;

    "ordinary shares" prior to the completion of this offering are to our ordinary shares, par value US$0.000000001 per share, and upon and after the completion of this offering are to our Class A and Class B ordinary shares, par value 0.000000001 per share;

    "ordinary shares issued and outstanding" are to our ordinary shares issued and outstanding;

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    "our company" are to Ruhnn Holding Limited, an exempted company with limited liability incorporated under the laws of the Cayman Islands;

    "our KOLs" or "our signed KOLs" are to KOLs who have entered into cooperation agreements or employment agreements with us;

    "RMB" or "Renminbi" are to the legal currency of China;

    "Smart Fabric Detection" are to an AI solution still under development of one of our investee companies that aims to improve fabric defect inspection;

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

    "variable interest entity," "VIE" or "Hanyi E-Commerce" is to Hangzhou Hanyi E-Commerce Co., Ltd., a limited liability company established under the laws of the PRC and 100% owned by PRC citizens and entities; and

    "we," "us," "our" and "Ruhnn" are to (i) prior to the consummation of the Equity Restructuring on October 4, 2018, our predecessor, Hanyi E-Commerce, and its consolidated subsidiaries, and (ii) following the consummation of the Equity Restructuring, our company and its consolidated subsidiaries and affiliated entities.

        Our reporting currency is the Renminbi. This prospectus also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Renminbi into U.S. dollars were made at RMB6.8755 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2018. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On March 29, 2019, the noon buying rate for Renminbi was RMB6.7112 to US$1.00.

        Except as otherwise indicated, all information in this prospectus assumes:

    the filing and effectiveness of our amended and restated memorandum and articles of association, which will occur immediately prior to the completion of this offering; and

    no exercise by the underwriters of their option to purchase up to an additional 1,500,000 ADSs representing 7,500,000 Class A ordinary shares from us and the selling shareholders.

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THE OFFERING

ADSs Offered by Us

 

10,000,000 ADSs

Public Offering Price

 

US$12.50 per ADS.

ADSs Outstanding Immediately After This Offering

 

10,000,000 ADSs (or 11,500,000 ADSs if the underwriters exercise in full the over-allotment option).

Ordinary Shares Outstanding Immediately After This Offering

 

We will adopt a dual class ordinary share structure immediately prior to the completion of this offering. 413,572,659 ordinary shares, comprised of 236,238,409 Class A ordinary shares and 177,334,250 Class B ordinary shares (or 415,822,659 ordinary shares if the underwriters exercise their over-allotment option in full, comprised of 243,738,409 Class A ordinary shares and 172,084,250 Class B ordinary shares) will be issued and outstanding immediately upon the completion of this offering. Class B ordinary shares issued and outstanding immediately after the completion of this offering will represent 42.9% of our total issued and outstanding shares and 88.2% of the then total voting power (or 41.4% of our total issued and outstanding shares and 87.6% of the then total voting power if the underwriters exercise their over-allotment option in full).

Over-Allotment Option

 

We and the selling shareholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an additional 450,000 ADSs and 1,050,000 ADSs, respectively, at the initial public offering price, less underwriting discounts and commissions, solely for the purpose of covering over-allotments.

The ADSs

 

Each ADS represents five Class A ordinary shares.

 

The depositary will be the holder of Class A ordinary shares underlying the ADSs and you will have the rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.

 

You may surrender your ADSs to the depositary to withdraw Class A ordinary shares underlying your ADSs. The depositary will charge you a fee for such an exchange.

 

We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.

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To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares." We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

Ordinary Shares

 

Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A ordinary share will be entitled to one vote, and each Class B ordinary share will be entitled to ten votes. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any sale or transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, or upon a change of beneficial ownership of Class B ordinary shares as a result of which any person who is not an affiliate of the registered shareholder becomes a beneficial owner of such shares, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares. For a description of Class A ordinary shares and Class B ordinary shares, see "Description of Share Capital."

Use of Proceeds

 

We estimate that we will receive net proceeds of approximately US$112.9 million from this offering, or approximately US$118.1 million if the underwriters exercise their option to purchase additional ADSs from us in full, after deducting estimated underwriter discounts, commissions and estimated offering expenses payable by us.

 

We plan to use the net proceeds we will receive from this offering for (i) identifying additional monetization channels and pursuing strategic investments in our industry, (ii) identifying and cultivating KOLs, (iii) investing in technology, AI solutions and big data analytics, and (iv) general corporate purposes. See "Use of Proceeds" for more information.

 

We will not receive any of the proceeds from the sale of ADSs by the selling shareholders.

Risk Factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of the risks relating to investing in our ADSs. You should carefully consider these risks before deciding to invest in our ADSs.

Listing

 

Our ADSs have been approved for listing on the Nasdaq Global Select Market.

Proposed Trading Symbol

 

RUHN

Depositary

 

Citibank, N.A.

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Custodian

 

Citibank, N.A.—Hong Kong

Lock-up

 

We, our executive officers, directors and shareholders, have agreed with the underwriters not to sell, transfer or dispose of any ADSs, Class A ordinary shares or similar securities for a period of 180 days after the date of this prospectus, subject to certain exceptions. See "Shares Eligible for Future Sale" and "Underwriting."

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Summary Combined and Consolidated Financial and Operating Data

        The following summary combined and consolidated statements of operations data for fiscal years ended March 31, 2017 and 2018 and the summary combined and consolidated balance sheet data as of March 31, 2017 and 2018 and the summary combined and consolidated cash flow data for the fiscal years ended March 31, 2017 and 2018 have been derived from our audited combined and consolidated financial statements included elsewhere in this prospectus. The following summary combined and consolidated statements of operations data for the nine months ended December 31, 2017 and 2018 the summary combined and consolidated balance sheet data as of December 31, 2018 and the summary combined and consolidated cash flow data for the nine months ended December 31, 2017 and 2018 have been derived from our unaudited interim condensed combined and consolidated financial statements included elsewhere in this prospectus.

        Our company was incorporated on May 11, 2018 and did not engage in any business or operations until completion of the Equity Restructuring on October 4, 2018. The Equity Restructuring enabled our company to obtain 100% control over Hanyi E-Commerce through a series of contractual arrangements and consolidate Hanyi E-Commerce and its operating subsidiaries in our financial statements. For more details, please see "Our History and Corporate Structure—Our History."

        Our combined and consolidated financial statements are prepared and presented in accordance with U.S. GAAP. The historical results are not necessarily indicative of results to be expected for any future period. You should read the following summary combined and consolidated financial data in conjunction with our combined and consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations," both of which are included elsewhere in this prospectus.

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Summary Combined and Consolidated Statements of Operations Data

 
  Fiscal Year Ended March 31,   Nine Months Ended December 31,  
 
  2017   2018   2017   2018  
 
  RMB   %   RMB   US$   %   RMB   %   RMB   US$   %  
 
  (in thousands, except for percentages)
 

Net revenues:

                                                             

Product sales

    572,445     99.1     912,512     132,720     96.3     728,126     96.9     755,862     109,935     88.3  

Services

    5,457     0.9     35,068     5,100     3.7     22,960     3.1     100,319     14,591     11.7  

Total net revenues

    577,902     100.0     947,580     137,820     100.0     751,086     100.0     856,181     124,526     100.0  

Cost of revenues:

                                                             

Cost of product sales

    (362,609 )   (62.7 )   (625,263 )   (90,941 )   (66.0 )   (478,071 )   (63.7 )   (523,433 )   (76,130 )   (61.1 )

Cost of services

    (2,619 )   (0.5 )   (18,122 )   (2,636 )   (1.9 )   (11,548 )   (1.5 )   (46,450 )   (6,756 )   (5.5 )

Total cost of revenue

    (365,228 )   (63.2 )   (643,385 )   (93,577 )   (67.9 )   (489,619 )   (65.2 )   (569,883 )   (82,886 )   (66.6 )

Gross Profit

    212,674     36.8     304,195     44,243     32.1     261,467     34.8     286,298     41,640     33.4  

Operating expenses:

                                                             

Fulfillment expenses

    (69,412 )   (12.0 )   (100,071 )   (14,554 )   (10.6 )   (71,426 )   (9.5 )   (99,517 )   (14,474 )   (11.6 )

Sales and marketing expenses

    (97,813 )   (16.9 )   (146,207 )   (21,265 )   (15.4 )   (112,068 )   (14.9 )   (158,393 )   (23,037 )   (18.5 )

General and administrative expenses                              

    (67,106 )   (11.6 )   (130,978 )   (19,050 )   (13.8 )   (91,566 )   (12.2 )   (76,377 )   (11,109 )   (8.9 )

Other operating (loss) income, net

    (168 )       710     103     0.1     1,065     0.1     530     77     0.1  

Loss from operations

    (21,825 )   (3.7 )   (72,351 )   (10,523 )   (7.6 )   (12,528 )   (1.7 )   (47,459 )   (6,903 )   (5.5 )

Interest income

    42         88     13         55     0.0     398     58     0.0  

Interest expense

    (1,574 )   (0.3 )                       (107 )   (15 )   (0.0 )

Foreign exchange gain (loss)

    56         (241 )   (35 )       (143 )   (0.0 )   71     10     0.0  

Loss before income taxes

    (23,301 )   (4.0 )   (72,504 )   (10,545 )   (7.6 )   (12,616 )   (1.7 )   (47,097 )   (6,850 )   (5.5 )

Income tax expenses

    (15,243 )   (2.6 )   (15,843 )   (2,304 )   (1.7 )   (12,462 )   (1.7 )   (9,479 )   (1,379 )   (1.1 )

Loss from equity method investees                              

    (1,593 )   (0.3 )   (1,607 )   (234 )   (0.2 )   (1,055 )   (0.1 )   (927 )   (135 )   (0.1 )

Net loss

    (40,137 )   (6.9 )   (89,954 )   (13,083 )   (9.5 )   (26,133 )   (3.5 )   (57,503 )   (8,364 )   (6.7 )

Summary Combined and Consolidated Balance Sheet Data

 
  As of March 31,   As of December 31,  
 
  2017   2018   2018  
 
  RMB   RMB   US$   RMB   US$  
 
  (in thousands)
 

Selected Combined and Consolidated Balance Sheet:

                               

Cash and cash equivalents

    21,369     9,714     1,412     156,518     22,765  

Restricted cash

        21,208     3,085     14,866     2,162  

Accounts receivable, net

    219     6,240     908     18,465     2,686  

Inventories

    234,579     320,383     46,598     289,717     42,138  

Advances to suppliers, net

    40,977     24,695     3,592     40,462     5,885  

Prepaid expenses and other current assets

    31,238     30,295     4,406     31,559     4,590  

Total current assets

    333,031     412,829     60,044     552,459     80,352  

Total assets

    342,292     424,644     61,762     689,424     100,273  

Accounts payable

    68,697     72,890     10,601     150,529     21,894  

Amounts due to related parties

    285,570     374,558     54,477     575,125     83,649  

Total liabilities

    385,509     558,669     81,255     847,870     123,318  

Total shareholders' deficit

    (43,217 )   (134,025 )   (19,493 )   (158,446 )   (23,045 )

Total liabilities and shareholders' deficit

    342,292     424,644     61,762     689,424     100,273  

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Summary Combined and Consolidated Statements of Cash Flow Data

 
  Fiscal Year Ended
March 31,
  Nine Months Ended
December 31,
 
 
  2017   2018   2017   2018  
 
  RMB   RMB   US$   RMB   RMB   US$  
 
  (in thousands)
 

Summary Combined and Consolidated Cash Flow:

                                     

Net cash (used in) provided by operating activities

    (240,532 )   (27,575 )   (4,011 )   54,031     45,738     6,653  

Net cash used in investing activities

    (10,133 )   (1,949 )   (283 )   (1,739 )   (3,074 )   (447 )

Net cash (used in) provided by financing activities

    272,034     39,077     5,683     (9,967 )   97,798     14,224  

Net increase in cash, cash equivalents and restricted cash

    21,369     9,553     1,389     42,325     140,462     20,430  

Cash, cash equivalents and restricted cash at beginning of the year/period

        21,369     3,108     21,369     30,922     4,497  

Cash, cash equivalents and restricted cash at end of the year/period

    21,369     30,922     4,497     63,694     171,384     24,927  

Summary Quarterly Results of Operations

        The following table sets forth our unaudited combined and consolidated quarterly results of operations for the periods indicated. You should read the following table in conjunction with our combined and consolidated financial statements and related notes included elsewhere in this prospectus. We have prepared the unaudited combined and consolidated quarterly financial information on the same basis as our combined and consolidated financial statements. The unaudited combined and consolidated quarterly financial information includes all adjustments, consisting only of normal and recurring adjustments, that we consider necessary fair a fair representation of our operating results for the quarters presented.

 
  For the three months ended  
 
  June 30,
2016
  September 30,
2016
  December 31,
2016
  March 31,
2017
  June 30,
2017
  September 30,
2017
  December 31,
2017
  March 31,
2018
  June 30,
2018
  September 30,
2018
  December 31,
2018
 
 
  1st quarter
FY 2017
  2nd quarter
FY 2017
  3rd quarter
FY 2017
  4th quarter
FY 2017
  1st quarter
FY 2018
  2nd quarter
FY 2018
  3rd quarter
FY 2018
  4th quarter
FY 2018
  1st quarter
FY 2019
  2nd quarter
FY 2019
  3rd quarter
FY 2019
 
 
  (RMB in thousands)
 

Net revenues

                                                                   

Product sales

    72,391     114,015     247,809     138,230     158,904     173,603     395,619     184,386     211,210     202,897     341,755  

Services

    220     561     3,337     1,339     4,110     6,597     12,253     12,108     21,730     35,055     43,534  

Total net revenues

    72,611     114,576     251,146     139,569     163,014     180,200     407,872     196,494     232,940     237,952     385,289  

Cost of revenues

                                                                   

Cost of product sales

    (33,232 )   (73,454 )   (170,510 )   (85,413 )   (109,460 )   (101,578 )   (267,033 )   (147,192 )   (166,848 )   (137,679 )   (218,906 )

Cost of services

    (96 )   (248 )   (1,776 )   (499 )   (1,292 )   (4,579 )   (5,677 )   (6,574 )   (8,319 )   (19,389 )   (18,742 )

Total cost of revenues

    (33,328 )   (73,702 )   (172,286 )   (85,912 )   (110,752 )   (106,157 )   (272,710 )   (153,766 )   (175,167 )   (157,068 )   (237,648 )

Gross profit

    39,283     40,874     78,860     53,657     52,262     74,043     135,162     42,728     57,773     80,884     147,641  

Operating expenses:

                                                                   

Fulfillment

    (11,000 )   (17,652 )   (21,398 )   (19,362 )   (18,354 )   (18,964 )   (34,108 )   (28,645 )   (31,172 )   (30,333 )   (38,012 )

Sales and marketing

    (9,919 )   (23,640 )   (36,228 )   (28,026 )   (23,372 )   (32,907 )   (55,789 )   (34,139 )   (43,185 )   (44,371 )   (70,837 )

General and administrative

    (12,493 )   (15,482 )   (18,638 )   (20,493 )   (26,099 )   (31,589 )   (33,878 )   (39,412 )   (30,632 )   (21,121 )   (24,624 )

Other operating (loss) income, net

    5         52     (225 )   392     61     612     (355 )   121     (22 )   431  

Income (loss) from operations

    5,876     (15,900 )   2,648     (14,449 )   (15,171 )   (9,356 )   11,999     (59,823 )   (47,095 )   (14,963 )   14,599  

Interest income

    2     7     20     13     20     9     26     33     154     72     172  

Interest expense

    (92 )   (42 )   (1,170 )   (270 )                       (107 )    

Foreign exchange gain (loss)

            (3 )   59     (173 )   (50 )   80     (98 )   17     30     24  

Income (loss) before income taxes

    5,786     (15,935 )   1,495     (14,647 )   (15,324 )   (9,397 )   12,105     (59,888 )   (46,924 )   (14,968 )   14,795  

Income tax expense

    (2,924 )   (2,463 )   (8,235 )   (1,621 )   (3,371 )   (2,067 )   (7,024 )   (3,381 )   (2,390 )   (2,853 )   (4,236 )

Share of loss in equity method investments

                (1,593 )   (718 )   (330 )   (7 )   (552 )   52     (447 )   (532 )

Net income (loss)

    2,862     (18,398 )   (6,740 )   (17,861 )   (19,413 )   (11,794 )   5,074     (63,821 )   (49,262 )   (18,268 )   10,027  

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Summary Operating Data

        The following tables present our key operating data as of the dates and for the periods indicated:

 
  As of and for fiscal year ended March 31,   As of and for the nine months
ended December 31,
 
 
  2017   2018   2018  
 
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
 

Top-tier KOLs(1)

    2     12.0     750.6     3     21.0     1,333.7     3     32.5     1,220.3  

Established KOLs(2)

    3     4.4     139.3     7     17.5     321.4     7     28.9     324.2  

Emerging KOLs(3)

    57     35.7     346.4     73     64.9     390.1     103     87.0     667.8  

Total

    62     52.1     1,236.3     83     103.4     2,045.2     113     148.4     2,212.3  

(1)
Top-tier KOLs facilitated GMV of above RMB100.0 million in the past twelve months.

(2)
Established KOLs facilitated GMV of RMB30.0 million to RMB100.0 million in the past twelve months.

(3)
Emerging KOLs facilitated GMV of less than RMB30.0 million in the past twelve months.

(4)
The number of fans presented may include a single fan who was included multiple times if the fan follows more than one KOL, follows the same KOL across multiple platforms, or both.


 
  As of and for the fiscal year ended
March 31,
  As of and for the nine months ended
December 31,
 
  2017   2018   2017   2018

Full-Service Model

               

Number of our KOLs serving such business model(1)            

  37   33   33   25

Number of our online stores

  57   86   81   91

Number of orders placed through our online stores

  5.1 million   7.5 million   6.2 million   5.7 million

GMV of our online stores

  RMB1,236.3 million   RMB1,944.4 million   RMB1,614.9 million   RMB1,776.6 million

Platform Model

 

 

 

 

 

 

 

 

Number of our KOLs serving such business model(1)                               

  18   57   50   101

Number of brands using our services

  18   166   47   501

Number of third-party online stores(2)

  nil   6   7   28

GMV of third-party online stores(3)

  nil   RMB100.8 million   RMB72.8 million   RMB435.7 million

(1)
Certain KOLs under our full-service model overlap with those under our platform model. On the other hand, our KOLs that were undergoing training and had not started generating GMV under either of our business models as of the relevant date were not included in these numbers.

(2)
Includes third-party online stores to which we provide KOL sales services and KOL advertising services.

(3)
Includes GMV from third-party online stores to which we only provide KOL sales services.

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RISK FACTORS

        You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below and our combined and consolidated financial statements and related notes, before making an investment in our ADSs. Any of the following risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and prospects. The market price of our ADSs could decline significantly as a result of any of these risks and uncertainties, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

We may not be able to maintain and optimize our KOL ecosystem.

        Our ability to maintain our KOL ecosystem which creates strong network effects among our ecosystem participants is critical to our success. The extent to which we are able to maintain and strengthen the attractiveness of our ecosystem depends on our ability to offer a mutually beneficial platform for all participants, including our KOLs, their fans who are potential buyers in our online stores, designers, brands and online retailers, manufacturers and suppliers. To this end, we need to maintain the quality of our products and services, develop attractive opportunities and create profits for our ecosystem participants, expand the scope and scale of our ecosystem, and retain our participants. We must also continue utilizing data to enhance our KOL selection and cultivation, increase fan engagement, develop our product design and merchandising, improve operational efficiency and upgrade our technology infrastructure.

        Changes made to enhance our ecosystem or balance the interests of participants may be viewed positively by one participant but may have negative effects upon another. If we fail to balance the interests of all participants in our ecosystem, we may fail to attract and retain additional ecosystem participants, which could adversely impact our business, financial condition and results of operations.

Our limited operating history makes it difficult to evaluate our business and prospects. We cannot guarantee that we will be able to maintain the growth rate that we have experienced to date.

        We have a limited operating history. Our founders started to explore the commercialization of KOLs through e-commerce in 2014, and the first company in our current corporate structure commenced operations in 2016. Revenues from our product sales through full-service model increased by 59.4% from RMB572.4 million for fiscal year 2017 to RMB912.5 million (US$132.7 million) for fiscal year 2018, and increased by 3.8% from RMB728.1 million for the first three quarters of fiscal year 2018 to RMB755.9 million (US$109.9 million) for the first three quarters of fiscal year 2019. Revenues from our services through platform model increased by approximately 5.4 times from RMB5.5 million for fiscal year 2017 to RMB35.1 million (US$5.1 million) for fiscal year 2018, and increased by approximately 3.4 times from RMB23.0 million for the first three quarters of fiscal year 2018 to RMB100.3 million (US$14.6 million) for the first three quarters of fiscal year 2019. However, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will grow at the same rate as we did in the past, or avoid any decline in the future. Our growth may slow down or become negative, and revenues may decline for a number of possible reasons, some of which are beyond our control, including decreasing consumer spending, increasing competition, declining growth of our overall market or industry, the emergence of alternative business models, changes in rules, regulations, government policies or general economic conditions. It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If our growth rate declines, investors' perceptions of our business and prospects may be materially and adversely affected and the market price of our ADSs could decline. You should consider our prospects in light of the risks and uncertainties that companies with a limited operating history may encounter.

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A substantial portion of our GMV and revenue is generated from online stores opened in the names of a limited number of KOLs. We may experience a decrease in purchases on our online stores.

        Online stores opened in the names of our top-tier KOLs accounted for 65.1%, 66.1% and 55.2% of our GMV for fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, respectively, and 67.2%, 69.0% and 67.3% of our revenue for fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, respectively. In particular, online stores opened in the name of Zhang Dayi, one of our top-tier KOLs, accounted for 49.6%, 51.0% and 44.9% of our GMV for fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, respectively, and 50.8%, 52.4% and 53.5% of our revenue for fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, respectively. The success of our online stores is largely determined by the popularity of the KOLs in whose names such stores are opened. KOLs with more fans are able to reach a wider audience when they promote our products on their social media pages and to direct more potential customers to our online stores to purchase such products. As of December 31, 2018, our top-tier KOLs had approximately 32.5 million fans and Zhang Dayi had approximately 22.9 million fans on various social media platforms, representing 21.9% and 15.4%, respectively, of the total number of fans of our KOLs.

        Our concentration on online stores opened in the names of a few KOLs exposes us to the risk of substantial decreases in, or impediments to the growth of, our GMV and revenue if the number of fans or the popularity of any of such KOLs is reduced or fails to grow. We anticipate that our top-tier KOLs will continue to contribute to the majority of our total net revenues in the near future, as it will take time for other KOLs to develop their fan bases and thus our customer base. We cannot assure you that our top-tier KOLs will be able to retain their popularity, or our other KOLs will be able to increase their number of fans. Any failure to do so will materially and adversely affect our business, prospects, financial performance and results of operations.

We have incurred net losses in the past, and we may continue to incur losses in the future.

        We have incurred net losses in our history. For fiscal years 2017 and 2018, we incurred net losses of RMB40.1 million and RMB90.0 million (US$13.1 million), respectively, and negative cash flows from operations of RMB240.5 million and RMB27.6 million (US$4.0 million), respectively. For the first three quarters of fiscal years 2018 and 2019, we incurred net losses of RMB26.1 million and RMB57.5 million (US$8.4 million), respectively. We may incur net losses in the future, which may raise substantial doubt about our ability to continue as a going concern. For more details, see Note 2 to our combined and consolidated financial statements included elsewhere in this prospectus. We expect our operating expenses to increase in absolute amounts in the future due to (i) the continued expansion of our business, (ii) the continued investment in AI solutions and technology infrastructure, and (iii) the continued identification and cultivation of new KOLs, which will affect our ability to achieve profitability.

        Our ability to achieve profitability depends on our ability to, among other things, increase the number of fans and consumers, grow and diversify our product and service offerings and optimize our cost structure. However, we may not be able to achieve any of the above. In particular, our sales and marketing expenses increased by 49.5% from RMB97.8 million for fiscal year 2017 to RMB146.2 million (US$21.3 million) for fiscal year 2018, because we opened a number of new online stores in fiscal year 2018 and we paid more service fees to e-commerce platforms and social media for promoting our new online stores. Moreover, our sales and marketing expenses increased by 41.3% from RMB112.1 million for the first three quarters of fiscal year 2018 to RMB158.4 million (US$23.0 million) for the first three quarters of fiscal year 2019, primarily due to the increased salaries paid to our KOL cultivation team and expenses relating to KOL support and training because we continued investing in identifying and cultivating new KOLs to serve our entire platform while we experienced growth in our KOL sales business and KOL advertising business. If we continue to incur substantial sales and marketing expenses without being able to achieve the anticipated consumer and

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GMV growth, our operating results may be materially and adversely affected. As a result, we may fail to improve our operating margin and may continue to incur net losses in the future.

We and our KOLs may fail to anticipate or influence changes in fans' buying preferences and develop our product offering and merchandising.

        The success of our business depends on our and our KOLs' ability to anticipate and influence the purchase decisions of our KOLs' fans. The market for products sold in our online stores, in particular women's apparel, changes rapidly in ways that are often difficult to predict. Consequently, we must stay abreast of emerging consumer preferences, anticipate product trends that will appeal to our KOLs' existing and potential fans and take them into account during our product design and manufacturing process. This requires a combination of various elements, including but not limited to accurate analysis and prediction of market trends, timely collection of fans' feedback, strong research and development capability, and access to flexible product production. If we are unable to accurately predict or timely react to evolving preferences or trends, or if we misjudge the market for our products, the continued success and future growth of our business could be materially and adversely affected, potentially resulting in significant decreases in revenue.

We may not be able to attract new KOLs or retain our existing KOLs.

        We rely on our KOLs to promote our products and to drive traffic to our online stores. See "Business—Our KOLs—Collaboration with Our KOLs." We enter into cooperation agreements or employment agreements with our KOLs. The term of the cooperation agreements typically ranges from three to five years, and the term of any employment agreement is negotiated on a case-by-case basis. If any of our KOLs cease to cooperate with us during the term of the cooperation agreement or employment agreement, sales and marketing efforts of that KOL will reduce. If we are unable to enforce our rights against him or her, there may be less or no traffic to our online stores opened in his or her name and we may generate less revenue from such online stores. Even if we are able to enforce our rights against the relevant KOL, the gross compensation that we receive through enforcement may be substantially less than the revenue we would have earned were the cooperation or employment agreement performed in full by the relevant KOL.

        Starting from 2017, the cooperation agreements we entered into with our KOLs normally provide that, if the KOL's revenue or number of new fans reaches a certain threshold during the initial contract term, it will automatically renew for a period of three years upon expiration of the original term. However, the cooperation agreements entered into before 2017 do not have such provision. If, after the term, any of our KOLs is able to sustain his or her popularity and decides to open his or her own online store or to cooperate with other KOL sales and marketing platforms, he or she may compete with our KOLs and our online stores and our ability to generate revenue could be reduced.

We may not be successful in cultivating KOLs and may be unable to recoup the costs incurred in cultivating our KOLs.

        We incurred a significant amount of operating expenses in training and providing professional support to our KOLs for fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019. A significant portion of such expenses in respect of each KOL are incurred before the KOL has developed a sufficiently large fan base to generate any revenue for us.

        The cultivation of successful KOLs is subject to many uncertainties, including their personal style, charisma, attitude and professionalism, the receptiveness of social media users to our KOLs and other circumstances beyond our control. If any of our KOLs fails to develop a fan base to our expectations, we may not open any online store in his or her name or such online store may not be successful, and in such case, we may fail to receive the expected revenue from online stores or fail to recoup the costs

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incurred in training and supporting such KOL, which may adversely impact our business, financial condition and results of operations.

Negative publicity about our KOLs or our products may materially and adversely affect our reputation, our business and the trading price of our ADSs.

        Negative publicity about our KOLs or our products may arise and appear on the internet and other media from time to time, and negative publicity of a more serious nature may arise in the future. For example, our KOLs may post unlawful, false, offensive or controversial content on their social media pages, notwithstanding any terms of use of the social media platforms and our guidelines, which may result in negative comments and complaints or even cause their accounts to be closed by social media platforms. In addition, they may also receive negative publicity if they are involved in any illegal activities, scandals or rumors.

        Our products may also be subject to negative publicity for various reasons, such as complaints about the quality of our and their products and related services or other public relation incidents of us, which may adversely affect our reputation and the sales of our products of those of third-party online retailers in our online stores. Any such negative publicity, regardless of veracity, could result in the expenditure of funds and management time and may have a material and adverse effect on our reputation, our business and the trading price of our ADSs.

We have experienced rapid growth since our inception, but we may fail to adequately manage our expansion.

        Our rapid growth has placed, and continues to place, significant strain on our management and our technology infrastructure, as well as our operational, financial and administrative systems. To accommodate our growth, we anticipate that we will need to implement a variety of new and upgraded systems, procedures and controls. We will also need to continue expanding, training, managing and motivating our KOLs and employees and manage our relationships with our customers, suppliers and other service providers. All of these endeavors involve risks and will require substantial management effort and additional expenditures. We cannot assure you that we will be able to manage our growth or execute our strategies effectively, and any failure to do so may have a material adverse effect on our business, financial condition and results of operations.

We face challenges and risks associated with diversifying our monetization channels.

        We have in the past generated most of our revenue from our full-service model. In the future, under our full-service model, we intend to establish our online stores on more popular e-commerce platforms, diversify our product portfolio and expand into additional verticals. Further, under our platform model, we plan to diversify our service offerings to include more KOL services such as additional forms of advertising and casting. Such plans may require us to devote significant financial and managerial resources and may not perform as expected. In addition, we may not be able to successfully anticipate and address customer demands and preferences in connection with new product offerings and our existing network may not be adaptable to the new product offerings.

        We also expect to explore new monetization opportunities and expand our revenue sources, and to adjust the proportion of our revenue from different revenue sources in response to changes in market conditions. This may make predicting our future results of operations more difficult than it otherwise would be. Therefore, our past results of operations should not be taken as indicative of our future performance. We may also be inexperienced with the operations associated with new monetization opportunities.

        If we cannot successfully address challenges, we may not be able to recoup our investments with respect to any new initiatives, in which case our business, financial condition and results of operations could be materially and adversely affected.

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We may fail to manage our inventories effectively.

        To operate our business successfully and meet our consumers' demands and expectations, we must maintain a certain level of finished goods inventory to ensure immediate delivery when required. However, forecasts are inherently uncertain. For example, as we allow consumers to cancel their pre-orders, we may not be able to make accurate forecasts and actual orders may be lower than our forecasted orders, and therefore, we may not be able to maintain an appropriate level of inventory of fabrics and raw materials for production. In addition, if our forecasted demands are lower than actual demand, we may not be able to maintain an adequate inventory level of our finished goods or produce our products in a timely manner, and may lose sales and market share to our competitors. On the other hand, if our forecasted demand are higher than actual demand, we may be exposed to increased inventory risks due to accumulated excess inventory of our finished products, fabrics or raw materials. Excess inventory levels may lead to increases in inventory holding costs, risk of inventory obsolescence, increases in markdown allowances and write-offs.

Our return and exchange policies may adversely affect our results of operations.

        We have adopted consumer-friendly return and exchange policies that make it convenient for consumers to change their minds after completing purchases. We may also be required by law to adopt new or amend existing return and exchange policies from time to time. For example, pursuant to the recently amended Consumer Protection Law, which became effective in March 2014, consumers are generally entitled to return the products purchased within seven days upon receipt without giving any reasons when they purchase the products from business operators on the internet. See "Regulation—Regulations Relating to Tort Liability, Product Quality and Consumer Protection." These policies subject us to additional costs and expenses, which we may not recoup through increased revenue. Our ability to handle a large volume of returns is unproven. If our return and exchange policy is misused by a significant number of consumers, our costs may increase significantly and our results of operations may be materially and adversely affected.

Our results of operations are subject to fluctuations due to the seasonality of our business and other events.

        We have experienced, and we expect to continue to experience, seasonal fluctuations in our revenues, which have caused, and will continue to cause, fluctuations in our results of operations. We generally experience a lower level of sales in the fourth quarter of each fiscal year due to the Chinese New Year holiday, during which consumers generally spend less time on our KOLs' social media spaces and on online shopping, while we usually have higher sales in the third quarter of each fiscal year due to sales on Singles Day in November, Double Twelve in December and sales of fall and winter apparel, which typically have a higher average selling price than spring and summer apparel. In addition, our logistics and fulfillment service hours will be impacted by holidays.

        We make planning, inventory and personnel decisions based on our estimates of demand. If we fail to adequately increase inventory levels for popular products or do not have sufficient staff to handle purchase orders in a timely manner, we may fail to meet consumer demand, which may reduce the volume of transactions in our online stores as well as the attractiveness or such online stores. On the other hand, if we overstock products or if we hire more staff than required, we may be required to take inventory markdowns or write-offs or we may incur unnecessary costs, which could reduce our profits.

We may be subject to product liability claims that could be costly and time-consuming.

        We sell our products and promote third-party merchants' products on our KOL sales and marketing platform; some of the products may be defective. If any product that we sell were to cause personal injury or injury to property, the injured party or parties could bring claims against us. We could also be subject to claims that consumers were harmed due to their reliance on our KOLs'

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promotion of third-party brands' products. If a successful claim were brought against us, it could adversely affect our business. We may have the right under applicable laws, rules and regulations to recover from the relevant manufacturers or third-party merchants compensation that we are required to make to consumers in connection with a product liability, personal injury or a similar claim, if such relevant party is found responsible. However, there can be no assurance that we will be able to recover all or any amounts from these parties. Any product liability claim, regardless of its merit or success, could result in the expenditure of funds and management time and adverse publicity and could have a negative impact on our reputation, business, financial condition and results of operations.

We may incur liability for counterfeit, unauthorized, illegal, or infringing products sold or misleading information available on our KOL sales and marketing platform.

        Under our platform model, our KOLs represent reputable brands and online retailers on our KOL sales and marketing platform. However, brands' and online retailers' measures of safeguarding against counterfeit, unauthorized, illegal, or infringing products sold through e-commerce platforms may not be adequate. Although we have indemnity clauses in most of our contracts with our brands and online retailers, sales could decline and our reputation may be adversely affected. We may be subject to sanctions under applicable laws and regulations if we are deemed to have participated or assisted in infringement activities associated with counterfeit goods, which may include injunctions to cease infringing activities, rectification, compensation, administrative penalties and even criminal liability, depending on the gravity of such misconduct. Furthermore, counterfeit products may be defective or inferior in quality as compared to authentic products and may pose safety risks to consumers. If consumers are injured by counterfeit, unauthorized, illegal, or infringing products sold on our KOL sales and marketing platform, we may be subject to lawsuits, severe administrative penalties and criminal liability. See "—We may be subject to product liability claims that could be costly and time-consuming." We believe our reputation is extremely important to our success and our competitive position. The discovery of counterfeit, unauthorized, illegal, or infringing products promoted by our KOLs or sold on our KOL sales and marketing platform may severally damage our reputation among brand partners, and they may refrain from using our services in the future, which would materially and adversely affect our operations and financial results.

We rely on a limited number of online social media platforms and e-commerce platforms to conduct our business. However, operators of the platforms may curtail or inhibit our ability to use the platforms, or there may be material disruption of the platforms.

        Our KOLs use social media platforms such as Weibo, Weitao and WeChat to promote our and third-party products and to drive traffic to online stores on Taobao.

        While they are generally open to all users, these social media and e-commerce platforms have no obligation to allow us or our KOLs to use their platforms in the long term. If we or our KOLs breach the terms of use of such platforms, or for any other reason, the platform operators may decide at any time to curtail or inhibit our ability to use such platforms, for example, by banning or closing our or our KOLs' user accounts. Additionally, these platforms may increase their fees or make changes to their respective business models, terms of use, policies or systems, and those changes could impair or restrict our or our KOLs' ability to post content and sell products. Further, social media platforms and e-commerce platforms could cease operations unexpectedly due to a number of events, including interruptions in telecommunication services, computer viruses and security breaches.

        Any of the above could reduce our KOLs' ability to post promotional content, fans' and consumers' engagement time, our ability to serve third-party online retailers, and traffic and sales on our online stores, any of which could affect our ability to achieve profitability or have a material adverse effect on our business, financial condition and results of operations.

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If we fail to manage and expand our relationships with suppliers, or otherwise fail to procure products at favorable terms, our business and growth prospects may suffer.

        As of December 31, 2018, we had over 800 fabric suppliers, wholesale clothing providers and manufacturers on our supplier list who had worked with us and with which we expect to continue our business relationships in the near future. Maintaining strong relationships with these suppliers is important to the growth of our business. In particular, we depend significantly on our suppliers to provide fabrics and sample clothes or to produce apparel for us on favorable pricing terms. We typically enter into framework agreements with suppliers on an annual basis, and these framework agreements do not ensure the availability of products or the continuation of particular pricing practices or payment terms beyond the end of the relevant contractual terms. We cannot assure you that our current suppliers will continue to sell products or provide services to us on commercially acceptable terms, or at all, after the term of the current agreement expires. If our suppliers cease to provide us with favorable payment terms, our requirements for working capital may increase and our operations may be materially and adversely affected.

        Moreover, we may also become involved in disputes with our suppliers on the required prepayments and relevant settlement afterwards. If we fail to maintain business relationships with our suppliers due to such disputes, and we will need to establish new supplier relationships promptly to ensure that we have access to a steady supply of products or services on favorable commercial terms. However, we cannot assure you that we will be able to find new suppliers who can satisfy our requirements.

The success of our platform model is linked to the success of third-party merchants whose products and services our KOLs promote or who publish advertisements on the social media space of our KOLs.

        For our platform model, our success and our growth are partly dependent upon the success of third-party merchants who hire our KOLs to promote their products and services or who place advertisements on our KOL sales and marketing platform. As we continue growing our business under our platform model, our future success will be tied to the success of such third-party merchants, including brands and online retailers. We cannot assure you that our efforts to optimize our customer base under our platform model will be successful or will not have any material adverse impact on our business performance or results of operations. If our customers under our platform model were to have financial difficulties, suffer impairment of their brands or if the profitability of, or demand for, their products or services decreases, it could adversely affect our results of operations and our ability to maintain and grow our business. Our business could also be adversely affected if our customers' marketing, brands or retail stores are not successful or if they reduce their marketing efforts.

We depend on logistics service providers to deliver products to customers, and they may fail to provide reliable logistics services.

        We rely on logistics service providers to deliver products to our customers. See "Business—Our Suppliers—Logistics Service Providers." Any major interruptions to or failures in these logistics service providers could prevent the timely or successful delivery of products. These interruptions may be due to unforeseen events that are beyond our control or the control of these third-party logistics providers, such as inclement weather, natural disasters, transportation interruptions or labor unrest or shortage. If products are not delivered on time or are delivered in a damaged state, customers may return the products and may claim refund from us, third-party brands or other online retailers who cooperate with us, and these third-party brands or other online retailers may have less confidence in our services. As a result, we may lose brand and online retailer partners, and our business, financial condition and results of operations could suffer.

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We are subject to payment processing related risks.

        Our online stores accept payments through third party online payment platforms such as Alipay. For certain payment methods, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profitability. We may be subject to fraud and other illegal activities in connection with online payment. We are also subject to various rules, regulations and requirements, regulatory or otherwise, governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to process electronic funds transfers or facilitate other types of online payments, and our business, financial condition and results of operations could be materially and adversely affected.

        In addition, as restricted by Alipay, one corporate entity can only be associated with a maximum of five online store accounts and receive revenues generated from these stores via Alipay. As we can associate our online store accounts to a limited number of our VIE's subsidiaries, we directly receive payments from a minority of our online store accounts via Alipay, while the majority of our online stores transfer their sale proceeds to us through bank accounts opened in the names of the respective KOLs. We have taken measures to maintain control over such KOLs' bank accounts and avoid KOLs' misappropriation or any other misconduct in connection with our revenues generated from online stores. For example, we create and keep the passcodes required to access the online payment system. However, we cannot assure you that these measures will be effective and keep us from being harmed by KOLs' misappropriation or misconduct. In addition, according to the Administrative Measures for RMB Bank Settlement Account, a corporation is not allowed to misuse personal accounts to receive payments from customers. Therefore, if our control over the KOL bank accounts is deemed as misuse by relevant government authorities, we may be subject to fines.

We may not be able to provide high-quality customer service.

        We depend on our customer service representatives and online store managers to provide assistance to customers on our online stores. See "Business—Our Customers—Consumers." If they fail to satisfy the individual needs of customers, our sales could be negatively affected and we may lose potential or existing third-party online retailers, which could have a material and adverse effect on our business, financial condition and results of operations.

We may not be able to compete successfully against current and future competitors.

        We face competition in the internet KOL facilitator market and e-commerce market in China, and we expect greater competition in the future from new market entrants. Intensified competition may result in a decrease in our market share or reduction in revenue or difficulty in recruiting new KOLs, any of which could negatively affect our business, financial condition, results of operations and our ability to grow our business.

        In addition, competition may intensify as our competitors raise additional capital and as established companies in other market segments expand into our market segments. If we cannot compete successfully against our current and future competitors, our business, financial condition and results of operations could be adversely affected.

We depend on our senior management as well as experienced and capable personnel generally, but we may fail to attract, motivate and retain them.

        Our future success is significantly dependent upon the continued service of our senior management and other key employees, including FENG Min, SUN Lei (Ray), SHEN Chao (Eric) and CHI Zhenbo (Nick). If members of our senior management team or other key personnel resign, join a competitor or form a competing company, we may not be able to locate suitable or qualified replacements and may

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face uncertainty and incur additional expenses as we seek to recruit and train new staff, which could severely disrupt our business and growth.

        We have entered into employment, non-compete, non-solicitation and confidentiality agreements with our senior management and other key personnel. However, these employment, non-compete, non-solicitation and confidentiality agreements do not ensure the continued service of these senior management and key personnel, and we may not be able to enforce these agreements. In addition, we do not maintain key person life insurance for any of the senior members of our management team or other key personnel.

        Competition for discovering and signing talents in the internet KOL facilitator industry and e-commerce industry in China is intense, and the availability of suitable and qualified candidates in China is limited. Competition for these individuals could cause us to offer higher compensation and other benefits to attract and retain them. Even if we were to offer higher compensation and other benefits, there is no assurance that these individuals will choose to join or continue to work for us. Any failure to attract or retain key management and personnel could severely disrupt our business and growth.

We may fail to obtain requisite approvals, licenses or permits applicable to our business or fail to comply with PRC laws and regulations.

        Our business is subject to supervision and regulation by relevant PRC government authorities, including the State Administration for Market Supervision, the Ministry of Industry and Information Technology of the PRC, the National Development and Reform Commission, the Ministry of Culture and Tourism of the PRC, China Food and Drug Administration and/or their relevant local counterparts. These government authorities promulgate and/or enforce regulations that cover many aspects of operation of online retailing such as Interim Measures for the Administration of Online Commodities Trading and Relevant Services, Product Quality Law of the PRC, Pricing Law of the PRC, Administrative Measures for Food Business Licensing, Regulations for the Administration of Commercial Performances and E-commerce Law of the PRC. We are required to hold a number of licenses and permits in connection with our operations, such as business license, commercial performance permit and food business license. While we currently hold all material licenses and permits required for our operations, we may be required to renew these licenses and permits upon their expiration or obtain new licenses or permits in the future as a result of our business expansion, change in our operations or change in laws and regulations applicable to us.

        As the e-commerce industry is still evolving in China, new laws and regulations may be adopted from time to time, and substantial uncertainties exist regarding the interpretation and implementation of current and future PRC laws and regulations applicable to our operations. Our current business activities could be found in violation of any future laws and regulations or any of the laws and regulations currently in effect due to changes in the relevant authorities' interpretation of these laws and regulations. In addition, although relevant PRC government authorities currently do not have any laws or regulations governing KOLs' qualifications, activities, behaviors and other elements that may have an impact to our business, they could tighten the restrictions on KOL-related business and promulgate new laws and regulations in the future.

        If we fail to adapt to any new regulatory requirement or any competent government authority considers that we operate our business without any requisite license, permit or approval, or otherwise fails to comply with applicable regulatory requirements, we may be subject to administrative actions and penalties against us, including fines, confiscation of our incomes, revocation of our licenses or permits, or, in severe cases, cessation of certain business. Any of these actions may have a material and adverse effect on our business, financial condition and results of operations.

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We may fail to renew our leases upon expiration or comply with relevant PRC laws that require registration of lease agreements as well as other title certificates, in which case we may have to relocate our offices or warehouses.

        As of December 31, 2018, we leased approximately 11,656 square meters of office space in Hangzhou and Shanghai, and leased an aggregate of over 59,470 square meters of warehouses in Haining and Hangzhou, Zhejiang Province, and we may have to relocate for a number of reasons. For example, we may not be able to successfully renew leases upon expiration of the current term, and may decide to move to more premium locations or have to relocate our operations as required by relevant PRC laws and regulations. In particular, two of our warehouses which are not located at our registered corporate addresses in China have not registered as our branches with the competent government authority and we may be subject to fines of up to RMB100,000 for each of such warehouses or may need to relocate our warehouses. In those cases, we may not be able to locate desirable alternative sites for our offices or warehouses under favorable terms. Nevertheless, we are in the process of establishing an operating entity to modify the registration of our corporate addresses to cover the said warehouses.

        We have not been able to receive from our lessors of some of our leased properties copies of title certificates or proof of authorization to lease the properties to us. In addition, we have not registered most of our lease agreements with relevant government authorities as required by PRC law. As of the date of this prospectus, we are not aware of any actions, claims or investigations threatened against us or our lessors with respect to the defects in our leasehold interests. However, if any of our leases is terminated as a result of challenges by third parties or governmental authorities for lack of title certificates or proof of authorization to lease, we do not expect to be subject to any fines or penalties but we may be forced to relocate the affected offices or warehouses and incur additional expenses relating to such relocation. In addition, failure to complete the lease registration will not affect the legal effectiveness of the lease agreements according to PRC law, but the real estate administrative authorities may require the parties to the lease agreements to complete lease registration within a prescribed period of time and the failure to do so may subject the parties to fines from RMB1,000 to RMB10,000 for each of such lease agreements.

We may not be able to adequately protect our intellectual property rights and exclusive rights.

        We rely on a combination of trademark, patent, copyright and trade secret protection laws in China and other jurisdictions, as well as confidentiality procedures and contractual provisions, to protect our intellectual property rights and other exclusive rights. Our cooperation agreements with KOLs typically provide that we own their portrait rights or right of publicity on social media platforms, social media accounts and online store accounts. Our cooperation agreements with KOLs also include provisions on confidentiality and intellectual property rights protections. We also enter into confidentiality agreements with our employees and any third parties who may access our proprietary information, and we rigorously control access to our proprietary technology and information. Our success also depends in part upon the technology and AI solutions that we utilize in designing and manufacturing products as well as certain systems we use in managing the entire fulfillment and transaction process.

        Nevertheless, it may be possible for third parties to obtain and use our intellectual property and exclusive rights without authorization. Intellectual property protection may not be sufficient or consistent in China. Moreover, cooperation agreements and confidentiality agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights and exclusive rights or to enforce our contractual rights in China or elsewhere. In addition, policing any unauthorized use of our intellectual property and exclusive rights is difficult, time-consuming and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property and exclusive rights. In the event that we resort to litigation to enforce our intellectual

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property rights and exclusive rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation or that that we would be able to halt any unauthorized use of our intellectual property and exclusive rights. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

We may be accused of infringing intellectual property rights of others and content restrictions of relevant laws.

        Third parties may claim that the technology or content used in our KOLs' social media pages or our operation of online stores infringe upon their intellectual property rights. For example, while offering our advertising services, we may be subject to liabilities such as infringement of copyrights or trademarks and to other claims based on the materials and content posted on our KOL sales and marketing platform. We have been in the past subject to claims relating to infringement of the intellectual property rights of others. The possibility of intellectual property claims against us increases as we continue to grow. Such claims, whether or not having merit, may result in our expenditure of significant financial and management resources, injunctions against us or payment of damages. We may need to obtain licenses from third parties who allege that we have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. These risks have been amplified by the increase in the number of third parties whose sole or primary business is to assert such claims.

        China has enacted laws and regulations governing internet access and the distribution of products, services, news, information, audio-video programs and other content through the internet. The PRC government has prohibited the distribution of information through the internet that it deems to be in violation of PRC laws and regulations. If any of the information disseminated through our KOLs' social media pages or our online stores were deemed by the PRC government to violate any content restrictions, we would not be able to continue displaying such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.

        The outcome of any claims, investigations and proceedings is inherently uncertain, and in any event, defending against these claims could be both costly and time-consuming and could significantly divert the efforts and resources of our management and other personnel. An adverse determination in any such litigation or proceedings could cause us to pay damages, legal fees and other costs, as well as limit our ability to conduct business or require us to change the manner in which we operate. Even if such assertions against us are unsuccessful, they may cause us to lose existing and future business and incur reputational harm and substantial legal fees.

The proper functioning of our information technology systems is essential to our business. We may fail to maintain the satisfactory performance of our systems.

        Our business relies on the proper functioning of our information technology systems. We use information technology systems to enable us to conduct our operations, including product design and procurement, inventory control, supplier management, market data analysis, sales, logistics, KOL identification, cultivation and support, customer service, budgeting and financial reporting. Although we did not experience any material failure or breakdown of our information technology systems during fiscal years 2017 and 2018 and the first three quarters of fiscal year 2019, we cannot assure you that our information technology systems will always operate without interruptions. Any malfunction of our information technology systems, whether caused by computer viruses, hacking or other security breaches, errors encountered during system upgrades or other issues, that result in the unavailability or

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slowdown of our information technology systems may, individually or collectively, materially and adversely affect our business, financial condition and results of operations.

        In addition, computer viruses, security breaches and information theft may lead to delays or errors in transaction processing, inability to fulfill purchase orders or loss of data. We cannot assure you that our security mechanisms will be sufficient to protect our information technology systems from any such occurrences, which could materially and adversely affect our business, reputation and prospects.

        Further, we must continue to upgrade and improve our information technology systems and software to support our business growth, and failure to do so could impede our growth. However, we cannot assure you that we will be successful in implementing these system and software upgrades and improvement plans. In particular, our systems may experience interruptions during upgrades, and any new technologies may not be fully integrated with our existing systems on a timely basis, or at all. If our existing or future technology systems or software do not function properly, we could experience disruptions and failures, which in turn could materially and adversely affect our business, financial condition and results of operations.

Our business generates, collects and processes a large quantity of data, and any improper use or disclosure of or unauthorized access to such data may harm our reputation.

        Our business generates, collects and processes a large quantity of personal, transaction, demographic and behavioral data. We face risks inherent in handling large volumes of data and in protecting the security of such data. In particular, we face challenges related to protecting the data in our system, including against attacks on our system by outside parties or fraudulent behavior by our employees, addressing concerns related to privacy and sharing, safety, security and other factors, and complying with applicable laws, rules and regulations relating to the collection, use, disclosure and security of personal information, including requests from regulatory and government authorities relating to such data.

        The PRC regulatory and enforcement regime with regard to data security and data protection has continued to evolve. There are uncertainties on how certain laws and regulations will be implemented in practice. PRC regulators have been increasingly focused on regulating data security and data protection. We expect that these areas will receive greater attention from regulators, as well as attract public scrutiny and attention going forward. This greater attention, scrutiny and enforcement, including more frequent inspections, could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, our reputation and results of operations could be materially and adversely affected.

Failure to protect confidential information of KOLs, fans and consumers, brands and other merchants on our KOL sales and marketing platform against security breaches could damage our reputation and substantially harm our business and results of operations.

        A significant challenge to the e-commerce business is the secure storage of confidential information and its secure transmission over public networks. A majority of the product orders and purchase payments are made through online transactions. Maintaining complete security on our KOL sales and marketing platform for the storage and transmission of confidential or private information, such as consumers' personal information, payment-related information and transaction information, is essential to maintain consumer confidence in our platform.

        We have adopted strict security policies and measures, including encryption technology, to protect our proprietary data and buyer information. However, advances in technology, skills of hackers, new discovery in the field of cryptography or other events or development could result in a compromise or breach of the technology that we use to protect confidential information. We may not be able to prevent third parties from illegally obtaining such confidential or private information we hold with

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respect to KOLs, fans and consumers, brands and other merchants on our platform. Such individuals obtaining confidential or private information may further engage in various illegal activities using such information. In addition, we have limited control or influence over the security policies or measures adopted by third-party online payment service providers through which most of our consumers may choose to make payment for purchases. Any negative publicity about our online stores' safety or privacy protection mechanisms and policies, and any claims asserted against us or fines imposed upon us as a result of actual or perceived failures, could have a material and adverse effect on our public image, reputation, financial condition and results of operations. Any compromise of our information security or the information security measures of third-party online payment service providers could have a material and adverse effect on our reputation, business, prospects, financial condition and results of operations.

We may not be able to obtain sufficient capital to maintain or expand our business operations.

        Our business operations and expansion require a substantial amount of capital. We had negative cash flows from operations of RMB240.5 million and RMB27.6 million (US$4.0 million) for fiscal years 2017 and 2018, respectively. Although we generated cash flows from operations of RMB45.7 million (US$6.7 million) for the first three quarters of fiscal year 2019, we expect our business operations will continue to require a substantial amount of working capital and we cannot assure you that we will be able to maintain positive cash flows from operations in the near future. To expand our business, we have also incurred, and expect to continue to incur, substantial costs to expand our KOL pool and develop our diversified monetization channels and we may only be able to recover such costs over the long term. Further, in connection with our restructuring in October 2018, our VIE, Hanyi E-Commerce, is expected to repay certain amounts due to Hangzhou Ruhnn so that Hangzhou Ruhnn can return to its institutional investors the amounts of their original Renminbi investments while the investors are expected to pay U.S. dollar equivalent of such amounts to our company as subscription price for the ordinary shares we issued to them. For additional details, see "Our History and Corporate Structure—Our History." The restructuring agreements allow Hangzhou Ruhnn to return such investments in installments and Hangzhou Ruhnn will not be required to pay the next installment until the subscription price equals to the previous installment paid by the relevant investor to our company. We cannot assure you that these institutional investors will fulfill their payment obligations in a timely manner, and if there is any delay in their payment of the subscription price to us for any reason, it may reduce our working capital and adversely affect our cash position.

        We have historically funded our operations with contributions and advances from our shareholders. There can be no assurance that we will be able to generate sufficient cash from our operations to fund our capital requirements or raise additional funds through equity or debt financings on satisfactory terms or at all, in which case we may be required to prioritize projects or curtail capital expenditures, and our results of operations could be adversely affected. On the other hand, if we raise funds through debt financings, we may also become subject to restrictive covenants that could limit our future capital raising activities and other financial and operational matters. If we raise funds through further issuances of equity or equity-linked securities, our existing shareholders could suffer significant dilution in their percentage ownership of our company.

We may engage in acquisitions, investments or strategic alliances in the future, which could require significant management attention and materially and adversely affect our business and results of operations.

        We may identify strategic partners to form strategic alliances and invest in or acquire additional assets, technologies or businesses that are complementary to our existing business. These investments may involve minority stakes in other companies, acquisitions of entire companies or acquisitions of selected assets.

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        Any future strategic alliances, investments or acquisitions and the subsequent integration of the new assets and businesses obtained or developed from such transactions into our own may divert management from their primary responsibilities and subject us to additional liabilities. In addition, the costs of identifying and consummating investments and acquisitions may be significant. We may also incur costs and experience uncertainties in completing necessary registrations and obtaining necessary approvals from relevant government authorities in China and elsewhere in the world. The costs and duration of integrating newly acquired assets and businesses could also materially exceed our expectations. Any such negative developments could have a material adverse effect on our business, financial condition, results of operations and cash flow.

We may not have sufficient insurance coverage.

        We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased property insurance covering our inventory. However, we do not maintain business interruption insurance, general third-party liability insurance or key-man insurance. This could leave us exposed to potential claims and losses. Any business disruption, litigation, regulatory action, outbreak of epidemic disease or natural disaster could also expose us to substantial costs and diversion of resources. We cannot assure you that our insurance coverage is sufficient to prevent us from any losses or that we will be able to successfully claim for losses under our current insurance policies on a timely basis, or at all. If we incur losses that are not covered by our insurance policies, or if the amount reimbursed is significantly less than our actual losses, our business, financial condition and results of operations could be materially and adversely affected.

If we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.

        Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our combined and consolidated financial statements included in this prospectus, we and our independent registered public accounting firm identified two material weakness in our internal control over financial reporting, which relate to (i) a lack of sufficient accounting personnel with U.S. GAAP knowledge and SEC financial reporting requirements and lack of accounting policies and procedures relating to financial reporting in accordance with U.S. GAAP, and (ii) a lack of formal risk assessment process over financial reporting and internal control framework. The material weaknesses, if not remediated timely, may lead to material misstatements in our combined and consolidated financial statements in the future.

        Following the identification of the material weaknesses and other control deficiencies, we have taken measures, and plan to continue to take measures, to remediate these control deficiencies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting". However, the implementation of these measures may not fully address these deficiencies in our internal control over financial reporting, and we cannot conclude that they have been fully remediated. Our failure to correct these control deficiencies or our failure to discover and address any other control deficiencies could result in inaccuracies in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting could significantly hinder our ability to prevent fraud.

        Upon completion of this offering, we will become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, requires that we include a report from

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management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for fiscal year ending March 31, 2020. In addition, once we cease to be an "emerging growth company" as defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal control or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

        During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods.

We may experience a severe or prolonged downturn in the global or Chinese economy.

        Any prolonged slowdown in the Chinese or global economy may have a negative impact on our business, results of operations and financial condition. In particular, general economic factors and conditions in China or worldwide, including the general interest rate environment and unemployment rates, may affect advertising customers' willingness to advertise or consumers' willingness to spend on entertainment. Economic conditions in China are sensitive to global economic conditions. The global financial markets have experienced significant disruptions since 2008 and the United States, Europe and other economies have experienced periods of recession. The recovery from the lows of 2008 and 2009 has been uneven and is facing new challenges, including the escalation of the European sovereign debt crisis from 2011 and the slowdown of the Chinese economy since 2012. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world's leading economies, including the United States and China. There have been concerns over unrest in North Korea, Ukraine, the Middle East and Africa, which have resulted in volatility in financial and other markets. There have also been concerns over the expected withdrawal of the United Kingdom from the European Union as well as concerns about the economic effect of the tensions in the relationship between the United States, China and neighboring Asian countries. Starting from early 2018, U.S. President Donald J. Trump announced the imposition of tariffs on Chinese goods entering the United States, and recently both China and the U.S. have each imposed additional tariffs. The United States may also in the future impose tariffs on the importation of consumer products. Although we do not currently export any of our products to the United States, we may do so in the near future. It is not yet clear what impact these tariffs may have or what actions other governments, including the Chinese government, may take

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in retaliation. In addition, these developments could have a material adverse effect on global economic conditions, the stability of global financial markets and the Chinese economy. If present Chinese and global economic uncertainties persist, we may have difficulty in attracting advertising customers or spending by consumers on entertainment. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.

Any occurrence of a natural disaster, widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

        Our business could be materially and adversely affected by natural disasters, such as snowstorms, earthquakes, fires or floods, the outbreak of a widespread health epidemic, such as swine flu, avian influenza, severe acute respiratory syndrome, or SARS, Ebola or other events, such as wars, acts of terrorism, environmental accidents, power shortage or communication interruptions. The occurrence of such a disaster or a prolonged outbreak of an epidemic illness or other adverse public health developments in China or elsewhere in the world could materially disrupt our business and operations. Such events could also significantly impact our industry and cause a temporary closure of the facilities we use for our operations, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. Our operations could be disrupted if any of our employees or employees of our business partners were suspected of having the swine flu, avian influenza, SARS or Ebola, since this could require us or our business partners to quarantine some or all of such employees or disinfect the facilities used for our operations. In addition, our revenues and profitability could be materially reduced to the extent that a natural disaster, health epidemic or other outbreak harms the global or PRC economy in general. Our operations could also be severely disrupted if our buyers, sellers or other participants were affected by such natural disasters, health epidemics or other outbreaks.

The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and results of operations.

        The Standing Committee of the National People's Congress enacted the Labor Contract Law in 2008, and amended it on December 28, 2012. The Labor Contract Law introduced specific provisions related to fixed-term employment contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written contract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law, an employer is obligated to sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract, with certain exceptions, must have an unlimited term, subject to certain exceptions. With certain exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC governmental authorities have continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.

        Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, employees are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance, and housing funds and employers are required, together with their employees or separately, to pay the social insurance premiums and housing funds for their employees. To comply with such laws and regulations, we provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance to our employees. Additionally, we provide supplementary medical insurance for all management and research and development personnel. We currently make social insurance and housing fund contributions according to the minimum standards announced by local governments, but we may be deemed as violating relevant PRC laws and regulations that require companies to make social insurance and

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housing fund contributions based on actual wages. We may be deemed as violating the PRC Social Insurance Law and the Administrative Measures on Housing Fund, and we may be subject to fines and legal sanctions, including a late charge and a fine ranging from one to three times the amount due, and our business, financial condition and results of operations may be adversely affected.

        These laws designed to enhance labor protection tend to increase our labor costs. In addition, as the interpretation and implementation of these regulations are still evolving, our employment practices may not be at all times be deemed in compliance with the regulations. As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.

Risks Relating to Our Corporate Structure

The PRC government may find that the contractual arrangements that establish our corporate structure for operating our business do not comply with applicable PRC laws and regulations.

        Pursuant to the Special Administrative Measures for Access of Foreign Investment (Negative List) (2018 Edition), the Regulation on the Administration of Commercial Performances (2016 Revision) and relevant applicable PRC laws and regulations, foreign investors normally are not allowed to hold more than 49% of the equity interests in the enterprise providing talent agency services, except that, investors from Hong Kong and Macao may establish wholly Hong Kong-funded or Macao-funded talent agencies in the mainland. Such investors must meet certain requirements, including that the Hong Kong or Macao investor must be incorporated in Hong Kong or Macao and has engaged in substantive business operations for three years or more.

        In addition, pursuant to the Circular on Lifting the Restriction to Foreign Shareholding Percentage in Online Data Processing and Transaction Processing Business (Operational E-commerce), or the New E-commerce Circular, while foreign investors are allowed to hold up to 100% equity interest of an entity operating online data processing and transaction processing business (operational e-commerce) in China, such foreign investors still need to satisfy certain stringent qualification requirements, for instance, the major foreign investors must have good track records and operating experience in the value-added telecommunications service industry. Further, there remain significant uncertainties with respect to the interpretation and implementation of the New E-commerce Circular as well as the applications for the license regarding online data processing and transaction processing business by a wholly foreign funded enterprise in practice.

        To ensure compliance with PRC laws and regulations, we conduct our businesses in China mainly through our PRC affiliates, Hangzhou Hanyi E-Commerce Co., Ltd., or Hanyi E-Commerce or VIE, and its subsidiaries. Hanyi E-Commerce is 1% owned by FENG Min and 99% owned by Hangzhou Xinghui, which is a company incorporated in the PRC and wholly owned by FENG Min. FENG Min is a PRC citizen. We entered into a series of contractual arrangements with Hanyi E-Commerce, which enable us to:

        Because of these contractual arrangements, we are the primary beneficiary of Hanyi E-Commerce and its subsidiaries and treat them as our PRC affiliates under U.S. GAAP. We consolidate the financial results of Hanyi E-Commerce and its subsidiaries in our financial statements in accordance with U.S. GAAP. For a detailed discussion of these contractual arrangements, see "Our History and Corporate Structure."

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        There are, however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations concerning foreign investment in the PRC, and their application to and effect on the legality, binding effect and enforceability of the contractual arrangements. In particular, we cannot rule out the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the opinion of our PRC legal counsel.

        It is uncertain whether any new PRC laws, rules or regulations relating to VIE structures will be adopted or if adopted, what affect they may have on our corporate structure. On March 15, 2019, the National People's Congress promulgated the Foreign Investment Law, which will become effective on January 1, 2020 and replace the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law to become the legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates three forms of foreign investment, but does not explicitly stipulate the contractual arrangements as a form of foreign investment. Notwithstanding the above, the Foreign Investment Law stipulates that the concept of a foreign investment includes foreign investors investing in China through "any other methods" under laws, administrative regulations, or provisions prescribed by the State Council. Therefore, contractual arrangements could be deemed as a form of foreign investment under future laws, administrative regulations or provisions of the State Council of the PRC. If the other laws, administrative regulations and provisions of the State Council do not incorporate contractual arrangements as a form of foreign investment, the contractual arrangements as a whole and each of the agreements comprising the contractual arrangements will not be materially affected and will continue to be legal, valid and binding on the parties. See "Regulation—Foreign Investment Law" and "—We face uncertainties with respect to the implementation of the Foreign Investment Law."

        If, as a result of such contractual arrangement, we or Hanyi E-Commerce and its subsidiaries are found to be in violation of any existing or future PRC laws or regulations, or such contractual arrangement is determined as illegal and invalid by the PRC court, arbitral tribunal or regulatory authorities, or we fail to obtain, maintain or renew any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

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        The imposition of any of these penalties could result in a material and adverse effect on our ability to conduct our business and on our results of operations. If any of these penalties results in our inability to direct the activities of Hanyi E-Commerce and its subsidiaries that most significantly impact their economic performance, and/or our failure to receive the economic benefits from Hanyi E-Commerce and its subsidiaries, we may not be able to consolidate them in our financial statements in accordance with U.S. GAAP.

We face uncertainties with respect to the implementation of the Foreign Investment Law.

        On March 15, 2019, the National People's Congress promulgated the Foreign Investment Law, which will become effective on January 1, 2020 and replace the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law to become the legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates three forms of foreign investment, but does not explicitly stipulate the contractual arrangements as a form of foreign investment. Notwithstanding the above, the Foreign Investment Law stipulates that the concept of a foreign investment includes foreign investors investing in China through "any other methods" under laws, administrative regulations, or provisions prescribed by the State Council. Therefore, there are possibilities that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, at which time it will be uncertain whether the contractual arrangements will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangements will be handled. There is no guarantee that the contractual arrangements and our business will not be materially and adversely affected in the future due to changes in PRC laws and regulations. If future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be completed by companies with existing contractual arrangements, we may face substantial uncertainties as to the timely completion of such actions. In the extreme case scenario, we may be required to unwind the contractual arrangements and/or dispose our VIEs, which could have a material and adverse effect on our business, financial condition and result of operations.

We rely on contractual arrangements with Hanyi E-Commerce and its shareholders for our operations in China, which may not be as effective in providing control as direct ownership.

        We have relied and expect to continue to rely on the contractual arrangements with Hanyi E-Commerce and its shareholders to operate our KOL sales and marketing business. For a description of these contractual arrangements, see "Our History and Corporate Structure—Our Corporate Structure—Contractual Arrangements with Our VIE and Its Shareholders." The revenue contribution of Hanyi E-Commerce and its subsidiaries accounted for all of our total revenues for fiscal years 2017 and 2018. However, these contractual arrangements may not be as effective as direct equity ownership in providing us with control over Hanyi E-Commerce and its subsidiaries. Any failure by Hanyi E-Commerce and its subsidiaries or the shareholders of Hanyi E-Commerce to perform their obligations under the contractual arrangements would have a material adverse effect on the financial position and performance of our company. For example, the contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in

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accordance with arbitral procedures as contractually stipulated. The commercial arbitration system in China is not as developed as some other jurisdictions, such as the United States.

        As a result, uncertainties in the commercial arbitration system or legal system in China could limit our ability to enforce these contractual arrangements. In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions.

        If the imposition of government actions causes us to lose our right to direct the activities of Hanyi E-Commerce and its subsidiaries or our right to receive substantially all the economic benefits from Hanyi E-Commerce and its subsidiaries and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of Hanyi E-Commerce and its subsidiaries.

Hanyi E-Commerce and its shareholders may fail to perform their obligations under the contractual arrangements.

        Hanyi E-Commerce and its shareholders may fail to take certain actions required for our business or to follow our instructions despite their contractual obligations to do so. If they fail to perform their obligations under their respective agreements with us, we may have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, which may not be effective.

The shareholders of Hanyi E-Commerce may have actual or potential conflict of interest with us and not act in the best interests of our company.

        The shareholders of Hanyi E-Commerce, namely, FENG Min and Hangzhou Xinghui, which is wholly owned by FENG Min, may have actual or potential conflicts of interest with us. These shareholders may refuse to sign or breach, or cause Hanyi E-Commerce to breach, or refuse to renew, the existing contractual arrangements we have with them and Hanyi E-Commerce, which would have a material and adverse effect on our ability to effectively control and receive economic benefits from Hanyi E-Commerce and its subsidiaries. For example, the shareholders may be able to cause our agreements with Hanyi E-Commerce to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company. If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

We rely on dividends, fees and other distributions paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could hinder our ability to conduct our business.

        We are a holding company and rely principally on dividends and fees paid by our subsidiaries for our cash needs, including paying dividends and other cash distributions to our shareholders to the extent we choose to do so, servicing any debt we may incur and paying our operating expenses. The income for our subsidiaries in turn depends on the service fees paid by our VIE. Current PRC regulations permit our subsidiaries in China to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiary may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. Furthermore, if our subsidiaries or our VIE in China incur debt on their own behalf in the

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future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any such restrictions may materially affect such entities' ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.

Contractual arrangements between Hanyi E-Commerce and us may be subject to scrutiny by the PRC tax authorities who may find that we or Hanyi E-Commerce and its subsidiaries owe additional taxes.

        Under PRC laws and regulations, transactions between related parties should be conducted on an arm's-length basis and may be subject to audit or challenge by the PRC tax authorities. We could face material adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among our subsidiary in China, Hanyi E-Commerce and its shareholders are not conducted on an arm's-length basis and adjust the income of Hanyi E-Commerce and its subsidiaries through the transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in, for PRC tax purposes, increased tax liabilities of our subsidiary in China and affiliates. In addition, the PRC tax authorities may require us to disgorge our prior tax benefits, and require us to pay additional taxes for prior tax years and impose late payment fees and other penalties on our subsidiary in China and affiliates for underpayment of prior taxes. To date, similar contractual arrangements have been used by many public companies, including companies listed in the United States, and, to our knowledge, the PRC tax authorities have not imposed any material penalties on those companies. However, we cannot assure you that such penalties will not be imposed on any other companies or us in the future. Our net income may be reduced if the tax liabilities of Hanyi E-Commerce and its subsidiaries materially increase or if they are found to be subject to additional tax obligations, late payment fees or other penalties.

Hanyi E-Commerce and its subsidiaries may become the subject of a bankruptcy or liquidation proceeding.

        We currently conduct our operations in China through contractual arrangements with Hanyi E-Commerce and its shareholders. As part of these arrangements, substantially all of our assets that are critical to the operation of our business are held by Hanyi E-Commerce and its subsidiaries. If any of these entities goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of Hanyi E-Commerce and its subsidiaries undergoes a voluntary or involuntary liquidation proceeding, its equity owner or unrelated third-party creditors may claim rights relating to some or all of these assets, which would hinder our ability to operate our business and could materially and adversely affect our business, our ability to generate revenue and the market price of our ADSs.

Our corporate actions are significantly influenced by our principal shareholders, including our founders, FENG Min, SUN Lei (Ray) and SHEN Chao (Eric), who have the ability to exert significant influence over important corporate matters that require approval of shareholders, which may deprive you of an opportunity to receive a premium for your ADSs and materially reduce the value of your investment.

        Immediately prior to the completion of this offering, our outstanding share capital will be re-designated into Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to ten votes at general meetings of our shareholders. Immediately after the completion of this offering, FENG Min, SUN Lei (Ray) and SHEN Chao (Eric) will beneficially own, in aggregate, 100% of our Class B ordinary shares, representing approximately 88.2% of the aggregate voting power of our issued and outstanding share capital, while FENG Min will beneficially own 56.4% of our Class B ordinary shares, representing approximately 50.1% of the aggregate voting power of our issued and outstanding share capital, assuming the underwriters do not exercise their option to purchase additional ADSs. This concentration of ownership

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and the protective provisions in our second amended and restated memorandum and articles of association, which will become effective upon the completion of this offering, may discourage, delay or prevent a change in control of our company, which could have the dual effect of depriving our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and reducing the price of the ADSs. As a result of the foregoing, the value of your investment could be materially reduced.

The custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these assets.

        Under PRC law, legal documents for corporate transactions, including agreements and contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant PRC industry and commerce authorities.

        In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries or affiliates. If any employee obtains, misuses or misappropriates our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations.

Risks Relating to Doing Business in China

The economic, political and social conditions in China, as well as government policies, laws and regulations, could affect our business, financial condition and results of operations.

        Our operations are in China and our revenue is derived from our operations in China. Accordingly, our results of operations and prospects are, to a significant degree, subject to economic, political and legal developments in China. The economy of China differs from the economies of most developed countries in many respects, including the extent of government involvement, its level of development, its growth rate and its control over foreign exchange. China's economy has been transitioning from a planned economy to a more market-oriented economy. In recent years, the PRC government has implemented measures emphasizing market forces for economic reform, the reduction of State ownership of productive assets and the establishment of sound corporate governance in business enterprises. However, a significant portion of productive assets in China is still owned by the PRC government. The PRC government continues to play a significant role in regulating industrial development. It also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policies and providing preferential treatments to particular industries or companies. All of these factors could affect the economic conditions in China and, in turn, our business.

Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.

        Our operating subsidiaries are incorporated under and governed by the laws of the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference, but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, such as foreign investment, corporate organization and governance, commerce, taxation and trade. As a significant part of our business is conducted in China, our operations are principally governed by PRC laws and regulations. However,

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since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. In addition, we cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using the proceeds of this offering to make loans to our PRC subsidiary and our VIE, or to make additional capital contributions to our PRC subsidiary.

        In utilizing the proceeds of this offering, we, as an offshore holding company, are permitted under PRC laws and regulations to provide funding to our PRC subsidiary, which is treated as an FIE under PRC laws, through loans or capital contributions. However, loans by us to our PRC subsidiary to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange, or the SAFE and capital contributions to our PRC subsidiary are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System, and registration with other governmental authorities in China.

        SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or Circular 19, effective on June 1, 2015. According to Circular 19, the flow and use of the Renminbi capital converted from foreign currency-denominated registered capital of a FIE is regulated such that Renminbi capital may not be used for the issuance of Renminbi entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although Circular 19 allows Renminbi capital converted from foreign currency-denominated registered capital of a FIE to be used for equity investments within the PRC, it also reiterates the principle that Renminbi converted from the foreign currency-denominated capital of a FIE may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in the PRC in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue Renminbi entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and Circular 16 could result in administrative penalties. Circular 19 and Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our PRC subsidiary, which may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

        Due to the restrictions imposed on loans in foreign currencies extended to any PRC domestic companies, we are not likely to make such loans to our VIE and its subsidiaries, each a PRC domestic company. Meanwhile, we are not likely to finance the activities of our VIE and its subsidiaries by means of capital contributions given the restrictions on foreign investment in the businesses that are currently conducted by our VIE and its subsidiaries.

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        In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or VIE or future capital contributions by us to our PRC subsidiary. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary or VIE and its subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use foreign currency, including the proceeds we received from this offering, and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

PRC regulations relating to offshore investment activities by PRC residents may limit our overseas investments or limit our PRC subsidiary's ability to distribute profits to us or otherwise expose us to liability and penalties under PRC law.

        PRC enterprises' overseas direct investment is under the supervision of the MOFCOM, NDRC and SAFE, and shall be subject to relevant governing rules such as the Administrative Measures for the Outbound Investment of Enterprises promulgated by the NFRC on December 26, 2017, Administrative Measures for Outbound Investment promulgated by the MOFCOM on September 6, 2014 and the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies promulgated by the SAFE on February 13, 2015. Where PRC enterprises make overseas direct investment, they shall file with or obtain the approval from the MOFCOM and NDRC, or their local counterparts, and register with the banks as well.

        The SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released in February 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 2015.

        If our shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC subsidiary may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

        FENG Min, SUN Lei (Ray), SHEN Chao (Eric), ZHANG Yi, also known as ZHANG Dayi, have completed initial SAFE registration in connection with our financings and will update their registration filings with SAFE under SAFE Circular 37 when any changes should be registered under SAFE Circular 37.

        However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make or update such registrations, and we

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cannot compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

        If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities.

We rely on dividends paid by our subsidiaries for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

        We are a holding company incorporated in the Cayman Islands and operate our business through our operating entities in China and Hong Kong. We rely on dividends paid by our subsidiaries for our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities established in China is subject to limitations. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Our PRC subsidiary is also required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves or statutory capital reserve fund until the aggregate amount of such reserves reaches 50% of its respective registered capital. Its statutory reserves are not distributable as loans, advances or cash dividends. We anticipate that in the foreseeable future our PRC subsidiary will need to continue to set aside 10% of its after-tax profits to its statutory reserves. In addition, if our PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

        In addition, under the Enterprise Income Tax Law, or EIT Law, the Notice of the State Administration of Taxation on Negotiated Reduction of Dividends and Interest Rates, or Notice 112, which was issued on January 29, 2008, the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion, or the Double Taxation Arrangement (Hong Kong), which became effective on December 8, 2006, and the Notice of the State Administration of Taxation Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties, or Notice 601, which became effective on October 27, 2009, dividends from our PRC subsidiary paid to us through our Hong Kong subsidiary may be subject to a withholding tax at a rate of 10%, or at a rate of 5% if our Hong Kong subsidiary is considered as a "beneficial owner" that is generally engaged in substantial business activities and entitled to treaty benefits under the Double Taxation Arrangement (Hong Kong). Furthermore, the ultimate tax rate will be determined by treaty between the PRC and the tax residence of the holder of the PRC subsidiary. We are actively monitoring the withholding tax and are evaluating appropriate organizational changes to minimize the corresponding tax impact.

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We may be classified as a "resident enterprise" for PRC enterprise income tax purposes, which could result in unfavorable tax consequences to us and our non-PRC shareholders.

        The EIT Law provides that enterprises established outside of the PRC whose "de facto management bodies" are located in the PRC are considered "resident enterprises" and are generally subject to the uniform 25% enterprise income tax rate on their worldwide income. In addition, a circular issued by the State Administration of Taxation, or the SAT, on April 22, 2009 regarding the standards used to classify certain PRC-invested enterprises controlled by PRC enterprises or PRC group enterprises and established outside of the PRC as "resident enterprises" clarified that dividends and other income paid by such "resident enterprises" will be considered to be PRC-source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC enterprise shareholders. This circular also subjects such "resident enterprises" to various reporting requirements with PRC tax authorities. Under the implementation regulations to the enterprise income tax, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and operations, personnel and human resources, finances and properties of an enterprise. In addition, the circular mentioned above sets out criteria for determining whether "de facto management bodies" are located in the PRC for overseas incorporated, domestically controlled enterprises. However, as this circular only applies to enterprises established outside of the PRC that are controlled by PRC enterprises or groups of PRC enterprises, it remains unclear how the tax authorities will determine the location of "de facto management bodies" of overseas incorporated enterprises that are controlled by foreign enterprises or individuals. Therefore, although substantially all of our management is currently located in the PRC, it remains unclear whether the PRC tax authorities would require or permit our overseas registered entities to be treated as PRC resident enterprises. We do not consider our company to be a PRC resident enterprise. However, if PRC tax authorities disagree with our assessment and determine that we are a "resident enterprise", we may be subject to enterprise income tax at a rate of 25% on our worldwide income and dividends paid by us to our non-PRC shareholders as well as capital gains recognized by them with respect to the sale of our shares or ADSs may be subject to a PRC withholding tax. This will have an impact on our effective tax rate, a material adverse effect on our net income and results of operations, and may require us to withhold tax on our non-PRC shareholders.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

        Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the SAT in 2009 with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer.

        In February 2015, the SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Circular 7. SAT Circular 7 supersedes the rules with respect to the Indirect Transfer under SAT Circular 698, but does not touch upon the other provisions of SAT Circular 698, which remain in force. SAT Circular 7 has introduced a new tax regime that is significantly different from the previous one under SAT Circular 698. SAT Circular 7 extends its tax jurisdiction to not only Indirect Transfers set forth under SAT Circular 698 but also transactions involving transfer of other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Circular 7 provides clearer criteria than SAT Circular 698 for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Circular 7 also

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brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

        In October 2017, the SAT issued an Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, or SAT Circular 37. Effective December 2017, SAT Circular 37, among others, repealed the Circular 698 and amended certain provisions in SAT Circular 7. According to SAT Circular 37, where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the Enterprise Income Tax, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority. However, if the non-resident enterprise voluntarily declares and pays the tax payable before the tax authority orders it to do so within the required time limits, it shall be deemed that such enterprise has paid the tax in time.

        We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or taxed if our company is the transferor in such transactions, and may be subject to withholding obligations if our company is the transferee in such transactions, under SAT Circular 7 and SAT Circular 37. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under the SAT circulars. As a result, we may be required to expend valuable resources to comply with the SAT circulars, to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, any of which may have a material adverse effect on our financial condition and results of operations.

It may be difficult to effect service of process upon us or our directors or executive officers who reside in China or to enforce against them in China any judgments obtained from non-PRC courts.

        Most of our directors and executive officers reside within China, and most of our assets and the assets of those persons are located within China. It may not be possible for investors to effect service of process upon us or those persons inside China or to enforce against us or them in China any judgments obtained from non-PRC courts. China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts in the United States, the United Kingdom, Japan or most other western countries. However, judgments rendered by Hong Kong courts may be recognized and enforced in China if the requirements set forth by the Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of Mainland and of the Hong Kong Special Administrative Region Pursuant to Agreed Jurisdiction by Parties Concerned are met.

        Therefore recognition and enforcement in China of judgments of a court in any of these jurisdictions other than Hong Kong in relation to any matter not subject to binding arbitration provisions may be difficult or impossible.

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The PRC government's control over foreign currency conversion may adversely affect our business and results of operations and our ability to remit dividends.

        Conversion and remittance of foreign currencies are subject to the PRC foreign exchange regulations. It cannot be guaranteed that under a certain exchange rate, we shall have sufficient foreign exchange to meet our foreign exchange needs. Under the current PRC foreign exchange control system, foreign exchange transactions under the current account conducted by us, including the payment of dividends, do not require advance approval from the SAFE, but we are required to present relevant documentary evidence of such transactions and conduct such transactions at designated foreign exchange banks within China that have the licenses to carry out foreign exchange business. Foreign exchange transactions under the capital account, however, normally need to be approved by or registered with the SAFE or its local branch unless otherwise permitted by law. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Any insufficiency of foreign exchange may restrict our ability to obtain sufficient foreign exchange for dividend payments to shareholders or satisfy any other foreign exchange obligation. If we fail to obtain approvals from the SAFE to convert RMB into any foreign exchange for any of the above purposes, our potential offshore capital expenditure plans and even our business may be materially and adversely affected.

        In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

Inflation in China could negatively affect our profitability and growth.

        Economic growth in China has, during certain periods, been accompanied by periods of high inflation, and the Chinese government has implemented various policies from time to time to control inflation. For example, the PRC government introduced measures in certain sectors to avoid overheating of the Chinese economy, including increasing interest rates and capital reserve thresholds at Chinese commercial banks. The effects of the stimulus measures implemented by the PRC government since the global economic crisis that commenced in 2008 and the continued growth in the overall economy since then have resulted in sustained inflationary pressures. If these inflationary pressures continue and are not mitigated by PRC government measures, our cost of sales will likely increase and our profitability could be materially reduced, as there is no assurance that we would be able to pass any cost increases onto our customers.

The audit report included in this prospectus is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

        Our independent registered public accounting firm that issues the audit reports included in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the

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Chinese authorities, our auditors are not currently inspected by the PCAOB. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. However, it remains unclear what further actions the SEC and PCAOB will take to address the problem.

        Inspections of other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms' audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating our auditors' audits and its quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

        The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditors' audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

Proceedings instituted by the SEC against Chinese affiliates of the "big four" accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act.

        Starting in 2011, the Chinese affiliates of the "big four" accounting firms, including our independent registered public accounting firm, were affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. The firms were, however, advised and directed that, under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the CSRC.

        In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including our independent registered public accounting firm. A first instance trial of the proceedings in July 2013 in the SEC's internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioner had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepts that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms will receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance require them to facilitate production via the CSRC. If they fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-month bar on a single firm's performance of certain audit work, commencement of a new proceeding against a firm, or in extreme cases the resumption of the current proceeding against all four firms. If additional remedial measures are imposed on the Chinese affiliates of the "big four" accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging the firms' failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

        In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or

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impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about any such future proceedings against these audit firms may cause investor uncertainty regarding China-based, U.S.-listed companies and the market price of our common stock may be adversely affected.

        If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the Nasdaq Global Select Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.

Risks Relating to Our ADSs and This Offering

An active trading market for our ordinary shares or our ADSs may not develop and the trading price for our ADSs may fluctuate significantly.

        Our ADSs have been approved for listing on the Nasdaq Global Select Market. Prior to the completion of this offering, there has been no public market for our ADSs or our ordinary shares, and we cannot assure you that a liquid public market for our ADSs will develop. If an active public market for our ADSs does not develop following the completion of this offering, the market price and liquidity of our ADSs may be materially and adversely affected. The initial public offering price for our ADSs was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

The trading price of our ADSs is likely to be volatile, which could result in substantial losses to investors.

        The trading price of our ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with operations located mainly in China that have listed their securities in the United States. A number of the PRC companies or companies with operations located mainly in China have listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of those companies' securities after their offerings may affect the attitudes of investors toward companies with operations located mainly in China listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

        In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations, including the following:

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        Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.

        In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

If securities or industry analysts do not publish research reports about us or our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

        The trading market for our ADSs will be influenced by research reports that industry or securities analysts publish about us or our business. If one or more analysts who cover us downgrade our ADSs, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to decline.

We currently do not expect to pay dividends in the foreseeable future and you must rely on price appreciation of our ADSs for return on your investment.

        We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

        Our board of directors has complete discretion as to whether to distribute dividends subject to our memorandum and articles of association and certain restrictions under Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

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Substantial future sales or the expectation of substantial sales of our ADSs in the public market could cause the price of our ADSs to decline.

        Sales of our ADSs in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have 413,572,659 ordinary shares outstanding, comprising 236,238,409 Class A ordinary shares and 177,334,250 Class B ordinary shares, including 50,000,000 Class A ordinary shares represented by ADSs newly issued in connection with this offering, assuming the underwriters do not exercise their option to purchase additional ADSs. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act. The remaining Class A ordinary shares outstanding after this offering, including any Class A ordinary shares that may be converted from Class B ordinary shares outstanding after this offering, will be available for sale in the form of ADSs upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 and Rule 701 under the Securities Act. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the underwriters. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our ADSs could decline.

Because the initial public offering price is substantially higher than our pro forma net tangible book value per share, you will experience immediate and substantial dilution.

        If you purchase ADSs in this offering, you will pay more for each ADS than the corresponding amount paid by existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$11.43 per ADS (assuming no exercise of outstanding options to acquire Class A ordinary shares and no exercise of the underwriters' option to purchase additional ADSs), representing the difference between our pro forma as adjusted net tangible book value per ADS of US$1.07 as of December 31, 2018, after giving effect to this offering and the initial public offering price of US$12.50 per ADS. See "Dilution" for a more complete description of how the value of your investment in our ADSs will be diluted upon the completion of this offering.

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

        We have not determined a specific use for a portion of the net proceeds of this offering. Although we have disclosed our intentions with respect of the use and allocation of the net proceeds of this offering elsewhere in this prospectus, our management will have significant flexibility and discretion in applying these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase our ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

If we are a passive foreign investment company for United States federal income tax purposes for any taxable year, United States holders of our ADSs or Class A ordinary shares could be subject to adverse United States federal income tax consequences.

        A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or

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are held for the production of passive income. A separate determination must be made after the close of each taxable year as to whether a non-United States corporation is a PFIC for that year. Based on the past and projected composition of our income and assets, and the valuation of our assets, including goodwill (which we have determined based on the expected price of our ADSs in this offering), we do not believe we were a PFIC for our most recent taxable year, and we do not expect to become a PFIC in the current taxable year or in the foreseeable future, although there can be no assurance in this regard.

        It is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. The composition of our assets and income may be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. Because we have valued our goodwill based on the expected market value of our ADSs, a decrease in the price of our ADSs may also result in our becoming a PFIC.

        In addition, there is uncertainty as to the treatment of our corporate structure and ownership of our consolidated VIE for United States federal income tax purposes. For United States federal income tax purposes, we consider ourselves to own the equity of our consolidated VIE. If it is determined, contrary to our view, that we do not own the equity of our consolidated VIE for United States federal income tax purposes (for instance, because the relevant PRC authorities do not respect these arrangements), we may be treated as a PFIC.

        If we are a PFIC for any taxable year during which a United States person holds ADSs or Class A ordinary shares, certain adverse United States federal income tax consequences could apply to such United States person. See "Taxation—Material United States Federal Income Tax Considerations—Passive Foreign Investment Company."

Our second amended and restated memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs.

        We have adopted second amended and restated memorandum and articles of association that will become effective immediately prior to completion of this offering. Our new memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions, including a provision that entitles each Class B ordinary share to ten votes in respect of all matters subject to a shareholders' vote. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Although all of our authorized Class B ordinary shares are expected to be issued upon the completion of this offering, if any of such Class B ordinary shares are converted into Class A ordinary shares or cancelled for any reasons, our board of directors will have the authority without further action by our shareholders to issue additional Class B ordinary shares, which will be dilutive to our Class A ordinary shareholders. In addition, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and ADSs may be materially and adversely affected.

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The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.

        Certain shareholder advisory firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our ADSs representing Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our ADSs.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

        We are an exempted company with limited liability registered under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Law (as amended) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

        Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

        Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. We intend to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of the Nasdaq Global Select Market.

        As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law (as amended) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

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Certain judgments obtained against us by our shareholders may not be enforceable.

        We are a Cayman Islands company and all of our assets are located outside of the United States. Substantially all of our current operations are conducted in China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and the PRC, see "Enforcement of Civil Liabilities."

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

        We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided by the JOBS Act. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards and we have not elected to "opt out" of this provision. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the Nasdaq Global Select Market corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards.

        Our ADSs have been approved for listing on the Nasdaq Global Select Market. The Nasdaq Global Select Market corporate governance listing standards permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Global Select Market corporate governance listing standards.

        For instance, we are not required to: (i) have a majority of the board be independent; (ii) have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors; or (iii) have regularly scheduled executive sessions with only independent directors each year. We intend to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of the Nasdaq Global Select Market.

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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

        Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

        We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq Global Select Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your ordinary shares.

        As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, (a) if voting is by poll, the depositary will vote the underlying ordinary shares in accordance with these instructions and (b) if voting is by show of hands, the depositary will vote the underlying Class A ordinary shares in accordance with the voting instructions received from a majority of holders of ADSs who provided truly voting instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our amended and restated memorandum and articles of association that will become effective immediately upon completion of this offering, the minimum notice period required for convening a general meeting is 14 days. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

Your rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement and the deposit agreement may be amended or terminated without your consent.

        Under the deposit agreement, any action or proceeding against or involving the depositary, arising out of or based upon the deposit agreement or the transactions contemplated thereby or by virtue of

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owning the ADSs (including any such action or proceeding that may arise under the Securities Act or Exchange Act) may only be instituted in a state or federal court in New York, New York, and you, as a holder of our ADSs, will have irrevocably waived any objection which you may have to the laying of venue of any such proceeding, and irrevocably submitted to the exclusive jurisdiction of such courts in any such action or proceeding. Also, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you will be deemed to have agreed to be bound by the deposit agreement as amended, unless such amendment is found to be invalid under any applicable laws, including the federal securities law. See "Description of American Depositary Shares" for more information.

ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiffs in any such action.

        The deposit agreement governing the ADSs representing our Class A ordinary shares provides that, to the fullest extent permitted by applicable law, ADSs holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. The waiver to right to a jury trial of the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs or the depositary's compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

        If we or the depositary oppose a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. The enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.

        If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcome than a trial by jury would have had, including results that could be less favorable to the plaintiffs in any such action.

The depositary for our ADSs will give us a discretionary proxy to vote Class A ordinary shares underlying your ADSs if you do not vote at shareholders' meetings, except in limited circumstances, which could adversely affect your interests.

        Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs at shareholders' meetings unless:

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        The effect of this discretionary proxy is that if you do not vote at shareholders' meetings, you cannot prevent our Class A ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our Class A ordinary shares are not subject to this discretionary proxy.

You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

        The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, Class A ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, Class A ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may experience dilution of your holdings due to inability to participate in rights offerings.

        We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to

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deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

The requirements of being a public company may strain our resources and divert management's attention.

        As a public company, we will be subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, the U.S. Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and the listing standards of the Nasdaq Global Select Market as applicable to a foreign private issuer, which are different in some material respects from those required for a U.S. public company. We expect that the requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources. As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors, shareholders or third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, financial condition and results of operations.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about us and our industry. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Industry Overview," "Business" and "Regulation" in this prospectus. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

        In some cases, you can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The forward-looking statements included in this prospectus relate to, among others:

        This prospectus also contains market data relating to the internet KOL facilitator industry in China, including market position, market size, and growth rates of the markets in which we participate, that are based on industry publications and reports. Statistical data in these publications and reports also include projections based on a number of assumptions. The internet KOL facilitator industry in China may not grow at the rates projected by market data, or at all. The failure of these markets to grow at the projected rates may have a material adverse effect on our business and the market price of our ADSs. If any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors" and elsewhere in this prospectus. You should not place undue reliance on these forward-looking statements.

        The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we have referred to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

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USE OF PROCEEDS

        We estimate that we will receive net proceeds from this offering of approximately US$112.9 million, or approximately US$118.1 million if the underwriters exercise their option to purchase additional ADSs in full, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us and based upon the initial public offering price of US$12.50 per ADS.

        We plan to use the net proceeds we will receive from this offering as follows:

        The foregoing represents our intentions as of the date of this prospectus with respect of the use and allocation of the net proceeds of this offering based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying the net proceeds of the offering.

        The occurrence of unforeseen events or changed business conditions may result in application of the proceeds of this offering in a manner other than as described in this prospectus.

        To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we intend to invest our net proceeds in short-term, interest bearing, debt instruments or bank deposits.

        In utilizing the proceeds of this offering, we, as an offshore holding company, are permitted under PRC laws and regulations to provide funding to our PRC subsidiary only through loans or capital contributions. Subject to satisfaction of applicable government registration and approval requirements, we may extend inter-company loans to our PRC subsidiary or make additional capital contributions to our PRC subsidiary to fund its capital expenditures or working capital. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See "Risk Factors—Risks Relating to Our ADSs and This Offering—We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree."

        We will not receive any of the proceeds from the sale of ADSs by the selling shareholders.

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DIVIDEND POLICY

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

        Any future determination to pay dividends will be made at the discretion of our board of directors and may be based on a number of factors, including our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our Class A ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See "Description of American Depositary Shares." Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.

        We are a holding company incorporated in the Cayman Islands. In order for us to distribute any dividends to our shareholders and ADS holders, we rely on dividends distributed by our subsidiaries in the PRC and other jurisdictions. Distributions from our subsidiaries to us may be subject to various local taxes, such as withholding tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in China. See "Risk Factors—Risks Relating to Doing Business in China—We rely on dividends paid by our subsidiaries for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business."

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2018 presented on:

        The pro forma and pro forma as adjusted information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the initial public offering price of our ADSs and other terms of this offering determined at pricing. You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and

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Results of Operations" and our financial statements and related notes included elsewhere in this prospectus.

 
  As of December 31, 2018  
 
  Actual   Pro Forma   Pro Forma
as Adjusted
 
 
  RMB   US$   RMB   US$   RMB   US$  
 
  (in thousands)
 

Shareholders' (deficit) equity:

                                     

Ordinary shares (US$0.000000001 par value; 1,000,000,000 ordinary shares authorized, 319,406,760 ordinary shares issued and outstanding on an actual basis)

                         

Class A ordinary shares (US$0.000000001 par value; 822,665,750 Class A ordinary shares authorized, 186,238,409 Class A ordinary shares issued and outstanding on a pro forma basis; 236,238,409 shares issued and outstanding on a pro forma as adjusted basis)

                         

Class B ordinary shares (US$0.000000001 par value; 177,334,250 Class B ordinary shares authorized, 177,334,250 Class B ordinary shares issued and outstanding on a pro forma basis and on a pro forma adjusted basis)

                         

Additional paid-in capital

    616,115     89,611     714,491     103,918     1,490,735     216,818  

Subscription receivable

    (558,995 )   (81,303 )   (558,995 )   (81,303 )   (558,995 )   (81,303 )

Accumulated deficit

    (204,539 )   (29,749 )   (204,539 )   (29,749 )   (204,539 )   (29,749 )

Total shareholders' deficit

    (147,419 )   (21,441 )   (49,043 )   (7,134 )   727,201     105,766  

Non-controlling interest

    (11,027 )   (1,604 )                

Total equity

    (158,446 )   (23,045 )   (49,043 )   (7,134 )   727,201     105,766  

*
There are uncertainties relating to the payment of the subscription price by our shareholders, in particular with respect to the satisfaction of certain regulatory requirements. As such, there can be no assurance that the unpaid subscription price will be paid before the deadline contemplated in the restructuring agreements.

**
On March 5, 2019, we entered into an agreement with ZHANG Yi, one of our top KOLs and a shareholder, whereby we issued 44,165,899 ordinary shares to her in exchange for her 49% non-controlling equity interest in Hangzhou Dayi and the exclusive cooperation rights with her in online sales of women apparel products until the later of five years after the completion of this offering or when her beneficial interest in our company fall below 5%. The fair value of the shares issued to ZHANG Yi in the amount of RMB759.2 million is based on the initial public offering price of US$12.50 per ADS. The fair value of shares issued to ZHANG Yi has been allocated to the acquisition of the non-controlling interest of Hangzhou Dayi and exclusive cooperation rights at RMB649.8 million and RMB109.4 million respectively and are on a provisional basis pending on our final valuation. As such, the amount of the additional paid-in capital recorded as a result of this transaction is subject to change.

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DILUTION

        If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per Class A ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares. Because our Class A ordinary shares and Class B ordinary shares will have the same dividend and other rights, except for conversion and voting rights, the following discussion is presented on the basis of all of our ordinary shares, including Class A ordinary shares and Class B ordinary shares.

        Our net tangible book value as of December 31, 2018 was approximately RMB(165.1) million (US$(24.0) million), or RMB(0.52) (US$(0.08)) per ordinary share as of that date, and US$(0.38) per ADS. Net tangible book value represents the amount of our total assets, less the amount of our intangible assets, goodwill, prepaid IPO expenses and total liabilities. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the Hangzhou Dayi Minority Interest Acquisition and issuance and sale by us of 50,000,000 Class A ordinary shares in the form of ADSs in this offering at the initial public offering price of US$12.50 per ADS after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us.

        Without taking into account any other changes in net tangible book value after December 31, 2018, other than to give effect to (i) the Hangzhou Dayi Minority Interest Acquisition and (ii) the issuance and sale by us of 50,000,000 Class A ordinary shares in the form of ADSs in this offering at the initial public offering price of US$12.50 per ADS after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2018 would have been US$88.9 million, or US$0.21 per outstanding ordinary share and US$1.07 per ADS. This represents an immediate increase in net tangible book value of US$0.29 per ordinary share and US$1.45 per ADS to the existing shareholders and an immediate dilution in net tangible book value of US$2.29 per ordinary share and US$11.43 per ADS to investors purchasing ADSs in this offering.

        The following table illustrates such dilution:

 
  Per ordinary share   Per ADS  

Actual net tangible book value per share as of December 31, 2018

  US$ (0.08 ) US$ (0.38 )

Pro forma net tangible book value per share after giving effect to the Hangzhou Dayi Minority Interest Acquisition

  US$ (0.07 ) US$ (0.33 )

Pro forma as adjusted net tangible book value per share after giving effect to the Hangzhou Dayi Minority Interest Acquisition and this offering. 

  US$ 0.21   US$ 1.07  

Initial public offering price

  US$ 2.50   US$ 12.50  

Dilution in net tangible book value per share to new investors in this offering

  US$ 2.29   US$ 11.43  

        The amount of dilution in net tangible book value to new investors in this offering set forth above is determined after giving effect to this offering from the public offering price per ordinary share.

        The following table summarizes, on a pro forma basis as of December 31, 2018, the differences between existing shareholders and the new investors with respect to the number of Class A ordinary shares (in the form of ADSs or shares) purchased from us, the total consideration paid and the average price per ordinary share and per ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses. The total number of ordinary shares does not include

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Class A ordinary shares underlying the ADSs issuable upon the exercise of the option to purchase additional ADSs granted to the underwriters.

 
  Ordinary Shares
Purchased
   
   
   
   
 
 
  Total Consideration   Average
Price per
Ordinary
Share
   
 
 
  Average
Price per
ADS
 
 
  Number   Percent   Amount   Percent  

Existing shareholders

    363,572,659     87.9 % US$ 81,302,501     39.4 % US$ 0.22   US$ 1.12  

New investors

    50,000,000     12.1 % US$ 125,000,000     60.6 % US$ 2.50   US$ 12.50  

Total

    413,572,659     100 % US$ 206,302,501     100 % US$ 0.50   US$ 2.49  

        If the underwriters were to fully exercise the over-allotment option to purchase 7,500,000 additional shares of our ordinary shares from us and the selling shareholders, the percentage of shares of our ordinary shares held by existing shareholders would be 86.2%, and the percentage of shares of our common stock held by new investors would be 13.8%.

        The pro forma information discussed above is illustrative only.

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EXCHANGE RATE INFORMATION

        Most of our revenues and expenses are denominated in Renminbi. This prospectus contains translations of Renminbi amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this prospectus were made at a rate of RMB6.8755 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2018. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. On March 29, 2019, the noon buying rate for Renminbi was RMB6.7112 to US$1.00.

        The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. For all dates and periods, the exchange rate refers to the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board.

 
  Noon Buying Rate  
 
  Period End   Average(1)   Low   High  
 
  (RMB per US$1.00)
 

2014

    6.2046     6.1704     6.2591     6.0402  

2015

    6.4778     6.2869     6.4896     6.1870  

2016

    6.9430     6.6549     6.9580     6.4480  

2017

    6.5063     6.7350     6.9575     6.4773  

2018

    6.8755     6.6090     6.9737     6.2649  

September

    6.8680     6.8551     6.8880     6.8270  

October

    6.9737     6.9191     6.9737     6.8680  

November

    6.9558     6.9367     6.9558     6.8894  

December

    6.8755     6.8837     6.9077     6.8343  

2019

                         

January

    6.6958     6.7863     6.8708     6.6958  

February

    6.6912     6.7367     6.7907     6.6822  

March (through March 29, 2019)

    6.7112     6.7119     6.7381     6.6916  

    Source: Federal Reserve Statistical Release

(1)
Annual averages are calculated using the average of the rates on the last business day of each month during the relevant year. Monthly averages are calculated using the average of the daily rates during the relevant month.

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ENFORCEMENT OF CIVIL LIABILITIES

        We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a lesser extent. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

        Most of our operations are conducted in China, and most of our assets are located in China. In addition, most of our directors and officers are residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce in United States courts judgments obtained in United States courts based on the civil liability provisions of the United States federal securities laws against us and our officers and directors.

        We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the U.S. District Court for the Southern District of New York under the federal securities laws of the U.S. or of any state in the U.S. or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

        Ogier, our counsel as to Cayman Islands law, and Jingtian & Gongcheng, our counsel as to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would, respectively, (1) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States and (2) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

        Ogier has informed us that the uncertainty with regard to Cayman Islands law relates to whether a judgment obtained from the United States courts under the civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company. However, as the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature obtained from U.S. courts under the civil liability provisions of U.S. Securities laws, it is uncertain whether they would be enforceable in the Cayman Islands.

        In addition, Ogier has advised us that although there is no statutory recognition in the Cayman Islands of judgments obtained in the federal or state courts of the United States, (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final and conclusive, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and

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is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

        Jingtian & Gongcheng has advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. Jingtian & Gongcheng has advised us further that under PRC law, courts in the PRC will not recognize or enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or social public interest. As there existed no treaty or other form of reciprocity between China and the United States governing the recognition and enforcement of judgments as of the date of this prospectus, including those predicated upon the liability provisions of the United States federal securities laws, there is uncertainty whether and on what basis a PRC court would enforce judgments rendered by United States courts. In addition, because there is no treaty or other form of reciprocity between the Cayman Islands and China governing the recognition and enforcement of judgments as of the date of this prospectus, there is further uncertainty as to whether and on what basis a PRC court would enforce judgments rendered by a Cayman Islands court.

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OUR HISTORY AND CORPORATE STRUCTURE

Our History

        In March 2016, our predecessor, Hanyi E-Commerce, was established in the PRC by Hangzhou Ruhnn Holdings Co., Ltd., or Hangzhou Ruhnn, which was owned by our founders, FENG Min, SUN Lei (Ray) and SHEN Chao (Eric) and several institutional investors.

        In preparation for this offering, our founders and the institutional investors of Hanyi E-Commerce undertook a series of equity transactions as described below, or the Equity Restructuring, to re-domicile the holding entity of our business from the PRC to the Cayman Islands.

        In May 2018, our company was incorporated in the Cayman Islands as the proposed listing entity. In June 2018, WuHan Investment Limited, or WuHan Investment, was incorporated in the British Virgin Islands as a wholly owned subsidiary of our company. In August 2018, YiHnn (Hong Kong) Limited, or YiHnn HK, was incorporated in Hong Kong as a wholly owned subsidiary of WuHan Investment. In September 2018, Hangzhou Yihan Technology Co., Ltd., or Yihan Technology or the WFOE, was established in the PRC as a wholly owned subsidiary of YiHnn HK.

        On October 4, 2018, our company, our founders and the institutional investors of Hangzhou Ruhnn entered into a series of agreements whereby our company issued 319,406,660 ordinary shares to these founders and institutional shareholders at substantially identical ownership percentages as their existing indirect ownership in Hanyi E-Commerce. On the same date, we obtained 100% control over Hanyi E-Commerce through a series of contractual arrangements among the WFOE, Hanyi E-Commerce and its shareholders. These contractual agreements enabled the WFOE to have effective control over and receive the economic benefits of Hanyi E-Commerce. Accordingly, we are considered the primary beneficiary of Hanyi E-Commerce, and are able to consolidate Hanyi E-Commerce and its operating subsidiaries in our financial statements. For more details, please see "—Contractual Arrangements with Our VIE and Its Shareholders."

        Under the restructuring agreements, Hangzhou Ruhnn agreed to return to its institutional investors the amounts of their original Renminbi investments in Hangzhou Ruhnn while these investors agreed to pay the U.S. dollar equivalent of such amounts to our company as subscription price for the ordinary shares we issued to them. Hanyi E-Commerce also had amounts due to Hangzhou Ruhnn that were approximately the same as the amounts Hangzhou Ruhnn agreed to return to the investors. It is contemplated that Hanyi E-Commerce will repay the amounts due to Hangzhou Ruhnn, Hangzhou Ruhnn will return the original Renminbi investments to the investors, and the investors will pay the subscription price to our company. As the investors may need to satisfy certain regulatory requirements before paying the subscription price, Hangzhou Ruhnn will return an investor's original Renminbi investment only after the investor informs Hangzhou Ruhnn of its readiness to pay the subscription price. As of the date of this prospectus, the investors informed us that they have completed the required filings with the relevant governmental authorities and are in the process of completing procedures with their banks before they can make the payment. The restructuring agreements allow Hangzhou Ruhnn to return such investments in installments and Hangzhou Ruhnn will not be required to pay the next installment until the subscription price equals to the previous installment paid by the relevant investor to our company. The restructuring agreements require Hangzhou Ruhnn to complete return of the original Renminbi investments and the investors to pay the subscription price to our company no later than three months after the completion of this offering. However, as there are uncertainties involved in these payment transactions, in particular with respect to the satisfaction of the regulatory requirements, there can be no assurance that these payments will be completed before the deadline contemplated in the restructuring agreements.

        In March 2019, in order to acquire the remaining ownership of Hangzhou Dayi, and convert it from a 51%-owned subsidiary to a wholly owned subsidiary of Hanyi E-Commerce, we entered into the following agreements with ZHANG Yi, one of our top KOLs, and her affiliated entities: (i) an equity

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interest transfer agreement pursuant to which Hangzhou Wunai Yidui Trade Co., Ltd. agreed to transfer 49% equity interest in Hangzhou Dayi to Hanyi E-Commerce; and (ii) a share purchase agreement pursuant to which we agreed to issue 44,165,899 ordinary shares, which will be re-designated to Class A ordinary shares, to China Himalaya Investment Limited, a company wholly owned by ZHANG Yi. These transactions were completed in the same month. In connection with these transactions, ZHANG Yi also agreed to continue her exclusive cooperation with us in online sales of women apparel products until the later of five years after the completion of this offering or when her beneficial interests in our company fall below 5%.

Our Corporate Structure

        The chart below summaries our corporate and shareholding structure and identifies the significant subsidiaries and affiliates described above and the places of incorporation as of the date of this prospectus:

GRAPHIC


(1)
Ruhnn1106 Investment Limited, wholly owned by FENG Min, one of our founders.

(2)
LEIYU Investment Limited, wholly owned by SUN Lei (Ray), one of our founders.

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(3)
YangMing Investment Limited, wholly owned by SHEN Chao (Eric), one of our founders.

(4)
China Himalaya Investment Limited, wholly owned by ZHANG Yi, one of our top KOLs.

(5)
None of these pre-IPO investors beneficially owns more than 10% of our equity interest.

(6)
Representing ordinary shares held by Ruhnn Investment Limited, a limited liability company incorporated in the British Virgin Islands, wholly owned by Ruhnn Investment Trust for our employee incentive scheme. FENG Min is the sole member of the advisory committee of Ruhnn Investment Trust.

(7)
On October 4, 2018, as part of the Equity Restructuring, Hangzhou Ruhnn, the former parent of Hanyi E-Commerce transferred 1% equity interest in Hanyi E-Commerce to FENG Min for the purpose of creating a new nominee shareholder to enter into the contractual arrangements.

(8)
Wholly owned by FENG Min. On October 4, 2018, as part of the Equity Restructuring, Hangzhou Ruhnn, the former parent of Hanyi E-Commerce transferred 99% equity interest in Hanyi E-Commerce to this entity for the purpose of creating a new nominee shareholder to enter into the contractual arrangements.

(9)
Exclusive Business Corporation Agreement, Exclusive Call Option Agreement, Power of Attorney and Equity Interest Pledge Agreement.

(10)
Exclusive Call Option Agreement, Power of Attorney, Equity Interest Pledge Agreement and Spousal Consent Letter.

(11)
Exclusive Call Option Agreement, Power of Attorney and Equity Interest Pledge Agreement.

Contractual Arrangements with Our VIE and Its Shareholders

        As a Cayman Island company, our holding company is classified as a foreign enterprise under PRC laws and regulations, and our WFOE is an FIE. FIEs are subject to a number of restrictions under PRC laws and regulations. In particular, we currently hold a commercial performance license for introducing our KOLs to participate in TV shows and other performances, which is classified as talent agency services. Moreover, we plan to expand our e-commerce-related businesses in the future, some of which may be classified as value-added telecommunication services. As these businesses may be subject to strict business licensing requirements, including limitations on foreign ownership and in order to have greater flexibility in carrying out our business and implementing our business strategies in compliance with PRC laws and regulations, we operate our businesses in China mainly through our VIE and its subsidiaries. Our VIE and most of its subsidiaries are domestic PRC companies. We and our WFOE have entered into a series of contractual arrangements with our VIE and its direct and indirect shareholders, through which we are able to consolidate the financial results of our VIE and its subsidiaries. These contractual arrangements allow us to:

        As a result of these contractual arrangements, we are the primary beneficiary of our VIE and its subsidiaries and have their financial results in our combined and consolidated financial statements in accordance with U.S. GAAP. However, these contractual arrangements may not be as effective in providing operational control as direct ownership and the use of the contractual arrangements exposes us to certain risks. For example, our VIE or its direct or indirect shareholders may breach the contractual arrangements with us. In such cases, we would have to rely on legal remedies under PRC law, which may not always be effective, particularly in light of uncertainties in the PRC legal system. See "Risk Factors—Risks Relating to Our Corporate Structure".

        If the VIE or its direct or indirect shareholders fail to perform their obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us effective control over the VIE and its subsidiaries. See "Risk Factors—Risks Relating to

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Our Corporate Structure—We rely on contractual arrangements with Hanyi E-Commerce and its shareholders for our operations in China, which may not be as effective in providing control as direct ownership". If we are unable to maintain effective control over our VIE and its subsidiaries, we will not be able to continue consolidating their financial results into our financial results. Our VIE and its subsidiaries contributed substantially all of our total revenues. Further, we rely on dividends and other distributions paid to us by our offshore and PRC subsidiaries, which in turn depends on the service fees paid from our VIE and its subsidiaries. In practice, we evaluate on a case-by-case basis the performance and future plans of our VIE and its subsidiaries before determining the amount of fees we will collect from them. We do not have unfettered access to the revenues from our WFOE, our VIE or its subsidiaries due to the significant legal restrictions on the payment of dividends by PRC companies, foreign exchange control restrictions, and restrictions on foreign investment, among others. See "Risk Factors—Risks Relating to Our Corporate Structure—We rely on dividends, fees and other distributions paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could hinder our ability to conduct our business".

        The following is a summary of the currently effective contractual agreements.

Agreements that Provide Us with Effective Control over Our VIE and Its Shareholders

        Equity Interest Pledge Agreement.    Pursuant to the Equity Interest Pledge Agreement, Hangzhou Xinghui Corporate Management Consulting Co., Ltd., or Hangzhou Xinghui, and FENG Min have pledged all of their equity interest in Hanyi E-Commerce to guarantee the performance of obligations by Hanyi E-Commerce, Hangzhou Xinghui and FENG Min under the relevant contractual arrangements, which include the Power of Attorney Agreement, Exclusive Business Cooperation Agreement and Exclusive Call Option Agreement. If Hangzhou Xinghui, Hanyi E-Commerce and FENG Min breach their contractual obligations under these agreements, our WFOE, as pledgee, will have the right to auction or sell all or part of the pledged equity interests of Hangzhou Xinghui and FENG Min, and receive proceeds from such auction or sale. Hangzhou Xinghui and FENG Min agree, among other things, that, during the term of the Equity Interest Pledge Agreement, Hangzhou Xinghui will not dispose of the pledged equity interests or create or allow creation of any encumbrance on the pledged equity interests or any portion thereof, without the prior written consent of our WFOE, except for the performance of the Exclusive Call Option Agreement. The Equity Interest Pledge Agreement will remain effective until the termination of the Exclusive Business Cooperation Agreement and all of the obligations thereunder have been fulfilled.

        Power of Attorney Agreement.    Pursuant to the Power of Attorney Agreement, Hangzhou Xinghui and FENG Min have irrevocably authorized our WFOE and certain person(s) designated by our WFOE to act on Hangzhou Xinghui and FENG Min's behalf as exclusive agent and attorney, to the extent permitted by law, with respect to all shareholder rights, including but not limited to the right to call, attend and vote on shareholder's meetings and serve as directors and executive officers. The Power of Attorney Agreement is irrevocable and continuously effective from the execution date unless our WFOE provides a written termination notice to Hangzhou Xinghui and FENG Min or other conditions of termination under the Power of Attorney Agreement have been met.

Agreement that Allows Us to Receive Economic Benefits from Our VIE and Its Shareholders

        Exclusive Business Cooperation Agreement.    Under the Exclusive Business Cooperation Agreement, our WFOE has the exclusive right to provide Hanyi E-Commerce with comprehensive technical support, consulting services and other services. In exchange, our WFOE is entitled to receive an annual service fee from Hanyi E-Commerce at an amount that is equal to 100% of its net profit. The WFOE has the right to adjust the service fee payment frequency at its sole discretion. In addition, our WFOE owns the intellectual property rights arising out of the performance of the Exclusive Business

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Cooperation Agreement. Unless otherwise terminated in accordance with the provisions of the Exclusive Business Cooperation Agreement or in accordance with applicable PRC laws or terminated by our WFOE in writing 30 days in advance, the Exclusive Business Cooperation Agreement remains continuously effective.

Agreement that Provides Us with the Option to Purchase the Equity Interest in Our VIE

        Exclusive Call Option Agreement.    Pursuant to the Exclusive Call Option Agreement, Hangzhou Xinghui and FENG Min have irrevocably granted our WFOE an exclusive option to purchase by itself or by its designate person(s), at our WFOE's sole discretion at any time, to the extent permitted under PRC law, all or part of Hangzhou Xinhui's and FENG Min's equity interests in Hanyi E-Commerce. The purchase price of the equity interests shall be a nominal price, unless otherwise required by the relevant government authority or PRC law, in which case, the price shall be the minimum price permitted by the government authority or PRC law. Hangzhou Xinghui, FENG Min and Hanyi E-Commerce have agreed that, without our WFOE's prior written consent, they will not, among other things, amend Hanyi E-Commerce's articles of association, change Hanyi E-Commerce's registered capital or scope of business, allow Hanyi E-Commerce to be separated or dissolved, sell or otherwise dispose of Hanyi E-Commerce's assets and beneficial interest that is worth RMB1,000,000 or more, or provide any loans or guarantees. In addition, Hangzhou Xinghui and FENG Min undertake, among other things, that it will not sell or otherwise dispose of its equity interests in Hanyi E-Commerce or create any pledge or encumbrance on their equity interests in Hanyi E-Commerce without our WFOE's prior written consent. The Exclusive Call Option Agreement will remain effective until all equity interests in and all assets of Hanyi E-Commerce have been transferred or assigned to our WFOE or its designated person(s).

        Spousal Consent Letter.    Pursuant to the Spousal Consent Letter executed by the spouse of FENG Min, our chairman of board of directors, the signing spouse confirmed and agreed that Mr. FENG's direct or indirect equity interests in Hanyi E-Commerce are his own property and that the spouse does not enjoy and right or interest in connection with such equity interests of Hanyi E-Commerce held by Mr. FENG's. The spouse also irrevocably agreed that she would not claim in the future any right or interest in connection with such equity interests in Hanyi E-Commerce held directly or indirectly by Mr. FENG's.

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SELECTED COMBINED AND CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following selected combined and consolidated statements of operations data for fiscal years ended March 31, 2017 and 2018, the selected combined and consolidated balance sheet data as of March 31, 2017 and 2018 and the selected combined and consolidated cash flow data for the fiscal years ended March 31, 2017 and 2018 have been derived from our audited combined and consolidated financial statements included elsewhere in this prospectus. The following selected combined and consolidated statements of operations data for the nine months ended December 31, 2017 and 2018, the selected combined and consolidated balance sheet data as of December 31, 2018 and the selected combined and consolidated cash flow data for the nine months ended December 31, 2017 and 2018 have been derived from our unaudited interim condensed combined and consolidated financial statements included elsewhere in this prospectus.

        Our company was incorporated on May 11, 2018 and did not engage in any business or operations until completion of the Equity Restructuring on October 4, 2018. The Equity Restructuring enabled our company to obtain 100% control over Hanyi E-Commerce through a series of contractual arrangements and consolidate Hanyi E-Commerce and its operating subsidiaries in our financial statements. For more details, please see "Our History and Corporate Structure—Our History."

        Our combined and consolidated financial statements are prepared and presented in accordance with U.S. GAAP. The historical results are not necessarily indicative of results to be expected for any future period. You should read the following selected combined and consolidated financial data in conjunction with our combined and consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations," both of which are included elsewhere in this prospectus.

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Selected Combined and Consolidated Statements of Operations Data

 
  Fiscal Year Ended March 31,   Nine Months Ended December 31,  
 
  2017   2018   2017   2018  
 
  RMB   %   RMB   US$   %   RMB   %   RMB   US$   %  
 
  (in thousands, except for percentages, ordinary shares and Net loss per ordinary share)
 

Net revenues:

                                                             

Product sales

    572,445     99.1     912,512     132,720     96.3     728,126     96.9     755,862     109,935     88.3  

Services

    5,457     0.9     35,068     5,100     3.7     22,960     3.1     100,319     14,591     11.7  

Total net revenues

    577,902     100.0     947,580     137,820     100.0     751,086     100.0     856,181     124,526     100.0  

Cost of revenues:

                                                             

Cost of product sales

    (362,609 )   (62.7 )   (625,263 )   (90,941 )   (66.0 )   (478,071 )   (63.7 )   (523,433 )   (76,130 )   (61.1 )

Cost of services

    (2,619 )   (0.5 )   (18,122 )   (2,636 )   (1.9 )   (11,548 )   (1.5 )   (46,450 )   (6,756 )   (5.5 )

Total cost of revenue

    (365,228 )   (63.2 )   (643,385 )   (93,577 )   (67.9 )   (489,619 )   (65.2 )   (569,883 )   (82,886 )   (66.6 )

Gross Profit

    212,674     36.8     304,195     44,243     32.1     261,467     34.8     286,298     41,640     33.4  

Operating expenses:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Fulfillment expenses

    (69,412 )   (12.0 )   (100,071 )   (14,554 )   (10.6 )   (71,426 )   (9.5 )   (99,517 )   (14,474 )   (11.6 )

Sales and marketing expenses

    (97,813 )   (16.9 )   (146,207 )   (21,265 )   (15.4 )   (112,068 )   (14.9 )   (158,393 )   (23,037 )   (18.5 )

General and administrative expenses

    (67,106 )   (11.6 )   (130,978 )   (19,050 )   (13.8 )   (91,566 )   (12.2 )   (76,377 )   (11,109 )   (8.9 )

Other operating (loss) income, net

    (168 )       710     103     0.1     1,065     0.1     530     77     0.1  

Loss from operations

    (21,825 )   (3.7 )   (72,351 )   (10,523 )   (7.6 )   (12,528 )   (1.7 )   (47,459 )   (6,903 )   (5.5 )

Interest income

    42         88     13         55     0.0     398     58     0.0  

Interest expense

    (1,574 )   (0.3 )                       (107 )   (15 )   (0.0 )

Foreign exchange gain (loss)

    56         (241 )   (35 )       (143 )   (0.0 )   71     10     0.0  

Loss before income taxes

    (23,301 )   (4.0 )   (72,504 )   (10,545 )   (7.6 )   (12,616 )   (1.7 )   (47,097 )   (6,850 )   (5.5 )

Income tax expenses

    (15,243 )   (2.6 )   (15,843 )   (2,304 )   (1.7 )   (12,462 )   (1.7 )   (9,479 )   (1,379 )   (1.1 )

Loss from equity method investees

    (1,593 )   (0.3 )   (1,607 )   (234 )   (0.2 )   (1,055 )   (0.1 )   (927 )   (135 )   (0.1 )

Net loss

    (40,137 )   (6.9 )   (89,954 )   (13,083 )   (9.5 )   (26,133 )   (3.5 )   (57,503 )   (8,364 )   (6.7 )

Less: Net income attributable to non-controlling interest

    (15,247 )   (2.6 )   (14,051 )   (2,044 )   (1.5 )   (15,046 )   (2.0 )   12,353     1,797     1.4  

Net loss attributable to Ruhnn Holding Limited

    (55,384 )   (9.5 )   (104,005 )   (15,127 )   (11.0 )   (41,179 )   (5.5 )   (45,150 )   (6,567 )   (5.3 )

Net loss per ordinary share:

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

Basic and diluted

    (0.17 )         (0.33 )   (0.05 )         (0.13 )         (0.14 )   (0.02 )      

Weighted average shares used in calculating net loss per ordinary share:

                                                             

Basic and diluted

    319,406,760           319,406,760     319,406,760           319,406,760           319,406,760     319,406,760        

Net loss

   
(40,137

)
 
(6.9

)
 
(89,954

)
 
(13,083

)
 
(9.5

)
 
(26,133

)
 
(3.5

)
 
(57,503

)
 
(8,364

)
 
(6.7

)

Other comprehensive loss:

                                                             

Foreign currency translation adjustments                               

                                         

Comprehensive loss

    (40,137 )   (6.9 )   (89,954 )   (13,083 )   (9.5 )   (26,133 )   (3.5 )   (57,503 )   (8,364 )   (6.7 )

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Selected Combined and Consolidated Balance Sheet Data

 
  As of March 31,   As of December 31,  
 
  2017   2018   2018  
 
  RMB   RMB   US$   RMB   US$  
 
  (in thousands)
 

Selected Combined and Consolidated Balance Sheet:

                               

Cash and cash equivalents

    21,369     9,714     1,412     156,518     22,765  

Restricted cash

        21,208     3,085     14,866     2,162  

Accounts receivable, net

    219     6,240     908     18,465     2,686  

Inventories

    234,579     320,383     46,598     289,717     42,138  

Advances to suppliers, net

    40,977     24,695     3,592     40,462     5,885  

Prepaid expenses and other current assets

    31,238     30,295     4,406     31,559     4,590  

Total current assets

    333,031     412,829     60,044     552,459     80,352  

Total assets

    342,292     424,644     61,762     689,424     100,273  

Accounts payable

    68,697     72,890     10,601     150,529     21,894  

Amounts due to related parties

    285,570     374,558     54,477     575,125     83,649  

Total liabilities

    385,509     558,669     81,255     847,870     123,318  

Total shareholders' deficit

    (43,217 )   (134,025 )   (19,493 )   (158,446 )   (23,045 )

Total liabilities and shareholders' deficit

    342,292     424,644     61,762     689,424     100,273  

Selected Combined and Consolidated Statements of Cash Flow Data

 
  Fiscal Year Ended
March 31,
  Nine Months Ended
December 31,
 
 
  2017   2018   2017   2018  
 
  RMB   RMB   US$   RMB   RMB   US$  
 
  (in thousands)
 

Selected Combined and Consolidated Cash Flow:

                                     

Net cash (used in) provided by operating activities

    (240,532 )   (27,575 )   (4,011 )   54,031     45,738     6,653  

Net cash used in investing activities

    (10,133 )   (1,949 )   (283 )   (1,739 )   (3,074 )   (447 )

Net cash (used in) provided by financing activities

    272,034     39,077     5,683     (9,967 )   97,798     14,224  

Net increase in cash, cash equivalents and restricted cash

    21,369     9,553     1,389     42,325     140,462     20,430  

Cash, cash equivalents and restricted cash at beginning of the year/period

        21,369     3,108     21,369     30,922     4,497  

Cash, cash equivalents and restricted cash at end of the year/period

    21,369     30,922     4,497     63,694     171,384     24,927  

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Selected Operating Data

        The following tables present our key operating data as of the dates and for the periods indicated:

 
  As of and for fiscal year ended March 31,   As of and for the nine months
ended December 31,
 
 
  2017   2018   2018  
 
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
  Number
of KOLs
  Number
of fans(4)
(in millions)
  GMV
(RMB
in millions)
 

Top-tier KOLs(1)

    2     12.0     750.6     3     21.0     1,333.7     3     32.5     1,220.3  

Established KOLs(2)

    3     4.4     139.3     7     17.5     321.4     7     28.9     324.2  

Emerging KOLs(3)

    57     35.7     346.4     73     64.9     390.1     103     87.0     667.8