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United States securities and exchange commission logo
August 15, 2023
Eric Ya Shen
Chief Executive Officer
Vipshop Holdings Ltd
128 Dingxin Road
Haizhu District
Guangzhou 510220
People s Republic of China
Re: Vipshop Holdings
Ltd
Form 20-F for
Fiscal Year Ended December 31, 2022
Filed April 19,
2023
File No. 001-35454
Dear Eric Ya Shen:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for Fiscal Year Ended December 31, 2022
Item 3. Key Information, page 4
1. In future filings,
please disclose prominently in this section that you are not a Chinese
operating company but a
Cayman Islands holding company with operations conducted by
your subsidiaries and
through contractual arrangements with a variable interest entity
(VIE) based in China
and that this structure involves unique risks to investors. If true,
disclose that these
contracts have not been tested in court.
2. In future filings,
please disclose that a majority of your operations are located in China, if
true, as opposed to
that they are "primarily" in China. In addition, in future filings please
disclose the location
of your auditor s headquarters.
Eric Ya Shen
FirstName LastNameEric Ya Shen
Vipshop Holdings Ltd
Comapany
August 15, NameVipshop
2023 Holdings Ltd
August
Page 2 15, 2023 Page 2
FirstName LastName
3. In future filings, please refrain from using terms such as "we" or
"our" when describing
activities or functions of a VIE. We note that currently your
definition of "we" and "our"
includes the operations of the VIE. In addition, we note your
definition of "China" does
not include Hong Kong. Please revise the definition to clarify that
the legal and
operational risks associated with operating in China also apply to any
operations in Hong
Kong. We also note you have a Hong Kong subsidiary, Vipshop Hong Kong;
please
discuss in future filings, the applicable laws and regulations in Hong
Kong as well as the
related risks and consequences. Examples of applicable laws and
regulations include,
but are not limited to:
Enforceability of civil liabilities in Hong Kong;
Regulatory actions related to data security or anti-monopoly
concerns in Hong Kong
and their potential impact on your ability to conduct business,
accept
foreign investment or list on a U.S./foreign exchange; and
Risk factor disclosure explaining whether there are
laws/regulations in Hong Kong
that result in oversight over data security, how this oversight
impacts the company s
business, and to what extent the company believes that it is
compliant with the
regulations or policies that have been issued.
4. In future filings, provide a summary a diagram of the company s
corporate structure that
includes all three of the VIEs you use, as your disclosure currently
suggests you have
contractual relationships with three, (i) Vipshop E-Commerce, (ii)
Vipshop Information,
and (iii) Pin Jun Tong. In addition, describe all contracts and
arrangements through which
you claim to have economic rights and exercise control that results in
consolidation of the
VIE s operations and financial results into your financial
statements. We note that you
have a detailed list starting on page 109, please provide a summary of
this disclosure in
Item 3. Disclose the uncertainties regarding the status of the rights
of the Cayman Islands
holding company with respect to its contractual arrangements with the
VIE, its founders
and owners, and the challenges the company may face enforcing these
contractual
agreements due to legal uncertainties and jurisdictional limits.
Permissions Required from the PRC Authorities for Our Operations, page 7
5. We note that in this section you qualify your list of permissions by
materiality "that are
material for their business" and as an incomplete list "including,
among others." The
disclosure here should not be qualified by materiality and should list
each required
approval. In future filings, please make appropriate revisions to your
disclosure. In
addition, we note that you do not appear to have relied upon an
opinion of counsel with
respect to your conclusions regarding CSRC and CAC approval and that
you do not need
any additional permissions and approvals to operate your business. If
true, state as much
in future filings, explain why such an opinion was not obtained, and
explain the basis for
your conclusions that the approvals are not required. Where you state
that you "have not
been denied by any PRC government authority for such requisite
permissions or filing
procedures," revise to clarify that this statement applies to all
required approvals, not just
approvals required by the CSRC and CAC.
Eric Ya Shen
FirstName LastNameEric Ya Shen
Vipshop Holdings Ltd
Comapany
August 15, NameVipshop
2023 Holdings Ltd
August
Page 3 15, 2023 Page 3
FirstName LastName
Cash and Asset Flows Through Our Organization, page 8
6. To the extent that you have cash management policies that dictate how
funds are
transferred between you, your subsidiaries, the consolidated VIEs or
investors, in future
filings please summarize the policies in this section and disclose the
source of such
policies; alternatively, state that you have no such cash management
policies that dictate
how funds are transferred.
7. Quantify any cash flows and transfers of other assets by type that
have occurred between
the holding company, its subsidiaries, and the consolidated VIEs, and
direction of
transfer. Quantify any dividends or distributions that a subsidiary or
consolidated VIE
have made to the holding company and which entity made such transfer,
and their tax
consequences. In this regard, we note that you have only disclosed
that the holding
company has not declared or paid any cash dividends to investors. Your
disclosure should
make clear if no transfers, dividends, or distributions have been made
to date. Also
provide a cross-references to the consolidated financial statements
where you currently
only cross reference to the condensed consolidating schedules. Include
comparable
disclosure in Item 5 of this Form 20-F.
D. Risk Factors
Summary of Risk Factors
Risks Relating to Doing Business in China, page 17
8. In future filings, disclose the risks that your corporate structure
and being based in or
having the majority of the company s operations in China poses to
investors. In particular,
describe the significant regulatory, liquidity, and enforcement risks.
For example,
specifically discuss risks arising from the legal system in China,
including risks and
uncertainties regarding the enforcement of laws and that rules and
regulations in China
can change quickly with little advance notice; and the risk that the
Chinese government
may intervene or influence your operations at any time, or may exert
more control over
offerings conducted overseas and/or foreign investment in China-based
issuers, which
could result in a material change in your operations and/or the value
of your securities.
Acknowledge any risks that any actions by the Chinese government to
exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers could significantly limit or completely hinder
your ability to offer
or continue to offer securities to investors and cause the value of
such securities to
significantly decline or be worthless. Ensure that each summary risk
factor in this sub-
section and the sub-section titled "Risks Relating to Our Corporate
Structure" also
have cross-references (including page numbers) to the relevant
individual detailed risk
factor.
9. Please amend your disclosure here and in the risk factors section to
state that, to the extent
cash or assets in the business is in the PRC/Hong Kong or a PRC/Hong
Kong entity, the
funds or assets may not be available to fund operations or for other
use outside of the
Eric Ya Shen
FirstName LastNameEric Ya Shen
Vipshop Holdings Ltd
Comapany
August 15, NameVipshop
2023 Holdings Ltd
August
Page 4 15, 2023 Page 4
FirstName LastName
PRC/Hong Kong due to interventions in or the imposition of
restrictions and limitations
on the ability of you, your subsidiaries, or the consolidated VIEs by
the PRC government
to transfer cash or assets.
The PRC government's significant oversight and discretion over our business
operations could
result in a material adverse change in our..., page 43
10. Given the significant oversight and discretion of the government of
the PRC over the
operations of your business, please describe any material impact that
intervention or
control by the PRC government has or may have on your business or on
the value of your
securities. We remind you that, pursuant to federal securities rules,
the term control
(including the terms controlling, controlled by, and
under common control with )
means the possession, direct or indirect, of the power to direct or
cause the direction of
the management and policies of a person, whether through the ownership
of voting
securities, by contract, or otherwise.
Enforceability of Civil Liabilities, page 143
11. In future filings, please disclose in this section if one or more of
your directors, officers or
members of senior management are located in the PRC or Hong Kong, and
identify the
relevant individual(s).
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections,
page 169
12. We note your statement that you reviewed your register of members and
public EDGAR
filings made by your shareholders in connection with your required
submission under
paragraph (a). Please supplementally describe any additional materials
that were reviewed
and tell us whether you relied upon any legal opinions or third party
certifications such as
affidavits as the basis for your submission. In your response, please
provide a similarly
detailed discussion of the materials reviewed and legal opinions or
third party
certifications relied upon in connection with the required disclosures
under paragraphs
(b)(2) and (3).
13. In order to clarify the scope of your review, please supplementally
describe the steps you
have taken to confirm that none of the members of your board or the
boards of your
consolidated foreign operating entities are officials of the Chinese
Communist Party. For
instance, please tell us how the board members current or prior
memberships on, or
affiliations with, committees of the Chinese Communist Party factored
into your
determination. In addition, please tell us whether you have relied
upon third party
certifications such as affidavits as the basis for your disclosure.
14. With respect to your disclosure pursuant to Item 16I(b)(5), we note
that you have included
language that such disclosure is to our knowledge. Please
supplementally confirm
without qualification, if true, that your articles and the articles of
your consolidated
foreign operating entities do not contain wording from any charter of
the Chinese
Communist Party.
Eric Ya Shen
FirstName LastNameEric Ya Shen
Vipshop Holdings Ltd
Comapany
August 15, NameVipshop
2023 Holdings Ltd
August
Page 5 15, 2023 Page 5
FirstName LastName
15. We note that your disclosures pursuant to Items 16I(b)(2), (b)(3), and
(b)(5) are provided
for Vipshop Holdings Limited or the VIEs. We also note that your
disclosure on pages 5
and 108, along with the list of significant consolidated entities in
Exhibit 8.1, appear to
indicate that you have subsidiaries in Hong Kong and mainland China
that are not
included in your VIEs. Please note that Item 16I(b) requires that you
provide disclosures
for yourself and your consolidated foreign operating entities,
including variable interest
entities or similar structures.
With respect to (b)(2), please supplementally clarify the
jurisdictions in which your
consolidated foreign operating entities are organized or
incorporated and tell us the
percentage of your shares or the shares of your consolidated
operating entities owned
by governmental entities in each foreign jurisdiction in which
you have consolidated
operating entities.
With respect to (b)(3) and (b)(5), please provide the required
information for you and
all of your consolidated foreign operating entities in your
supplemental response.
16. We note your supplemental submission pursuant to Item 16I(a) and
disclosure pursuant
Item 16I(b)(3) address ownership or control by Chinese and PRC
governmental entities.
However, we note your definition of China or PRC on page 1
of your Form 20-F
distinguishes between mainland China and Hong Kong. Please
supplementally tell us the
ownership or control by governmental entities in Hong Kong as well as
the PRC.
Notes to the Consolidated Financial Statements
Note 2. Summary of Signiifcant Accounting Policies
(s) Revenue Recognition, page F-26
17. We note per pages 65 and 70 that products on your platform are offered
primarily through
a consignment model. Please tell us whether you obtain control of
these products prior to
their sale, and your consideration of ASC 606-10-25-30 and ASC
606-10-55-79 and 80 in
recognizing the related revenue.
(t) Costs of Revenues, page F-29
18. Please tell us your consideration of including fulfillment expenses
and on-line payment
processing fees within cost of revenues.
19. We note that you provide financing to some of your suppliers by
advancing them cash for
portions of accounts payables owed to them, and that the related
interest received over the
financing periods is presented as a reduction to cost of revenues.
Please tell us the amount
of related interest offset for each period presented, and if material,
tell us your
consideration of quantifying the amount in your discussion on changes
in cost of revenues
in MD&A.
General
20. In future filings, please refrain from implying that the contractual
agreements are
equivalent to equity ownership in the businesses of the VIEs. Any
references to control or
Eric Ya Shen
Vipshop Holdings Ltd
August 15, 2023
Page 6
benefits that accrue to you because of the VIEs should be limited to a
clear description of
the conditions you have satisfied for consolidation of the VIE under U.S.
GAAP.
Additionally, your disclosure should clarify that you are the primary
beneficiary of the
VIE for accounting purposes. Some non-exclusive examples include:
On pages 39 and 47, you refer to having "contractual control" over
the VIE;
On page 109, you state that you "direct" the operations of the VIE;
and
On page 158, you state that you "control" management's decisions.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Aamira Chaudhry at 202-551-3389 or Theresa Brillant at
202-551-3307
if you have questions regarding comments on the financial statements and
related
matters. Contact Austin Pattan at 202-551-6756 or Jennifer Thompson at
202-551-3737 if you
have any questions about comments related to your status as a
Commission-Identified Issuer
during your most recently completed fiscal year. Please contact Nicholas
Nalbantian at 202-551-
7470 or Taylor Beech at 202-551-4515 with any other questions.
Sincerely,
FirstName LastNameEric Ya Shen
Division of
Corporation Finance
Comapany NameVipshop Holdings Ltd
Office of Trade &
Services
August 15, 2023 Page 6
cc: Yuting Wu
FirstName LastName