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I. Preface

Under the fixed tone of "giving priority to the recovery and expansion of consumption", online retailing, which is influenced by Internet penetration and the rise of "home economy", occupies an increasingly important position.

This year’s government work report pointed out that in the past five years, the proportion of online retail sales of physical goods in China’s total retail sales of consumer goods increased from 15.8% to 27.2%. In the rapid growth of nearly doubling, instant retailing with high convenience and timeliness, as an important part of O2O(Online To Offline) home business, has become one of the main engines of new retail in recent years, and is also regarded as the key track of new retail and the blowing "window".

The "Report on the Development of Online Retail Market in China in 2022" released by the Department of Electronic Commerce and Information Technology of the Ministry of Commerce on February 20th this year proposed that the industries and categories of instant retail penetration will continue to expand in the future, covering more application scenarios. In 2023, the Ministry of Commerce will launch a three-year action plan, comprehensively promote the construction of a convenient living circle, promote new online and offline integration models such as online booking and instant retail, and create a new engine for consumption growth.

Second, the definition of instant retail

As the name implies, instant retail is the core, which refers to a new retail format that connects local retail supply and meets consumers’ immediate needs through instant logistics performance. It contains three core elements — — Immediate demand, local supply, immediate performance.

By definition, instant retailing is a service that consumers place orders on the online trading platform, and offline retailers within 3 ~ 5km around perform door-to-door delivery through third-party (or retailer-owned) logistics. The products provided include food and beverage, fresh fruits and vegetables, medical care, digital 3C and other commodities, and the delivery time is usually 30 ~ 60 minutes.

As a new retail model born with the rapid maturity of digital retail and instant delivery business, the biggest feature of instant retail is that it takes physical stores as the supply chain and relies on the instant delivery system to provide consumers with high convenience and high timeliness of home business to meet consumers’ emergency needs or immediate needs under normal conditions.

The main participants in this industry include retailers, brands, e-commerce platforms, and enterprises that undertake logistics and distribution services.

Instant retailing is divided into self-operated mode and platform mode. Comparatively speaking, the platform model is lighter, wider in use, richer in categories, and closely related to physical retail.

Different from traditional e-commerce represented by Tmall and JD.COM, and also different from emerging e-commerce such as social e-commerce and live e-commerce represented by Tik Tok, Pinduoduo and Xiaohongshu, instant e-commerce represented by Meituan, Hungry, JD.COM’s arrival at home and Taoxianda has strong timeliness, and point-to-point convenience services also put forward higher requirements for the service capabilities of platforms and businesses.

Different from catering takeout, instant retailing not only includes food catering, but also includes a large number of standard products, and the goods sold often have strong brand or retail channel brand attributes. If the extension of the concept of "take-away" is constantly broadened, instant retailing can also be regarded as a form of take-away that covers more industries and contents.

Different from retail in the same city, instant retail has stronger delivery timeliness and more limited delivery distance, and mainly relies on offline retailers within a certain range of consumers’ locations to meet users’ shopping needs.

Third, the development and present situation of instant retailing

In the era of accelerated penetration of the Internet, e-commerce and new retail formats have risen rapidly, which has had a great impact on traditional physical retail. However, offline entities always have irreplaceable advantages. With the increasing trend of online and offline integration, online to offline has won the favor of more and more enterprises by virtue of its advantages of opening up online and offline and improving the efficiency of traditional commercial operations. Giants such as Ali, Meituan, JD.COM and even SF have accelerated the layout of related tracks.

Focusing on retail entities and returning to the essence of the industry has also become the main development goal of encouraging the development of new consumption patterns and new formats and cultivating new retail in China in recent years. The Ministry of Commerce believes that instant retailing has effectively promoted the development of online services and localization of e-commerce.

In July 2022, the "Report on the Development of Online Retail Market in China in the First Half of 2022" issued by the Department of Electronic Commerce and Information Technology of the Ministry of Commerce clearly put forward the concept of "instant retail" for the first time, and said that online and offline channels tend to be deeply integrated, and new consumption scenarios such as instant retail, contactless consumption and live broadcast with goods will accelerate the layout and maintain the development momentum. On February 13th this year, Document No.1 of the Central Committee made it clear that in the course of "accelerating the development of modern rural service industry", it will "comprehensively promote the construction of county commercial system and vigorously develop new modes such as joint distribution and instant retail".

Although the concept was clearly put forward last year, the instant retail model existed several years ago. At the beginning, the business of home delivery was mainly concentrated in fresh e-commerce.

According to the "Report on the Development of Online Retail Market in China in 2022" released by the Department of Electronic Commerce and Information Technology of the Ministry of Commerce on February 20th this year, in recent years, instant retail services represented by fresh food, supermarkets and medicines have developed rapidly, and the proportion of all kinds of non-catering take-away business is expanding, and the take-away platform has also developed from a catering-based platform to a "everything delivered to home" platform. In terms of consumer demands, daily shopping is the mainstream appeal of consumers, and emergency shopping is most prominent in health categories, and demands such as "big promotion of buying", "early adopter buying" and "gift buying" are gradually emerging.

In recent years, consumers have begun to use "take-out" as express delivery, and more and more ways are used to solve daily consumption needs, such as take-out and flash purchase, which greatly cultivates users’ habit of "getting home" and puts instant retailing on the stage, making it stand out in the overall O2O market and become an engine that outperforms the general trend.

Coupled with the factors of joint efforts of government and enterprises, the O2O market with instant retail as the leader has expanded rapidly in recent years.

According to the White Paper on Instant Retail Open Platform Model published by China Chain Store & Franchise Association (hereinafter referred to as the White Paper), the overall market size of O2O exceeded 3.3 trillion yuan in 2021, of which the growth rate of home business in recent five years was 64%, which was the internal driving force for the growth of O2O market. As an important part of O2O home-to-home business, instant retail has grown significantly, with the market scale increasing by 81% in the past five years. It is expected that its contribution rate to O2O home-to-home business will continue to increase in the future, and it is expected to drive the growth of the overall market scale of O2O.

Focusing on O2O home delivery business, this cake with a market scale of more than 2 trillion in 2021 is mainly composed of two sub-businesses: catering take-out and instant retail. Due to the late start, instant retail accounts for a relatively low proportion. However, with the growth rate higher than the overall home-to-home business, the White Paper predicts that the compound growth rate of instant retail will continue to be high in the next few years. It is estimated that by 2026, the market size of instant retail will reach about 1.2 trillion yuan, becoming an important part of O2O home-to-home business.

IResearch also predicts that the order size of the instant delivery service industry in China is expected to be close to 100 billion in 2026, and the instant retail that has stood on the "window" will continue to maintain rapid growth, and it is expected to become the mainstream of the retail industry in China in the next 10 years.

Fourth, the main modes and players of instant retailing

In terms of business model, instant retailing is mainly divided into self-operated model and platform model.

Self-operated mode means that the merchants build their own stores or warehouses and online platforms, and at the same time have the ability of independent distribution, and are responsible for the whole chain management of goods. On behalf of enterprises, there are Boxma Xiansheng, Dingdong Shopping, Wal-Mart and Pupu Supermarket.

The platform mode means that the platform itself does not directly own the goods, but relies on the Internet platform to effectively link the online consumer demand with the offline stores, and the performing party provides instant delivery capacity services to deliver the goods in the stores to consumers. Representative enterprises include Meituan, JD.COM, Hungry, Taoxianda, etc.

Main players in platform mode:

(1) Meituan Flash Purchase

Meituan Flash Shopping is an instant retail platform under Meituan, which was officially released as an independent brand in 2018.

As a natural extension of the take-away business, Meituan Flash Shopping has gradually expanded from catering to supermarket convenience, specialty stores, drinks and snacks, fresh fruits and vegetables, green flowers, pet mothers and babies, digital books, daily cosmetics, household appliances and groceries.

In the past five years, from the first single non-food business to providing digital transformation solutions for brands and retailers, Meituan Flash Shopping has stood on the shoulder of Meituan Takeaway, and has also inherited its core resources — — 690 million young, high-quality users with strong growth and high consumption power, and a huge instant delivery network covering more than 2,800 urban counties and flags and with more than 5 million US group riders. This allows Meituan’s goods to be delivered in 30 minutes, which has strong "immediate" performance ability and distribution service advantages.

In 2020, Meituan piloted Meituan Lightning Warehouse in Beijing, Shanghai and other cities, which was similar to the pre-warehouse mode, focusing on daily consumption and fast-moving consumer goods, and basically did not sell fresh food. By the end of 2022, Meituan Lightning Warehouse has grown to more than 2,000, covering more than 180 cities across the country.

In 2021, the strategic adjustment of Meituan was upgraded from "Food+Platform" to "retail+technology", and the retail special group was led by Wang Xing himself, which showed the importance. In September 2021, Meituan held the "2021 Meituan Flash Shopping Digital Retail Conference" for the first time, announcing the launch of the "Billion Brand Growth Plan" for brand owners and the "Hundred Cities and Ten Thousand Stores Action" for chain stores. Meituan proposed that the retail market will enter the era of "Everything Now" from "Everything Store".

Since the second quarter of 2022, the strategic position of Meituan Flash Shopping has been greatly improved. The business statistics of financial reports are divided into core local businesses and new businesses, while Meituan Flash Shopping is divided into core local businesses from new businesses. According to the data as of June, 2022, the average daily order volume of Meituan’s flash purchase reached 4.3 million orders, and the peak daily order volume in Chinese Valentine’s Day last August reached 9.7 million orders, close to 10 million orders. Meituan’s financial report shows that in the second quarter of 2022, the number of Meituan’s instant delivery orders increased to 4.1 billion, and the quarterly revenue of core local commercial sectors including food and beverage takeout and Meituan’s flash purchase business increased to 36.8 billion yuan.

(2) JD.COM arrives home.

JD.COM Home is an instant retail brand owned by JD.COM, which was officially launched in 2015.

Relying on JD.COM App, JD.COM Home App and small programs, JD.COM joined hands with Dada Express Delivery and retail partners to provide consumers with an instant consumption service experience of supermarket convenience, fresh fruits and vegetables, mobile phone digital, medical health, home fashion, personal care and beauty, cakes, clothing, home appliances and other massive commodities delivered to their homes in about one hour.

On the supply side, JD.COM Home has successively cooperated with Yonghui Supermarket, Wal-Mart, CR Vanguard and other supermarkets in the past eight years, and merged with Dada to form Dada-JD.COM Home.

On the platform side, on October 11th, 2021, JD.COM released JD.COM Hourly Shopping, which fully integrated the advantages and resources of JD.COM Retail and JD.COM Home Shopping. Users bought goods with the logo of "Hourly Shopping" on JD.COM APP, which will be delivered directly from the surrounding stores 3 ~ 5km away and delivered within one hour. This is the collection of all the instant retail capabilities that can provide goods with hourly service in JD.COM ecological domain, which marks the realization of full LBS (Location-based Service) in JD.COM App and a key step in the layout of local retail in JD.COM. In 2022, JD.COM’s "hourly shopping" also opened the New Year Festival to ensure that the Spring Festival would not be closed.

Focusing on traffic empowerment, fulfillment empowerment, user empowerment, commodity empowerment and marketing empowerment, JD.COM Home provides online and offline integrated instant retail solutions for traditional retailers, and helps physical stores to have online fulfillment and refined operation capabilities, greatly improving floor efficiency and human efficiency, and achieving long-term online performance growth. Among them, in terms of traffic, JD.COM’s home and JD.COM’s dual-App operation opened the search portal for 590 million active users in JD.COM.

By the first quarter of 2022, JD.COM Daojia and JD.COM Hours Shopping had established cooperation with 86 of the top 100 supermarkets in China, covering more than 1,800 counties and cities in China, with over 200,000 offline active stores and serving over 75.4 million active consumers. According to the financial report for the fourth quarter and the whole year of 2022 released by Dada Group on March 9 this year, in 2022, the total transaction volume (GMV) of JD.COM Home Platform reached 63.3 billion yuan, up 47% year-on-year, and the number of active stores exceeded 220,000, up 50% year-on-year.

(3) Hungry

Hungry? It’s an instant retail platform owned by Alibaba.

At the beginning of its establishment in 2008, Hungry took "Everything 30min" as its mission, mainly engaged in online take-out, new retail, instant delivery and catering supply chain, which promoted the digitalization process of China catering industry. In 2018, it was wholly acquired by Alibaba and Ant Financial for $9.5 billion. Since then, hungry people have been fully integrated into the new retail strategy promoted by Alibaba, which has opened a new upgrade to expand the new retail of local life services.

On October 12, 2018, Alibaba announced the establishment of a local life service company to integrate Hungry with Word of Mouth. On June 17th, 2020, 100% of hungry people went online, and all business systems and database facilities were moved to Alibaba Cloud, supporting 100 million people to order online at the same time. On July 10th of the same year, when I was hungry, I announced that I had upgraded from a food and beverage take-out platform to a life service platform to solve all the immediate needs of users, and the service was upgraded from "take-out" to "send everything". Hungry brand advocates have changed from "good but not expensive, full of flavor" to "what you love, what you come for", and the food delivery service has been upgraded to all kinds of home service, including daily necessities, medicines, flowers, fresh food, running errands and many other consumer goods.

In the home business, if you are hungry, continue to focus on strategic cities to improve user retention and operational efficiency, and enhance the growth of non-meal delivery services. In recent years, if you are hungry, the joint merchants continue to upgrade the service standards in the real-time field, and launch several innovative services such as sunshine fruit cutting and melting, and are committed to consumers’ better realization of "rest assured and arrive on time" in a fast-paced life.

According to the 2022 blue rider Development and Security Report, 1.14 million riders will earn a stable income by being hungry in 2021. Hungry? According to the official website data, Hummingbirds have an average daily delivery order of 4.5 million, and the number of cooperative merchants has reached 3.5 million. The delivery service covers 2,000 large, medium and small cities and counties, and more than 3 million people have joined the ranks of Hummingbird Knights.

According to the Q3 financial report for the fiscal year 2023 (as of the end of December 2022) released by Alibaba, Ali’s local income was 13.164 billion yuan, up 6% year-on-year, and its operating loss was 5.473 billion yuan. The financial report shows that the overall order volume of Ali’s local life services in the current period increased flat year-on-year. Among them, the hungry home business continued to record positive GMV growth, the destination business was affected by the epidemic, and the overall order volume slowed down in December.

(4) Taoxianda

Taoxianda is an instant retail platform under the same city retail business group of Alibaba, which was officially launched in May 2017.

Different from the above three companies, Taoxianda initially positioned itself as "supermarket goods can reach every hour", realizing local supermarkets to settle in and consumers to shop at home for one hour. In recent years, Taoxianda has gradually extended from the supermarket category to more near-field demand categories, providing all-round near-field services covering supermarket categories, flowers and green plants, medicines, fresh fruit and fruit cutting, coffee and so on, and continuing to maintain the one-hour delivery time limit.

As a part of Alibaba’s new retail strategy, Amoy Star serves the traditional retail industry by helping businesses digitally transform their physical stores and providing online and offline integrated product solutions. At present, more than 30 physical retailers have settled in and more than 2,600 stores have been launched. They are committed to building a life consumption platform with good quality, good experience and good price, and provide multi-layer performance services for nearly 240 cities across the country with one-hour delivery and half-day delivery. By 2022, Taoxianda has accumulated 200 cooperative brands, basically achieving the brand coverage of the standard category.

Taoxianda takes the homepage of mobile phone Taobao as the main online entrance, and at the same time carries out multi-position operation of mobile phone Taobao, Alipay, mobile phone Tmall, and Ali ecological global link, linking traditional large supermarkets, flower shops, drug chains, fruit chains and convenience store chains within 3-5 kilometers for consumers of billions of scales. Based on Taobao’s powerful digital ability, it ensures a richer choice of product width. Taoxianda helps consumers place orders anytime and anywhere through mobile phone Taobao, and purchase all the needs of daily life in one stop. At present, Taoxianda is provided with delivery service by hummingbirds.

V. Comparison between the two modes

The two modes of instant retail have their own advantages and disadvantages, but from the perspective of their business attributes, the open platform mode has attracted more attention from the outside world and is regarded as the main market with fierce competition in the future.

(1) Platform mode

Because the platform model does not own goods directly and does not need to invest heavily in laying offline stores, it takes up less capital, and belongs to the model of asset-light strategy, which is more conducive to the rapid expansion of the market, and also helps to focus on online traffic operation and the improvement of logistics distribution capacity.

Compared with the self-operated mode, by continuously expanding the types, scope and quantity of settled businesses, the integrated products will be richer in categories, often covering all categories such as grain, oil and non-staple food, snack food, fresh fruits and vegetables, mobile phone digital, medicine and health, personal beauty care, flowers, cakes, clothing, home and small household appliances, which can meet the instant consumption needs of consumers.

As far as traffic is concerned, the platform model mainly relies on the entrance of the Internet platform. Because the digital gene has a strong traffic resource base and operational ability, it can bring new traffic to many offline retailers and brands, help offline entities reach the surrounding consumers more efficiently, and provide a complete set of digital solutions for online and offline integration.

The revenue of the platform model mainly comes from the service fee of the platform, and profits are realized through the scale effect generated by the platform.

(2) Self-operated mode

The self-operated mode mainly sells products directly owned and operated by the merchants themselves, so it needs to purchase, invest money to build a large number of pre-warehouses or stores online, and train teams to complete all links such as sorting, distribution, and management and operation of commodity inventory, so it needs a large cost investment and belongs to a typical heavy asset operation. Most of the self-operated models are vertical fresh e-commerce or large-scale offline supermarkets. This operating model requires enterprises to have high profitability and business expansion capabilities, otherwise they will easily fall into a state of loss.

Compared with the platform model, the self-operated model not only has higher cost, but also has lower variety and brand richness. On the one hand, it is necessary to purchase or customize production from brands or suppliers, and on the other hand, it is necessary to ensure the efficiency of performance. Because we have to take care of all links from procurement, operation to sorting and distribution, the expansion space is smaller than that of the platform model, but the overall management and control are relatively centralized.

The self-operated mode is similar to the profit mode of traditional stores. The income mainly comes from the difference between the purchase and sale of goods, and the circulation efficiency of goods is improved through automation, digitization and other ways, thus increasing profits.

Vi. Major Players’ Dynamics in 2023

Instant retail stations are popular, attracting a lot of players. Prior to this, Baidu take-out and Didi take-out had been laid out, but in the end they all chose to leave for different reasons. Recently, Internet giants such as Tik Tok and WeChat have been reported to enter the take-away business one after another, hoping to get a slice of instant retail. It is certain that while the market structure is taking shape, the competition in this field will become more and more fierce.

Then, in 2023, when the economy is accelerating recovery, what actions will the main players take?

(1) Meituan Flash

As an important part of Meituan’s instant retail, Meituan’s pre-warehouse e-commerce business, Meituan’s grocery shopping, will become one of the focuses of this year’s efforts.

In February this year, Suzhou Kaesong plan, which was put on hold at the beginning of last year, was restarted, and the site selection has been completed locally, and it will be opened in the near future. In addition, Meituan will go to more East China cities to start a new round of expansion plans on the premise of ensuring breakeven this year. At present, Meituan has more than 500 pre-positions for grocery shopping, and the average daily order quantity is stable at more than 1.1 million.

At the same time of expansion, Meituan is also strengthening in-depth cooperation with more leading brands to promote the joint business plan of merchant brands. For example, in February this year, it signed a joint business plan for 2023 with Yili, and announced that it would cooperate deeply in the Internet retail field of a full range of products such as fresh milk, yogurt and ice cream. The two sides will fully cooperate in new product launch, Internet brand marketing and supply chain optimization to continuously optimize the consumer experience.

As one of the instant retail platforms with the largest number of riders, Meituan will continue to increase investment in riders this year to ensure the efficiency of performance and service quality. At the beginning of this year, Meituan launched the "Spring Breeze Sending Jobs" campaign in 2023, and launched six major measures, which not only opened 500,000 rider posts, but also launched live recruitment and special recruitment, expanded the employment opportunities of part-time riders, and developed exclusive functions for key groups, and continuously improved the "novice system" and channels for promotion, job transfer and academic upgrading to attract and retain talents. On February 13th, Meituan Flash Delivery also announced the measures to optimize the orders for large items, and optimized the delivery rules for "large-volume, large-weight and high-price" orders such as flowers, beauty cosmetics and mobile phones, so that riders can get large-order delivery subsidies in special scenes.

In addition, it is reported that Meituan Consumer Finance will be established in 2023, which indicates that Meituan will use financial technology to empower instant retailing.

(2) JD.COM arrives home.

For JD.COM to get home, it is the key direction in 2023 to continue to expand the coverage of joint brands and businesses, and make efforts to sell high-frequency repurchased products such as fresh food and vegetables, and further give play to the advantages of digital intelligence to improve the performance efficiency.

In the first quarter of this year, JD.COM signed a new contract with chain stores such as Good Sale and Convenience Bee, and has cooperated with 90% of the top 100 supermarkets. At the same time, it also newly signed fresh brands such as Jiawo, dairy brands such as Uno, and wine brands such as Jiang Xiaobai, and continued to increase instant retail.

In February, it was also reported that JD.COM was testing the "JD.COM Shopping" project in a low-key way, and the possibility of independent channels, apps, etc. was not ruled out. The news has not been officially confirmed, but JD.COM, which is good at low-frequency products such as 3C digital, hopes to further strengthen the business attributes of fresh food and food shopping in JD.COM in instant retail brands, and it is undoubtedly a high probability trend to increase the sales of high-frequency products. In fact, constantly expanding categories and scenarios to attract as many consumers as possible is also the direction of all instant retail platforms.

In terms of shopping convenience and performance service, JD.COM will continue to give full play to the advantages of omni-channel layout and digital intelligent supply chain when he gets home, and further improve the performance efficiency of brand owners and physical stores. In March this year, JD.COM signed a strategic cooperation agreement with Xiaotiancai, a smart wear brand. Focusing on the "hourly purchase" business, all parties will cooperate in many aspects, such as commodity management, omni-channel digital marketing, refined operation of users, and optimization of performance efficiency, so as to jointly create an ecological closed loop of instant consumption of e-education categories, enhance consumers’ instant retail experience, and explore new growth in the instant retail market. By March, 2023, the number of stores that Xiaotiancai cooperated with JD.COM Hourly Shopping has exceeded 5,000, and the goal is to achieve the online hourly shopping business in JD.COM with over 6,000 stores by the end of 2023.

(3) Hungry

In 2023, hungry people who started from food and beverage take-out will continue to consolidate their advantages and help the food and beverage brands to grow further through various measures in four dimensions: content marketing, product building, event marketing and omni-channel shelves.

In addition, if you are hungry, you plan to take the word "Jin" as the first step this year. On the basis of undertaking 30 municipal government coupon projects in 2022, you will further promote the integration of data and reality and promote new forms of employment.

For physical stores, if you are hungry, you are committed to helping businesses to take the "three small steps" of integration of numbers and reality: taking the first step on the platform for businesses with caring service, promoting businesses’ single-volume business with creative marketing, and driving businesses’ consumption innovation with scene creation.

In terms of performance services, the promises of "rest assured" and "on time" will continue to be fulfilled. At the same time, we will continue to strengthen the protection of riders, continue to optimize the "rider growth and development system", and serve the development of riders in an all-round, full-coverage and whole-process manner, so that more workers can truly feel that flexible employment can become a long-term career.

At present, Alibaba’s local business sector with the strategic framework of "home+destination" has gone hand in hand in the past, and has made certain progress as a whole. Among them, the progress of being hungry is remarkable — — Due to the continuous improvement of economic benefits per unit and the increase of average order value year by year, the loss of Ali Life Service Plate accelerated and narrowed due to the continuous improvement of business operations. This trend is expected to continue this year.

(4) Taoxianda

From the taste of the year to the flowers and rain gear for Valentine’s Day, and then to the one-hour service of the "licensed photo suit", a series of actions of Amoy Xianda are highlighted this year. This instant retail platform, which was originally positioned as "supermarket goods can reach the hour", is moving towards a more comprehensive product category and more service scenarios, and is constantly breaking through in performance efficiency.

In February this year, the first batch of flower shops in Hangzhou settled in Taoxianda, and the service was delivered within five kilometers around the store within one hour. Considering that Valentine’s Day on February 14th is also the wedding peak, Taoxianda also launched a "licensed photo suit". Consumers can enter Taoxianda through Taobao’s homepage, and place an order with one button, including a product set with flowers, veil and swastika, which will be delivered to the photo scene in one hour. In addition, Taoxianda is also accelerating access to more local businesses, such as reaching a strategic cooperation with the flagship store of adult stores, further increasing the convenience of consumers’ shopping and the timeliness of arrival.

At the beginning of this year, it was reported that Tmall was planning an "hourly shopping" business, which was called the retail version of Hungry. Liu Peng, Alibaba’s vice president and president of Alibaba’s B2C retail business group, took the first position and is currently building a business team. However, the relevant person in charge replied that "Hours Reach" means "Amoy Fresh Reach", and consumers can click "Amoy Fresh Reach" on the homepage of Taobao App to experience the one-hour express delivery service of fresh fruits and vegetables, rice flour, grain and oil, daily necessities and other commodities. It seems that Ali, who already has a hungry horse and a box horse, will pay more attention to the investment of Amoy Fresh, thus forming three instant retail business lines to accelerate the opening of the situation.

Seven, instant retail development trend

The extension and expansion from food and beverage take-out and supermarket delivery to more retail scenes will be the development trend of instant retail, thus showing the characteristics of wider customer base, more scenes and more comprehensive demands on the consumer side, while showing the advantages of more comprehensive products, more brands and wider regions on the supply side.

As far as the consumer side is concerned, the extension of more retail scenes, such as the consumption expansion from a single home to hotels, administrative institutions and other scenes, will inevitably meet the more diverse demands of more customers, and accelerate the demand expansion from "daily purchase" and "emergency purchase" to "big promotion purchase", "early adopter purchase" and "gift purchase" and so on. In terms of coverage, it will accelerate its penetration from first-and second-tier cities to cities and villages in the third and fourth lines and below.

The improvement of consumer demand needs the upgrading of the supply side, and it will also drive the changes of the supply side.

Looking back, the initial instant retailing was mainly catering, food and beverage and fresh products, but in the process of development, it gradually extended to more categories such as mobile phone digital, medical health, personal beauty care, flowers, clothing, home and small household appliances. In the future, it will expand from leading brands to more brands, and more regional specialty products are expected to be included in the field of instant retailing, expanding sales channels and better meeting the needs of consumers.

From the platform side, the platform will continue to deepen the operation of traffic and the performance of services, thus continuously improving the traffic and service empowerment for retailers and brands.

Among them, in terms of traffic operation, the future instant retail open platform will evolve into a cooperative and open platform, which will gather not only the traffic portal of the platform itself, but also more retail scene traffic including content e-commerce and live broadcast.

In terms of performance services, the platform will continue to break through on the basis of the current hourly experience, and achieve minute-level, even faster and smarter performance efficiency by introducing more unmanned intelligent technologies. At present, the performance service of basic commodities will be further extended to product-related peripheral services, and financial technology elements such as consumer finance will be integrated to improve the innovation and attractiveness of services.

In terms of empowering retailers and brands, the platform is currently mainly based on big data to help retailers and brands to carry out omni-channel marketing promotion, provide marketing decision-making assistance to continuously optimize marketing strategies, and at the same time operate the full link for instant retail stores to help traditional retailers realize digital transformation, so as to improve the operational efficiency of stores and thus enhance the consumption experience. In the future, such empowerment will expand from marketing and store operation to a longer chain and a more complete product cycle such as supply chain management, helping traditional retailers and brands to provide the ultimate service that matches the needs of consumers in time in the evolution of C2M (Customer-to-Manufacturer).

From the 13th to 15th day of the first month of 2023, the Dunhuang Municipal Bureau of Culture, Sports, Radio, Television and Tourism, the Dunhuang Cultural Center and the Dunhuang Ancient City Scenic Area jointly presented the large-scale Dunhuang folk intangible cultural heritage performance "Dunhuang Iron Flower" to the general public, which was the first time that the second Dunhuang Ancient City Light Show joined the performance of intangible cultural heritage.

Tie Hua is a large-scale traditional folk fireworks, and it is a folk cultural performance skill discovered by China ancient craftsmen in the process of casting utensils. It started in the Northern Song Dynasty, flourished in the Ming and Qing Dynasties, and has a history of more than a thousand years. "Tie Tie Hua" originated from the sacrificial activities of craftsmen. According to legend, at the beginning of each year, before the opening of the five craftsmen, the first craftsmen will set up a flower shed through consultation, and set up a god shed in the north of the flower shed, facing the south, and choose an auspicious day to offer various sacrifices in laojunmiao and the Temple of Fire in the county. After that, all the people in the shops and shop names of the five craftsmen carried the statue of the old gentleman enshrined in our shop and marched in line, blowing and beating and setting off firecrackers all the way to the shed. All craftsmen’s shops along the way should set up incense table offerings to welcome them. After the team arrived at the shed, they put the statue of the old gentleman in the shed and held a sacrificial ceremony, asking the old gentleman and Vulcan to bless peace throughout the year, prosperous business and wealth in all seasons. Start playing flowers at night. Most of the people who take part in the flower-playing are craftsmen in various stores. Before the flower-playing, they should bow down and change clothes in the shed, asking the gods to protect their safety and avoid burns.

The event of Dunhuang Ancient City was held for three days, and the cumulative number of visitors reached more than 3,000, which added some flavor to Dunhuang people after the Spring Festival holiday. The artists who participated in this performance mentioned in the interview that as an intangible cultural heritage in China, Tiehua has a long history of skills, magnificent performances and grand scenes. Usually, more than a dozen flower-beaters are needed to stick one after another, one by one, between the furnace and the flower shed. One stick of iron flower soars into the sky, and another stick comes one after another. The sticks are connected in an endless stream. The iron flower splashes, meteors are like waterfalls, firecrackers are ringing in unison, and the sound shakes the sky. "We also hope that through such performances, the general public can see, understand and participate in the intangible cultural heritage, and at the same time express the good wishes of’ striking while the iron is hot, the grain will be abundant, and it will be auspicious for the country and the people.’"

Lanzhou Daily All-Media Reporter Fei Yongzhen Wang Xuan Bao Xuefeng Wen/Poster/Video

Shi Yuhan, editor of the first instance

Liu Yuwei, Duty Officer of the Second Trial

Wang Wenxue, Editor-in-Chief of the Third Trial.

The operating comments of the Board of Directors of Nanxin Technology in 2023 are as follows:

　　I. Discussion and analysis of business conditions

　　In 2023, influenced by macro factors such as weak terminal market and slow economic development, the global and even domestic semiconductor market is under great pressure. According to the data of the World Semiconductor Trade Statistics Organization (WSTS), the global semiconductor market scale is expected to decrease by 9.4% to 520.1 billion US dollars compared with the same period of last year. With the advantages of technological innovation, product research and development and customer barriers, the company enriched product categories and improved product layout, and achieved steady growth in performance during the reporting period.

　　During the reporting period, the company achieved an operating income of 1,780,402,300 yuan, an increase of 36.87% compared with last year; The net profit attributable to shareholders of listed companies was 261,357,500 yuan, an increase of 6.15% over the same period of last year; The gross profit margin of the main business was 42.30%, a decrease of 0.74 percentage points compared with the same period of last year.

　　At the end of the reporting period, the company’s total assets were 4,461,859,900 yuan, an increase of 93.63% over the end of the previous year; The net assets attributable to shareholders of listed companies were 3,699,036,800 yuan, an increase of 244.34% over the end of last year. In line with the profit distribution conditions, the company actively promotes the profit distribution to shareholders. In 2023, based on the total share capital of 423,530,000 shares, the company plans to distribute a cash dividend of 118,588 2.8 yuan (including tax) for every 10 shares, accounting for 45.37% of the net profit attributable to shareholders of listed companies in 2023.

　　(a) the overall operating condition is stable, and the performance in a single quarter continues to improve.

　　In the case of the overall market downturn, the company has continuously broadened its product layout around application scenarios and continuously introduced products with market competitiveness, and its performance has continued to improve. The company’s operating income in each quarter in 2023 was 285,668,200 yuan, 374,791,500 yuan, 545,396,400 yuan and 574,546,200 yuan respectively, and the annual performance maintained an overall upward trend. In 2023, the gross profit margin of the company’s main business was 42.30%, a decrease of 0.74 percentage points compared with 2022, and its profitability remained stable.

　　(B) Insist on increasing R&D investment and increasing the achievements of R&D teams.

　　During the reporting period, the company invested 292,517,100 yuan in R&D, an increase of 57.02% over the same period of last year; By the end of the reporting period, the number of R&D personnel in the company had increased to 378, an increase of 32.17% over the same period of last year, and the number of R&D personnel accounted for 65.40% of the company.

　　In 2023, the company obtained 29 new authorized invention patents, and accumulated 89 patents, all of which were invention patents. The company has added seven core technologies, all of which are independently developed, namely, lithium battery monitoring technology, zero-voltage switching charge pump control technology, low-voltage self-starting technology, secondary control fully integrated soft-switching Fyback technology, SmartHighSideDriver technology, automotive smart fuse technology and automotive antenna LDO technology, and all of the above technologies have been applied to the company’s products.

　　(3) Enrich product models and actively expand emerging application fields.

　　As one of the leading analog and embedded chip design companies in China, the company continuously improves product layout around application scenarios to provide customers with better end-to-end complete solutions. While deeply cultivating the original advantageous fields such as smart phones, the company is also actively expanding into the fields of automotive electronics and industrial applications.

　　1. Key investment in automotive electronics business, and significant progress has been made.

　　According to the data of China Association of Automobile Manufacturers, in 2023, China’s automobile production and sales reached 30.161 million and 30.094 million respectively, up by 11.6% and 12% respectively, and the annual production and sales both reached record highs. Benefiting from the growth of the automotive electronics market and several new automotive products, during the reporting period, the company achieved an operating income of 30,641,000 yuan in the field of automotive electronics applications, an increase of 89.02% over the same period of last year, and the products were introduced to many well-known head customers in the industry.

　　The company attaches great importance to the automotive electronics business, invests a lot of resources, and develops several projects at the same time. The company cut into the automobile head manufacturer from the vehicle-mounted wireless wired charging, and with the ability of rapid iteration and continuous innovation, it constantly expanded the layout of new categories, and carried out product layout planning in the fields of automobile instruments, intelligent cockpit, ADAS and BMS. During the reporting period, the company’s USB and wireless charging solutions were mass-produced at the client; High-performance DC-DC power chips, HSD chips, E-fuse chips and other new products have achieved scale sample delivery at the client, and some customers have entered the fixed-point design stage of the project.

　　2, the smart phone power management chip covers the whole link, so as to improve the single-machine value.

　　During the reporting period, the company’s mobile phone wired charging chip continued to introduce products with higher integration and higher performance, which can achieve a maximum fast charging power of 300W, further maintaining its leading position in the industry and helping customers further improve the charging power and experience of products.

　　Through the application scenario traction, the company improved the product layout of the overall charging link of smart phones during the reporting period, and achieved full coverage of wired charging, wireless charging, screen driver chips and lithium battery protection chips. With the help of wired charging chips, the company has reached a deep cooperative relationship with domestic mainstream mobile phone manufacturers, and actively promoted the introduction of other product lines in the field of mobile phones, improving the stand-alone value of the company’s products in mobile phones.

　　3. Enrich the product matrix and actively expand the industrial application market.

　　The company continues to enrich product categories and plans to achieve end-to-end product layout in the industrial field; Actively expand the market of products in industrial and other fields, and achieve certain results in the fields of energy storage, drones, power tools, communications, etc., and it is expected to be further introduced into industrial power supply, AIPower and other fields in the future.

　　(D) the construction of reliability laboratories, improve quality management.

　　The company attaches great importance to quality management and establishes a quality management system according to the requirements of TS16949. The product quality has been recognized and trusted by many well-known domestic terminal manufacturers. During the reporting period, the company successfully completed the highest level certification of ISO26262 functional safety management system -ASILD level certification, and the overall product quality system moved to a new level.

　　The company actively builds its own test center, and obtains instant, accurate and complete feedback data by customizing specialized test procedures for key nodes in the process of new product research and development, thus giving positive effects to product research and development to the maximum extent. In 2023, the company has completed the construction of the second phase of the reliability laboratory. With the second phase of the laboratory put into use, the company’s quality management ability will continue to gain.

　　(E) Perfect supply chain management to improve product competitiveness.

　　The company attaches great importance to the construction of supply chain capacity, seeks cooperation with leading manufacturers in the industrial chain in supplier selection, and has established efficient linkage mechanism and long-term stable cooperative relationship with suppliers such as upstream wafer manufacturers and packaging and testing manufacturers.

　　The company’s main wafer suppliers and main packaging and testing suppliers are mainly well-known enterprises in the industry. They not only have advanced production technology to ensure the yield and consistency of products, but also are local partners, which is conducive to the independent control of the company’s supply chain, which can effectively guarantee the company’s capacity supply and reduce the impact of capacity fluctuation on the timeliness of product delivery. At the same time, because the company tilts its production capacity to the head supplier and increases the demand for orders, it can gain a better price advantage. In addition, through strategic cooperation with upstream suppliers and the development of their own processes, the company can maintain the leading position of products in wafer manufacturing process and packaging process, and further improve the competitiveness of products.

　　(six) pay attention to personnel training and establish a long-term incentive system.

　　In the process of development, the company always regards talents as the core resources of the company, and does a good job in talent construction for the large-scale growth and long-term development of the company. In 2023, the company actively broadened the channels for introducing talents, efficiently integrated R&D resources, and continuously optimized the talent team. By the end of the reporting period, the company had a total of 578 employees, including 378 R&D personnel, accounting for 65.40% of the total number of employees, of which 55.56% were R&D personnel with master’s degree or above.

　　In order to promote the construction of talent echelon, the company pays attention to employee training, optimizes talent training scheme, improves the construction of talent training system, and standardizes internal training management and professional technology sharing and exchange system. During the reporting period, the company formulated the restricted stock incentive plan for 2023. Through the implementation of the restricted stock incentive plan, 8,701,394 restricted shares were granted for the first time, which fully mobilized the enthusiasm of the company’s employees and effectively combined the interests of shareholders, the company and employees, so that all parties concerned about the long-term development of the company.

　　II. Description of the company’s main business, business model, industry and R&D during the reporting period.

　　(a) the main business, main products or services.

　　Nanxin Technology is one of the leading analog and embedded chip design enterprises in China. Its main business is the research, development, design and sales of analog and embedded chips, focusing on the field of power supply and battery management, and providing customers with end-to-end complete solutions. The company’s existing products have covered mobile device power management chips (including line charging management chips, wireless charging management chips, lithium battery management chips, and other mobile device power management chips), general power management chips, adapter power management chips, and automotive electronic chips. By building a complete product matrix, it meets the application needs of customers’ systems.

　　With the business vision of "becoming the world’s leading analog and embedded chip enterprise", the company has launched high-performance power supply and battery management chips in the fields of consumer electronics, industry and automotive electronics with efficient research and development capabilities, excellent technological innovation capabilities and strict quality control capabilities, helping domestic chips to be self-controllable. The company has established an efficient linkage mechanism and long-term stable cooperative relationship with upstream wafer manufacturers, packaging and testing manufacturers and other suppliers, which has improved the company’s supply chain capability; The company has established an increasingly close partnership with terminal brand customers, kept abreast of the new direction and trends of demand-side technology in good cooperation, and conducted targeted R&D iterations on products, thus improving R&D efficiency. In the future, the company will continue to strengthen technology accumulation, increase R&D investment, continue to iteratively upgrade existing products, continuously enrich the product matrix, enhance its advantages in the field of consumer electronics, further expand its applications in industrial and automotive electronics, and strive to become the world’s leading analog and embedded chip enterprise.

　　(II) Main business models

　　During the reporting period, there was no significant change in the company’s business model. The business model adopted by the company is the Fabess model of peers in the industry, mainly focusing on the design and sales of chips, and outsourcing wafer manufacturing, packaging and testing to third-party wafer manufacturing and packaging testing enterprises.

　　1. R&D mode

　　The company adopts the business model of Fabess, and product design and research and development are the core of the company’s business. The company attaches great importance to the construction and management of R&D innovation system, and has long been committed to establishing a standardized product R&D process and quality control system to ensure that all product series can achieve high-quality product design, effective quality assurance and reliable risk management at all stages of R&D. The company’s specific R&D process includes business processes such as project establishment stage, project design stage, product verification and mass production stage to ensure that the R&D and verification processes of products can be effectively controlled and managed.

　　2, procurement and production mode

　　The company focuses on the research, development and sales of chips. By entrusting the wafer factory and the packaging and testing factory external processing to complete the wafer manufacturing and packaging testing, the company itself is only engaged in the testing of some chips. This model is technology-driven, flexible and efficient.

　　In Fabess mode, the company mainly carries out research and development, sales and quality control of chip products, and the production of products is completed by outsourcing mode, that is, the company submits the integrated circuit data independently developed and designed to the wafer factory for wafer manufacturing, and then submits the manufactured wafers to the sealing and testing factory for packaging and testing. At present, the company mainly purchases wafers and their related packaging and testing services, and the company’s wafer foundry manufacturers and packaging and testing service providers are mainly well-known enterprises in the industry.

　　3. Sales model

　　At present, the company adopts the sales mode of "distribution is the main, supplemented by direct sales", that is, the company sells products through distributors and directly to terminal manufacturers. Direct selling mode means that the company sells its products directly to the end customers, and distribution mode means that the company sells its products to dealers outright.

　　(3) the industry situation

　　1. The development stage, basic characteristics and main technical threshold of the industry.

　　1. Industry

　　The company’s main business is the research and development, design and sales of analog and embedded chips, and its industry belongs to the integrated circuit design industry. According to the National Economic Industry Classification of People’s Republic of China (PRC) (GB/T4754-2017), the company belongs to "Computer, Communication and Other Electronic Equipment Manufacturing" in "Manufacturing", and the industry code is "C39". The integrated circuit design industry in which the company is located belongs to the encouraged industry stipulated in the Guidance Catalogue for Industrial Structure Adjustment (2019 edition) promulgated by the National Development and Reform Commission. The competent government department is the Ministry of Industry and Information Technology, and the industry self-regulatory organization is the China Semiconductor Industry Association.

　　2. Overview of industry development

　　(1) integrated circuit industry

　　Integrated circuit industry is the core of information technology industry, and it is a strategic, basic and leading industry that supports economic and social development and guarantees national security. Integrated circuit products can be mainly divided into digital chips and analog chips according to their functions, in which digital chips refer to integrated circuit chips designed and operated based on digital logic and used to process digital signals, including micro-components, memory and logic chip adapter power management chips; Analog chip refers to an integrated circuit chip that processes continuous analog signals.

　　As the market performance in the second and third quarters of 2023 was slightly better than expected, at the end of November 2023, the World Semiconductor Trade Statistics Organization (WSTS) raised its forecast for the global semiconductor market in 2023, from the previous US$ 515 billion to US$ 520.1 billion, and the global semiconductor market in 2023 decreased by 9.4% compared with that in 2022.

　　According to WSTS forecast, the semiconductor market in all regions of the world will pick up in 2024, especially in America and Asia-Pacific region, which will achieve double-digit growth. It is predicted that the global semiconductor market will recover strongly in 2024, with a forecast growth of 13.1% to US$ 588.4 billion.

　　In the long run, the global and China IC industry will continue to grow. In recent years, emerging industries such as new energy vehicles, 5G, autonomous driving, data centers, industrial automation, artificial intelligence, Internet of Things, and wearable devices will form strong future demand. In the next few years, the growth rate of communication, consumer electronics, data center and other fields will slow down, while the fields of automobile and industrial use will grow rapidly.

　　China is the world’s largest demand market for integrated circuits, especially for high-end chips with high value. The import amount of chips far exceeds the export amount, which shows that there is a lot of import substitution space in the chip field in China. It has become an urgent problem for China’s high-end integrated circuit industry to realize self-control and import substitution. In order to promote the process of chip localization, in May 2015, the State Council released "Made in China 2025", which proposed that the chip self-sufficiency rate should reach 70% in 2025.

　　According to the statistical bulletin of national economic and social development in 2023 issued by the National Bureau of Statistics, China’s annual output of integrated circuits in 2023 was 351.44 billion, an increase of 6.9% over the previous year. In 2001, the number of integrated circuits exported was 267.8 billion, down by 1.8% over the previous year, amounting to 956.8 billion yuan, down by 5.0% over the previous year, ranking fourth among China’s major commodity exports. The number of integrated circuits imported was 479.6 billion, down by 10.8% over the previous year, and the amount was 2,459.1 billion yuan, down by 10.6% over the previous year, ranking first among China’s major commodity imports.

　　(2) analog chip industry

　　Analog integrated circuit products have a long life cycle, and their downstream applications are widespread and scattered, which is a barometer of the development of the whole market. Thanks to the technology accumulation of the industry itself and the development of downstream application fields such as consumer electronics, smart home, intelligent security, automotive electronics and industrial control, the analog integrated circuit industry has maintained steady development. According to WSTS forecast, the global analog chip market scale will reach 84.1 billion US dollars in 2024, an increase of 3.7% compared with 2023.

　　In 2023, the growth rate of China’s analog chip market will slow down, but it is expected to exceed 300 billion yuan, accounting for more than 50% of the global analog chip market. In the short to medium term, China will remain the largest analog chip consumer market in the world.

　　With the domestic demand for analog chips in automobile, industry, communication and other fields, and the domestic analog chips have great room for improvement in localization rate, the analog chip market in China will continue to grow in the future.

　　3, the technical level and characteristics of the industry

　　In terms of high-power charging, the charging power of consumer terminals represented by mobile phones has gradually increased. The conventional 18W charging power has been gradually replaced by 33W, and some high-end models and flagship models have introduced charging power of 200W and above, which has driven the penetration rate and charging power of high-power charging to continue to increase.

　　In terms of miniaturization charging, the third generation semiconductor technology and high integration scheme make the power density of adapters increase and the number of peripheral devices decrease, and miniaturization charging scheme becomes the market trend.

　　In the end-to-end complete solution, the complete solution can reduce the system cost of the terminal manufacturer and shorten the product development cycle of the terminal manufacturer. For chip manufacturers, providing an end-to-end complete solution requires chip manufacturers to fully understand the whole system, break through the limitations of single product research and development, and have higher requirements for chip manufacturers.

　　4, the main technical threshold

　　The downstream applications of the company’s products include high-end consumer fields such as mobile phones and notebook computers, and automotive and industrial fields. Among them, the internal power management chip of mobile phone requires high volume, stability and consistency, and the company’s products are mainly used for charging management and battery management, which requires high safety and performance; Automotive and industrial application scenarios require high chips. Therefore, there are high technical barriers in the industry where the company is located.

　　2. Analysis of the industry position of the company and its changes.

　　(1) The company is one of the few companies in China that can directly compete with international manufacturers in the same industry and realize domestic substitution of high-end products.

　　Analog and embedded chip companies with outstanding R&D strength and large-scale operation capability are mainly concentrated overseas. Nanxin Technology is one of the few companies in China that can directly compete with international manufacturers in the field of power supply and battery management and realize domestic substitution of high-end products. In the field of consumer electronics applications such as mobile phones, the company directly competes with international manufacturers in the same industry, and replaces the market share of some international manufacturers, helping domestic substitution of chips. Among the products represented by charging management chips, the key technical indicators of some models of the company have already possessed the performance of competing with international manufacturers or surpassing foreign competitors.

　　(2) The company is the backbone in the field of domestic analog chips.

　　After years of development, the company has been among the forefront of domestic analog chip design companies and has grown into the backbone of the domestic analog chip field. As a design company focusing on power management chips, the company’s products cover the whole charging link, and it is one of the few local enterprises with complete solutions from power supply end to equipment end. In the fields of smart phones, automotive electronics, industry and pan-consumption, the company has opened up the whole product application field, with rich product matrix, completed the end-to-end product layout of each application scenario, and strengthened the overall product innovation competitiveness of the company. With forward-looking product definition ability and strong research and development ability, the company has the advantages of leading performance and high reliability, and has been widely recognized by customers in the fields of smart phones, automotive electronics, industry and pan-consumption. In the field of smart phones, the company’s products have entered well-known mobile phone brands such as Glory, OPPO, Xiaomi, vivo and Voice. In the automotive field, the company’s products have entered Volvo, Hyundai and other brands; In the industrial field, the company’s products have entered brands such as TTI; In the field of pan-consumption, the company’s products have entered Anker, Zimi, Belgin, Harman and other brands.

　　3. The development of new technologies, (), new formats and new models during the reporting period and the future development trend.

　　1. New technology

　　(1) high efficiency and low consumption

　　In the field of power supply, power conversion efficiency and standby power consumption are always one of the core indicators. All countries in the world have introduced various energy efficiency standards, such as American Energy Star, German "Der Blaue Engel Standard" and China Certification Center. The industry realizes the high efficiency and low power consumption requirements of power management chip and its power supply system by developing more advanced circuit topology and switch control technology, lower conductance power device technology and more sophisticated high voltage start technology.

　　(2) integration

　　The thinness and thinness of portable devices has always been the key demand to improve the user experience, and the technology of power supply and battery management chip has also shown an increasingly significant integration trend. On the one hand, in order to achieve the goal of thinness and thinness, the terminal product requires higher integration and fewer peripheral devices, so as to reduce the number of components in the whole scheme, save circuit board space and reduce the size of the whole scheme; On the other hand, the terminal equipment is becoming more and more complex, and its more functional features and more complex processors require more advanced power management solutions, and it is required to integrate more functions on a smaller silicon chip to achieve stronger system power performance. At the same time, the integrated power supply and battery management chip can effectively reduce the system cost and design complexity, shorten the research and development cycle of terminal manufacturers, and improve the long-term reliability of the system.

　　(3) Simulation technology and embedded processing technology cooperate with each other.

　　With the system functions becoming more and more complex, the requirements for energy consumption are getting higher and higher, and the requirements for monitoring and controlling the running state of power supply and battery are also getting higher and higher. The design of power supply and battery management chip is no longer satisfied with real-time monitoring of current, voltage and temperature, but also needs to realize the requirements of diagnosing power supply, battery working state and flexibly setting output voltage and current parameters. In addition, the power management chip needs real-time communication with the main system to meet the power supply requirements of each functional module of the system, so as to meet the requirements of intelligent power management and regulation. Simulation technology and embedded technology cooperate with each other, which promotes the development of power supply and battery management chip in the intelligent direction. Through the seamless combination of hardware and embedded software, the functions of monitoring, controlling and communicating the state of power supply and battery can be flexibly realized. In recent years, with the advantages of flexible debugging, fast response, high integration and high controllability, a new generation of power supply and battery management chips combining analog technology and embedded processing technology are gradually expanding to many application fields.

　　2. New industries

　　(1) The third generation compound semiconductor gallium nitride (GaN) has become a market trend.

　　Transformer is the largest component in the charger, and the key to miniaturization of charger lies in the miniaturization of transformer. Generally, the higher the switching frequency, the smaller the required transformer volume. The switching frequency of traditional Si materials has reached the upper limit, and the third generation semiconductor materials can achieve faster switching speed, thus allowing higher switching frequency and further reducing the size of the charger. With the characteristics of fast switching speed, high power density, high voltage resistance and high frequency, the third-generation compound semiconductor small-volume charging adapter based on GaN is increasingly widely used in high-end models. According to Yoe data, the application scale of power GaN in the consumer market is expected to increase from 79.6 million US dollars in 2021 to 964.7 million US dollars in 2027, with a compound annual growth rate of 52%.

　　In the process of expanding the market of GaN power supply, the requirements for the integration of chips are getting higher and higher. The original GaN power supply is generally designed by controller+driver+gallium nitride power device, which is not only complicated in circuit layout, relatively difficult in product development, but also expensive. In recent years, based on the technical advantages of power chips, outstanding chip manufacturers in the industry have introduced highly integrated power chips with built-in GaN power devices, that is, sealed GaN chips. By improving the chip integration, the peripheral components are further reduced, the size of the charger is reduced, the difficulty of system development and debugging is also reduced, and the product reliability is improved.

　　(2) Intelligentization and electrification drive the rapid development of automotive electronics.

　　The intelligent electrification reform is reshaping the traditional automobile industrial chain, and automobile electronics has become the core factor to promote the reform. Various analog and embedded chips, sensors and computing chips are widely used in various functional modules of electric smart cars, which drives the rapid development of automobile electronics and the rapid improvement of the value of automobile electronics supply chain. According to Roland Berger’s prediction, the value of BOM (bill of materials) related to automotive electronics will increase from $3,130/car to $7,030/car from 2019 to 2025, in which the value of intelligent BOM will increase by $1,665/car and the value of electric BOM will increase by $2,235/car.

　　In the field of power supply and battery management chips, thanks to the wide application of intelligent functions such as automatic driving and intelligent cockpit in automobiles, the demand for chips related to digital display, human-vehicle interaction and ADAS, such as display screen power supply, backlight drive, USB car charging, system and camera power supply, has greatly increased. Under the electrification reform, the traditional fuel powertrain system has been eliminated, and the electric powertrain system has adopted new components such as BMS and DC-DC converter, and the demand for power supply and battery management chips has greatly increased. Automotive electronics has become another field that promotes the rapid growth of the power supply and battery management chip market after the consumer field.

　　3. New format

　　(1) governments of various countries or regions increase their support for industries.

　　In recent years, due to the shortage of chips in many countries, integrated circuit manufacturing powers and regions, including the United States, Japan and Europe, have re-recognized the importance of advanced integrated circuit technology and supply security, and have introduced supportive policies to accelerate the layout of semiconductor industries including integrated circuits, and strengthen government support for industries to consolidate the competitiveness of enterprises. Take Europe as an example. On September 21, 2023, the European Chip Act came into effect. The EU will invest more than 43 billion euros to boost the European chip industry. The Act requires that the global share of EU chip production should be increased from 10% in 2023 to 20% in 2030 to meet its own and world market demand.

　　(2) The demand for domestic substitution of integrated circuits in the whole industry is significant.

　　Integrated circuits are very important to the development of China’s information industry. Although China is the largest chip market in the world, it has long been dependent on imports, and it is also in a weak position in the global chip industry. Especially since foreign countries cut off supply in recent years, the China market has been greatly affected. It is urgent to speed up the development of its own core technology and improve the self-sufficiency rate of chips. The State Council released "Made in China 2025", which proposed that the chip self-sufficiency rate in China should reach 70% in 2025. According to TechInsights, the chip self-sufficiency rate in China will be less than 30% in 2023. In order to realize the independent control of the industry, integrated circuits, as a national strategic industry, are expected to receive strong policy support, and the industry and capital environment will continue to improve.

　　At the same time, as the focus of global terminal manufacturing and semiconductor manufacturing shifts to the Asia-Pacific region, the field of power management chip design also shows a trend of shifting from Europe, America and other regions to China. Under the interaction of multiple factors, more and more OEM/ODM manufacturers in China began to choose local suppliers as secondary suppliers when they were out of stock, and the demand for integrated circuit localization increased significantly.

　　Specifically, in the field of power management chips, local power management chip design companies have accelerated their technological catch-up under the background of escalating trade friction between China and the United States, and the gap between the overall technical level and foreign design companies has been narrowing. The power management chips designed and developed by domestic enterprises have gradually replaced the share of foreign competitors in many application fields, especially in the consumer electronics market with medium and small power segments. The shipments have increased year by year, and the market share has also gradually increased.

　　4. New mode

　　(1) The industrial chain is more closely coordinated.

　　Influenced by the uncertainty of macro-political and economic situation and the trade friction between China and the United States, the competition of global integrated circuit industry has intensified, and industrial synergy has become a trend. With the increasingly fierce "arms race" of international chip giants, the core competitiveness of integrated circuit industry enterprises is no longer just a single dominant technology or product, but also comes from the control and operation of highly concentrated and efficient resources in the industrial chain, and the industrial competition mode has officially changed to "whole industry chain competition".

　　The coordinated development of industrial chain is conducive to the faster progress of the industry. Chip designers are more closely coordinated with upstream wafer manufacturers, packaging and testing manufacturers and downstream terminal manufacturers, and it is more important to build an all-round semiconductor ecosystem in the upstream and downstream of the industrial chain. Through cooperation with downstream terminal manufacturers, we can better understand the terminal requirements and guide the research and development direction; By cooperating with upstream wafer manufacturers and packaging and testing manufacturers, we can strengthen the supply chain capability and jointly promote the technological progress in wafer manufacturing and packaging and testing.

　　In the process of coordinated development of industrial chain, industry competition will pay more attention to the competition of comprehensive strength of products, customers and talents, and the industrial competition mode will develop towards systematization and ecology.

　　(IV) Core technologies and R&D progress

　　1. Core technologies and their advanced features and changes during the reporting period.

　　During the reporting period, the company added seven core technologies, namely, lithium battery monitoring technology, zero-voltage switching charge pump control technology, low-voltage self-starting technology, secondary control fully integrated soft-switching Fyback technology, SmartHighSideDriver technology, automotive smart fuse technology and automotive antenna LDO technology.

　　2. R&D achievements obtained during the reporting period

　　During the reporting period, the company applied for 62 new intellectual property projects, including 62 invention patents; By December 31st, 2023, the company had obtained 89 invention patents and 61 layout designs of integrated circuits.

　　3. R&D investment table

　　Reasons for significant changes in total R&D investment compared with the previous year

　　Mainly due to the company’s increased investment in R&D, the investment in R&D personnel salary and R&D materials increased significantly during the reporting period compared with the same period of last year.

　　4. Research projects

　　25/223

　　28/223

　　5. R&D personnel

　　6. Other explanations

　　Iii. Analysis of core competitiveness during the reporting period

　　(A) analysis of core competitiveness

　　1. The leading domestic chip manufacturer with end-to-end complete solution capability.

　　The company has a number of product lines, covering the entire charging link management link, and is a leading chip manufacturer with end-to-end complete solution capability in China. The company is deeply deployed in the fields of smart phones, automotive electronics, industry and pan-consumption. The company will continue to develop new products around customer applications, complete the product layout of the overall charging link of the scene, and continuously enhance the competitiveness of products.

　　At the R&D level, providing a complete solution needs to form a set of proprietary technology system based on a full understanding of the whole system, which is not limited to single-point or local cognition, so it can strengthen cooperation with customers in a wider range and at a higher level. By providing customers with complete solutions, we can deeply understand the pain points of customers and solve practical problems for customers, thus promoting the company’s multi-dimensional and all-round innovation.

　　On the quality control level, the compatibility, adaptability and reliability of products are the keys to the performance and quality of terminal equipment. A complete solution can reduce the compatibility and adaptability of products between different manufacturers, effectively improve the quality control and accountability efficiency of the whole procurement link, and thus ensure the stable operation of terminal equipment to the greatest extent.

　　At the sales level, customers can effectively reduce their operating and purchasing costs and shorten their product development cycle by purchasing complete solutions. The company can also promote the sales of other related products through the early introduction of a single product, thus improving the sales efficiency of the company’s products. Through the sales and support of the whole package, we can further enhance customer stickiness and build a higher competitive threshold.

　　2. Adhere to technological innovation, precipitate excellent product definition ability, and continuously create value for customers.

　　The company has long adhered to technological independence and innovation. Through years of insight into the market and continuous definition of new products, the company has accumulated excellent product definition ability, which can actively and quickly match the development trend of the industry and the demands of customers. The planned product R&D roadmap has a high degree of fit with the future product needs of downstream customers, creating more valuable and competitive products for customers.

　　Defining and launching products in time according to market demand is based on the company’s management’s rich industry experience and keen market insight, which requires the R&D team to have rich technical accumulation and the ability to solve new demands and problems in the R&D process, and the production, operation, marketing and other departments to respond quickly and implement them. All the above factors reflect the company’s comprehensive competitiveness such as R&D ability, customer accumulation and supply chain coordination.

　　3. High-quality brand customer barriers+self-controllable supply chain

　　With excellent technical innovation and product research and development capabilities, the company continues to provide customers with more valuable and competitive products, which has been widely recognized by the market. Brand customers are strict and cautious when choosing chip suppliers, and the entry threshold is high. They need to go through long-term product review and verification before they can enter their supply system. The company’s products have been widely recognized by end customers in performance, delivery, quality and other aspects. During the reporting period, they won several awards from customers such as OPPO, vivo, Glory and Lenovo, which were deeply affirmed and recognized by customers.

　　The long-term cooperation between the company and the end customers of major brands has formed a strong stickiness, which is helpful for the company to achieve stable operation. At the same time, brand end customers have strong comprehensive strength and unremitting pursuit of technological innovation, which represents the development direction of the industry. With the development of brand end customers, the company can timely understand and meet the latest needs of customers in the process of serving customers, can continuously maintain the forward-looking research and development and the leading position of products, and promote the virtuous circle of company products from research and development to landing and continuous iteration.

　　The company attaches great importance to the construction of independent and controllable supply chain system, and actively seeks in-depth cooperation with leading suppliers in the industry. At present, it has established long-term cooperative relations of mutual trust with many leading suppliers in the industry.

　　The company’s main suppliers are local partners, ensuring the company’s supply chain to be autonomous and controllable. In addition, the company has established strategic cooperative relations with major suppliers, gained the advantage of purchasing cost by gathering order demand, and at the same time cooperated with suppliers in depth to build its own technology, so as to maintain the leading position of the company’s products in technology and packaging and enhance the competitiveness of products.

　　4. Improve the product layout with multiple application scenarios, and the platform-based development has achieved initial results.

　　During the reporting period, the company achieved rapid growth in the fields of smart phones, automotive electronics, adapters, industry and pan-consumption. In the future, the company will continue to improve the product layout of various application scenarios and enhance product competitiveness and profitability in various application fields.

　　Through continuous optimization and improvement of product layout, the company will gradually develop into a more competitive platform company, with a more stable business structure and further increased risk resistance, laying a solid foundation for the company’s further development.

　　(II) Events that have seriously affected the core competitiveness of the company during the reporting period, impact analysis and countermeasures.

　　Fourth, risk factors

　　(A) Not yet profitable risk

　　(2) Risk of sharp decline in performance or loss

　　(C) core competitiveness risks

　　(1) Risk of product development and technological innovation

　　The company’s products are mainly used in consumer electronics. The consumer electronics industry is changing rapidly and the market window is short, which requires the company to launch new products quickly and update and iterate continuously with the market changes. Therefore, the company needs to maintain a high sensitivity to market changes and the iterative trend of mainstream technologies, and formulate a dynamic technology development strategy. In the future, if the company’s technology R&D level lags behind the upgrading level of the industry, it will lead to the waste of the company’s R&D resources and miss the market development opportunities, which will have an adverse impact on the company.

　　(2) Risk of R&D personnel loss or shortage

　　Integrated circuit design enterprises usually need to train R&D designers for a long time, build experienced design teams, and constantly introduce excellent design talents. With the increasingly fierce market competition, the competition for R&D talents among companies in the industry is increasing. In the future, if the salary level of the company is not competitive, the human resource management and internal promotion system are not effectively implemented, and there is no effective equity incentive measures, it will be difficult to introduce more outstanding technical personnel, and even lead to the loss of existing backbone technical personnel, which will have an adverse impact on the company’s technology research and development.

　　(3) Risk of core technology leakage

　　The company’s core technology runs through the process of product development, design and production, which is very important for the company to control production costs and improve product performance and quality, and is the company’s core competitiveness. If the protection of core technologies is unfavorable or the outflow of core technicians leads to the leakage, theft or imitation of key technologies by competitors, it may have an adverse impact on the company’s technological innovation, business development and even operating performance.

　　(4) Operational risks

　　(1) The risk of high customer concentration under the distribution mode.

　　During the reporting period, the total sales revenue of the company to the top five customers accounted for 74.35% of the current operating income, accounting for a relatively high proportion. The company’s customers are mainly well-known electronic component dealers in the industry.

　　In the future, if the operation and credit status of the company’s major customers or terminal brand manufacturers are adversely changed, or the current operation and procurement strategies of major customers are greatly changed, the company will have certain uncertainty about the sales revenue of major customers, thus affecting the company’s stable profitability. In addition, if the demand of some major customers decreases, the company’s revenue growth rate may slow down or even decline.

　　(2) The risk of high concentration of suppliers

　　The company’s main wafer suppliers and sealing and testing suppliers belong to domestic industry leading enterprises, and the concentration of suppliers is relatively high.

　　Wafer manufacturing and packaging testing are both capital and technology-intensive industries, and the number of suppliers who meet the company’s technical and production requirements is relatively small. In the future, if the company’s main suppliers have adverse changes in their operations, limited production capacity or tense cooperation relations, or because of adverse changes in the overall prosperity of the industrial chain, suppliers may not be able to deliver goods in full and on time, and may put forward more unfavorable commercial cooperation conditions such as supply price, payment requirements and delivery period, which will adversely affect the company’s production and operation.

　　(3) Management risks caused by the expansion of the company’s scale

　　During the reporting period, the company’s business continued to develop, and the company’s corresponding asset scale and personnel were also expanding. With the public offering of the company’s shares and the implementation of investment projects with raised funds, the company’s business scale and personnel team are expected to further expand, which will put forward higher requirements for the company’s management, resource integration, technology development, market development, quality control and other aspects. If the company’s internal management level can’t meet the requirements of the company’s rapid development, it will make the company likely to have management risks caused by scale expansion, which will adversely affect the company’s further development.

　　(4) The risk that the company’s revenue will maintain steady growth.

　　During the reporting period, the scale of the global semiconductor market declined due to local geopolitical wars, declining demand for terminal applications and other factors. In the short term, the global economic growth is expected to slow down, the demand in the terminal consumer market will be difficult to boost, the competition among companies in the same industry in the world will continue to intensify, or it will have an adverse impact on the company’s products, resulting in the company’s operating income can not continue to grow.

　　(V) Financial risks

　　1. Risk of fluctuation of gross profit margin of the company’s products

　　In 2023, the gross profit margin of the company’s main business was 42.30%, a decrease of 0.74 percentage points compared with the same period of last year, and there were fluctuations in gross profit. The gross profit margin of the company’s main products is mainly affected by downstream demand, product price, product structure, materials and processing costs and the company’s technical level. If the recovery of the industry is less than expected, or geopolitical instability is unfavorable to the downstream consumer electronics market, the risk of further weakening of consumer market demand and further decline of the company’s gross profit margin will not be ruled out, which will adversely affect the company’s profitability. Therefore, if the company can’t optimize the gross profit margin level through continuous technical iteration, optimizing product structure and reducing product unit cost, it may lead to a decline in the company’s gross profit margin, thus affecting the company’s profitability and performance.

　　2. Inventory depreciation risk

　　At the end of 2023 and 2022, the book value of the company’s inventory was 525,382,600 yuan and 335,584,000 yuan respectively, and the inventory scale increased with the expansion of business scale. If the market demand environment changes, the market competition intensifies, or the company cannot effectively expand sales channels, optimize inventory management, and reasonably control inventory scale, it may lead to unsalable products and inventory backlog, thus increasing the risk of inventory depreciation and adversely affecting the company’s operating performance.

　　3. Risk of exchange rate fluctuation

　　In 2023 and 2022, the company sold and purchased overseas, quoted and settled in US dollars. With the expansion of the company’s business scale, the amount of overseas sales and purchases is expected to increase further. Although the company has considered the possible fluctuation of exchange rate between the conclusion of contracts or orders and the receipt and payment of funds, there is still great uncertainty about the exchange rate change with the changes of domestic and international political and economic environment. If the exchange rate between RMB and USD fluctuates greatly in the future, it will have a certain impact on the company’s performance.

　　(VI) Industry risks

　　China is the world’s largest consumer market for analog chips. With the two-wheel drive of new technologies and industrial policies, the demand for analog chips in China will become stronger in the future. At present, the global analog chip market is dominated by European and American manufacturers such as TI, which occupy the high-end product market of China analog chip industry, and by virtue of their advantages in capital, platform, research and development, they create greater competitive pressure on domestic enterprises trying to enter the middle and high-end product market. Faced with the competitive pressure of these head manufacturers, the company may adopt the strategy of providing customers with better cost performance to obtain orders for products with similar performance, which may lead to the risk of pressure on product profit level and cash flow. In addition, in recent years, the number of domestic analog chip manufacturers has increased, and the industry competition has intensified, and the company may face the risk of declining profitability.

　　(VII) Macro-environmental risks

　　In recent years, international trade frictions have been constant, and some countries have tried to restrict the development of related industries in China by means of trade protection. The company has always strictly abided by the laws of China and other countries, but the international situation is changing rapidly. Once the company’s business is limited, suppliers are unable to supply or customers’ purchases are constrained due to international trade frictions, the normal production and operation of the company will be greatly adversely affected.

　　In recent years, the United States has successively listed some enterprises in the upstream and downstream of the industrial chain in the "entity list", or restricted the access of some China companies to semiconductor technology and services by other means. Some suppliers of the company inevitably use American equipment or technology, and if the trade friction continues to intensify, it may lead to restrictions on their supply or service to the company, thus adversely affecting their operations.

　　(8) Risks related to depositary receipts

　　(9) Other major risks.

　　V. Main operations during the reporting period

　　In 2023, the company realized an operating income of 1,780,402,300 yuan, an increase of 36.87% year-on-year; Operating profit was 262,693,700 yuan, up 10.21% year-on-year; The total profit was 266,277,800 yuan, up 10.34% year-on-year; The net profit attributable to owners of the parent company was 261,357,500 yuan, up 6.15% year-on-year.

　　During the reporting period, the company’s total operating income increased by 479,621,500 yuan year-on-year, with an increase of 36.87%, mainly due to the expansion of business scale and sales growth.

　　VI. The Company’s Discussion and Analysis on the Company’s Future Development

　　(A) the industry pattern and trends

　　(II) Company development strategy

　　With the business vision of "becoming the world’s leading analog and embedded chip enterprise", the company has launched high-performance power supply and battery management chips in the fields of consumer electronics, industry and automotive electronics with efficient research and development capabilities, excellent technological innovation capabilities and strict quality control capabilities, helping domestic chips to be self-controllable. The company has established an efficient linkage mechanism and long-term and stable cooperative relationship with suppliers such as wafer manufacturers and packaging and testing manufacturers, which has improved the company’s supply chain capability; The company has established an increasingly close partnership with terminal brand customers, kept abreast of the new direction and trends of demand-side technology in good cooperation, and conducted targeted R&D iterations on products, thus improving R&D efficiency. In the future, the company will continue to strengthen technology accumulation, continuously upgrade existing products, continuously enrich the product matrix, enhance its advantages in the field of consumer electronics, expand its applications in the field of industry and automotive electronics, and strive to become the world’s leading analog and embedded chip enterprise.

　　(3) Business plan

　　1. Strengthen R&D investment, continue product innovation, and promote the steady growth of the company’s main business.

　　In 2024, the company expects to maintain the R&D expense rate of the previous year and continuously strengthen R&D investment to meet the company’s growing product demand. The company will adhere to technological innovation, take the application scenario as the traction, continuously lay out new products and new application fields, further consolidate and expand the competitive advantage of the company’s main business, and realize the steady growth of the company’s performance.

　　2. Formulate the company’s long-term development strategy and promote the steady and rapid growth of the company.

　　The company has set a long-term development strategic goal and determined a short-term business plan for the next three years. The company will make joint efforts in smart phones, automotive electronics, industry and other consumer markets, continuously enrich product categories, realize end-to-end product layout of various application scenarios, and further expand its competitive advantage. Through root technology development and product technology innovation, the company will deposit excellent product definition ability, continue to create value for customers, build a deeper business moat, and promote the company’s steady, high-speed and sustained growth.

　　3. Consolidate and enhance the market share of the domestic market and actively explore overseas markets.

　　Guided by market demand, the company will continue to pay close attention to the changes in the habits of end users, deeply understand the actual needs of end users for charging products, enhance customer stickiness, explore more efficient and stable customer cooperation modes, and develop new domestic customers to enhance the market share of the domestic market. By establishing overseas sales channels, actively expand overseas customers and enhance business development space.

　　4. Continue to promote the company’s cost reduction and efficiency improvement, and increase the profit margin.

　　Although the global semiconductor market is expected to recover in 2024, the fierce competition in the domestic chip market is expected to continue. Carrying out cost reduction is conducive to reducing the company’s expenses, improving the company’s profit level, improving efficiency, strengthening the input-output ratio and improving the conversion efficiency of input. In 2024, the company plans to reduce costs and increase efficiency as a key task of its annual operation, which will be implemented in relevant departments and jobs to cope with the weak national economy and intensified competition, and to keep the company’s revenue growing steadily and continuously.

　　5. Strengthen organizational construction and improve management efficiency.

　　In 2024, the company will continue to strengthen organizational capacity building, carry out the capacity improvement of middle and back-office business departments, improve the overall business process efficiency, and build an efficient business process system with feedback mechanism. The management of the company will further improve the efficiency of operation and management, continuously strengthen the company’s core competitiveness, profitability and comprehensive risk management capabilities, and help the company’s business scale development, with a view to achieving rapid development and giving back to investors.

　　6. Promote the standardized operation of listed companies and improve their management ability and governance level.

　　In 2024, The Company will strictly abide by the Company Law of People’s Republic of China (PRC) (hereinafter referred to as the Company Law), the Securities Law of People’s Republic of China (PRC) (hereinafter referred to as the Securities Law), the Listing Rules of science and technology innovation board Stock Exchange of Shanghai Stock Exchange, the Self-regulatory Guidance of science and technology innovation board Listed Companies of Shanghai Stock Exchange No.1-Standardized Operation and the Articles of Association of Shanghai Nanxin Semiconductor Technology Co., Ltd. (hereinafter referred to as the Articles of Association). Continue to promote the standardized operation of public companies, fully fulfill the obligation of information disclosure in accordance with the law, actively undertake corporate social responsibilities, improve the governance level of listed companies, continue to strengthen communication with investors, and protect the legitimate rights and interests of investors. At the same time, strengthen the training of the company’s business and system at all levels, improve management ability and level, formulate implementation plans, consolidate management responsibilities, promote the improvement of corporate governance and management level from top to bottom, and ensure the full completion of the annual business objectives.