User Engagement and Growth - The CHEERS App downloads increased from 259 million in December 2021 to 342 million by December 31, 2022, while CHEERS e-Mall downloads rose from 12.5 million to 34.5 million in the same period[354]. - Monthly Active Users (MAU) are tracked to manage operations, with a focus on adjusting promotional activities based on user engagement[355]. - The Repurchase Rate (RPR) for the CHEERS e-Mall was 34.5% for the 360-day period during the commercial year of 2022, indicating strong customer retention[355]. - The average Daily Time Spent (DTS) on the CHEERS video platform was 56 minutes during the commercial year of 2022, reflecting user engagement[356]. - The company has launched ten live streaming shows, enhancing user interaction and driving sales through discount coupons and real-time games[366]. - The CHEERS video platform has been upgraded to include a UGC rights management system, encouraging user-generated content and creator partnerships[362]. Ecosystem and Product Development - The CHEERS ecosystem is expanding with the introduction of new apps, including CheerCar and CheerReal, and the anticipated launch of CheerChat in 2023[352]. - The company plans to leverage blockchain technologies and strategic collaborations to develop a metaverse platform that integrates intelligent retail, social networking, and gaming[353]. - The CheerChat app, which entered beta testing in 2021, aims to penetrate the social audio market and is expected to launch in 2023[386]. - The company has developed four online games for its CHEERS e-Mall platform, monetizing through in-app purchases[382]. - The company plans to develop Glory Star metaverse experience centers, integrating reality with the virtual world using 5G, AI, AR, and VR technologies[388]. Market Trends and Projections - The total e-commerce market sales in China reached RMB34,810 billion in 2019, with a CAGR of 12.4% from 2015 to 2019[401]. - The population of online shoppers in China is expected to reach 850 million by 2021, at a CAGR of 10.8%[401]. - The population of online video users in China reached 850.44 million by March 2020, with a CAGR of 13.3% from 2015[403]. - The market scale of proprietary PGC video content-driven e-commerce platforms was approximately RMB3.5 billion in 2019, with a CAGR of 151.6% from 2016 to 2019[408]. - The market for proprietary PGC video content-driven e-commerce platforms is expected to grow at a CAGR of 32.5% to RMB14.5 billion by 2024[408]. Regulatory Environment - The PRC government imposes extensive regulations on the e-commerce industry, affecting the company's operations and potential foreign investments[419]. - Foreign investors are prohibited from holding more than 50% equity in telecommunications enterprises providing value-added services, impacting the company's investment structure[422]. - The company is currently in compliance with the PRC Consumer Rights and Interests Protection Law and the Online Trading Measures in all material aspects[438]. - The company has adopted internal procedures to monitor content displayed on its website and application to comply with PRC laws and regulations[453]. - Internet information service providers are required to protect user personal information and may face penalties for violations, including fines and revocation of licenses[448]. - The Network Security Law mandates that internet operators take necessary measures to safeguard network data and prevent illegal activities[451]. - The company must maintain a monitoring system for platform-based operators to ensure compliance with market regulations[436]. Financial and Taxation Matters - The enterprise income tax rate for resident enterprises is 25%, while non-resident enterprises pay 10% for income sourced within China without a local presence[477]. - The standard withholding tax rate on dividends for non-resident enterprises is 20%, reduced to 10% under certain conditions[485]. - The VAT rate for taxpayers selling goods is 17%, adjusted to 16% in 2018, and further reduced to 13% in 2019[482][484]. - The company intends to retain all available funds and future earnings for business operations and expansion, with no anticipated dividends in the foreseeable future[516]. - Current PRC regulations require WFOE to pay dividends to the Hong Kong subsidiary only from accumulated after-tax profits, with a mandatory 10% set aside for statutory reserves[519]. Corporate Structure and Compliance - The company operates through VIEs due to restrictions on foreign ownership in certain sectors, consolidating their operating results in financial statements under U.S. GAAP[503]. - The exclusive option agreements with VIE shareholders allow the company to acquire equity interests at the lowest price permitted under PRC law, with a term of 10 years[505]. - The business cooperation agreements stipulate that VIEs cannot enter transactions affecting their assets without WFOE's consent, ensuring control over operations[504]. - The share pledge agreements provide WFOE with priority security interests in VIEs' equity to secure performance under principal agreements[506]. - The company is structured as a Cayman Islands exempted company, conducting operations in China through PRC subsidiaries and VIEs[499]. Employment and Social Security - As of December 31, 2022, the company had 138 full-time employees, with the CHEERS Platform and e-Mall Department accounting for 58.0% of the total headcount[413]. - The company participates in various government statutory social security plans, contributing specified percentages of employee salaries[412]. - The PRC Social Insurance Law mandates both employers and individuals to pay social insurance premiums[464].
Glory Star(GSMG) - 2022 Q4 - Annual Report