ITEM 1. BUSINESS.
COMPANY HISTORY
China Automotive Systems, Inc., “China Automotive” or the “Company,” was incorporated in the State of Delaware on June 29, 1999. Through its subsidiary, Great Genesis Holdings Limited, “Genesis,” a corporation organized under the laws of the Hong Kong Special Administrative Region, China, it owns interests in nine Sino-joint ventures and seven wholly-owned subsidiaries in the People’s Republic of China, “China” or the “PRC,” which manufacture power steering systems and/or related products for different segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil.
Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after sales service and research and development (“R&D”) support.
Unless the context indicates otherwise, the Company uses the terms “the Company,” “we,” “our” and “us” to refer to China Automotive collectively on a consolidated basis.
BUSINESS OVERVIEW
The Company is a holding company and has no significant business operations or assets other than its interest in Genesis and HLUSA. Genesis mainly engages in the manufacture and sale of automotive systems and components through its controlled subsidiaries and the joint ventures, as described below.
4 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China Automotive Systems, Inc. [NASDAQ:CAAS] | ​ |
| ↓100% | ​ | ​ | ​ | ​ | ​ | ​ | ↓100% | ​ | ​ | ​ |
| Great Genesis Holdings Limited | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Henglong USA Corporation | ​ | ​ | ​ | ​ | ​ |
| ↓ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ↓100% | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ↓70% | ​ | ​ | ​ | ​ | ​ |
| Hubei | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Shenyang | ​ | ​ | ​ | ​ | ​ |
| Henglong | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Jinbei | ​ | ​ | ​ | ​ | ​ |
| Automotive | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Henglong | ​ | ​ | ​ | ​ | ​ |
| System Group | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Automotive | ​ | ​ | ​ | ​ | ​ |
| Co., Ltd. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Steering System | ​ | ​ | ​ | ​ | ​ |
| “Hubei | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Henglong”1 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | “Shenyang”2 | ​ | ​ | ​ | ​ | ​ |
| ↓ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ↓100% | ​ | ↓100% | ↓100% | ↓85% | ​ | ↓70% | ​ | ↓95.84% | ​ | ↓100% | ​ | ↓60% | ↓66.6% | ​ | ↓51% | ​ | ↓62% | ↓100% |
| Jingzhou | ​ | Shashi | ​ | Wuhu | ​ | Wuhan | ​ | Chongqing | ​ | CAAS | ​ | Hubei | ​ | Jingzhou | ​ | Hubei | ​ | Hyoseong | ​ | Wuhu | ​ | Changchun | ​ |
| Henglong | ​ | Jiulong | ​ | Henglong | ​ | Jielong | ​ | Henglong | ​ | Brazil’s | ​ | Henglong | ​ | Qingyan | ​ | Henglong | ​ | (Wuhan) | ​ | Hongrun | ​ | Hualong | ​ |
| Automotive | ​ | Power | ​ | Automotive | ​ | Electric | ​ | Hongyan | ​ | Imports And | ​ | Group | ​ | Intelligent | ​ | & KYB | ​ | Motion | ​ | New | ​ | Automotive | ​ |
| Parts | ​ | Steering | ​ | Steering | ​ | Power | ​ | Automotive | ​ | Trade In | ​ | Shanghai | ​ | Automotive | ​ | Automobile | ​ | Mechatronics | ​ | Material | ​ | Technology | ​ |
| Co., Ltd. | ​ | Gears | ​ | System Co., | ​ | Steering Co., | ​ | System Co., | ​ | Automotive | ​ | Automotive | ​ | Technology | ​ | Electric | ​ | System | ​ | Co., Ltd. | ​ | Co., Ltd. | ​ |
| ​ | ​ | Co., Ltd. | ​ | Ltd. | ​ | Ltd. | ​ | Ltd. | ​ | Parts Ltd. | ​ | Electronics | ​ | Research | ​ | Steering | ​ | Co., Ltd. | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Research and | ​ | Institute | ​ | System | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Development | ​ | Co., Ltd. | ​ | Co., Ltd. | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Ltd. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | “Chongqing | ​ | “Brazil | ​ | “Shanghai | ​ | “Jingzhou | ​ | “Henglong | ​ | “Wuhan | ​ | “Wuhu | ​ | “Changchun | ​ |
| “Henglong”3 | ​ | “Jiulong”4 | ​ | “Wuhu”5 | ​ | “Jielong”6 | ​ | Henglong”7 | ​ | Henglong”8 | ​ | Henglong”11 | ​ | Qingyan”12 | ​ | KYB”13 | ​ | Hyoseong”14 | ​ | Hongrun”15 | ​ | Hualong”16 | ​ |
| ↓ | ​ | ​ | ​ | ​ | ↓ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ↓100% | ​ | ​ | ​ | ​ | ↓85% | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Jingzhou | ​ | ​ | ​ | ​ | Wuhan | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Henglong | ​ | ​ | ​ | ​ | Chuguanjie | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Automotive | ​ | ​ | ​ | ​ | Automotive | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Technology | ​ | ​ | ​ | ​ | Science and | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| (Testing) | ​ | ​ | ​ | ​ | Technology | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Center | ​ | ​ | ​ | ​ | Ltd. | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| “Testing | ​ | ​ | ​ | ​ | “Wuhan | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Center”9 | ​ | ​ | ​ | ​ | Chuguanjie”10 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 1. | On March 7, 2007, Genesis established Hubei Henglong, formerly known as Jingzhou Hengsheng Automotive System Co., Ltd., its wholly-owned subsidiary, to engage in the production and sales of automotive steering systems. On July 8, 2012, Hubei Henglong changed its name to Hubei Henglong Automotive System Group Co., Ltd. |
| 2. | Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles. |
| 3. | Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light-duty vehicles. |
| 4. | Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles. |
| 5. | Wuhu was established in 2006 and mainly engages in the production and sales of automobile steering systems. In April 2021, the Company obtained an additional 22.67% equity in Wuhu for total consideration of RMB 6.9 million, equivalent to approximately $1.1 million, from the other shareholder. The Company retained its controlling interest in Wuhu and the acquisition of the non-controlling interest was accounted for as an equity transaction. |
| 6. | Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns. |
| 7. | On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts. |
| 8. | On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sale of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction. |

| 9. | In December 2009, Henglong, a subsidiary of Genesis, formed Testing Center, which mainly engages in the research and development of new products. |
| 10. | In May 2014, together with Hubei Wanlong, Jielong formed a subsidiary, Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie”, which mainly engages in research and development, manufacture and sales of automobile electronic systems and parts. Wuhan Chuguanjie is located in Wuhan, China. |
| 11. | In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics. |
| 12. | In November 2017, Hubei Henglong formed Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”, which mainly engages in the research and development of intelligent automotive technology. |
| 13. | In August 2018, Hubei Henglong and KYB (China) Investment Co., Ltd. (“KYB”) established Hubei Henglong KYB Automobile Electric Steering System Co., Ltd. (“Henglong KYB”), which mainly engages in design, manufacture, sales and after-sales service of automobile electronic systems. Hubei Henglong owns 66.6% of the shares of this entity and has consolidated it since its establishment. |
| 14. | In March 2019, Hubei Henglong and Hyoseong Electric Co., Ltd. established Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd. (“Wuhan Hyoseong”), which mainly engages in the design, manufacture and sales of automotive motors and electromechanical integrated systems. Hubei Henglong owns 51.0% of the shares of Wuhan Hyoseong and has consolidated it since its establishment. |
| 15. | In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd. (“Wuhu Hongrun”), which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment. |
| 16. | In April 2020, Hubei Henglong acquired 100.0% of the equity interests of Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong”, for total consideration of RMB 1.2 million, equivalent to approximately $0.2 million from an entity controlled by Hanlin Chen. Before the acquisition, 52.1% of the shares of Changchun Hualong were ultimately owned by Hanlin Chen and 47.9% of the shares were owned by third parties. Changchun Hualong mainly engages in design and R&D of automotive parts. |

| — | Brand Recognition. Under the brands of Henglong and Jiulong, the Company offers four separate series of power steering sets and 310 models of power steering sets, steering columns and steering hoses. |
| — | Quality Control. The Henglong and Jiulong manufacturing facilities obtained the ISO/TS 16949 System Certification in January 2004, a well-recognized quality control system in the auto industry developed by TUVRheindland of Germany. |
| — | Cost Efficiency. By improving the Company’s production ability and enhancing equipment management, optimizing the process and products structure, perfecting the supplier system and cutting production cost, the Company’s goal is to achieve a more competitive profit margin. |
| — | Research and Development. The Company established Testing Center for the research and development of products and, by partnering with Nanyang Ind. Co. Ltd. and Tsinghua University for the development of advanced steering systems, the Company’s objective is to gain increased market share in China. |
| — | International Expansion. The Company has entered into agreements with several international vehicle manufacturers and auto parts modules suppliers and carried on preliminary negotiations regarding future development projects. |
| — | Acquisitions. The Company is exploring opportunities to create long-term growth through new ventures or acquisitions of other auto component manufacturers. The Company will seek acquisition targets that meet the following criteria: |
| ● | companies that can be easily integrated into product manufacturing and corporate management; |
| ● | companies that have strong joint venture partners that would become major customers; and |
| ● | companies involved with power steering systems. |

| ​ | ​ | ​ | ​ |
| ​ | Percentage of Total |
| Name of Major Customers | Revenue in 2021 |
| Fiat Chrysler North America | 21.2 | % |
| Great Wall Motors | 9.0 | % |
| Hubei Hongrun | 5.1 | % |
| Beiqi Foton | 5.1 | % |
| Ford Motor Company | 4.4 | % |
| Total | 44.8 | % |

●86 by Wuhu;●237 by Jielong;●94 by Wuhan Chuguanjie;●876 by Hubei Henglong;●17 by HLUSA;●116 by Chongqing Henglong;●51 by Brazil Henglong;●417 by Henglong KYB;●22 by Wuhan Hyoseong;●15 by Wuhu Hongrun; and●21 by Chuangchun Hualong.As of December 31, 2021, Henglong, Jiulong, Shenyang, Chongqing, Wuhan Chuguanjie, Hubei Henglong and Wuhu had a manufacturing and administration area of 111,211 square meters, 39,478 square meters, 35,354 square meters, 57,849 square meters, 53,675 square meters, 277,269 square meters and 83,705 square meters, respectively.Hubei Province, which is home to Dongfeng, one of the largest automakers in China, provides an ample supply of inexpensive but skilled labor to automotive-related industries. The annual production of one of the Company’s main products, power steering gears, was approximately 7.8 million units and 7.5 million units in 2021 and 2020, respectively. Although the production process continues to rely heavily on manual labor, the Company has invested substantially in high-level production machinery to improve capacity and production quality. Approximately $60.0 million was spent over the last three years to purchase professional-grade equipment and extend workshops.RAW MATERIALSThe Company purchases various manufactured components and raw materials for use in its manufacturing processes. The principal components and raw materials the Company purchases include castings, finished sub-components, aluminum, steel, fabricated metal electronic parts and molded plastic parts. The most important raw material is steel. The Company enters into purchase agreements with local suppliers. The annual purchase plans are determined at the beginning of the calendar year but are subject to revision every three months as a result of customers’ orders. A purchase order is made according to monthly production plans. This protects the Company from building up inventory when the orders from customers change.The Company’s purchases from its ten largest suppliers represented in the aggregate 23.2% of all components and raw materials it purchased for the year ended December 31, 2021, and none of them provided more than 10% of total purchases.All components and raw materials are available from numerous sources. The Company has not, in recent years, experienced any significant shortages of manufactured components or raw materials and normally does not carry inventories of these items in excess of what is reasonably required to meet its production and shipping schedules.RESEARCH AND DEVELOPMENTThe Company owns the Testing Center, a Hubei Provincial-Level technical center, which has been approved by the Hubei Economic Commission. The center has a staff of about 198, including 139 engineers, primarily focusing on steering system R&D, tests, production process improvement and new material and production methodology application.In addition, the Company has formed Shanghai Henglong to engage in the design and sale of automotive electronics, including key parts of EPS.9 |Page
The Company believes that its engineering and technical expertise, together with its emphasis on continuing research and development, allow it to use the latest technologies, materials and processes to solve problems for its customers and to bring new, innovative products to market. The Company believes that continued research and development activities, including engineering, are critical to maintaining its pipeline of technologically advanced products. The Company has aggressively managed costs in other portions of its business in order to increase its total expenditures for research and development activities, including engineering, at approximately $28.2 million and $25.7 million for the years ended December 31, 2021 and 2020, respectively. In 2021 and 2020, the sales of such newly developed products accounted for about 23.2% and 14.8%, respectively, of total sales.COMPETITIONThe automotive components industry is extremely competitive. The Company’s customers consider criteria including quality, price/cost competitiveness, system and product performance, reliability and timeliness of delivery, new product and technology development capability, excellence and flexibility in operations, degree of global and local presence, effectiveness of customer service and overall management capability. The power steering system market is fragmented in China, and the Company has seven major competitors. Of these competitors, two are Sino-foreign joint ventures while the other five are state-owned. Like many competitive industries, there is pressure on downward selling prices.The Company’s major competitors, including Shanghai ZF, Nexteer and First Auto FKS, “FKS,” are component suppliers to specific automobile manufacturers. Shanghai ZF is the joint venture of SAIC and ZF Germany, which is an exclusive supplier to SAIC-Volkswagen and SAIC-GM. FKS is a joint venture between First Auto Group and Japan’s Koyo Company and its main customer is FAW-Volkswagen Company.While the Chinese government limits foreign ownership of auto assemblers to 50%, there is no analogous limitation in the automotive components industry. Thus, opportunities exist for foreign component suppliers to set up factories in China. These overseas competitors employ technology that may be more advanced and may have existing relationships with global automobile assemblers, but they are generally not as competitive as the Company in China in terms of production cost and flexibility in meeting client requirements.CHINESE AUTOMOBILE INDUSTRYThe Company is a supplier of automotive parts and most of its operations are located in China. An increase or decrease in the output and sales of Chinese vehicles could result in an increase or decrease of the Company’s results of operations. According to the latest statistics from the China Association of Automobile Manufacturers, “CAAM”, the output and sales volume of passenger vehicles in 2021 was 21.4 million and 21.5 million units respectively, an increase of 7.1% and 6.5%, respectively, compared to 2020. The output and sales volume of commercial vehicles in 2021 was 4.7 million and 4.8 million units, respectively, a decrease of 10.7% and 6.6%, respectively, compared to 2020. In 2021, the Company’s sales of steering gears for passenger vehicles increased by 26.5% and the sales of steering gears for commercial vehicles decreased by 16.0%, compared to 2020 in China.ENVIRONMENTAL COMPLIANCEThe Company is subject to the requirements of U.S. federal, state, local and non-U.S., including China’s, environmental and occupational safety and health laws and regulations. These include laws regulating air emissions, water discharge and waste management. The Company has an environmental management structure designed to facilitate and support its compliance with these requirements globally. Although the Company intends to comply with all such requirements and regulations, it cannot provide assurance that it is at all times in compliance. The Company has made and will continue to make capital and other expenditures to comply with environmental requirements, although such expenditures were not material during the past two years. Environmental requirements are complex, change frequently and have tended to become more stringent over time. Accordingly, the Company cannot assure that environmental requirements will not change or become more stringent over time or that its eventual environmental cleanup costs and liabilities will not be material.During the years ended December 31, 2021 and 2020, the Company did not make any material capital expenditures relating to environmental compliance.10 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Net Sales | Long-term assets |
| ​ | ​ | Year Ended December 31, | ​ | As of December 31, |
| ​ | 2021 | 2020 | 2021 | 2020 |
| Geographic region: | ​ |
| China | 65.3 | % | 70.6 | % | 99.2 | % | 99.1 | % |
| United States | 27.0 | 27.5 | 0.5 | 0.5 | ​ |
| Other foreign countries | 7.7 | 1.9 | 0.3 | 0.4 | ​ |
| Total consolidated | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |

ITEM 1A. RISK FACTORS.
Any investment in the Company’s securities involves a high degree of risk. You should carefully consider the risks described below, together with the information contained elsewhere in this Annual Report, before you make a decision to invest in the Company. The Company’s business, financial conditions and results of operations could be materially and adversely affected by many risk factors. Because of these risk factors, actual results might differ significantly from those projected in any forward-looking statements. Factors that might cause such differences include, among others, the following:
RISKS RELATED TO THE COMPANY’S BUSINESS AND INDUSTRY
The cyclical nature of automotive production and sales could result in a reduction in automotive sales, which could adversely affect the Company’s business and results of operations.
The Company’s business relies on automotive vehicle production and sales by its customers, which are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences and the price and availability of gasoline. They also can be affected by labor relations issues, regulatory requirements and other factors. In the last two years, the price of automobiles in China has generally declined. Additionally, the volume of automotive production in China has fluctuated from year to year, which gives rise to fluctuations in the demand for the Company’s products. Therefore, any significant economic decline could result in a reduction in automotive production and sales by the Company’s customers and could have a material adverse effect on the Company’s results of operations. Moreover, if the prices of automobiles keep declining, the selling price of automotive parts also would decrease, which would result in lower revenues and profitability.
Increasing costs for manufactured components and raw materials may adversely affect the Company’s profitability.
The Company uses a broad range of manufactured components and raw materials in its products, including castings, electronic components, finished sub-components, molded plastic parts, fabricated metal, aluminum, steel and resins. Because it may be difficult to pass increased prices for these items on to the Company’s customers, a significant increase in the prices of the Company’s components and materials could materially increase the Company’s operating costs and adversely affect its profit margins and profitability.
11 |Page
Because the Company is a holding company with substantially all of its operations conducted through its subsidiaries, its performance will be affected by the performance of its subsidiaries.The Company almost has no operations independent of those of Genesis and its subsidiaries, and the Company’s principal assets are its investments in Genesis and its subsidiaries and affiliates. As a result, the Company is dependent upon the performance of Genesis and its subsidiaries and will be subject to the financial, business and other factors affecting Genesis as well as general economic and financial conditions. As substantially all of the Company’s operations are, and will be, conducted through its subsidiaries, the Company will be dependent on the cash flow of its subsidiaries to meet its obligations.Because virtually all of the Company’s assets are, and will be, held by operating subsidiaries, the claims of the Company’s stockholders will be structurally subordinate to all existing and future liabilities, obligations and trade payables of such subsidiaries. In the event of the Company’s bankruptcy, liquidation or reorganization, its assets and those of its subsidiaries will be available to satisfy the claims of the Company’s stockholders only after all of its and its subsidiaries’ liabilities and obligations have been paid in full.With the automobile parts markets being highly competitive and many of the Company’s competitors having greater resources than it does, the Company may not be able to compete successfully.The automobile parts industry is a highly competitive business. The Company’s customers consider criteria including:​●quality;●price/cost competitiveness;●system and product performance;●reliability and timeliness of delivery;●new product and technology development capability;●excellence and flexibility in operations;●degree of global and local presence;●effectiveness of customer service; and●overall management capability.The Company’s competitors include independent suppliers of parts, as well as suppliers formed by spin-offs from the Company’s customers, who are becoming more aggressive in selling parts to other vehicle manufacturers. Depending on the particular product, the number of the Company’s competitors varies significantly. Many of the Company’s competitors have substantially greater revenues and financial resources than it does, as well as stronger brand names, consumer recognition, business relationships with vehicle manufacturers, and geographic presence than it has. The Company may not be able to compete favorably and increased competition may substantially harm its business, business prospects and results of operations.Internationally, the Company faces different market dynamics and competition. The Company may not be as successful as its competitors in generating revenues in international markets due to the lack of recognition of its products or other factors. Developing product recognition overseas is expensive and time-consuming and the Company’s international expansion efforts may be more costly and less profitable than it expects. If the Company is not successful in its target markets, its sales could decline, its margins could be negatively impacted and it could lose market share, any of which could materially harm the Company’s business, results of operations and profitability.Pricing pressure by automobile manufacturers on their suppliers may adversely affect the Company’s business and results of operations.Recently, pricing pressure from automobile manufacturers has been prevalent in the automotive parts industry in China. Virtually all vehicle manufacturers seek price reductions each year. Although the Company has tried to reduce costs and resist price reductions, these reductions have impacted the Company’s sales and profit margins. If the Company cannot offset continued price reductions through improved operating efficiencies and reduced expenditures, price reductions will have a material adverse effect on the Company’s results of operations.12 |Page
The Company’s business, revenues and profitability would be materially and adversely affected if it loses any of its large customers.For the year ended December 31, 2021, approximately 21.2%, 9.0%, 5.1%, 5.1% and 4.4% of the Company’s sales were to Fiat Chrysler North America, Great Wall Motors, Hubei Hongrun, Beiqi Foton and Ford Motor Company, the Company’s five largest customers in 2021, respectively. In total, these five largest customers accounted for 44.8% of total sales in 2021. For the year ended December 31, 2020, approximately 23.6%, 7.3%, 6.0%, 5.9% and 4.3% of the Company’s sales were to Fiat Chrysler North America, Great Wall Motors, Hubei Hongrun, Beiqi Foton and Dongfeng Auto Group, the Company’s five largest customers in 2020, respectively. In total, these five largest customers accounted for 47.1% of total sales in 2020. The loss of, or significant reduction in purchases by, one or more of these major customers could adversely affect the Company’s business.The Company may not be able to collect receivables incurred by customers.The Company currently sells its products on credit and its ability to receive payment for its products depends on the continued creditworthiness of its customers. Although the Company has long-term relationships with its major customers, the customer base may change if its sales increase because of the Company’s expanded capacity. If the Company is not able to collect its receivables, its profitability will be adversely affected.In November 2020, Intermediate People’s Court of Shenyang, Liaoning province, China, accepted the bankruptcy reorganization application of one of our customers. As of December 31, 2021 and 2020, the Company had accounts and notes receivable with a total amount of $6.6 million and $6.4 million, respectively, due from this customer and its subsidiaries, which receivables we considered in significant doubt of collectability. The Company provided full allowance for these receivables.The Company may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect the Company’s financial condition and liquidity.The Company may be exposed to product liability and warranty claims if its products actually or allegedly fail to perform as expected or the use of its products results, or is alleged to result, in bodily injury and/or property damage. The Company started to pay some of its customers’ increased after-sales service expenses due to consumer rights protection policies of “recall” issued by the Chinese government in 2004, such as the recalling flawed vehicles policy. Beginning in 2004, automobile manufacturers unilaterally required their suppliers to pay a “3-R Guarantees” service charge for repair, replacement and refund in an amount of about 2%–6% of the total amount of parts supplied. Accordingly, the Company has experienced and will continue to experience higher after-sales service expenses. Product liability, warranty and recall costs may have a material adverse effect on the Company’s financial condition.The Company is subject to environmental and safety regulations, which may increase the Company’s compliance costs and may adversely affect its results of operations.The Company is subject to the requirements of environmental and occupational safety and health laws and regulations in China. The Company cannot provide assurance that it has been or will be at all times in full compliance with all of these requirements, or that it will not incur material costs or liabilities in connection with these requirements. Additionally, these regulations may change in a manner that could have a material adverse effect on the Company’s business, results of operations and financial condition. The capital requirements and other expenditures that may be necessary to comply with environmental requirements could increase and become a material expense of doing business.Non-performance by the Company’s suppliers may adversely affect its operations by delaying delivery or causing delivery failures, which may negatively affect demand, sales and profitability.The Company purchases various types of equipment, raw materials and manufactured component parts from its suppliers. The Company would be materially and adversely affected by the failure of its suppliers to perform as expected. The Company could experience delivery delays or failures caused by production issues or delivery of non-conforming products if its suppliers fail to perform, and it also faces these risks in the event any of its suppliers becomes insolvent or bankrupt.13 |Page
The Company’s business and growth may suffer if it fails to attract and retain key personnel.The Company’s ability to operate its business and implement its strategies effectively depends on the efforts of its executive officers and other key employees. The Company depends on the continued contributions of its senior management and other key personnel. The Company’s future success also depends on its ability to identify, attract and retain highly skilled technical staff, particularly engineers and other employees with mechanics and electronics expertise, and managerial, finance and marketing personnel. The Company does not maintain a key person life insurance policy on Mr. Hanlin Chen or Mr. Qizhou Wu. The loss of the services of any of the Company’s key employees or the failure to attract or retain other qualified personnel could substantially harm the Company’s business.The Company’s management controls approximately 63.8% of its outstanding common stock and may have conflicts of interest with the Company’s minority stockholders.As of December 31, 2021, members of the Company’s management beneficially own approximately 63.8% of the outstanding shares of the Company’s common stock. As a result, except for the related party transactions that require approval of the audit committee of the board of directors of the Company, these majority stockholders have control over decisions to enter into any corporate transaction, which could result in the approval of transactions that might not maximize overall stockholders’ value. Additionally, these stockholders control the election of members of the Company’s board, have the ability to appoint new members to the Company’s management team and control the outcome of matters submitted to a vote of the holders of the Company’s common stock. The interests of these majority stockholders may at times conflict with the interests of the Company’s other stockholders. The Company regularly engages in transactions with entities controlled by one or more of its officers and directors, including those controlled by Mr. Hanlin Chen, the chairman of the board of directors of the Company and its controlling stockholder.There is a limited public float of the Company’s common stock, which can result in the Company’s stock price being volatile and prevent the realization of a profit on resale of the Company’s common stock or derivative securities.There is a limited public float of the Company’s common stock. As of December 31, 2021, approximately 36.2% of the Company’s outstanding common stock is considered part of the public float. The term “public float” refers to shares freely and actively tradable on the NASDAQ Capital Market and not owned by officers, directors or affiliates, as such term is defined under the Securities Act. As a result of the limited public float and the limited trading volume on some days, the market price of the Company’s common stock can be volatile, and relatively small changes in the demand for or supply of the Company’s common stock can have a disproportionate effect on the market price for its common stock. This stock price volatility could prevent a security holder seeking to sell the Company’s common stock or derivative securities from being able to sell them at or above the price at which the stock or derivative securities were bought, or at a price which a fully liquid market would report.The Company is subject to penny stock regulations and restrictions.The SEC has adopted regulations which generally define so-called “penny stock” as an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. As of December 31, 2021, the closing price for the Company’s common stock was $2.68. If the Company’s stock is a “penny stock”, it may become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “Penny Stock Rule.” This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors,” generally, individuals with a net worth in excess of $1.0 million or annual incomes exceeding $0.2 million, or $0.3 million together with their spouses. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell the Company’s securities and may affect the ability of purchasers to sell any of the Company’s securities in the secondary market.For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure also is required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.14 |Page
There can be no assurance that the Company’s common stock will qualify for exemption from the Penny Stock Rule. In any event, even if the Company’s common stock were exempt from the Penny Stock Rule, the Company would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware may discourage a takeover attempt.Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware, the state in which it is organized, could make it difficult for a third party to acquire the Company, even if doing so might be beneficial to the Company’s stockholders. Provisions of the Company’s certificate of incorporation and bylaws impose various procedural and other requirements, which could make it difficult for stockholders to effect certain corporate actions and possibly prevent transactions that would maximize stockholders’ value.Failure to maintain effective internal control over financial reporting could have a material adverse effect on the Company’s business, results of operations and the trading price of its shares.The Company is subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, the “SEC,” as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring public companies to include a report of management in its annual report that contains an assessment by management of the effectiveness of such company’s internal control over financial reporting.If the Company fails to maintain the adequacy of its internal controls in the future, it will not be able to ensure that it can conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for the Company to produce reliable financial reports and are important to help prevent fraud. Any failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of the Company’s financial statements, which in turn could harm its business and negatively impact the trading price of its common stock. Furthermore, the Company may need to incur additional costs and use additional management and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.The Company generally does not pay cash dividends on its common stock.Although the Company announced a special cash dividend of $0.18 per common share to the Company’s shareholders of record as of the close of business on June 26, 2014, it does not anticipate paying any other cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company’s board of directors deems relevant.Techniques employed by short sellers may drive down the market price of the Company’s common stock.Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s best interests for the price of the stock to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a stock short. These short attacks have, in the past, led to selling of shares in the market.In the recent past, public companies that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered around allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.15 |Page
It is not clear what effect such negative publicity would have on the Company, if any. If the Company were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company could have to expend a significant amount of resources to investigate such allegations and/or defend itself. While the Company would strongly defend against any such short seller attacks, the Company may be constrained in the manner in which it can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract the Company’s management from growing the Company. Even if such allegations are ultimately proven to be groundless, allegations against the Company could severely impact its business operations and stockholders’ equity, and any investment in the Company’s stock could be greatly reduced or rendered worthless.The Company’s secured credit facilities contain certain financial covenants that it may not satisfy, which, if not satisfied, could result in the acceleration of the amounts due under the Company’s secured credit facilities and the limitation of the Company’s ability to borrow additional funds in the future.The agreements governing the Company’s secured credit facilities subject it to various financial and other restrictive covenants with which the Company must comply on an ongoing or periodic basis. These covenants include, but are not limited to, restrictions on the utilization of the funds and the maintenance of certain financial ratios. If the Company violates any of these covenants, the Company’s outstanding debt under the Company’s secured credit facilities could become immediately due and payable, the Company’s lenders could proceed against any collateral securing such indebtedness and the Company’s ability to borrow additional funds in the future may be limited. Alternatively, the Company could be forced to refinance or renegotiate the terms and conditions of the Company’s secured credit facilities, including the interest rates, financial and restrictive covenants and security requirements of the secured credit facilities, on terms that may be significantly less favorable to the Company.Our business operations have been and may continue to be materially and adversely affected by the outbreak of the coronavirus disease (COVID-19).An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, where the Company’s headquarters is located, in December 2019 and has been expanding within the PRC and globally. The new strain of COVID-19 is considered to be highly contagious and poses a serious public health threat. On January 23, 2020, the PRC government announced the lockdown of Wuhan city in an attempt to quarantine the city. Since then, other measures including travel restrictions have been imposed in other major cities in the PRC and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January. As our headquarters are located in Wuhan, we closed our headquarters effective January 23, 2020 and reopened in late March 2020.Any outbreak of such epidemic illness or other adverse public health developments in the PRC or elsewhere in the world may materially and adversely affect the global economy, our markets and our business.We cannot foresee whether the pandemic of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. If the pandemic of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for automobile sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.RISKS RELATED TO DOING BUSINESS IN CHINA AND OTHER COUNTRIES BESIDES THE UNITED STATESThe Company may face a severe operating environment during times of economic recession.The sales volume of the Company’s core products is largely influenced by the demand for its customers’ end products which are mostly sold in the Chinese markets. Future economic crises, either within China or without, may lead to a drastic drop in demand for the Company’s products.16 |Page
Inflation in China could negatively affect the Company’s profitability and growth.China’s economy has experienced rapid growth, much of it due to the issuance of debt over the last few years. This debt-fueled economic growth has led to growth in the money supply, causing rising inflation. If prices for the Company’s products rise at a rate that is insufficient to compensate for the rise in the cost of production, it may harm the Company’s profitability. In order to control inflation, the Chinese government has imposed controls on bank credit, limits on loans and other restrictions on economic activities. Such policies have led to a slowing of economic growth. Additional measures could further slow economic activity in China, which could, in turn, materially increase the Company’s costs while also reducing demand for the Company’s products.The Chinese government’s macroeconomic policies could have a negative effect on the Company’s business and results of operations.The Chinese government has implemented various measures from time to time to control the rate of economic growth in the PRC. Some of these measures may have a negative effect on the Company over the short or long term. Recently, to cope with high inflation and economic imbalances, the Chinese government has tightened monetary policy and implemented floating exchange rate policy. In addition, in order to alleviate some of the effects of unbalanced growth and social discontent, the Chinese government has enacted a series of social programs and anti-inflationary measures. These, in turn, have increased the costs on the financial and manufacturing sectors, without having alleviated the effects of high inflation and economic imbalances. The Chinese government’s macroeconomic policies, even if effected properly, may significantly slow down China’s economy or cause great social unrest, all of which would have a negative effect on the Company’s business and results of operations.The economic, political and social conditions in China could affect the Company’s business.Most of the Company’s business, assets and operations are located in China. The economy of China differs from the economies of most developed countries in many respects, including government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. The economy of China has been transitioning from a planned economy to a more market-oriented economy. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government.In addition, the Chinese government continues to play a significant role in regulating industry by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Therefore, the Chinese government’s involvement in the economy could adversely affect the Company’s business operations, results of operations and/or financial condition.Because the Company’s operations are mostly located outside of the United States and are subject to Chinese laws, any change of Chinese laws may adversely affect its business.Most of the Company’s operations are in the PRC, which exposes it to risks, such as exchange controls and currency restrictions, currency fluctuations and devaluations, changes in local economic conditions, changes in Chinese laws and regulations, exposure to possible expropriation or other PRC government actions, and unsettled political conditions. These factors may have a material adverse effect on the Company’s operations or on its business, results of operations and financial condition.17 |Page
The Company’s international expansion plans subject it to risks inherent in doing business internationally.The Company’s long-term business strategy relies on the expansion of its international sales outside China by targeting markets, such as the United States and Brazil. Risks affecting the Company’s international expansion include challenges caused by distance, language and cultural differences, conflicting and changing laws and regulations, foreign laws, international import and export legislation, trading and investment policies, foreign currency fluctuations, the burdens of complying with a wide variety of laws and regulations, protectionist laws and business practices that favor local businesses in some countries, foreign tax consequences, higher costs associated with doing business internationally, restrictions on the export or import of technology, difficulties in staffing and managing international operations, trade and tariff restrictions, and variations in tariffs, quotas, taxes and other market barriers. These risks could harm the Company’s international expansion efforts, which could in turn materially and adversely affect its business, operating results and financial condition.On September 17, 2012, the United States filed a trade case with the World Trade Organization, “WTO,” against the PRC with respect to the PRC government’s purported provision of subsidies to the automobile and automobile-parts enterprises in the PRC. If the WTO rules against China in this trade case, the cost of sales of the Company could increase due to the imposition of any tariff and/or the Company’s ability to export products to the United States could be limited, which could affect the Company’s business and operating results.In addition, under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted additional disclosure requirements related to the source of certain “conflict minerals” for issuers for which such “conflict minerals” are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by that issuer. The metals covered by the rules include tin, tantalum, tungsten and gold, commonly referred to as “3TG.” If these materials are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, the rules require a reasonable country of origin inquiry be conducted to determine if an issuer knows, or has reason to believe, that any of the minerals used in the production process may have originated from the Democratic Republic of the Congo or an adjoining country. In such a case, if an issuer were not able to determine that the minerals did not originate from a covered country or conclude that there is no reason to believe that the minerals used in the production process may have originated in a covered country, that issuer could be required to perform supply chain due diligence on members of its supply chain. Global supply chains can have multiple layers, thus the costs of complying with these new requirements could be substantial. These new requirements may also reduce the number of suppliers that provide conflict-free metals and may also affect a company’s ability to obtain products in sufficient quantities or at competitive prices. If the Company was to source such 3TG minerals that are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, compliance costs with these rules and/or the unavailability of raw materials could have a material adverse effect on the Company’s results of operations.The Company faces risks associated with currency exchange rate fluctuations; any adverse fluctuation may adversely affect its operating margins.Although the Company is incorporated in the State of Delaware, in the United States, the majority of its current revenues are in Chinese currency. Conducting business in currencies other than U.S. dollars subjects the Company to fluctuations in currency exchange rates that could have a negative impact on its reported operating results. Fluctuations in the value of the U.S. dollar relative to other currencies impact the Company’s revenues, cost of revenues and operating margins and result in foreign currency translation gains and losses. Historically, the Company has not engaged in exchange rate hedging activities. Although the Company may implement hedging strategies to mitigate this risk, these strategies may not eliminate its exposure to foreign exchange rate fluctuations and involve costs and risks of their own, such as ongoing management time and expertise requirements, external costs to implement the strategy and potential accounting implications.If relations between the United States and China worsen, the Company’s stock price may decrease and the Company may have difficulty accessing the U.S. capital markets.At various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China could adversely affect the market price of the Company’s common stock and its ability to access U.S. capital markets. Political events, international trade disputes and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company, its customers and its other business partners.18 |Page
The Chinese government could change its policies toward private enterprise, which could adversely affect the Company’s business.The Company’s business is subject to political and economic uncertainties in China and may be adversely affected by China’s political, economic and social developments. Over the past several years, the Chinese government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The Chinese government may not continue to pursue these policies or may alter them to the Company’s detriment from time to time. Changes in policies, laws and regulations, or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on the Company’s business. Nationalization or expropriation could result in the total loss of the Company’s investment in China.Government control of currency conversion and future movements in exchange rates may adversely affect the Company’s operations and financial results.The Company receives most of its revenues in Chinese Renminbi, “RMB”. A portion of such revenues will be converted into other currencies to meet the Company’s foreign currency obligations. Foreign exchange transactions under the Company’s capital account, including principal payments in respect of foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the State Administration of Foreign Exchange in China. These limitations could affect the Company’s ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures.The Chinese government controls its foreign currency reserves through restrictions on imports and conversion of RMB into foreign currency. In July 2005, the Chinese government has adjusted its exchange rate policy from “Fixed Rate” to “Floating Rate”. From July 2005 to December 2021, the exchange rate between the RMB and the U.S. dollar appreciated from RMB 1.00 to $0.1205 to RMB 1.00 to $0.1568. Any significant appreciation of the RMB is likely to decrease the income of export products and the cash flow of the Company.Because the Chinese legal system is not fully developed, the Company and its security holders’ legal protections may be limited.The Chinese legal system is based on written statutes and their interpretation by the Supreme People’s Court. Although the Chinese government introduced new laws and regulations to modernize its business, securities and tax systems on January 1, 1994, China does not yet possess a comprehensive body of business law. Because Chinese laws and regulations are relatively new, interpretation, implementation and enforcement of these laws and regulations involve uncertainties and inconsistencies and it may be difficult to enforce contracts. In addition, as the Chinese legal system develops, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on the Company’s business operations. Moreover, interpretative case law does not have the same precedential value in China as in the United States, so legal compliance in China may be more difficult or expensive.It may be difficult to serve the Company with legal process or enforce judgments against the Company or its management.Most of the Company’s assets are located in China, nine of its directors and officers are non-residents of the United States, and all or substantial portions of the assets of such non-residents are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon such persons to originate an action in the United States. Moreover, there is uncertainty that the courts of China would enforce judgments of U.S. courts against the Company, its directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or an original action brought in China based upon the securities laws of the United States or any state.19 |Page
The Company may be subject to fines and legal sanctions imposed by State Administration of Foreign Exchange, “SAFE”, or other Chinese government authorities if it or its Chinese directors or employees fail to comply with recent Chinese regulations relating to employee share options or shares granted by offshore listed companies to Chinese domestic individuals.On December 25, 2006, the People’s Bank of China, or PBOC, issued the Administration Measures on Individual Foreign Exchange Control, and the corresponding Implementation Rules were issued by SAFE on January 5, 2007. Both of these regulations became effective on February 1, 2007. According to these regulations, all foreign exchange matters relating to employee stock holding plans, share option plans or similar plans with Chinese domestic individuals’ participation require approval from the SAFE or its authorized branch. On March 28, 2007, the SAFE issued the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or the Stock Option Rule. Under the Stock Option Rule, Chinese domestic individuals who are granted share options or shares by an offshore listed company are required, through a Chinese agent or Chinese subsidiary of the offshore listed company, to register with the SAFE and complete certain other procedures. As the Company is an offshore listed company, its Chinese domestic directors and employees who may be granted share options or shares shall become subject to the Stock Option Rule. Under the Stock Option Rule, employees stock holding plans, share option plans or similar plans of offshore listed companies with Chinese domestic individuals’ participation must be filed with the SAFE. After the Chinese domestic directors or employees exercise their options, they must apply for the amendment to the registration with the SAFE. As of December 31, 2021, the Company has completed such SAFE registration and other related procedures according to PRC law. If the Company or its Chinese domestic directors or employees fail to comply with these regulations in the future, the Company or its Chinese domestic directors or employees may be subject to fines or other legal sanctions imposed by the SAFE or other Chinese government authorities.Capital outflow policies in China may hamper the Company’s ability to declare and pay dividends to its stockholders.China has adopted currency and capital transfer regulations. These regulations may require the Company to comply with complex regulations for the movement of capital. Although the Company’s management believes that it will be in compliance with these regulations, should these regulations or the interpretation of them by courts or regulatory agencies change, the Company may not be able to pay dividends to its stockholders outside of China. In addition, under current Chinese law, the Company’s joint-ventures and wholly-owned enterprise in China must retain a reserve equal to 10% of its net income after taxes, not to exceed 50% of its registered capital. Accordingly, this reserve will not be available to be distributed as dividends to the Company’s stockholders. The Company presently does not intend to pay dividends for the foreseeable future. The Company’s board of directors intends to follow a policy of retaining all of the Company’s earnings to finance the development and execution of its strategy and the expansion of the Company’s business.The recent state government interference into business activities of U.S.-listed Chinese companies may negatively impact our operations.Recently, the Chinese government announced that it would step up supervision of Chinese companies listed on foreign exchanges. China intends to improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration of China has also opened a cybersecurity probe into several U.S.-listed tech companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and transfer data. If the Chinese government’s interference expands, our operations may be negatively impacted in a significant way, although, presently, there is no discernible immediate impact. ​The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives the investors with the benefits of such inspections. Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is not currently inspected by the PCAOB.20 |Page
This lack of PCAOB inspections in China prevents the PCAOB from fully evaluating audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in our common stock are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. Our shares may be delisted and prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB is unable to inspect or fully investigate auditors located in China. On December 16, 2021, the PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. Under the current law, delisting and prohibition from over-the-counter trading in the U.S. could take place in 2024. If this happens there is no certainty that we will be able to list our shares on a non-U.S. exchange or that a market for our shares will develop outside of the U.S. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China’s, the Holding Foreign Companies Accountable Act, or the HFCAA was signed into law on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the counter trading market in the U.S. Accordingly, under the current law this could happen in 2024.On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA (the “Final Amendments”). The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party, including the text of any such charter. The Final Amendments also establish procedures the SEC will follow in identifying issuers and prohibiting trading by certain issuers under the HFCAA.On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. In March 2022, the SEC issued its first “Conclusive list of issuers identified under the HFCAA” indicating that those companies are now formally subject to the delisting provisions if they remain on the list for three consecutive years. We anticipate being added to the list shortly after the filing of this annual report on Form 10-K.The HFCAA or other efforts to increase U.S. regulatory access to audit information could cause investor uncertainty for affected issuers, including us, and the market price of the shares could be adversely affected. Additionally, whether the PCAOB will be able to conduct inspections of our auditor before the issuance of our financial statements to be included in our Form 10-K for the year ending December 31, 2023 which is due by March 31, 2024, or at all, is subject to substantial uncertainty and depends on factors out of our and our auditor’s control. If our auditor is unable to be inspected in time, we could be delisted from the Nasdaq Stock Market and our shares will not be permitted for trading “over-the-counter” either. Such a delisting would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a delisting would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.If our shares are delisted from Nasdaq and are prohibited from trading in the over-the-counter market in the U.S. there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the U.S.21 |Page
The potential enactment of the Accelerating Holding Foreign Companies Accountable Act would decrease the number of non-inspection years from three years to two, thus reducing the time period before our shares may be prohibited from over-the-counter trading or delisted. If this bill were enacted, our shares could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. in 2023.On June 22, 2021, the U.S. Senate passed a bill known as the Accelerating Holding Foreign Companies Accountable Act, to amend Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)) to prohibit securities of any registrant from being listed on any of the U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB inspection for two consecutive years, instead of three consecutive years as currently provided in the HFCAA.On February 4, 2022, the U.S. House of Representatives passed the America Competes Act of 2022 which includes the exact same amendments as the bill passed by the Senate. The America Competes Act, however, includes a broader range of legislation not related to the HFCAA in response to the U.S. Innovation and Competition Act passed by the Senate in 2021. The U.S. House of Representatives and U.S. Senate will need to agree on amendments to these respective bills to align the legislation and pass their amended bills before the President can sign into law. It is unclear when the U.S. Senate and U.S. House of Representatives will resolve the differences in the U.S. Innovation and Competition Act and the America Competes Act of 2022 bills currently passed, or when the U.S. President will sign the bill to make the amendment into law, if at all.In the case that the bill becomes the law, it will reduce the time period before our shares could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. from 2024 to 2023.Proceedings instituted by the SEC against PRC affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, could result in the Company’s financial statements being determined to not be in compliance with the requirements of the Exchange Act. Starting in 2011, the Chinese affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, were affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. However, the firms were advised and directed that under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the China Securities Regulatory Commission, or the CSRC.In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including the Company’s independent registered public accounting firm. A first instance trial of the proceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioners had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepted that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms were to receive matching Section 106 requests, and were required to abide by a detailed set of procedures with respect to such requests, which in substance required them to facilitate production via the CSRC. If they failed to meet specified criteria, the SEC retained authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure.Under the terms of the settlement, the underlying proceeding against the four China-based accounting firms was deemed dismissed with prejudice four years after entry of the settlement. The four-year mark occurred on February 6, 2019. The Company cannot predict whether the SEC will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC imposing penalties such as suspensions. If additional remedial measures are imposed on the Chinese affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, the Company could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.22 |Page
If the Company’s independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and the Company were unable to timely find another registered public accounting firm to audit and issue an opinion on the Company’s financial statements, the Company’s financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of the Company’s common stock from the Nasdaq Capital Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the Company’s common stock in the United States.The non-U.S. activities of the Company’s non-U.S. subsidiaries may be subject to U.S. taxation.The majority of the Company’s subsidiaries are based in China and are subject to income taxes in the PRC. These China-based subsidiaries conduct substantially all of the Company’s operations, and generate most of the Company’s income in China. The Company is a Delaware corporation and is subject to income tax in the United States. New U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment.Certain activities conducted in the PRC or other jurisdictions outside of the U.S. may give rise to U.S. corporate income tax. These taxes would be imposed on the Company when its subsidiaries that are controlled foreign corporations (“CFCs”) generate income that is subject to Subpart F of the U.S. Internal Revenue Code, or “Subpart F”. Passive income, such as rents, royalties, interest, dividends, and gain from disposal of the Company’s investments is among the types of income subject to taxation under Subpart F. Any income taxable under Subpart F is taxable in the U.S. at federal corporate income tax rates of up to 21% for taxable years beginning after December 31, 2017. Subpart F income is taxable to the Company, even if it is not distributed to the Company.The U.S. Tax Reform also includes provisions for a new tax on global intangible low-taxed income (“GILTI”) effective for tax years of non-U.S. corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of CFCs, subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations.Information technology dependency and cyber security vulnerabilities could lead to reduced revenue, liability claims, or competitive harm. The Company is dependent on information technology systems and infrastructure (“IT systems”) to conduct its business. The Company’s IT systems may be vulnerable to disruptions from human error, outdated applications, computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. Any significant disruption, breakdown, intrusion, interruption or corruption of these systems or data breaches could cause the loss of data or intellectual property, equipment damage, downtime, and/or safety related issues and could have a material adverse effect on the Company’s business. The Company has, from time to time, experienced incidents related to its IT systems, and expect that such incidents will continue, including malware and computer virus outbreaks, unauthorized access, systems failures and disruptions. The Company has measures and defenses in place against such events, but the Company may not be able to prevent, immediately detect, or remediate all instances of such events. A material security breach or disruption of the Company’s IT systems could result in theft, unauthorized use, or publication of the Company’s intellectual property and/or confidential business information, harm the Company’s competitive position, disrupt the Company’s manufacturing, reduce the value of the Company’s investment in research and development and other strategic initiatives, impair the Company’s ability to access vendors and suppliers or otherwise adversely affect the Company’s business.Additionally, the Company believes that utilities and other operators of critical infrastructure that serve the Company’s facilities face heightened security risks, including cyber-attack. In the event of such an attack, disruption in service from the Company’s utility providers could disrupt the Company’s manufacturing operations which rely on a continuous source of power (electrical, gas, etc.).23 |Page
The Company’s business is subject to natural disasters, health epidemics and other catastrophic incidents.In addition to COVID-19, China has in the past experienced significant natural disasters, including earthquakes, extreme weather conditions, as well as health scares related to epidemic diseases, and any similar event could materially impact the Company’s business in the future. If a disaster or other disruption were to occur in the future that affects the regions where the Company operates its business, the Company’s operations could be materially and adversely affected due to loss of personnel and damage to property. Even if the Company is not directly affected, such a disaster or disruption could affect the operations or financial conditions of the Company’s customers, which could harm the Company’s results of operations.The recent government interference into business activities of U.S.-listed Chinese companies may negatively impact our operations.Recently, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which were available to the public on July 6, 2021, which further emphasized their goal to strengthen the cross-border regulatory collaboration, to improve relevant laws and regulations on data security, cross-border data transmission, and confidential information management, and provided that efforts will be made to revise the regulations on strengthening the confidentiality and file management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures. However, these opinions are newly issued, and there were no further explanations or detailed rules or regulations with respect to such opinions, and there are still uncertainties regarding the interpretation and implementation of these opinions. China intends to improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration of China has also opened a cyber security probe into several U.S.-listed tech companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and transfer data. If the Chinese government’s interference expands, our operations may be negatively impacted in a significant way, although, presently, there is no discernible immediate impact.If the Company becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matters. Any unfavorable results from the investigations could harm our business operations and our reputation.Recently, U.S. public companies that have substantially all of their operations in China have been subjects of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities, lack of effective internal control over financial reporting, inadequate corporate governance and ineffective implementation thereof and, in many cases, allegations of fraud. As a result of enhanced scrutiny, criticism and negative publicity, the publicly traded stocks of many U.S.-listed Chinese companies have sharply decreased in value and, in some cases, have become virtually worthless or illiquid. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effects the sector-wide investigations will have on the Company. If the Company becomes a subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company will have to expend significant resources to investigate such allegations and defend the Company. If such allegations were not proven to be baseless, the Company would be severely hampered and the price of the stock of the Company could decline substantially. If such allegations were proven to be groundless, the investigation might have significantly distracted the attention of the Company’s management.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not Applicable.
24 |Page
ITEM 2. PROPERTIES.
The Company’s headquarters are located at No. 1 Henglong Road, Yu Qiao Development Zone, Shashi District, Jing Zhou City Hubei Province, the PRC. Set forth below are the manufacturing facilities operated by each joint venture. The Company has forty-five to fifty years long-term rights to use the lands and buildings (in thousands of USD, except for references to area in square meters).
​
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Total Area | Building Area | Original Cost of | ​ |
| Name of Entity | Product | (sq.m.) | (sq.m.) | Equipment | Site |
| Henglong | Automotive Parts | 97,818 | 20,226 | ​ | $ | 64,293 | Jingzhou City, Hubei Province |
| ​ | ​ | ​ | 13,393 | 13,707 | ​ | $ | — | Wuhan City, Hubei Province |
| Jiulong | Power Steering Gear | 39,478 | 24,734 | ​ | $ | 44,802 | Jingzhou City, Hubei Province |
| Shenyang | Automotive Steering Gear | 35,354 | 18,041 | ​ | $ | 8,865 | Shenyang City, Liaoning Province |
| Chongqing | Power Steering Gear | 57,849 | 22,812 | ​ | $ | 3,544 | Chongqing City |
| Jielong (1) | Electric Power Steering | — | — | ​ | $ | 7,449 | Jingzhou City, Hubei Province |
| Wuhan Chuguanjie | Electric Power Steering | 53,675 | 44,054 | ​ | $ | 5,472 | Wuhan City, Hubei Province |
| Henglong KYB (1) | Automotive Steering Gear | — | — | ​ | $ | 16,121 | Jingzhou City, Hubei Province |
| Hubei Henglong | Automotive Steering Gear | 277,269 | 78,833 | ​ | $ | 92,493 | Jingzhou City, Hubei Province |
| Wuhu | Automotive Steering Gear | 83,705 | 27,288 | ​ | $ | 7,550 | Wuhu City, Anhui Province |
| Wuhu Hongrun(1) | High Polymer Materials | — | — | ​ | $ | 1,158 | Wuhu City, Anhui Province |
| Total | ​ | ​ | 658,541 | 249,695 | ​ | $ | 251,747 |

| (1) | Jielong, Henglong KYB and Wuhu Hongrun do not own land use rights or buildings by themselves. They rent buildings from Jiulong, Hubei Henglong and Wuhu, respectively. |

The Company is not involved in investments in real estate or interests in real estate, real estate mortgages, and securities of or interests in persons primarily engaged in real estate activities, as all of its land rights are used for production purposes.
ITEM 3. LEGAL PROCEEDINGS.
On January 7, 2019, three purported stockholders of the Company filed a stockholder derivative complaint on behalf of the Company against the Company’s directors Hanlin Chen, Qizhou Wu and Guangxun Xu and former directors Arthur Wong and Robert Tung in the Delaware Court of Chancery, alleging that they had (a) breached their fiduciary duties by approving and paying excessive compensation to the non-employee directors of the Company, Arthur Wong, Guangxun Xu and Robert Tung, and (b) failed to make full and accurate disclosure of all material information with respect to director qualification and director compensation paid in 2017 in the Company’s annual proxy statement on Schedule 14A filed on October 10, 2018. The directors have engaged their own counsel to answer this complaint. On April 9, 2019, the Company moved to dismiss the complaint. The motion to dismiss was denied on July 17, 2019. As of November 2020, the Company reached a settlement to resolve the lawsuit for a sum of $55,998. The Company did not admit any liability in reaching the settlement. On February 5, 2021, the Court of Chancery conducted a hearing to confirm the settlement of the stockholder derivative action. The Court entered a Final Order and Judgment approving the settlement. The Court further ordered that the plaintiffs’ application for an award of attorneys’ fees and reimbursement of litigation expenses be reduced from $100,000 to $30,000. The Court’s Final Order and Judgment is publicly available on the Court of Chancery docket. As of December 31, 2021, the Company has received the above settlement of $55,998 from the directors and paid the above attorneys’ fees and reimbursement of litigation expenses.
Other than as described above, the Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
​
25 |Page
​PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Company’s common stock is traded on the Nasdaq Capital Market under the symbol “CAAS”.
ISSUER PURCHASES OF EQUITY SECURITIES
On December 5, 2018, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing markets prices or in privately negotiated transactions through December 4, 2019. The Company has extended the program to December 4, 2020. During the year ended December 31, 2019, under the repurchase program, the Company repurchased 452,559 shares of the Company’s common stock for cash consideration of $1.0 million on the open market. During the year ended December 31, 2020, there were no shares of common stock repurchased under such program.
On August 13, 2020, the Board of Directors of the Company approved a share repurchase program under which the Company is permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $3.50 per share through August 12, 2021. During the year ended December 31, 2020, the Company repurchased 322,269 of the shares that were authorized to be repurchased under the program. During the year ended December 31, 2021, there were no shares of common stock repurchased under such program.
STOCKHOLDERS
The Company’s common shares are issued in registered form. Securities Transfer Corporation in Frisco, Texas is the registrar and transfer agent for the Company’s common stock. As of December 31, 2021, there were 32,338,302 shares of the Company’s common stock (including 1,486,526 shares of the Company’s treasury stock) issued and the Company had approximately 56 stockholders of record.
DIVIDENDS
The Company does not anticipate paying any cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company’s board of directors deems relevant.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The securities authorized for issuance under equity compensation plans on December 31, 2021 are as follows:
​
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Number of securities to be | Weighted average | Number of securities |
| ​ | ​ | issued upon exercise of | ​ | exercise price of | ​ | remaining available for |
| Plan category | outstanding options | outstanding options | future issuance |
| Equity compensation plans approved by security holders | 2,200,000 | ​ | $ | 5.24 | 1,563,650 |

​
The stock option plan was approved at the Annual Meeting of Stockholders held on June 28, 2005 and extended for ten years at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares for issuance under the plan are 2,200,000. The term of the plan was extended to June 27, 2025.
26 |Page
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this report.
GENERAL OVERVIEW
China Automotive Systems, Inc., including, when the context so requires, its subsidiaries and the subsidiaries’ interests in the Sino-foreign joint ventures described below, is referred to herein as the “Company.” The Company, through its Sino-foreign joint ventures, engages in the manufacture and sales of automotive systems and components in the People’s Republic of China, the “PRC,” or “China.” Genesis, a company incorporated on January 3, 2003 under the Companies Ordinance of Hong Kong as a limited liability company, is a wholly-owned subsidiary of the Company. Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after sales service and research and development support. Furthermore, the Company owns the following aggregate net interests in the subsidiaries incorporated in the PRC and Brazil as of December 31, 2021 and 2020.
​
| ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Aggregate Net Interest |
| ​ | ​ | December 31, | ​ | December 31, | ​ |
| Name of Entity | 2021 | 2020 |
| Henglong | 100.00 | % | 100.00 | % |
| Jiulong | 100.00 | % | 100.00 | % |
| Shenyang | 70.00 | % | 70.00 | % |
| Wuhu | 100.00 | % | 77.33 | % |
| Jielong | 85.00 | % | 85.00 | % |
| Hubei Henglong | 100.00 | % | 100.00 | % |
| Testing Center | 100.00 | % | 100.00 | % |
| Chongqing Henglong | 70.00 | % | 70.00 | % |
| Brazil Henglong | 95.84 | % | 95.84 | % |
| Wuhan Chuguanjie | 85.00 | % | 85.00 | % |
| Shanghai Henglong | 100.00 | % | 100.00 | % |
| Jingzhou Qingyan | 60.00 | % | 60.00 | % |
| Henglong KYB | 66.60 | % | 66.60 | % |
| Wuhan Hyoseong | 51.00 | % | 51.00 | % |
| Wuhu Hongrun | 62.00 | % | 62.00 | % |
| Changchun Hualong | 100.00 | % | 100.00 | % |

​
27 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | 2021 | 2020 | Change | Change% |
| Net product sales | ​ | $ | 497,993 | ​ | $ | 417,636 | ​ | $ | 80,357 | 19.2 | % |
| Cost of products sold | ​ | 425,914 | ​ | 362,295 | ​ | 63,619 | 17.6 | ​ |
| Net gain on other sales | ​ | 4,368 | ​ | 4,320 | ​ | 48 | 1.1 | ​ |
| Selling expenses | ​ | 18,278 | ​ | 14,506 | ​ | 3,772 | 26.0 | ​ |
| General and administrative expenses | ​ | 24,423 | ​ | 27,581 | ​ | (3,158) | -11.4 | ​ |
| Research and development expenses | ​ | 28,228 | ​ | 25,723 | ​ | 2,505 | 9.7 | ​ |
| Other income, net | ​ | 6,668 | ​ | 2,438 | ​ | 4,230 | 173.5 | ​ |
| Interest expense | ​ | 1,437 | ​ | 1,592 | ​ | (155) | -9.7 | ​ |
| Financial expense, net | ​ | ​ | 2,350 | ​ | ​ | 4,897 | ​ | ​ | (2,547) | ​ | -52.0 | ​ |
| Income taxes | ​ | 4,004 | ​ | 2,163 | ​ | 1,841 | 85.1 | ​ |
| Net income/(loss) | ​ | 10,726 | ​ | (10,271) | ​ | 20,997 | -204.4 | ​ |
| Net loss attributable to non-controlling interest | ​ | (352) | ​ | (5,300) | ​ | 4,948 | -93.4 | ​ |
| Net income/(loss) attributable to parent company’s common shareholders | ​ | 11,050 | ​ | (4,980) | ​ | 16,030 | -321.9 | % |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Net Sales | Cost of sales |
| ​ | 2021 | 2020 | Change | 2021 | 2020 | Change |
| Henglong | ​ | $ | 202,612 | ​ | $ | 157,715 | ​ | $ | 44,897 | 28.5 | % | $ | 188,973 | ​ | $ | 146,478 | ​ | $ | 42,495 | 29.0 | % |
| Jiulong | ​ | 94,510 | ​ | 100,120 | ​ | (5,610) | -5.6 | ​ | 85,025 | ​ | 91,053 | ​ | (6,028) | -6.6 | ​ |
| Shenyang | ​ | 16,510 | ​ | 14,091 | ​ | 2,419 | 17.2 | ​ | 13,084 | ​ | 11,946 | ​ | 1,138 | 9.5 | ​ |
| Wuhu | ​ | 27,227 | ​ | 14,280 | ​ | 12,947 | 90.7 | ​ | 25,708 | ​ | 13,627 | ​ | 12,081 | 88.7 | ​ |
| Hubei Henglong | ​ | 128,142 | ​ | 115,991 | ​ | 12,151 | 10.5 | ​ | 105,969 | ​ | 92,797 | ​ | 13,172 | 14.2 | ​ |
| Henglong KYB | ​ | 80,683 | ​ | 52,659 | ​ | 28,024 | 53.2 | ​ | 75,277 | ​ | 52,691 | ​ | 22,586 | 42.9 | ​ |
| Other Entities | ​ | 96,397 | ​ | 61,202 | ​ | 35,195 | 57.5 | ​ | 76,800 | ​ | 48,260 | ​ | 28,540 | 59.1 | ​ |
| Total segment | ​ | 646,081 | ​ | 516,058 | ​ | 130,023 | 25.2 | ​ | 570,836 | ​ | 456,852 | ​ | 113,984 | 24.9 | ​ |
| Eliminations | ​ | (148,088) | ​ | (98,422) | ​ | (49,666) | 50.5 | ​ | (144,922) | ​ | (94,557) | ​ | (50,365) | 53.3 | ​ |
| Total | ​ | 497,993 | ​ | 417,636 | ​ | 80,357 | 19.2 | % | 425,914 | ​ | 362,295 | ​ | 63,619 | 17.6 | % |

| — | Henglong mainly engages in providing passenger vehicle steering systems. Net sales for Henglong were $202.6 million for the year ended December 31, 2021, compared with $157.7 million for the year ended December 31, 2020, representing an increase of $44.9 million, or 28.5%. An increase in sales volume led to a sales increase of $ 38.5 million, a decrease in selling price led to a sales decrease of $3.0 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $9.4 million. |
| — | Jiulong mainly engages in providing commercial vehicle steering systems. Net sales for Jiulong were $94.5 million for the year ended December 31, 2021, compared with $100.1 million for the year ended December 31, 2020, representing a decrease of $5.6 million, or 5.6%. A decrease in sales volume led to a sales decrease of $13.9 million, an increase in selling price led to a sales increase of $2.8 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $5.5 million. |
| — | Shenyang mainly engages in providing vehicle steering systems to Shenyang Brilliance Jinbei Automobile Co., LTD., “Jinbei”, one of the major automotive manufacturers in China. Net sales for Shenyang were $16.5 million for the year ended December 31, 2021, compared with $14.1 million for the year ended December 31, 2020, representing an increase of $2.4 million, or 17.0%. An increase in sales volume led to a sales increase of $0.1 million, an increase in selling price led to a sales increase of $1.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $1.0 million. |
| — | Wuhu mainly engages in providing vehicle steering systems to Chery Automobile Co., Ltd., “Chery”, one of the major automotive manufacturers in China. Net sales for Wuhu were $27.2 million for the year ended December 31, 2021, compared with $14.3 million for the year ended December 31, 2020, representing an increase of $12.9 million, or 90.2%. An increase in sales volume led to a sales increase of $12.6 million, a decrease in selling price led to a sales decrease of $0.9 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $1.2 million. |
| — | Hubei Henglong mainly engages in providing vehicle steering systems to Chrysler and Ford. Net sales for Hubei Henglong were $128.1 million for the year ended December 31, 2021, compared with $116.0 million for the year ended December 31, 2020, representing an increase of $12.1 million, or 10.4%. An increase in sales volume led to a sales increase of $10.1 million, a decrease in selling price led to a sales decrease of $4.6 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $6.6 million. |
| — | Henglong KYB mainly engages in providing passenger EPS products. Net sales for Henglong KYB were $80.7 million for the year ended December 31, 2021, compared with $52.7 million for the year ended December 31, 2020, representing an increase of $28.0 million, or 53.1%. An increase in sales volume led to a sales increase of $33.5 million, a decrease in selling price led to a sales decrease of $9.1 million, and the effect of foreign currency translation of the RMB against the U.S. dollar led to a sales increase of $3.6 million. |
| — | Net product sales for other entities were $96.4 million for the year ended December 31, 2021, compared with $61.2 million for the year ended December 31, 2020, representing an increase of $35.2 million, or 57.5%, mainly caused by increases in sales of Brazil Henglong. |
| — | Cost of sales for Henglong was $ 189.0 million for the year ended December 31, 2021, compared to $146.5 million for the year ended December 31, 2020, representing an increase of $42.5 million, or 29.0%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $25.0 million, an increase in unit cost resulting in a cost of sales increase of $8.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $9.2 million. |
| — | Cost of sales for Jiulong was $85.0 million for the year ended December 31, 2021, compared to $91.1 million for the year ended December 31, 2020, representing a decrease of $6.1 million, or 6.7%. The decrease in cost of sales was mainly due to a decrease in sales volumes resulting in a cost of sales decrease of $13.6 million, an increase in unit cost resulting in a cost of sales increase of $2.9 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $4.6 million. |

| — | Cost of sales for Shenyang was $13.1 million for the year ended December 31, 2021, compared with $11.9 million for the year ended December 31, 2020, representing an increase of $1.2 million, or 10.1%.The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $0.3 million, an increase in unit cost resulting in a cost of sales increase of $0.3 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $0.6 million. |
| — | Cost of sales for Wuhu was $25.7 million for the year ended December 31, 2021, compared to $13.6 million for the year ended December 31, 2020, representing an increase of $12.1 million, or 89.0%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $9.0 million, an increase in unit cost resulting in a cost of sales increase of $2.0 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $1.1 million. |
| — | Cost of sales for Hubei Henglong was $106.0 million for the year ended December 31, 2021, compared with $92.8 million for the year ended December 31, 2020, representing an increase of $13.2 million, or 14.2%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $14.1 million, a decrease in unit cost resulting in a cost of sales decrease of $6.2 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $5.3 million. |
| — | Cost of sales for Henglong KYB was $75.3 million for the year ended December 31, 2021, compared to $52.7 million for the year ended December 31, 2020, representing an increase of $22.6 million, or 42.9%. The increase in cost of sales was mainly due to an increase in sales volumes resulting in a cost of sales increase of $11.2 million, an increase in unit cost resulting in a cost of sales increase of $8.1 million, and the effect of foreign currency translation of the RMB against the U.S. dollar resulting in a cost of sales increase of $3.3 million. |
| — | Cost of products sold for other entities was $76.8 million for the year ended December 31, 2021, compared to $48.3 million for the year ended December 31, 2020, representing an increase of $28.5 million, or 59.0%, mainly caused by increases in sales of Brazil Henglong. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Year Ended December 31, | ​ | ​ | ​ |
| ​ | 2021 | 2020 | Increase/(Decrease) | Percentage |
| Transportation expense | ​ | $ | 9,870 | ​ | $ | 5,839 | ​ | $ | 4,031 | 69.0 | % |
| Marketing and office expense | ​ | 2,822 | ​ | 3,864 | ​ | (1,042) | -27.0 | % |
| Salaries and wages | ​ | 3,280 | ​ | 2,867 | ​ | 413 | 14.4 | % |
| Warehousing and inventory handling expenses | ​ | 2,146 | ​ | 1,790 | ​ | 356 | 19.9 | % |
| Other expense | ​ | 160 | ​ | 146 | ​ | 14 | 9.6 | % |
| Total | ​ | $ | 18,278 | ​ | $ | 14,506 | ​ | $ | 3,772 | 26.0 | % |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Year Ended December 31, | ​ | ​ | ​ |
| ​ | 2021 | 2020 | Increase/(Decrease) | Percentage |
| Salaries and wages | ​ | $ | 9,693 | ​ | $ | 8,415 | ​ | $ | 1,278 | 15.2 | % |
| Office expense | ​ | ​ | 3,361 | ​ | ​ | 3,746 | ​ | ​ | (385) | ​ | -10.3 | % |
| Allowances for credit losses | ​ | 2,738 | ​ | 6,808 | ​ | (4,070) | -59.8 | % |
| Depreciation and amortization expense | ​ | 2,233 | ​ | 1,963 | ​ | 270 | 13.8 | % |
| Labor insurance expense | ​ | ​ | 2,221 | ​ | ​ | 2,037 | ​ | ​ | 184 | ​ | 9.0 | % |
| Property and other taxes | ​ | ​ | 1,474 | ​ | ​ | 971 | ​ | ​ | 503 | ​ | 51.8 | % |
| Listing expenses (1) | ​ | 1,445 | ​ | 1,757 | ​ | (312) | -17.8 | % |
| Maintenance and repair expenses | ​ | 947 | ​ | 1,207 | ​ | (260) | -21.5 | % |
| Other expense | ​ | 311 | ​ | 677 | ​ | (366) | -54.1 | % |
| Total | ​ | $ | 24,423 | ​ | $ | 27,581 | ​ | $ | (3,158) | -11.4 | % |
| (1) | Listing expenses consisted of the costs associated with legal, accounting and auditing fees for operating a public company. |

Income TaxesIncome tax expense was $4.0 million for the year ended December 31, 2021, as compared to $2.2 million for the year ended December 31, 2020, representing an increase of $1.8 million, or 81.8%, which was mainly due to the change in provision of valuation allowance.Net Loss Attributable to Non-controlling InterestsThe Company recorded a net loss attributable to non-controlling interests of $0.4 million for the year ended December 31, 2021, as compared to $5.3 million for the year ended December 31, 2020, representing a decrease in net loss attributable to non-controlling interests of $4.9 million.Net Income/(loss) Attributable to Parent Company’s Common ShareholdersNet income attributable to parent company’s common shareholders was $11.1 million for the year ended December 31, 2021, as compared to net loss attributable to parent company’s common shareholders of $5.0 million for the year ended December 31, 2020, representing an increase in net income attributable to parent company’s common shareholders of $16.1 million.LIQUIDITY AND CAPITAL RESOURCESCapital Resources and Use of CashThe Company has historically financed its liquidity requirements from a variety of sources, including short-term borrowings under bank credit agreements, bankers’ acceptances, issuances of capital stock and notes and internally generated cash. As of December 31, 2021, the Company had cash and cash equivalents and short-term investments of $133.5 million, compared with $107.4 million as of December 31, 2020, representing an increase of $26.1 million, or 24.3%.The Company had working capital (current assets less current liabilities) of $149.6 million as of December 31, 2021, compared with $121.2 million as of December 31, 2020, representing an increase of $28.4 million, or 23.4%.Except for the expected distribution of dividends from the Company’s PRC subsidiaries to the Company in order to fund the payment of the one-time transition tax due to the U.S. Tax Reform, the Company intends to indefinitely reinvest the funds in subsidiaries established in the PRC.The pandemic of COVID-19 has had certain impacts on our cash flow for the year of 2021 with potential continuing impacts on subsequent periods. However, based on our liquidity assessment, we believe that our current cash position, cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for the foreseeable future and for at least 12 months subsequent to the filing of this annual report.Capital SourceThe Company’s capital source is multifaceted, such as bank loans and banks’ acceptance facilities. In financing activities and operating activities, the Company’s banks require the Company to sign line of credit agreements and repay such facilities within one to two years. On the condition that the Company can provide adequate mortgage security and has not violated the terms of the line of credit agreement, such facilities can be extended for another one to two years.The Company had short-term loans of $47.6 million, and bankers’ acceptance notes payable of $86.2 million as of December 31, 2021.32 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | Assessed |
| ​ | ​ | ​ | ​ | Due | ​ | Amount | ​ | Amount | ​ | Mortgage |
| ​ | Bank | Date | Available (3) | Used (4) | Value (5) |
| 1. Comprehensive credit facilities | China Everbright Bank (2) | May 2022 | ​ | 3,137 | ​ | 1,757 | ​ | 9,954 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 2. Comprehensive credit facilities | China CITIC Bank (2) | Aug 2022 | ​ | 66,659 | ​ | 38,506 | ​ | 20,426 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 3. Comprehensive credit facilities | Hubei Bank(1) | Mar 2022 | ​ | 26,664 | ​ | 21,732 | ​ | 73,119 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 4. Comprehensive credit facilities | China Industrial Bank | Nov 2022 | ​ | 1,098 | ​ | 1,098 | ​ | 3,100 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 5. Comprehensive credit facilities | Huishang Bank | May 2022 | ​ | 1,568 | ​ | — | ​ | — |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| 6. Comprehensive credit facilities | ​ | Bank of China | ​ | Jun 2022 | ​ | ​ | 14,273 | ​ | ​ | 13,489 | ​ | ​ | 6,274 |
| Total | ​ | ​ | ​ | ​ | ​ | $ | 113,399 | ​ | $ | 76,582 | ​ | $ | 112,873 |
| (1) | The facility has expired. The Company is currently in the process of negotiating with the bank to renew the credit facility. |
| (2) | The comprehensive credit facilities with China Everbright Bank are guaranteed by Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with China CITIC Bank are guaranteed by Henglong and Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with Bank of China are guaranteed by Hubei Henglong in addition to the above pledged assets. |
| (3) | “Amount available” is used for the drawdown of bank loans and issuance of bank notes at the Company’s discretion. If the Company elects to utilize the facility by issuance of bank notes, additional collateral is requested to be pledged to the bank. |
| (4) | “Amount used” represents the credit facilities used by the Company for the purpose of bank loans or notes payable during the facility contract period. The loans or notes payable under the credit facilities will remain outstanding regardless of the expiration of the relevant credit facilities until the separate loans or notes payable expire. The amount used includes bank loans of $42.9 million and notes payable of $33.6 million as of December 31, 2021. |
| (5) | In order to obtain lines of credit, the Company needs to pledge certain assets to banks. As of December 31, 2021, the pledged assets included property, plant and equipment, land use rights and tax refund special bank account with assessed value of $112.9 million. |

| 1. | Land use rights and buildings with an assessed value of approximately $10.0 million as security for its comprehensive credit facility with China Everbright Bank. |
| 2. | Land use rights and buildings with an assessed value of approximately $20.4 million as security for its comprehensive credit facility with China CITIC Bank Wuhan branch. |
| 3. | Equipment with an assessed value of approximately $73.1 million as security for its revolving comprehensive credit facility with Hubei Bank. |
| 4. | Buildings with an assessed value of approximately $3.1 million as security for its comprehensive credit facility with China Industrial Bank. |
| 5. | The tax refund special bank account with an assessed value of approximately $6.3 million as security for its comprehensive credit facility with Bank of China. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | (in thousands of USD) |
| ​ | ​ | ​ | ​ | ​ | Less than 1 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | More than 5 |
| ​ | Total | year | 1-3 years | 3-5 years | Years |
| Short-term loans including interest payable | ​ | $ | 48,354 | ​ | $ | 48,354 | ​ | $ | — | ​ | $ | — | ​ | $ | — |
| Notes payable (1) | ​ | 86,184 | ​ | 86,184 | ​ | — | ​ | — | ​ | — |
| Taxes payable and withholding tax liabilities due to U.S. Tax Reform (See Note 22) | ​ | 23,884 | ​ | 2,809 | ​ | 21,075 | ​ | — | ​ | — |
| Obligation for investment contract (2) | ​ | 10,858 | ​ | 10,858 | ​ | — | ​ | — | ​ | — |
| Other contractual purchase commitments, including service agreements | ​ | 23,890 | ​ | 21,930 | ​ | 1,960 | ​ | — | ​ | — |
| Total | ​ | $ | 193,170 | ​ | $ | 170,135 | ​ | $ | 23,035 | ​ | $ | — | ​ | $ | — |
| (1) | Notes payable do not bear interest. |
| (2) | In June 2021, Hubei Henglong entered into an agreement with other parties and committed to purchase 40% of the shares of Sentient AB for total consideration of RMB 155.2 million, equivalent to approximately $24.3 million. As of December 31, 2021, Hubei Henglong has paid RMB 86.0 million, equivalent to approximately $13.5 million, which was reported in other non-current assets as the transaction had not been consummated. According to the agreement, the remaining consideration of RMB 69.2 million, equivalent to approximately $10.9 million, will be paid in 2022. |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | Borrowing | ​ | ​ | ​ | Annual | Date of | ​ |
| Bank | ​ | ​ | ​ | Borrowing | ​ | Term | ​ | ​ | ​ | ​ | Interest | ​ | Interest | ​ | ​ |
| Government | Purpose | Date | (Months) | Principal | ​ | Rate | Payment | Due Date |
| China CITIC Bank (1) | Working Capital | ​ | Mar 22, 2021 | 12 | ​ | 4,238 | ​ | 3.45 | % | Pay in arrear | ​ | Mar 22, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Mar 22, 2021 | 12 | ​ | 7,041 | ​ | 3.45 | % | Pay in arrear | ​ | Mar 18, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | Apr 29, 2021 | 12 | ​ | 1,568 | ​ | 4.35 | % | Pay monthly | ​ | Apr 29, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | May 21, 2021 | 12 | ​ | 1,568 | ​ | 4.35 | % | Pay monthly | ​ | May 21, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | May 28, 2021 | 12 | ​ | 1,568 | ​ | 4.35 | % | Pay monthly | ​ | May 28, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | Jun 21, 2021 | 11 | ​ | 6,446 | ​ | 2.60 | % | Pay in arrear | ​ | May 17, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | Jun 21, 2021 | 12 | ​ | 5,223 | ​ | 2.60 | % | Pay in arrear | ​ | Jun 21, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Jun 21, 2021 | 6 | ​ | 1,545 | ​ | 2.60 | % | Pay in arrear | ​ | Jan 17, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Jul 27, 2021 | 6 | ​ | 1,569 | ​ | 4.35 | % | Pay monthly | ​ | Jan 27, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Aug 6, 2021 | 6 | ​ | 155 | ​ | 2.50 | % | Pay in arrear | ​ | Feb 6, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Aug 10, 2021 | 6 | ​ | 311 | ​ | 2.50 | % | Pay in arrear | ​ | Feb 10, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Bank of China | Working Capital | ​ | Aug 27, 2021 | 12 | ​ | 3,137 | ​ | 3.80 | % | Pay monthly | ​ | Aug 27, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Sep 24, 2021 | 6 | ​ | 262 | ​ | 2.45 | % | Pay in arrear | ​ | Mar 24, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Sep 24, 2021 | 6 | ​ | 208 | ​ | 2.70 | % | Pay in arrear | ​ | Mar 24, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank (1) | Working Capital | ​ | Sep 26, 2021 | 6 | ​ | 310 | ​ | 2.45 | % | Pay in arrear | ​ | Mar 26, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Bank of China | ​ | Working Capital | ​ | Sep 27, 2021 | ​ | 12 | ​ | ​ | 3,137 | ​ | 3.80 | % | Pay monthly | ​ | Sep 27, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | Working Capital | ​ | Oct 11, 2021 | 6 | ​ | 62 | ​ | 2.55 | % | Pay in arrear | ​ | Apr 11, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | ​ | Working Capital | ​ | Oct 22, 2021 | 6 | ​ | 155 | ​ | 2.70 | % | Pay in arrear | ​ | Apr 22, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Bank of China | ​ | Working Capital | ​ | Oct 27, 2021 | ​ | 12 | ​ | ​ | 3,137 | ​ | 3.80 | % | Pay monthly | ​ | Oct 27, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | ​ | Working Capital | ​ | Nov 4, 2021 | ​ | 6 | ​ | ​ | 155 | ​ | 2.70 | % | Pay in arrear | ​ | May 4, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China CITIC Bank | ​ | Working Capital | ​ | Nov 5, 2021 | ​ | 6 | ​ | ​ | 621 | ​ | 2.50 | % | Pay in arrear | ​ | May 5, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Bank of China | ​ | Working Capital | ​ | Nov 24, 2021 | ​ | 12 | ​ | ​ | 4,078 | ​ | 3.80 | % | Pay monthly | ​ | Nov 24, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| China Industrial Bank | ​ | Working Capital | ​ | Dec 22, 2021 | ​ | 12 | ​ | ​ | 1,098 | ​ | 3.85 | % | Pay quarterly | ​ | Dec 21, 2022 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 47,592 | ​ | ​ | ​ | ​ | ​ | ​ |
| (1) | These bank loans were repaid between January and March 2022 when they became due. |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Amount Payable on |
| Purpose | Term (Month) | Due Date | Due Date |
| Working Capital (1) | 6 | Jan. 2022 | ​ | $ | 14,030 |
| Working Capital (1) | 6 | Feb. 2022 | ​ | 14,948 |
| Working Capital (1) | 6 | Mar. 2022 | ​ | 13,924 |
| Working Capital | 6 | Apr. 2022 | ​ | 12,251 |
| Working Capital | 6 | May 2022 | ​ | 12,135 |
| Working Capital | 6 | Jun. 2022 | ​ | 18,896 |
| Total | ​ | ​ | ​ | $ | 86,184 |
| (1) | The notes payable were repaid in full on their respective due dates. |

| ● | it requires the Company to make assumptions about matters that were uncertain at the time it was making the estimate; and |
| ● | changes in the estimate or different estimates that the Company could have selected would have had a material impact on the Company’s financial condition or results of operations. |

| ​ |
| ​ | Critical |
| Balance Sheet | ​ | Estimate | ​ | ​ | Assumptions/Approaches | ​ | ​ | ​ |
| Caption | ​ | Item | ​ | Nature of Estimates Required | ​ | Used | ​ | Key Factors | ​ |
| Accrued liabilities and other long-term liabilities | ​ | Warranty obligations | ​ | Estimating warranty requires the Company to forecast the resolution of existing claims and expected future claims on products sold. OEMs are increasingly seeking to hold suppliers responsible for product warranties, which may impact the Company’s exposure to these costs. | ​ | The Company bases its estimate on historical trends of units sold and payment amounts, combined with its current understanding of the status of existing claims and discussions with its customers. | ​ | ·OEM sourcing ·OEM policy decisions regarding warranty claims | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Property, plant and equipment, intangible assets and other long-term assets | ​ | Valuation of long- lived assets and investments | ​ | The Company is required, from time-to-time, to review the recoverability of certain of its assets based on projections of anticipated future cash flows, including future profitability assessments of various product lines. | ​ | The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. | ​ | ·Future production estimates ·Customer preferences and decisions | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Accounts receivable | ​ | Allowance for doubtful accounts | ​ | The Company is required, from time to time, to review the credit of customers and make timely provision of allowance for doubtful accounts. | ​ | The Company estimates the collectability of the receivables based on the future cash flows using historical experiences. | ​ | ·Customer credit | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Inventory | ​ | Provision for inventory impairment | ​ | The Company is required, from time to time, to review the turnover of inventory based on projections of anticipated future cash flows, including provision of inventory impairment for over market price and undesirable inventories. | ​ | The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. | ​ | ·Future production estimates ·Customer preferences and decisions | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Deferred income taxes | ​ | Recoverability of deferred tax assets | ​ | The Company is required to estimate whether recoverability of its deferred tax assets is more likely than not based on forecasts of taxable earnings in the related tax jurisdiction. | ​ | The Company uses historical and projected future operating results, based upon approved business plans, including a review of the eligible carry-forward period, tax planning opportunities and other relevant considerations. | ​ | ·Tax law changes ·Variances in future projected profitability, including by taxing entity | ​ |

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates. For purposes of specific risk analysis, the Company uses sensitivity analysis to determine the effects that market risk exposures may have.
FOREIGN CURRENCY RISK
The Company’s reporting currency is the U.S. dollar and the majority of its revenues will be settled in RMB and U.S. dollars. The Company’s currency exchange rate risks come primarily from the sales of products to international customers. Most of the Company’s assets are denominated in RMB except for part of cash and accounts receivable. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB.
The value of the RMB fluctuates and is affected by, among other things, changes in China's political and economic conditions. In addition, the RMB is not readily convertible into U.S. dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rate quoted by the People’s Bank of China. The conversion of RMB into foreign currencies such as the U.S. dollar has been generally based on rates set by the People's Bank of China, which are set daily based on the previous day's interbank foreign exchange market rates and current exchange rates on the world financial markets. On December 31, 2021 and 2020, the exchange rates of RMB against U.S. dollar were RMB 1.00 to $0.1568 and RMB 1.00 to $0.1533, respectively. Any significant future appreciation of the RMB is likely to decrease the Company’s profits generated from overseas.
38 |Page
In order to mitigate the currency exchange rate risk, the Company and its international customers established a price negotiation mechanism that provides that, if the currency exchange rate fluctuation is more than 8% since the last price negotiation, the Company and the customers would adjust the prices for future sales. Normally the adjustment to future sales prices would reflect half of the impact from the change in exchange rate.CREDIT RISKFinancial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company does not require collateral or other security to support client receivables since most of its customers are large, well-established companies. The Company’s credit risk is also mitigated because its customers are all selected enterprises supported by the local government. One customer, Fiat Chrysler North America, accounted for more than 10% (21.2%) of the Company’s consolidated revenues in 2021. The Company maintains an allowance for doubtful accounts for any potential credit losses related to its trade receivables. The Company does not use foreign exchange contracts to hedge the risk in receivables denominated in foreign currencies and the Company does not hold or issue derivative financial instruments for trading or speculative purposes.INTEREST RATE RISKThe Company’s exposure to changes in interest rates results primarily from its credit facility borrowings. As of December 31, 2021, the Company had nil of outstanding indebtedness, which is subject to interest rate fluctuations.The Company’s level of outstanding indebtedness fluctuates from time to time and may result in additional payable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
| (a) | The financial statements required by this item begin on page 61. |

| (b) | Selected quarterly financial data for the past two years are summarized in the following table (figures are in thousands of USD, except those for items headed “Basic” and “Diluted”): |

​
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Quarterly Results of Operations |
| ​ | ​ | First | ​ | Second | ​ | Third | ​ | Fourth |
| ​ | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 |
| Net sales | ​ | $ | 130,341 | ​ | $ | 73,555 | ​ | $ | 120,604 | ​ | $ | 83,184 | ​ | $ | 108,231 | ​ | $ | 114,417 | ​ | $ | 138,817 | ​ | $ | 146,480 |
| Gross profit | ​ | 19,748 | ​ | 11,152 | ​ | 15,829 | ​ | 7,831 | ​ | 16,792 | ​ | 13,575 | ​ | 19,710 | ​ | 22,783 |
| Income/(loss) from operations | ​ | 4,160 | ​ | 1,012 | ​ | 119 | ​ | (5,192) | ​ | 591 | ​ | 58 | ​ | 648 | ​ | (4,027) |
| Net income/(loss) | ​ | 3,231 | ​ | (628) | ​ | 2,928 | ​ | (4,240) | ​ | (268) | ​ | 1,513 | ​ | 4,835 | ​ | (6,916) |
| Net income/(loss) attributable to non-controlling interest | ​ | 18 | ​ | (600) | ​ | (279) | ​ | (142) | ​ | 42 | ​ | (848) | ​ | (133) | ​ | (3,710) |
| Net income/(loss) attributable to parent company’s common shareholders | ​ | 3,206 | ​ | (28) | ​ | 3,200 | ​ | (4,098) | ​ | (317) | ​ | 2,358 | ​ | 4,961 | ​ | (3,212) |
| Net income/(loss) attributable to parent company’s common shareholders per share- | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Basic | ​ | $ | 0.10 | ​ | $ | — | ​ | $ | 0.10 | ​ | $ | (0.13) | ​ | $ | (0.01) | ​ | $ | 0.08 | ​ | $ | 0.16 | ​ | $ | (0.10) |
| Diluted | ​ | $ | 0.10 | ​ | $ | — | ​ | $ | 0.10 | ​ | $ | (0.13) | ​ | $ | (0.01) | ​ | $ | 0.08 | ​ | $ | 0.16 | ​ | $ | (0.10) |

​
​
​
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
39 |Page
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The Company’s management, under the supervision and with the participation of its chief executive officer and chief financial officer, Messrs. Wu Qizhou and Li Jie, respectively, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2021, the end of the period covered by this Report. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this Form 10-K, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Wu and Li concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021.
Management’s Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, is a process designed by, or under the supervision of, the chief executive officer and chief financial officer and effected by the board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
| a. | pertain to the maintenance of records that, in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; |

| b. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with appropriate authorization of the Company’s management and board of directors; and |

| c. | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements. |

In making its assessment of internal control over financial reporting, management, under the supervision and with the participation of the chief executive officer and chief financial officer, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in "Internal Control—Integrated Framework (2013)."
Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2021 and determined that internal control over financial reporting was effective as of December 31, 2021.
This report does not include an auditors’ report on the effectiveness of internal control over financial reporting due to SEC rules that exempt smaller reporting companies such as CAAS from providing such a report.
40 |Page
Inherent Limitations on Effectiveness of ControlsA control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.Changes in Internal Control Over Financial ReportingThere were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table and text set forth the names and ages of all directors and executive officers of the Company as of December 31, 2021. The Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the federal securities laws.
​
| Name | Age | Position(s) |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Hanlin Chen | ​ | 64 | ​ | Chairman of the Board | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Tong Kooi Teo | ​ | 65 | ​ | Director | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Guangxun Xu | ​ | 71 | ​ | Director | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Heng Henry Lu | ​ | 56 | ​ | Director | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Qizhou Wu | ​ | 57 | ​ | Chief Executive Officer and Director | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Jie Li | ​ | 52 | ​ | Chief Financial Officer | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Andy Tse | ​ | 51 | ​ | Senior Vice President | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Yijun Xia | ​ | 59 | ​ | Vice President | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ |
| Haimian Cai | ​ | 58 | ​ | Vice President | ​ |

​
41 |Page
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERSDirectorsHanlin Chen has served as the chairman of the board of directors and an executive officer since March 2003. Since January 2013, Mr. Chen has been a standing committee member of the Chinese People’s Political Consultative Conference and vice president of Foreign Investors Association of Hubei Province. From 1993 to 1997, Mr. Chen was the general manager of Shashi Jiulong Power Steering Gears Co., Ltd. Since 1997, he has been the chairman of the Board of Henglong Automotive Parts, Ltd. Mr. Hanlin Chen is the brother-in-law of the Company’s senior vice president, Mr. Andy Tse.Qizhou Wu has served as a director since March 2003 and as the chief executive officer of the Company since September 2007. He served as chief operating officer from 2003 to 2007. He was the executive general manager of Shashi Jiulong Power Steering Gears Co., Ltd. from 1993 to 1999 and the general manager of Henglong Automotive Parts Co., Ltd. from 1999 to 2002. Mr. Wu graduated from Tsinghua University in Beijing with a Master’s degree in automobile engineering.Heng Henry Lu has served as an independent director of the Company since July 2019. He is a member of the audit committee, the nominating committee and the compensation committee of the Board of Directors. He has been an adviser to NBS Group since February 2016. Dr. Lu was a partner of SVC China from 2012 to 2014 and Chief Representative of William Blair & Company, L.L.C., Shanghai Representative Office from 2006 to 2011. Prior to that, Dr. Lu was with McKinsey & Company advising global and domestic companies on their growth and financial strategies. Dr. Lu received a Doctor of Philosophy from Columbia University in 1997 and a Master of Business Administration from University of Chicago Business School in 2000.Tong Kooi Teo has served as an independent director of the Company since July 2019. He is the chairman of the compensation committee, and a member of the audit committee and the nominating committee of the Board of Directors. He is the Chief Executive Officer of DPS Corporate Advisory Company Limited, Beijing, China, a member of Head International Group, China since March 2018. He is a senior and independent non-executive director of Tropicana Corporation Bhd since March 2021, listed on the Kuala Lumpur Stock Exchange. He is also Non-Executive Director of Guocoland (China) Limited since February 2018. He was the Managing Director of Guoco Investment (China) Ltd., Hong Kong from 2014 to 2018, after serving as the Group Managing Director of Guocoland (China) Ltd. from 2012 to 2014. Prior to that, Mr. Teo was the Chief Executive Officer (China and Vietnam Operations) of WCT Holdings Bhd, Malaysia from 2011 to 2012. He was the Chief Executive Officer of Hong Leong Asia Ltd (HLA), which is listed on the Singapore Stock Exchange from 2004 to 2010. From 2003 to 2004, Mr. Teo was the Managing Director of Tasek Corporation Bhd, Malaysia, which was listed on the Kuala Lumpur Stock Exchange. From 1994 to 2002, Mr. Teo was General Manager of Corporate Banking Division and Chief Operating Officer of Hong Leong Bank Malaysia. From 1989 to 1994, Mr. Teo was with Deutsche Bank Malaysia where his last held position was Head of Corporate Banking.Guangxun Xu has served as an independent director of the Company since December 2009. He is the chairman of both the audit committee and the nominating committee, and a member of the compensation committee. Mr. Xu has been the Chief Representative of NASDAQ in China and a managing director of the NASDAQ Stock Market International, Asia for over ten (10) years. With a professional career in the finance field spanning over thirty (30) years, Mr. Xu’s practice focuses on providing package services on U.S. and U.K. listings, advising on and arranging for private placements, PIPEs, IPOs, pre-IPO restructuring, M&A, corporate and project finance, corporate governance, post-IPO IR compliance and risk control.Executive OfficersJie Li has served as the chief financial officer since September 2007. Prior to that position he served as the corporate secretary from December 2004. Prior to joining the Company in September 2003, Mr. Li was the assistant president of Jingzhou Jiulong Industrial Inc. from 1999 to 2003 and the general manager of Jingzhou Tianxin Investment Management Co. Ltd. from 2002 to 2003. Mr. Li has a Bachelor’s degree from the University of Science and Technology of China. He also completed his graduate studies in economics and business management at the Hubei Administration Institute.Andy Tse has served as a senior vice president of the Company since March 2003. He has also served as chairman of the board of Shenyang. He was the vice GM of Jiulong from 1993 to 1997 and the vice GM of Henglong. Mr. Tse has over 10 years of experience in automotive parts sales and strategic development. Mr. Tse has an MBA from the China People University. He is brother in-law to Hanlin Chen.42 |Page
Yijun Xia has served as a vice president of the Company since December 2009. He also served as the general manager of Henglong from April 2005 to December 2011. Prior to that position he served as the Vice-G.M. of Henglong from December 2002. Mr. Xia graduated from Wuhan University of Water Transportation Engineering with a bachelor degree in Metal Material and Heat Treatment.Haimian Cai was an independent director of the Company from September 2003 to December 2009, and also a member of the Company’s Audit, Compensation and Nominating Committees. Dr. Cai is a technical specialist in the automotive industry. Prior to that, Dr. Cai was a staff engineer in ITT Automotive Inc. Dr. Cai has written more than fifteen technical papers and co-authored a technical book regarding the Powder Metallurgy industry for automotive application. Dr. Cai has more than ten patents including pending patents. Dr. Cai holds a B.S. Degree in Automotive Engineering from Tsinghua University and a M.S. and Ph. D. in manufacturing engineering from Worcester Polytechnic Institute. Since December 2009, Mr. Cai has not served as independent director and a member of the Company’s Audit Committee, Compensation and Nominating Committees, because he was nominated as vice president of the Company.BOARD COMPOSITION AND COMMITTEESAudit Committee and Independent DirectorsThe Company has a standing Audit Committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Exchange Act, as amended. The Audit Committee is operated under a written charter. The Audit Committee consists of the following individuals, all of whom the Company considers to be independent, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence: Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu. Mr. Guangxun Xu is the Chairman of the Audit Committee. The Board has determined that Mr. Guangxun Xu is the audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K, serving on the Company’s Audit Committee.Compensation CommitteeThe Company has a standing Compensation Committee of the Board of Directors. The Compensation Committee is responsible for determining compensation for the Company’s executive officers. Three of the Company’s independent directors, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence, Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu serve on the Compensation Committee. Mr. Tong Kooi Teo is the Chairman of the Compensation Committee. The Board has determined that all members of the Compensation Committee are independent directors under the rules of the Nasdaq Stock Market, as applicable. The Compensation Committee administers the Company’s benefit plans, reviews and administers all compensation arrangements for executive officers, and establishes and reviews general policies relating to the compensation and benefits of the Company’s officers and employees. The Compensation Committee operates under a written charter that is made available on the Company’s website, www.caasauto.com.The Company’s Compensation Committee is empowered to review and approve the annual compensation and compensation procedures for the executive officers of the Company. The primary goals of the Compensation Committee of the Company’s Board of Directors with respect to executive compensation are to attract and retain the most talented and dedicated executives possible and to align executives’ incentives with stockholder value creation. The Compensation Committee evaluates individual executive performance with a goal of setting compensation at levels the committee believes are comparable with executives in other companies of similar size and stage of development operating in similar industry while taking into account the Company’s relative performance and its strategic goals.The Company has not retained a compensation consultant to review its policies and procedures with respect to executive compensation. The Company conducts an annual review of the aggregate level of its executive compensation, as well as the mix of elements used to compensate its executive officers. The Company compares compensation levels with amounts currently being paid to executives in its industry and most importantly with local practices in China. The Company is satisfied that its compensation levels are competitive with local conditions.43 |Page
Nominating CommitteeThe Company has a standing Nominating Committee of the Board of Directors. Director candidates are nominated by the Nominating Committee. The Nominating Committee will consider candidates based upon their business and financial experience, personal characteristics, and expertise that are complementary to the background and experience of other Board members, willingness to devote the required amount of time to carry out the duties and responsibilities of Board membership, willingness to objectively appraise management performance, and any such other qualifications the Nominating Committee deems necessary to ascertain the candidates’ ability to serve on the Board. The Nominating Committee will not consider nominee recommendations from security holders, other than the recommendations received from a security holder or group of security holders that beneficially owned more than 5 percent of the Company’s outstanding common stock for at least one year as of the date the recommendation is made. Three of the Company’s independent directors, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence, Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu, serve on the Nominating Committee. Mr. Xu is the Chairman of the Nominating Committee.Stockholder CommunicationsStockholders interested in communicating directly with the Board of Directors, or individual directors, may email the Company’s independent director Mr. Guangxun Xu at guangxunxu@hotmail.com. Mr. Xu will review all such correspondence and will regularly forward to the board of directors of the Company copies of all such correspondence that deals with the functions of the Board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review all of the correspondence received that is addressed to members of the board of directors of the Company and request copies of such correspondence. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters.Family RelationshipsMr. Hanlin Chen and Mr. Andy Tse are brothers-in-law.Code of Ethics and ConductThe Board of Directors has adopted a Code of Ethics and Conduct which is applicable to all officers, directors and employees. The Code of Ethics and Conduct was filed as an exhibit to the Form 10-K for the year ended December 31, 2009, which was filed with the Securities and Exchange Commission on March 25, 2010.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION DISCUSSION AND ANALYSIS
In 2003, the Board of Directors established a Compensation Committee consisting only of independent Board members, which is responsible for setting the Company’s policies regarding compensation and benefits and administering the Company’s benefit plans. At the end of fiscal year 2021, the Compensation Committee consisted of Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu. The members of the Compensation Committee approved the amount and form of compensation paid to executive officers of the Company and set the Company’s compensation policies and procedures during these periods.
The primary goals of the Company’s compensation committee with respect to executive compensation are to attract and retain highly talented and dedicated executives and to align executives’ incentives with stockholder value creation.
The Compensation Committee will conduct an annual review of the aggregate level of the Company’s executive compensation, as well as the mix of elements used to compensate the Company’s executive officers. The Company compares compensation levels with amounts currently being paid to executives at similar companies in the same area and the same industry. Most importantly, the Company compares compensation levels with local practices in China. The Company believes that its compensation levels are competitive with local conditions.
44 |Page
| a. | Grantees: Mr. Hanlin Chen, Mr. Qizhou Wu, Mr. Andy Tse, Mr. Jie Li, and Mr. Yijun Xia. |
| b. | Conditions: based on the Company’s consolidated financial statements, (i) the year over year growth rate of sales for 2021 must be 5% or higher; or (ii) the year over year growth rate of sales for 2021 must be 10% or higher. |
| c. | Bonus: If condition (i) is satisfied, 25% of each officer’s annual salary in 2021. If condition (ii) is satisfied, 50% of each officer’s annual salary in 2021. |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Name and principal position | Year | Salary (1) | Bonus (2) | Option Awards (3) | Total |
| Hanlin Chen (Chairman) | 2021 | ​ | $ | 330 | ​ | $ | 165 | ​ | $ | — | ​ | $ | 495 |
| ​ | 2020 | ​ | $ | 330 | ​ | $ | — | ​ | $ | — | ​ | $ | 330 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Qizhou Wu (CEO) | 2021 | ​ | $ | 220 | ​ | $ | 110 | ​ | $ | — | ​ | $ | 330 |
| ​ | 2020 | ​ | $ | 220 | ​ | $ | — | ​ | $ | — | ​ | $ | 220 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Jie Li (CFO) | 2021 | ​ | $ | 132 | ​ | $ | 66 | ​ | $ | — | ​ | $ | 198 |
| ​ | 2020 | ​ | $ | 132 | ​ | $ | — | ​ | $ | — | ​ | $ | 132 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Haimian Cai (Vice President) | 2021 | ​ | $ | 356 | ​ | $ | — | ​ | $ | — | ​ | $ | 356 |
| ​ | 2020 | ​ | $ | 337 | ​ | $ | — | ​ | $ | — | ​ | $ | 337 |
| (1) | Salary – Please refer to Base Salary disclosed under “Elements of compensation” section above for further details. |
| (2) | Bonus – Please refer to Performance Bonus disclosed under “Elements of compensation” section above for further details. |
| (3) | Option Awards – Please refer to Stock Option Awards disclosed under “Elements of compensation” section above for further details. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Name | Fees earned or paid in cash | Option awards (1) | Total |
| Tong Kooi Teo | ​ | $ | 32 | ​ | $ | 29 | ​ | $ | 61 |
| Guangxun Xu | ​ | $ | 59 | ​ | $ | 29 | ​ | $ | 88 |
| Heng Henry Lu | ​ | $ | 32 | ​ | $ | 29 | ​ | $ | 61 |
| (1) | Other than the cash payment based on the number of a director’s service years, workload and performance, the Company grants option awards to each director every year. In accordance with ASC Topic 718, the cost of the above-mentioned stock options issued to directors was measured on the grant date based on their fair value. The fair value is determined using the Black-Scholes option pricing model and certain assumptions. |

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power, including the power to vote or direct the vote, and/or sole or shared investment power, including the power to dispose of or direct the disposition of, with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable. The percentage ownership is based on 30,851,776 shares of common stock outstanding at December 31, 2021 (exclusive of 1,486,526 shares of treasury stock).
​
| ​ | ​ | ​ | ​ | ​ | ​ |
| Name/Title | Total Number of Shares | Percentage Ownership |
| Hanlin Chen, Chairman (1) | 17,849,014 | 57.85 | % |
| Li Ping Xie (1) | 17,849,014 | 57.85 | % |
| Wiselink Holdings Limited, “Wiselink” (1) | 17,849,014 | 57.85 | % |
| Qizhou Wu, CEO and Director | 1,325,136 | 4.30 | % |
| Guangxun Xu, Director | — | — | % |
| Tong Kooi Teo, Director | — | — | % |
| Heng Henry Lu, Director | — | — | % |
| Haimian Cai, VP | — | — | % |
| Jie Li, CFO (2) | 91,031 | 0.30 | % |
| Tse Andy, Sr. VP | 400,204 | 1.30 | % |
| Yijun Xia, VP | 17,200 | 0.06 | % |
| All Directors and Executive Officers (9 persons) | 19,682,585 | 63.80 | % |

| (1) | These 17,849,014 shares of common stock include: (i) 13,322,547 shares of common stock beneficially owned by Mr. Hanlin Chen; (ii) 1,502,925 shares of common stock beneficially owned by Ms. Liping Xie, Mr. Hanlin Chen’s wife; and (iii) 3,023,542 shares of common stock beneficially owned by Wiselink, a company controlled by Mr. Hanlin Chen. |

| (2) | Includes 50,000 shares held as nominee for Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. On October 13, 2014, the Company issued 4,078,000 of its common shares in a private placement to nominee holders of Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. for the acquisition of the 19.0% and 20.0% equity interest in Jiulong and Henglong held by Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd., respectively. All of the nominee holders of Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. are unrelated parties except for Mr. Jie Li (CFO). |

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
For the information required by Item 13 please refer to Note 2 (Basis of Presentation and Significant Accounting Policies–Certain Relationships and Related Transactions) and Note 25 (Related Party Transactions) to the consolidated financial statements in this Report.
The Company’s Audit Committee’s charter provides that one of its responsibilities is to review and approve related party transactions defined as those transactions required to be disclosed under Item 404 of Regulation S-K of the rules and regulations under the Exchange Act. The Company has a formal written set of policies and procedures for the review, approval or ratification of related party transactions. Where a related party transaction is identified, the Audit Committee reviews and, where appropriate, approves the transaction based on whether it believes that the transaction is at arm’s length and contains terms that are no less favorable than what the Company could have obtained from an unaffiliated third party.
47 |Page
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table sets forth the aggregate fees for professional audit services rendered by PricewaterhouseCoopers Zhong Tian LLP for the audit of the Company’s annual financial statements and other services provided in the fiscal years 2021 and 2020. The Audit Committee has approved the following fees (figures are in thousands of USD):
​
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Fiscal Year Ended |
| ​ | 2021 | 2020 |
| Audit Fees | ​ | $ | 768 | ​ | $ | 638 |

​
AUDIT COMMITTEE’S PRE-APPROVAL POLICY
During the fiscal years ended December 31, 2021 and 2020, the Audit Committee of the Board of Directors adopted policies and procedures for the pre-approval of all audit and non-audit services to be provided by the Company’s independent auditor and for the prohibition of certain services from being provided by the independent auditor. The Company may not engage the Company’s independent auditor to render any audit or non-audit service unless the service is approved in advance by the Audit Committee or the engagement to render the service is entered into pursuant to the Audit Committee’s pre-approval policies and procedures. On an annual basis, the Audit Committee may pre-approve services that are expected to be provided to the Company by the independent auditor during the fiscal year. At the time such pre-approval is granted, the Audit Committee specifies the pre-approved services and establishes a monetary limit with respect to each particular pre-approved service, which limit may not be exceeded without obtaining further pre-approval under the policy. For any pre-approval, the Audit Committee considers whether such services are consistent with the rules of the Securities and Exchange Commission on auditor independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)(1) FINANCIAL STATEMENTS
1.Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers Zhong Tian LLP
2.Consolidated Balance Sheets as of December 31, 2021 and 2020
3.Consolidated Statements of Income or Loss for the years ended December 31, 2021 and 2020
4.Consolidated Statements of Comprehensive Income or Loss for the years ended December 31, 2021 and 2020
5.Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020
6.Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
7.Notes to Consolidated Financial Statements
​
48 |Page
| ExhibitNumber | Description |
| ​ | ​ | ​ |
| 3.1(i) | ​ | Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Form 10-SB filed on August 27, 2001) |
| ​ | ​ | ​ |
| 3.1.1(i) | ​ | Certificate of Amendment of Certificate of Incorporation, filed May 19, 2003 (incorporated by reference to Exhibit 4.1.1 to the Company’s Registration Statement on Form S-3 (File No. 333-133331) filed on April 17, 2006) |
| ​ | ​ | ​ |
| 3.1(ii) | ​ | Bylaws (incorporated by reference to Exhibit 3(ii) to the Company’s Form 10-SB filed on August 27, 2001) |
| ​ | ​ | ​ |
| 4.1 | ​ | Description of the Company’s Securities* |
| ​ | ​ | ​ |
| 10.1 | ​ | Joint-venture Agreement, dated March 31, 2006, as amended on May 2, 2006, between Great Genesis Holdings Limited and Wuhu Chery Technology Co., Ltd. (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q Quarterly Report filed on May 10, 2006) |
| ​ | ​ | ​ |
| 10.2 | ​ | Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to exhibit 99.1 to the Company’s Form 8-K filed on April 2, 2008) Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on April 2, 2008) |
| ​ | ​ | ​ |
| 10.3 | ​ | English Translation of the Sino-Foreign Equity Joint Venture Contract dated January 24, 2010 between Great Genesis Holdings Limited and Beijing Hainachuan Auto Parts Co., Ltd. (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-K for the year ended December 31, 2010 filed on March 25, 2010) |
| 10.4 | Stock Exchange Agreement dated August 11, 2014 by and among Jingzhou City Jiulong Machinery Electricity Manufacturing Co., Ltd., China Automotive Systems, Inc. and Hubei Henglong Automotive System Group Co., Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q Quarterly Report filed on August 13, 2014) |
| ​ | ​ | ​ |
| 10.5 | ​ | English translation of Joint Venture Contract, dated as of April 27, 2018, by and between Hubei Henglong Automotive System Group Co., Ltd. and KYB (China) Investment Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2018) |
| ​ | ​ | ​ |
| 21 | ​ | Schedule of Subsidiaries (incorporated by reference to Note 1 of the consolidated financial statements of the Company in this Annual Report on Form 10-K) |
| ​ | ​ | ​ |
| 23.1 | ​ | Consent of PricewaterhouseCoopers Zhong Tian LLP* |
| ​ | ​ | ​ |
| 31.1 | ​ | Rule 13a-14(a) Certification* |
| ​ | ​ | ​ |
| 31.2 | ​ | Rule 13a-14(a) Certification* |
| ​ | ​ | ​ |
| 32.1 | ​ | Section 1350 Certification* |
| ​ | ​ | ​ |
| 32.2 | ​ | Section 1350 Certification* |
| ​ | ​ | ​ |
| 101* | ​ | The following materials from the China Automotive Systems, Inc. Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 30, 2022, formatted in Extensible Business Reporting Language (XBRL): |
| ​ | ​ | ​ |
| 104 | ​ | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| (i) | Consolidated Balance Sheets; |
| (ii) | Consolidated Statements of Income or Loss; |
| (iii) | Consolidated Statements of Comprehensive Income or Loss; |
| (iv) | Consolidated Statements of Changes in Stockholders’ Equity; |
| (v) | Consolidated Statements of Cash Flows; and |

| (vi) | Related notes. |
| * | Filed herewith. |

| ​ |
| ​ | ​ | CHINA AUTOMOTIVE SYSTEMS, INC. |
| ​ | ​ | ​ |
| Dated: March 30, 2022 | ​ | /s/ Qizhou Wu |
| Name: | Qizhou Wu |
| Title: | Chief Executive Officer and President |
| Dated: March 30, 2022 | /s/ Hanlin Chen |
| Name: | Hanlin Chen |
| Title: | Chairman and Director |
| Dated: March 30, 2022 | /s/ Qizhou Wu |
| Name: | Qizhou Wu |
| Title: | Chief Executive Officer, President and Director |
| (Principal Executive Officer) |
| Dated: March 30, 2022 | /s/ Jie Li |
| Name: | Jie Li |
| Title: | Chief Financial Officer |
| (Principal Financial Officer and Principal Accounting Officer) |
| Dated: March 30, 2022 | /s/ Tong Kooi Teo |
| Name: | Tong Kooi Teo |
| Title: | Director |
| ​ | ​ | ​ |
| Dated: March 30, 2022 | /s/ Guangxun Xu |
| Name: | Guangxun Xu |
| Title: | Director |
| Dated: March 30, 2022 | /s/ Heng Henry Lu |
| Name: | Heng Henry Lu |
| Title: | Director |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders of China Automotive Systems, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of China Automotive Systems, Inc. and its subsidiaries (the ‘‘Company’’) as of December 31, 2021 and 2020, and the related consolidated statements of income or loss, of comprehensive income or loss, of changes in stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the ‘‘consolidated financial statements’’). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.Change in Accounting PrincipleAs discussed in Notes 2 and 3 to the consolidated financial statements, the Company changed the manner in which it accounts for current expected credit losses on certain financial instruments in 2020.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.Valuation of unlisted investments of limited partnershipsAs described in Notes 2 and 8 to the consolidated financial statements, as of December 31, 2021, the Company’s long-term investments include investments in limited partnerships with an aggregated amount of $34.6 million which are accounted for using equity method. These limited partnerships are venture capital funds. They accounted for their investments in private companies at fair value classified under Level 3 in the fair value hierarchy (the “Level 3 Investments”). The fair value of the Level 3 Investments were determined using valuation techniques based on market approach or income approach with unobservable inputs, which required significant judgment made by management with respect to the assumptions and estimates for revenue growth rate, discount rate, price-to-earnings ratio, price-to-book ratio, lack of marketability discounts, and expected volatility. Such fair value of Level 3 Investments was reflected in the equity 52 |Page
| /s/ PricewaterhouseCoopers Zhong Tian LLP | ​ |
| Shanghai, the People’s Republic of China | ​ |
| March 30, 2022 | ​ |
| ​ | ​ |
| We have served as the Company's auditor since 2010. | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| ASSETS | ​ | ​ | ​ | ​ | ​ | ​ |
| Current assets: | ​ | ​ |
| Cash and cash equivalents | ​ | $ | 131,695 | ​ | $ | 97,248 |
| Pledged cash | ​ | 27,804 | ​ | 30,813 |
| Short-term investments | ​ | 1,756 | ​ | 10,139 |
| Accounts and notes receivable, net - unrelated parties (Allowance for credit losses of $ 11,961 and $ 9,853 , respectively) | ​ | 195,729 | ​ | 216,519 |
| Accounts and notes receivable, net - related parties (Allowance for credit losses of $ 898 and $ 1 , respectively) | ​ | 14,607 | ​ | 17,621 |
| Advance payments and others, net - unrelated parties (Allowance for credit losses of $ 55 and $ 58 , respectively) | ​ | 12,696 | ​ | 14,471 |
| Advance payments and others - related parties | ​ | 600 | ​ | 522 |
| Inventories | ​ | 116,493 | ​ | 88,325 |
| Total current assets | ​ | 501,380 | ​ | 475,658 |
| Non-current assets: | ​ | ​ | ​ | ​ |
| Property, plant and equipment, net | ​ | 127,721 | ​ | 141,004 |
| Land use rights, net | ​ | 10,732 | ​ | 10,774 |
| Intangible assets, net | ​ | ​ | 1,812 | ​ | ​ | 1,730 |
| Operating lease assets | ​ | 138 | ​ | 257 |
| Long-term time deposits | ​ | ​ | 8,135 | ​ | ​ | 4,688 |
| Other receivables, net (Allowance for credit losses of $ 50 and $ 58 , respectively) | ​ | 358 | ​ | 179 |
| Advance payment for property, plant and equipment - unrelated parties | ​ | 2,284 | ​ | 3,615 |
| Advance payment for property, plant and equipment - related parties | ​ | 810 | ​ | 3,284 |
| Long-term investments | ​ | 36,966 | ​ | 49,766 |
| Deferred tax assets | ​ | 10,114 | ​ | 13,846 |
| Other non-current assets | ​ | ​ | 16,312 | ​ | ​ | 2,759 |
| Total assets | ​ | $ | 716,762 | ​ | $ | 707,560 |
| ​ | ​ | ​ |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ​ | ​ |
| Current liabilities: | ​ | ​ |
| Bank and government loans | ​ | $ | 47,592 | ​ | $ | 44,238 |
| Accounts and notes payable - unrelated parties | ​ | 214,590 | ​ | 212,522 |
| Accounts and notes payable - related parties | ​ | 13,464 | ​ | 12,730 |
| Customer deposits | ​ | 2,400 | ​ | 1,482 |
| Accrued payroll and related costs | ​ | 10,984 | ​ | 13,405 |
| Accrued expenses and other payables | ​ | 50,332 | ​ | 55,607 |
| Taxes payable | ​ | 12,326 | ​ | 13,149 |
| Operating lease liabilities - current portion | ​ | ​ | 128 | ​ | ​ | 122 |
| Amounts due to shareholders/directors | ​ | — | ​ | 344 |
| Advances payable (current portion) | ​ | — | ​ | 885 |
| Total current liabilities | ​ | 351,816 | ​ | 354,484 |
| Long-term liabilities: | ​ | ​ |
| Advances payable | ​ | 2,028 | ​ | 3,722 |
| Operating lease liabilities - non-current portion | ​ | 22 | ​ | 149 |
| Other long-term payable | ​ | ​ | — | ​ | ​ | 1,126 |
| Deferred tax liabilities | ​ | 4,380 | ​ | 4,280 |
| Long-term taxes payable | ​ | 21,075 | ​ | 23,884 |
| ​ | ​ | ​ | ​ | ​ |
| Total liabilities | ​ | 379,321 | ​ | 387,645 |
| Commitments and Contingencies (Note 26) | ​ | ​ |
| Mezzanine equity: | ​ | ​ | ​ | ​ | ​ | ​ |
| Redeemable non-controlling interests | ​ | ​ | 553 | ​ | ​ | 523 |
| Stockholders’ Equity | ​ | ​ | ​ |
| Common stock, $ 0.0001 par value - Authorized - 80,000,000 shares Issued - 32,338,302 and 32,338,302 shares at December 31, 2021 and 2020, respectively | ​ | 3 | ​ | 3 |
| Additional paid-in capital | ​ | 63,731 | ​ | 64,273 |
| Retained earnings- | ​ | ​ | ​ | ​ |
| Appropriated | ​ | 11,481 | ​ | 11,303 |
| Unappropriated | ​ | 226,363 | ​ | 215,491 |
| Accumulated other comprehensive income | ​ | 24,717 | ​ | 17,413 |
| Treasury stock - 1,486,526 and 1,486,526 shares at December 31, 2021 and 2020, respectively | ​ | ( 5,261 ) | ​ | ( 5,261 ) |
| Total parent company stockholders’ equity | ​ | 321,034 | ​ | 303,222 |
| Non-controlling interests | ​ | 15,854 | ​ | 16,170 |
| Total stockholders’ equity | ​ | 336,888 | ​ | 319,392 |
| Total liabilities, mezzanine equity and stockholders’ equity | ​ | $ | 716,762 | ​ | $ | 707,560 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Net product sales ($ 65,131 and $ 53,222 sold to related parties for the years ended December 31, 2021 and 2020) | ​ | $ | 497,993 | ​ | $ | 417,636 |
| Cost of products sold ($ 31,580 and $ 23,879 purchased from related parties for the years ended December 31, 2021 and 2020) | ​ | 425,914 | ​ | 362,295 |
| Gross profit | ​ | 72,079 | ​ | 55,341 |
| Net gain on other sales | ​ | 4,368 | ​ | 4,320 |
| Operating expenses: | ​ | ​ | ​ | ​ |
| Selling expenses | ​ | 18,278 | ​ | 14,506 |
| General and administrative expenses | ​ | 24,423 | ​ | 27,581 |
| Research and development expenses | ​ | 28,228 | ​ | 25,723 |
| Total operating expenses | ​ | 70,929 | ​ | 67,810 |
| Operating income/(loss) | ​ | 5,518 | ​ | ( 8,149 ) |
| Other income, net | ​ | 6,668 | ​ | 2,438 |
| Interest expense | ​ | ( 1,437 ) | ​ | ( 1,592 ) |
| Financial expense, net | ​ | ( 2,350 ) | ​ | ( 4,897 ) |
| Income/(loss) before income tax expenses and equity in earnings of affiliated companies | ​ | 8,399 | ​ | ( 12,200 ) |
| Less: Income taxes | ​ | 4,004 | ​ | 2,163 |
| Add: Equity in earnings of affiliated companies | ​ | 6,331 | ​ | 4,092 |
| Net income/(loss) | ​ | 10,726 | ​ | ( 10,271 ) |
| Net loss attributable to non-controlling interest | ​ | ( 352 ) | ​ | ( 5,300 ) |
| Accretion to redemption value of redeemable non-controlling interests | ​ | ​ | ( 28 ) | ​ | ​ | ( 9 ) |
| Net income/(loss) attributable to parent company’s common shareholders | ​ | 11,050 | ​ | ( 4,980 ) |
| ​ | ​ | ​ |
| Net income/(loss) attributable to parent company’s common shareholders per share - | ​ | ​ |
| Basic | ​ | $ | 0.36 | ​ | $ | ( 0.16 ) |
| ​ | ​ | ​ |
| Diluted | ​ | $ | 0.36 | ​ | $ | ( 0.16 ) |
| ​ | ​ | ​ |
| Weighted average number of common shares outstanding - | ​ | ​ |
| Basic | ​ | 30,851,776 | ​ | 31,077,196 |
| Diluted | ​ | 30,855,431 | ​ | 31,077,196 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Net income/(loss) | ​ | ​ | 10,726 | ​ | ​ | ( 10,271 ) |
| Other comprehensive income: | ​ | ​ | ​ | ​ |
| Foreign currency translation gain | ​ | 7,784 | ​ | 22,386 |
| Comprehensive income | ​ | 18,510 | ​ | 12,115 |
| Comprehensive income/(loss)attributable to non-controlling interest | ​ | 128 | ​ | ( 3,789 ) |
| Accretion to redemption value of redeemable non-controlling interest | ​ | ​ | ( 28 ) | ​ | ​ | ( 9 ) |
| Comprehensive income attributable to parent company | ​ | $ | 18,354 | ​ | $ | 15,895 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | 2021 | 2020 |
| Common Stock | ​ | ​ |
| Balance at January 1, 2021 and 2020 - 32,338,302 and 32,338,302 shares, respectively | ​ | $ | 3 | ​ | $ | 3 |
| Balance at December 31, 2021 and 2020 - 32,338,302 and 32,338,302 shares, respectively | ​ | $ | 3 | ​ | $ | 3 |
| ​ | ​ | ​ |
| Additional Paid-in Capital | ​ | ​ | ​ |
| Balance at January 1 | ​ | $ | 64,273 | ​ | $ | 64,466 |
| Acquisition of the non-controlling interest in USAI | ​ | ​ | — | ​ | ​ | ( 29 ) |
| Acquisition of the non-controlling interest in Changchun Hualong | ​ | — | ​ | ( 76 ) |
| Deemed distribution to shareholders | ​ | ​ | — | ​ | ​ | ( 88 ) |
| Share-based compensation | ​ | ​ | 88 | ​ | ​ | — |
| Acquisition of the non-controlling interest in Wuhu | ​ | ​ | ( 630 ) | ​ | ​ | — |
| Balance at December 31 | ​ | $ | 63,731 | ​ | $ | 64,273 |
| ​ | ​ | ​ |
| Retained Earnings - Appropriated | ​ | ​ | ​ |
| Balance at January 1 | ​ | $ | 11,303 | ​ | $ | 11,265 |
| Appropriation of retained earnings | ​ | 178 | ​ | 38 |
| Balance at December 31 | ​ | $ | 11,481 | ​ | $ | 11,303 |
| ​ | ​ | ​ |
| Unappropriated | ​ | ​ |
| Balance at January 1 | ​ | $ | 215,491 | ​ | $ | 221,298 |
| Net income/(loss) attributable to parent company | ​ | 11,078 | ​ | ( 4,971 ) |
| Accretion of redeemable non-controlling interests | ​ | ​ | ( 28 ) | ​ | ​ | ( 9 ) |
| Cumulative effect of accounting change - credit loss | ​ | ​ | — | ​ | ​ | ( 789 ) |
| Appropriation of retained earnings | ​ | ( 178 ) | ​ | ( 38 ) |
| Balance at December 31 | ​ | $ | 226,363 | ​ | $ | 215,491 |
| ​ | ​ | ​ |
| Accumulated Other Comprehensive Income/(Loss) | ​ | ​ |
| Balance at January 1 | ​ | $ | 17,413 | ​ | $ | ( 3,462 ) |
| Net foreign currency translation adjustment attributable to parent company | ​ | 7,304 | ​ | 20,875 |
| Balance at December 31 | ​ | $ | 24,717 | ​ | $ | 17,413 |
| ​ | ​ | ​ |
| Treasury Stock | ​ | ​ |
| Balance at January 1, 2021 and 2020 – 1,486,526 and 1,164,257 shares, respectively | ​ | $ | ( 5,261 ) | ​ | $ | ( 4,261 ) |
| Repurchase of common stock in 2021 and 2020 – nil and 322,269 shares, respectively | ​ | — | ​ | ( 1,000 ) |
| Balance at December 31, 2021 and 2020 – 1,486,526 and 1,486,526 shares, respectively | ​ | $ | ( 5,261 ) | ​ | $ | ( 5,261 ) |
| ​ | ​ | ​ |
| Total parent company stockholders’ equity | ​ | $ | 321,034 | ​ | $ | 303,222 |
| ​ | ​ | ​ |
| Non-controlling Interest | ​ | ​ |
| Balance at January 1 | ​ | $ | 16,170 | ​ | $ | 20,250 |
| Net foreign currency translation adjustment attributable to non-controlling interest | ​ | 480 | ​ | 1,511 |
| Net loss attributable to non-controlling interest | ​ | ( 352 ) | ​ | ( 5,300 ) |
| Acquisition of the non-controlling interest in Wuhu | ​ | ​ | ( 444 ) | ​ | ​ | — |
| Cumulative effect of accounting change - credit loss | ​ | ​ | — | ​ | ​ | ( 102 ) |
| Acquisition of the non-controlling interest in USAI | ​ | ​ | — | ​ | ​ | 29 |
| Acquisition of the non-controlling interest in Changchun Hualong | ​ | — | ​ | ( 5 ) |
| Contribution by non-controlling shareholder of Wuhu Hongrun | ​ | — | ​ | 217 |
| Dividends declared to non-controlling interest holders of non-wholly owned subsidiaries | ​ | — | ​ | ( 430 ) |
| Balance at December 31 | ​ | $ | 15,854 | ​ | $ | 16,170 |
| ​ | ​ | ​ |
| Total stockholders’ equity | ​ | $ | 336,888 | ​ | $ | 319,392 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Cash flows from operating activities: | ​ | ​ | ​ | ​ | ​ | ​ |
| Net income/(loss) | ​ | $ | 10,726 | ​ | $ | ( 10,271 ) |
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ​ | ​ |
| Share-based compensation | ​ | ​ | 88 | ​ | ​ | — |
| Depreciation and amortization | ​ | 27,113 | ​ | 22,057 |
| Deferred income taxes | ​ | 4,020 | ​ | 2,205 |
| Allowance for credit losses | ​ | 2,738 | ​ | 6,238 |
| Equity in net earnings of affiliates | ​ | ( 6,331 ) | ​ | ( 4,092 ) |
| Government subsidy reclassified from advances payable | ​ | ​ | ( 1,253 ) | ​ | ​ | — |
| Loss on disposal of fixed assets | ​ | 389 | ​ | 129 |
| Government subsidy | ​ | — | ​ | 287 |
| (Increase)/decrease in: | ​ | ​ | ​ | ​ |
| Accounts and notes receivable | ​ | ​ | 26,560 | ​ | 7,295 |
| Advance payments and others | ​ | 1,439 | ​ | 1,176 |
| Inventories | ​ | ( 25,684 ) | ​ | ( 109 ) |
| Increase/(decrease) in: | ​ | ​ | ​ | ​ |
| Accounts and notes payable | ​ | ( 2,801 ) | ​ | 27,248 |
| Customer deposits | ​ | 870 | ​ | 93 |
| Accrued payroll and related costs | ​ | ( 2,721 ) | ​ | 1,073 |
| Accrued expenses and other payables | ​ | ( 4,081 ) | ​ | 7,069 |
| Taxes payable | ​ | ( 4,501 ) | ​ | ( 3,474 ) |
| Advances payable | ​ | ​ | 1,700 | ​ | ​ | 502 |
| Net cash provided by operating activities | ​ | 28,271 | ​ | 57,426 |
| ​ | ​ | ​ |
| Cash flows from investing activities: | ​ | ​ | ​ | ​ |
| Purchase of short-term investments and long-term time deposits | ​ | ( 63,478 ) | ​ | ( 60,055 ) |
| Proceeds from maturities of short-term investments | ​ | 69,351 | ​ | 53,393 |
| (Decrease)/increase in demand loans and employee housing loans included in other receivables | ​ | ( 171 ) | ​ | 165 |
| Loan to a related party | ​ | ​ | — | ​ | ​ | ( 151 ) |
| Repayment of loan from a related party | ​ | ​ | 154 | ​ | ​ | — |
| Cash received from property, plant and equipment sales | ​ | 150 | ​ | 1,495 |
| Cash paid to acquire property, plant and equipment and land use rights (including $ 1,965 and $ 2,668 paid to related parties for the years ended December 31, 2021 and 2020, respectively) | ​ | ( 9,260 ) | ​ | ( 15,825 ) |
| Cash paid to acquire intangible assets | ​ | ( 642 ) | ​ | ( 741 ) |
| Cash received from long-term investment | ​ | 20,621 | ​ | 3,322 |
| Investment under equity method | ​ | ​ | ( 308 ) | ​ | ​ | ( 5,360 ) |
| Cash prepaid for investment under equity method | ​ | ( 13,454 ) | ​ | — |
| Net cash provided by/(used in) investing activities | ​ | 2,963 | ​ | ( 23,757 ) |
| ​ | ​ | ​ |
| Cash flows from financing activities: | ​ | ​ | ​ | ​ |
| Proceeds from bank and government loans | ​ | 53,209 | ​ | 39,813 |
| Repayment of bank loans and government loans | ​ | ( 50,803 ) | ​ | ( 53,046 ) |
| Payment to broker agents for repurchase of common stock | ​ | — | ​ | ( 2,990 ) |
| Repayments of the borrowing under sale and leaseback transaction | ​ | ( 4,450 ) | ​ | ( 4,163 ) |
| Deemed distribution to shareholders | ​ | ​ | — | ​ | ​ | ( 88 ) |
| Acquisition of non-controlling interest | ​ | ( 1,075 ) | ​ | ( 81 ) |
| Cash received from capital contributions by non-controlling interest holder | ​ | — | ​ | 722 |
| Net cash used in financing activities | ​ | ( 3,119 ) | ​ | ( 19,833 ) |
| ​ | ​ | ​ | ​ | ​ |
| Cash and cash equivalents affected by foreign currency | ​ | 3,323 | ​ | 7,822 |
| Net increase in cash and cash equivalents | ​ | ​ | 31,438 | ​ | ​ | 21,658 |
| Cash, cash equivalents and pledged cash at beginning of year | ​ | ​ | 128,061 | ​ | ​ | 106,403 |
| Cash, cash equivalents and pledged cash at end of year | ​ | $ | 159,499 | ​ | $ | 128,061 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Cash paid for interest | ​ | $ | 1,843 | ​ | $ | 2,751 |
| Cash paid for income taxes | ​ | $ | 3,398 | ​ | $ | 3,229 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Property, plant and equipment recorded during the year which previously were advance payments | ​ | $ | 8,543 | ​ | $ | 11,838 |
| Accounts payable for acquiring property, plant and equipment | ​ | $ | 1,510 | ​ | $ | 2,024 |
| Accounts receivable in exchange for short-term investments | ​ | $ | — | ​ | $ | 223 |

| 1. | Organization and Business |
| ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Percentage Interest |
| ​ | ​ | December 31, | ​ | December 31, | ​ |
| Name of Entity | 2021 | 2020 |
| Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” 1 | 100.00 | % | 100.00 | % |
| Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” 2 | ​ | 100.00 | % | 100.00 | % |
| Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” 3 | 70.00 | % | 70.00 | % |
| Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” 4 | 85.00 | % | 85.00 | % |
| Wuhu Henglong Automotive Steering System Co., Ltd., “Wuhu”5 | ​ | 100.00 | % | 77.33 | % |
| Hubei Henglong Automotive System Group Co., Ltd., “Hubei Henglong” 6 | 100.00 | % | 100.00 | % |
| Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” 7 | 100.00 | % | 100.00 | % |
| Chongqing Henglong Hongyan Automotive System Co., Ltd., “Chongqing Henglong” 8 | 70.00 | % | 70.00 | % |
| CAAS Brazil’s Imports and Trade In Automotive Parts Ltd., “Brazil Henglong” 9 | 95.84 | % | 95.84 | % |
| Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie” 10 | 85.00 | % | 85.00 | % |
| Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong” 11 | 100.00 | % | 100.00 | % |
| Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”12 | 60.00 | % | 60.00 | % |
| Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB”13 | 66.60 | % | 66.60 | % |
| Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong”14 | ​ | 51.00 | % | 51.00 | % |
| Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”15 | ​ | 62.00 | % | 62.00 | % |
| Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong” 16 | ​ | 100.00 | % | 100.00 | % |
| 1. | Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles. |
| 2. | Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light duty vehicles. |
| 3. | Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles. |
| 4. | Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns. |

| 5. | Wuhu was established in 2006 and mainly engages in the production and sales of automobile steering systems. In April 2021, the Company obtained an additional 22.67 % equity interest in Wuhu for total consideration of RMB 6.9 million, equivalent to approximately $ 1.1 million, from the other shareholder. The Company retained its controlling interest in Wuhu and the acquisition of the non-controlling interest was accounted for as an equity transaction. |
| 6. | On March 7, 2007, Genesis established Hubei Henglong, formerly known as Jingzhou Hengsheng Automotive System Co., Ltd., its wholly-owned subsidiary, to engage in the production and sales of automotive steering systems. On July 8, 2012, Hubei Henglong changed its name to Hubei Henglong Automotive System Group Co., Ltd. |
| 7. | In December 2009, Henglong, a subsidiary of Genesis, formed the Testing Center, which mainly engages in the research and development of new products. |
| 8. | On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts. |
| 9. | On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sales of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84 % equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction. |
| 10. | In May 2014, together with Hubei Wanlong, Jielong formed a subsidiary, Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie”, which mainly engages in research and development, manufacture and sales of automobile electronic systems and parts. Wuhan Chuguanjie is located in Wuhan, China. |
| 11. | In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics. |
| 12. | In November 2017, Hubei Henglong formed Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”, which mainly engages in the research and development of intelligent automotive technology. |
| 13. | In August 2018, Hubei Henglong and KYB (China) Investment Co., Ltd. (“KYB”) established Hubei Henglong KYB Automobile Electric Steering System Co., Ltd. (“Henglong KYB”), which mainly engages in design, manufacture, sales and after-sales service of automobile electronic systems. Hubei Henglong owns 66.6 % of the shares of this entity and has consolidated it since its establishment. |
| 14. | In March 2019, Hubei Henglong and Hyoseong Electric Co., Ltd. established Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd. ("Wuhan Hyoseong"), which mainly engages in the design, manufacture and sales of automotive motors and electromechanical integrated systems. Hubei Henglong owns 51.0 % of the shares of Wuhan Hyoseong and has consolidated it since its establishment. |
| 15. | In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun", which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0 % of the shares of Wuhu Hongrun and has consolidated it since its establishment. |
| 16. | In April 2020, Hubei Henglong acquired 100.0 % of the equity interests of Changchun Hualong Automotive Technology Co., Ltd., "Changchun Hualong", for total consideration of RMB 1.2 million, equivalent to approximately $ 0.2 million from an entity controlled by Hanlin Chen. Before the acquisition, 52.1 % of the shares of Changchun Hualong were ultimately owned by Hanlin Chen and 47.9 % of the shares were owned by third parties. Changchun Hualong mainly engages in design and R&D of automotive parts. |

| 2. | Basis of Presentation and Significant Accounting Policies |

Henglong KYB was formed in 2018, with 66.60 % owned by the Company and 33.40 % owned by KYB. The highest authority of Henglong KYB is its board of directors, which is comprised of five directors, three of whom are appointed by the Company, and two of whom are appointed by KYB. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman of such board of directors is appointed by the Company and the general manager is appointed by KYB.Wuhan Hyoseong was formed in 2019, with 51 % owned by the Company and 49 % owned by Hyoseong. The highest authority of Wuhan Hyoseong is its board of directors, which is comprised of five directors, three of whom are appointed by the Company, and two of whom are appointed by Hyoseong. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman of such board of directors is appointed by the Company and the vice chairman is appointed by Wuhan Hyoseong.Wuhu Hongrun was formed in 2019, with 62 % owned by the Company and 38 % owned by the other two parties. The highest authority of Wuhu Hongrun is its board of directors, which is comprised of five directors. The directors are elected by the general meeting of shareholders. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman and the general management are appointed by the board of directors. Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company is of the opinion that the significant estimates related to valuation of long term assets and investment, the realizable value of accounts receivable and inventories, the accrual of warranty obligations and the recoverability of deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents - Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of purchase. Pledged Cash - Pledged as collateral for the Company’s notes payable and restricted to use. The Company regularly pays some of its suppliers by bank notes. The Company has to deposit a cash deposit, equivalent to 20 %- 100 % of the face value of the relevant bank note, in order to obtain the bank note. Short-term Investments - Short-term investments are comprised of time deposits with original terms of three months to one year and wealth management financial products maturing within one year. The carrying values of time deposits approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated statements of income or loss over the contractual term of the deposits. The wealth management financial products are measured at fair value and classified as Level 3 within the fair value measurement hierarchy. Changes in the fair value are reflected in other income in the consolidated statements of income or loss. Current Expected Credit Losses - In 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASC Topic 326"), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Company adopted this ASC Topic 326 and several associated ASUs on January 1, 2020 using a modified retrospective approach with a cumulative effect recorded as reduction of beginning retained earnings with amount of $ 0.8 million. As of January 1, 2021, the Company's accounts and notes receivable, advance payments and other receivables are within the scope of ASC Topic 326. The Company has identified the relevant risk characteristics of its customers and the related receivables, advance payments, and other receivables which include type of the products the Company provides, nature of the customers or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, and industry-specific factors that could impact the Company's receivables. Additionally, external data and macroeconomic factors are also considered.For the year ended December 31, 2021, the Company recorded $ 2.7 million expected credit loss expense in general and administrative expenses. As of December 31, 2021, the expected credit loss provision for the current and non-current assets were $ 12.9 million and $ 0.5 million, respectively. 63 |Page
| ​ | ​ | ​ |
| Category | Estimated Useful Life (Years) |
| Buildings | 25 |
| Machinery and equipment | 6 |
| Electronic equipment | 4 |
| Motor vehicles | 8 |

In assessing long-lived assets for impairment, management considered the Company’s product line portfolio, customers and related commercial agreements, and other factors in grouping assets and liabilities at the lowest level for which identifiable cash flows are largely independent. The Company considers projected future undiscounted cash flows, trends and other factors in its assessment of whether impairment conditions exist. Whilst the Company believes that its estimates of future cash flows are reasonable, different assumptions regarding such factors as future automotive production volumes, customer pricing, economics and productivity and cost saving initiatives, could significantly affect its estimates. In determining fair value of long-lived assets, management uses appraisals, management estimates or discounted cash flow calculations. Long-term Investments – The Company’s long-term investments include investments in corporations and investments in limited partnerships. Investments in corporations which the Company has the ability to exert significant influence are accounted for using the equity method. Investments in limited partnerships which the Company has more than virtually no influence are accounted for using the equity method. The limited partnerships accounted for its investments at fair value that were classified under Level 1 for their investees whose shares were listed and actively traded on stock exchange, or Level 3 for the investees that were private companies, in the fair value hierarchy. The fair value of the limited partnerships’ Level 3 investments were determined using valuation techniques based on market approach or income approach with unobservable inputs, which required significant judgment made by management with respect to the assumptions and estimates for revenue growth rate, discount rate, price-to-earnings ratio, price-to-book ratio, lack of marketability discounts, and expected volatility. Such fair value of the limited partnerships’ Level 3 investments was reflected in the equity in earnings of affiliated companies of the consolidated statements of income or loss and the carrying amount of the Company’s long-term investments under the equity method accounting.The Company continually reviews its investment to determine whether a decline in fair value below the carrying value is other than temporary. The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company’s carrying value and the financial condition, operating performance and near-term prospects of the investee. In addition, the Company considers the reason for the decline in fair value, including general market conditions, industry-specific or investee-specific reasons, changes in valuation subsequent to the balance sheet date and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is deemed to be other than temporary, the carrying value of the security is written down to fair value. There were no impairment losses for its long-term investment in the years ended December 31, 2021 and 2020. Revenue Recognition - The Company has adopted ASC Topic 606 “Revenue from Contracts with Customers”. Products sales to customers are made pursuant to master agreements entered into between the Company and its customers that provide for transfer of both title and risk of loss upon the Company’s delivery to the location specified in the contracts. The Company’s sales arrangements generally do not contain variable considerations and are short-term in nature. A period of credit term is granted to the customers after the delivery and before making payment. The Company recognizes revenue at a point in time based on management’s evaluation of when the customer obtains control of the products. Revenue is recognized when all performance obligations under the terms of a contract with the customer are satisfied and control of the product has been transferred to the customer. Sales of goods do not include multiple product and/or service elements.Revenue is measured as the amount of consideration management expects the Company to receive in exchange for transferring goods pursuant to the contracts. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as expense.At the time revenue is recognized, allowances are recorded, with the related reduction to revenue, for estimated price discounts based upon historical experience and related terms of customer arrangements. Where the Company has offered product warranties, the Company also establishes liabilities for estimated warranty costs based upon historical experience and specific warranty provisions. Warranty liabilities are adjusted when experience indicates the expected outcome will differ from initial estimates of the liability.The Company accounts for shipping and handling fees as a fulfillment cost since control of the products is usually transferred to the customer after the delivery. 65 |Page
Revenue DisaggregationRevenue disaggregation under the segment reporting standard is measured on the same basis as under the revenue standard. Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard, and does not repeat the disaggregation of revenue under both standards.Contract Assets and LiabilitiesContract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.Contract liabilities are mainly customer deposits.Customer DepositsAs of December 31, 2021 and 2020, the Company has customer deposits of $ 2.4 million and $ 1.5 million , respectively. During the year ended December 31, 2021, $ 7.2 million was received and $ 6.3 million (including $ 1.5 million from the beginning balance of customer deposits) was recognized as net product sales revenue. During the year ended December 31, 2020, $ 3.1 million was received and $ 2.9 million (including $ 1.3 million from the beginning balance of customer deposits) was recognized as net product sales revenue. Customer deposits represent non-refundable cash deposits for customers to secure rights to an amount of products produced by the Company under supply agreements. When the products are shipped to customers, the Company will recognize revenue and bill the customers to reduce the amount of the customer deposit liability.Practical Expedient and ExemptionsThe Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.The Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers promised goods to the customers and when the customers pay for the goods will be less than one year. Government Subsidies - The Company’s PRC based subsidiaries received government subsidies according to related policy from local government. For the subsidies for which the Chinese government has specified their purpose, such as product development and renewal of production facilities, the Company recorded specific purpose subsidies as advances payable when received. Upon government acceptance of the related project development or assets acquisition, the specific purpose subsidies are recognized to reduce related R&D expenses or cost of acquired assets. The Company recognized the subsidies that do not have specific purpose as other income upon receipt. Sales Taxes - The Company is subject to value added tax, “VAT.” The applicable VAT tax rate is 13% for products sold in the PRC. Products exported overseas are exempted from VAT. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold less VAT paid on purchases made with the relevant supporting invoices. VAT is collected from customers by the Company on behalf of the PRC tax authorities and is therefore not charged to the consolidated statements of income or loss. Uncertain Tax Positions - In order to assess uncertain tax positions, the Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. As of December 31, 2021 and 2020, the Company has no uncertain tax positions. 66 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Balance at the beginning of year | ​ | $ | 36,215 | ​ | $ | 32,907 |
| Additions during the year | ​ | 13,917 | ​ | 17,801 |
| Settlement within the year | ​ | ( 14,427 ) | ​ | ( 16,859 ) |
| Foreign currency translation loss | ​ | 867 | ​ | 2,366 |
| Balance at end of year | ​ | $ | 36,572 | ​ | $ | 36,215 |

Income Taxes - Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences, which is attributable to operating loss and tax credit carryforwards and for differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, by applying enacted statutory rates applicable to future years. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the period enacted. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized. The valuation allowance is based on management’s estimates of future taxable profits and application of relevant income tax law. The Company applies ASC 740, “Income Taxes”, which clarifies the accounting for uncertainty in income taxes recognized in the Company’s consolidated financial statements and prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.If the amount of the Company’s taxable income or income tax liability is a determinant of the amount of a grant, the grant is treated as a reduction of the income tax provision in the year the grant is realized.Gain on other sales - Gain on other sales mainly consists of rental income, gain on disposal of intangible assets and property, plant and equipment and technical services revenue. Research and Development Costs - Research and development costs are expensed as incurred. Advertising, Shipping and Handling Costs – Advertising, shipping and handling costs are expensed as incurred and recorded in selling expenses. Shipping and handling costs relating to sales of $ 9.9 million and $ 5.8 million were included in selling expenses for the years ended December 31, 2021 and 2020, respectively. Leases – The Company adopted ASU 2016-02, Leases, and other related ASUs (collectively, "ASC 842") on January 1, 2019, using the modified retrospective method of adoption. The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. The Company's major plants and buildings are self-owned and limited temporary small offices were rented. For leases with a term of 12 months or less, the Company makes an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company's incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on the lease term and the economic environment of the applicable country or region. The discount rate used by the Company for its operating lease was 4.49 %. As of December 31, 2021, the weighted average remaining lease term was 1 year . The Company did not have finance lease arrangements as of December 31, 2021. Income Per Share - Basic income per share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities, including convertible note holders, if any, based on their participating rights. Diluted income per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effects on income of participating securities as if they were dilutive ordinary shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the convertible notes using the if-converted method, and shares issuable upon the exercise of stock options and warrants for the purchase of ordinary shares using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be antidilutive. 68 |Page
Comprehensive Income – ASC Topic 220 establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. ASC Topic 220 defines comprehensive income to include all changes in equity except those resulting from investments by owners and distributions to owners, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on marketable securities. Fair Value Measurements – For purposes of fair value measurements, the Company applies the applicable provisions of ASC 820 “Fair Value Measurements and Disclosures.” Accordingly, fair value for the Company’s financial accounting and reporting purposes represents the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the designated measurement date. With an objective to increase consistency and comparability in fair value measurements and related disclosures, the Financial Accounting Standard Board established the fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. As at December 31, 2021 and 2020, the Company did not have any fair value assets and liabilities classified as Level 1. As at December 31, 2021 and 2020, marketable securities with amounts of $ 0.1 million and $ 0.2 million, respectively, were classified as Level 1.Level 2 Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. As at December 31, 2021 and 2020, the Company did not have any fair value assets and liabilities classified as Level 2.Level 3 Inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs shall reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). As at December 31, 2021 and 2020, wealth management financial products with amounts of $ 1.7 million and $ 9.9 million, respectively, were classified as Level 3.The Company’s financial instruments consist principally of cash and cash equivalents, pledged cash, time deposits, accounts and notes receivable, accounts and notes payable, advance payment or payable, other receivable or payable, accrued expenses and bank loans. As of December 31, 2021 and 2020, the respective carrying values of all financial instruments approximated fair value because any changes in fair value, after considering the discount rate, are immaterial.Segment Reporting - Based on the criteria established by ASC 280 "Segment Reporting," the Company currently operates and manages its business by product sectors and each of them is a reportable segment. The Company's chief operating decision-maker ("CODM") is the chief executive officer. The CODM reviews operating results to make decisions about allocating resources for the Company and assessing performance of its segments. Since most of the revenue generated of the Company and assets held by the Company are in PRC while others are generated and held in other countries, information by geographic region is also presented. Stock-Based Compensation - The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718, “Accounting for Stock-Based Compensation,” which establishes a fair value based method of accounting for stock-based compensation plans. In accordance with ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. 69 |Page
| ● | Jingzhou Henglong Fulida Textile Co., Ltd., “ Fulida ” |
| ● | Xiamen Joylon Co., Ltd., “ Xiamen Joylon ” |
| ● | Shanghai Tianxiang Automotive Parts Co., Ltd., “ Shanghai Tianxiang ” |
| ● | Shanghai Jinjie Industrial & Trading Co., Ltd., “ Shanghai Jinjie ” |
| ● | Jiangling Tongchuang Machining Co., Ltd., “ Jiangling Tongchuang ” |
| ● | Shanghai Hongxi Investment Inc, “ Hongxi ” |
| ● | Hubei Wiselink Equipment Manufacturing Co., Ltd., “ Hubei Wiselink ” |
| ● | Jingzhou Derun Agricultural S&T Development Co., Ltd., “ Jingzhou Derun ” |
| ● | Jingzhou Tongying Alloys Materials Co., Ltd., “ Jingzhou Tongying ” |
| ● | Wuhan Dida Information S&T Development Co., Ltd., “ Wuhan Dida ” |
| ● | Hubei Wanlong Investment Co., Ltd., “ Hubei Wanlong ” |
| ● | Jingzhou Yude Machining Co., Ltd., “ Jingzhou Yude ” |
| ● | Beijing Hainachuan HengLong Automotive Steering System Co., Ltd., “ Beijing Henglong ” |
| ● | Honghu Changrun Automotive Parts Co., Ltd., “ Honghu Changrun ” |
| ● | Jingzhou Henglong Real Estate Co., Ltd., “ Henglong Real Estate ” |
| ● | Xiamen Joylon Automotive Parts Co., Ltd., “Xiamen Automotive Parts ” |
| ● | Jingzhou Jiulong Machinery and Electronic Trading Co., Ltd., “ Jiulong Machinery ” |
| ● | Wuhan Tongkai Automobile Motor Co., Ltd., “ Wuhan Tongkai ” |
| ● | Jingzhou Natural Astaxanthin Inc, “Jingzhou Astaxanthin” |
| ● | Hubei Asta Biotech Inc., “Hubei Asta” |
| ● | Shanghai Yifu Automotive Electronics Technology Co., Ltd., “Shanghai Yifu” |
| ● | Suzhou Qingyan Venture Capital Fund L.P., “Suzhou Qingyan” |
| ● | Chongqing Qingyan Venture Capital Fund L.P., “Chongqing Qingyan” |
| ● | Chongqing Jinghua Automotive Intelligent Manufacturing Technology Research Co., Ltd., “Chongqing Jinghua” |
| ● | Hubei Hongrun Intelligent System Co.,Ltd., "Hubei Hongrun" |
| ● | Jingzhou WiseDawn Electric Car Co., Ltd., “Jingzhou WiseDawn” |
| ● | Hubei Zhirong Automobile Technology Co., Ltd., “Hubei Zhirong” |
| ● | Hubei Tongrun Automotive Parts Industry Development Co., Ltd., “Hubei Tongrun” |
| ● | Hubei Qingyan Venture Capital Fund L.P, "Hubei Qingyan" |
| ● | Hubei Henglongtianyu Pipe system Co.,Ltd., "Henglong Tianyu" |
| ● | Wuhan Ewinlink Intelligent System Co., Ltd., "Ewinlink" |
| ● | Hubei HLTW Automotive Lightweight Co.,Ltd., “Hubei HLTW” |

| ● | Hubei Jinlv New Energy Battery Technology Co., Ltd., “Hubei Jinlv” |
| ● | Hubei Yiling Intelligent Technology Co., Ltd., “Hubei Yiling” |
| ● | Sentient AB |

| 3. | Accounts and Notes Receivable |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Accounts receivable - unrelated parties | ​ | $ | 146,362 | ​ | $ | 141,018 |
| Notes receivable - unrelated parties (1) | ​ | 61,328 | ​ | 85,354 |
| Total accounts and notes receivable - unrelated parties | ​ | 207,690 | ​ | 226,372 |
| Less: allowance for doubtful accounts - unrelated parties | ​ | ( 11,961 ) | ​ | ( 9,853 ) |
| Accounts and notes receivable, net - unrelated parties | ​ | 195,729 | ​ | 216,519 |
| Accounts and notes receivable - related parties | ​ | 15,505 | ​ | 17,622 |
| Less: allowance for doubtful accounts - related parties | ​ | ​ | ( 898 ) | ​ | ​ | ( 1 ) |
| Accounts and notes receivable, net - related parties | ​ | ​ | 14,607 | ​ | ​ | 17,621 |
| Accounts and notes receivable, net | ​ | $ | 210,336 | ​ | $ | 234,140 |
| (1) | Notes receivable represents accounts receivable in the form of bills of exchange whose acceptances and settlements are handled by banks. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Balance at beginning of year | ​ | $ | 9,854 | ​ | $ | 2,379 |
| Cumulative effect of the adoption of ASC Topic 326 | ​ | ​ | — | ​ | ​ | 1,049 |
| Amounts provided during the year (1) | ​ | 2,774 | ​ | 6,278 |
| Amounts reversed of collection during the year | ​ | ( 24 ) | ​ | ( 94 ) |
| Foreign currency translation | ​ | 255 | ​ | 242 |
| Balance at end of year | ​ | $ | 12,859 | ​ | $ | 9,854 |
| (1) | In November 2020, Intermediate People's Court of Shenyang, Liaoning province, China accepted the bankruptcy reorganization application of one of the Company’s customers. As of December 31, 2021 and 2020, the Company had accounts and notes receivable with a total amount of $ 6.6 million and $ 6.4 million due from this customer and its subsidiaries, which receivables the Company considered in significant doubt of collectability, and the Company provided full allowance for these receivables . |

| 4. | Advance Payments and Others |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Prepayments for purchase of raw materials | ​ | $ | 6,066 | ​ | $ | 5,993 |
| Input VAT | ​ | 3,433 | ​ | 4,233 |
| Prepayment for share repurchase program | ​ | 1,238 | ​ | 2,138 |
| Prepaid income tax | ​ | 1,366 | ​ | 1,486 |
| Employee advances | ​ | ​ | 641 | ​ | ​ | 564 |
| Others | ​ | ​ | 607 | ​ | ​ | 637 |
| Total advance payments and others | ​ | ​ | 13,351 | ​ | ​ | 15,051 |
| Less: Allowance for doubtful accounts | ​ | ​ | ( 55 ) | ​ | ​ | ( 58 ) |
| Advance payments and others, net | ​ | $ | 13,296 | ​ | $ | 14,993 |
| 5. | Inventories |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Raw materials | ​ | $ | 33,583 | ​ | $ | 24,367 |
| Work in process | ​ | 9,415 | ​ | 10,098 |
| Finished goods | ​ | 73,495 | ​ | 53,860 |
| Balance at end of year | ​ | $ | 116,493 | ​ | $ | 88,325 |
| 6. | Property, Plant and Equipment |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Costs: | ​ | ​ |
| Buildings | ​ | $ | 69,554 | ​ | $ | 61,035 |
| Machinery and equipment | ​ | 253,245 | ​ | 233,273 |
| Electronic equipment | ​ | 6,887 | ​ | 6,491 |
| Motor vehicles | ​ | 5,121 | ​ | 5,064 |
| Construction in progress | ​ | 6,583 | ​ | 20,813 |
| ​ | ​ | 341,390 | ​ | 326,676 |
| Less: Accumulated depreciation | ​ | ( 213,669 ) | ​ | ( 185,672 ) |
| Balance at end of year | ​ | $ | 127,721 | ​ | $ | 141,004 |

| 7. | Intangible Assets |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Costs: | ​ | ​ |
| Patent technology | ​ | $ | 2,598 | ​ | $ | 2,215 |
| Management software license | ​ | 3,994 | ​ | 3,564 |
| Total intangible assets - at cost | ​ | 6,592 | ​ | 5,779 |
| Less: Accumulated amortization | ​ | ( 4,780 ) | ​ | ( 4,049 ) |
| Balance at end of year, net | ​ | $ | 1,812 | ​ | $ | 1,730 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Estimated Amortization Expenses |
| ​ | 2022 | 2023 | 2024 | 2025 | 2026 |
| Amortization expenses | ​ | $ | 606 | ​ | $ | 563 | ​ | $ | 310 | ​ | $ | 187 | ​ | $ | 72 |
| 8. | Long-term Investments |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Limited Partnerships: | ​ | ​ | ​ | ​ | ​ | ​ |
| Chongqing Venture Fund(1) | ​ | $ | 17,530 | ​ | $ | 20,230 |
| Hubei Venture Fund(2) | ​ | ​ | 9,665 | ​ | ​ | 14,473 |
| Suzhou Venture Fund (3) | ​ | 7,413 | ​ | 7,740 |
| Subtotal - Investments in limited partnerships | ​ | ​ | 34,608 | ​ | ​ | 42,443 |
| Corporations: | ​ | ​ | ​ | ​ | ​ | ​ |
| Beijing Henglong (4) | ​ | — | ​ | 5,241 |
| Henglong Tianyu(5) | ​ | 913 | ​ | 1,070 |
| Chongqing Jinghua(6) | ​ | 642 | ​ | 599 |
| Jiangsu Intelligent (7) | ​ | 803 | ​ | 413 |
| Subtotal - Investments in corporations | ​ | ​ | 2,358 | ​ | ​ | 7,323 |
| Total | ​ | $ | 36,966 | ​ | $ | 49,766 |
| (1) | In May 2016, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the "Chongqing Venture Fund". As of December 31, 2021, Hubei Henglong has made investments of RMB 100.0 million, equivalent to approximately $ 14.5 million, representing 18.5 % of Chongqing Venture Fund's equity. As a limited partner, Hubei Henglong has more than virtually no influence over Chongqing Venture Fund's operating and financial policies. The investment is accounted for using the equity method. In January, May, June, August and October 2021, Chongqing Venture Fund made distributions that were proportional to each owner’s allocated share of the fund, pursuant to which Hubei Henglong received $ 4.9 million in the aggregate. |
| (2) | In March 2018, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the "Hubei Venture Fund". As of December 31, 2021, Hubei Henglong has made investments of RMB 98.5 million, equivalent to approximately $ 15.1 million, representing 32.8 % of Hubei Venture Fund's equity. As a limited partner, Hubei Henglong has more than virtually no influence over the Hubei Venture Fund's operating and financial policies. The investment is accounted for using the equity method. In April and December 2021, Hubei Venture Fund made distributions that were proportional to each owner’s allocated share of the fund, pursuant to which Hubei Henglong received $ 6.1 million. |

| (3) | In September 2014, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the “Suzhou Venture Fund”. Hubei Henglong has made investments of RMB 50.0 million, equivalent to approximately $ 7.6 million, representing 12.5 % of the Suzhou Venture Fund's equity. As a limited partner, Hubei Henglong has more than virtually no influence over the Suzhou Venture Fund's operating and financial policies. The investment is accounted for using the equity method. In August 2021, Suzhou Venture Fund made distributions that were proportional to each owner's allocated share of the fund, pursuant to which Hubei Henglong received $ 1.4 million. |
| (4) | In January 2021, Beijing Henglong made distributions that were proportional to each owner’s allocated share of the fund, pursuant to which Hubei Henglong received $ 1.5 million. In December 2021, Beijing Henglong was liquidated, pursuant to which Hubei Henglong received liquidation value of $ 6.7 million. |
| (5) | In June 2019, the Company invested RMB 8.0 million, equivalent to approximately $ 1.2 million, to establish an associate company, "Henglong Tianyu", with Jingzhou Tianyu Auto Parts Co., Ltd. The Company owns 40 % of the equity in Henglong Tianyu, and can exercise significant influence over Henglong Tianyu’s operating and financial policies. The investment is accounted for using the equity method. |
| (6) | In October 2016, Hubei Henglong invested RMB 3.0 million, equivalent to approximately $ 0.5 million, to establish an associate company, Chongqing Jinghua Automotive Intelligent Manufacturing Technology Research Co., Ltd., “Chongqing Jinghua”, with five other parties. The Company owns 18.8 % of the equity in Chongqing Jinghua and can exercise significant influence over Chongqing Jinghua’s operating and financial policies. The investment is accounted for using the equity method. |
| (7) | In April 2019, Hubei Henglong invested RMB 5.0 million, equivalent to approximately $ 0.8 million, to establish an associate company, Jiangsu Intelligent Networking Automotive Innovation Center Co. Ltd., "Jiangsu Intelligent", with other parties. The Company owns 19.2 % of the equity in Jiangsu Intelligent and can exercise significant influence over Jiangsu Intelligent's operational and financial policies. The investment is accounted for using the equity method. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Revenue | ​ | $ | 88,122 | ​ | $ | 59,912 |
| Gross profit | ​ | 59,561 | ​ | 30,134 |
| Income from continuing operations | ​ | 63,067 | ​ | 28,012 |
| Net income | ​ | $ | 61,374 | ​ | $ | 28,968 |

| 9. | Deferred Income Tax Assets and Liabilities |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Losses carryforward (U.S.) (1) | ​ | $ | 2,559 | ​ | $ | 2,727 |
| Losses carryforward (Non-U.S.) (1) | ​ | 13,058 | ​ | 12,491 |
| Product warranties and other reserves | ​ | 8,679 | ​ | 7,930 |
| Property, plant and equipment | ​ | 7,760 | ​ | 5,246 |
| Share-based compensation | ​ | 26 | ​ | 18 |
| Bonus accrual | ​ | 106 | ​ | 567 |
| Other accruals | ​ | 1,101 | ​ | 1,453 |
| Deductible temporary difference related to revenue recognition | ​ | 879 | ​ | 1,551 |
| Others | ​ | 983 | ​ | 2,350 |
| Total deferred tax assets | ​ | 35,151 | ​ | 34,333 |
| Less: Valuation allowance (1) (2) | ​ | ( 22,788 ) | ​ | ( 18,155 ) |
| Total deferred tax assets, net of valuation allowance | ​ | 12,363 | ​ | 16,178 |
| ​ | ​ | ​ |
| Deferred withholding tax for dividend distribution from PRC subsidiaries (Note 22) | ​ | 4,380 | ​ | 4,280 |
| Other taxable temporary differences | ​ | 2,249 | ​ | 2,332 |
| Total deferred tax liabilities | ​ | $ | 6,629 | ​ | $ | 6,612 |
| (1) | The net operating loss carry -forward for the U.S. entity for income tax purposes are available to reduce future years' taxable income. These carry -forwards will not expire if not utilized, and the Company may carry the losses forward indefinitely. Net operating losses for China entities can be carried forward for 5 years to offset taxable income except for entities that qualify as a High & New Technology Enterprise, for which the net operating loss can be carried forward for 10 years . However, as of December 31, 2021, valuation allowance was $ 22.8 million, including $ 2.6 million allowance for the Company’s deferred tax assets in the United States and $ 20.2 million allowance for the Company’s non-U.S. deferred tax assets primarily in China. Based on the Company’s current operations, management believes that all deferred tax assets in the United States and certain deferred tax assets in non-U.S. regions are not likely to be realized in the future. |
| (2) | As of December 31, 2021, the Company had net operating tax loss carry -forwards amounting to $ 8.1 million and $ 2.7 million which will expire from 2022 to 2031 and from 2022 to 2026, respectively, if not used. Pursuant to a public announcement issued by the PRC State Administration of Taxation in August 2018, net operating losses of entities not qualified as "High & New Technology Enterprise" will expire between 2022 and 2026 if not utilized and those of entities qualified as "High & New Technology Enterprise" will expire in 2031. |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Deferred tax assets | ​ | $ | 10,114 | ​ | $ | 13,846 |
| Deferred tax liabilities | ​ | 4,380 | ​ | 4,280 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Balance at beginning of year | ​ | $ | 18,155 | ​ | $ | 10,630 |
| Amounts provided for during the year | ​ | 4,468 | ​ | 7,172 |
| Amounts used during the year | ​ | ( 247 ) | ​ | ( 183 ) |
| Foreign currency translation | ​ | 412 | ​ | 536 |
| Balance at end of year | ​ | $ | 22,788 | ​ | $ | 18,155 |
| ​ | ​ |
| December 31, |
| 2021 | 2020 |
| Prepayment for investment under equity method-Sentient AB(1) | ​ | $ | 13,489 | ​ | ​ | $ | - |
| Prepayment for acquisition of a subsidiary-Hefei Senye(2) | ​ | ​ | 2,823 | ​ | ​ | ​ | 2,759 |
| ​ | ​ | $ | 16,312 | ​ | ​ | $ | 2,759 |
| (1) | In June 2021, Hubei Henglong entered into an agreement with other parties and committed to purchase 40 % of the shares of Sentient AB for total consideration of RMB 155.2 million, equivalent to approximately $ 24.3 million. As of December 31, 2021, Hubei Henglong has paid RMB 86.0 million, equivalent to approximately $ 13.5 million, which was reported in other non-current assets as the transaction had not been consummated. |
| (2) | In November 2019, Hubei Henglong entered into an agreement with other parties and committed to purchase 70 % of the shares of Hefei Senye Light Plastic Technology Co., Ltd. for total consideration of RMB 33.6 million, equivalent to approximately $ 4.8 million. As of December 31, 2021, Hubei Henglong has paid the amount of RMB 18.0 million, equivalent to approximately $ 2.8 million, which was reported in other non-current assets as the transaction had not been consummated. |
| 11. | Bank and Government Loans |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Short-term bank loans (1) | ​ | $ | 47,592 | ​ | $ | 36,575 |
| Current portion of long-term government loan (2) | ​ | ​ | — | ​ | ​ | 7,663 |
| Subtotal | ​ | ​ | 47,592 | ​ | ​ | 44,238 |
| Long-term government loan (2) | ​ | ​ | — | ​ | ​ | 7,663 |
| Less: Current portion of long-term government loan (2) | ​ | — | ​ | ( 7,663 ) |
| Subtotal | ​ | ​ | — | ​ | ​ | — |
| Total bank and government loans | ​ | $ | 47,592 | ​ | $ | 44,238 |
| (1) | The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. The total credit facility amount was $ 116.8 million and $ 172.7 million, respectively, as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, the Company has drawn down loans with an aggregate amount of $ 47.6 million and $ 36.6 million, respectively. The weighted average interest rate was 3.5 % and 3.7 %, respectively. |

| (2) | On August 7 and September 3, 2019, the Company borrowed from the local government loans of RMB 20.0 million and RMB 30.0 million, equivalent to approximately $ 3.1 million and $ 4.6 million, respectively. These loans are due for repayment on June 30, 2021 and have an interest rate of 3.80 % per annum. As of December 31, 2021 and 2020, Henglong pledged nil and RMB 53.5 million, equivalent to approximately nil and $ 8.2 million, respectively, of notes receivable as collateral for the local government loans (See Note 3). The Company repaid these government loans on April 15, 2021. |
| 12. | Accounts and Notes Payable |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Accounts payable - unrelated parties | ​ | $ | 132,593 | ​ | $ | 132,349 |
| Notes payable - unrelated parties (1) | ​ | 81,997 | ​ | 80,173 |
| Accounts and notes payable - unrelated parties | ​ | 214,590 | ​ | 212,522 |
| Accounts and notes payable - related parties | ​ | 13,464 | ​ | 12,730 |
| Balance at end of year | ​ | $ | 228,054 | ​ | $ | 225,252 |
| (1) | Notes payable represent payables in the form of notes issued by the bank. As of December 31, 2021 and 2020, the Company has pledged cash of $ 27.8 million and $ 30.8 million, and also has pledged notes receivable of $ 18.2 million and $ 5.5 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholder upon maturity. The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. As of December 31, 2021 and 2020, the Company has used $ 33.6 million and $ 43.9 million of its credit facility, respectively, for issuing bank notes . |
| 13. | Accrued Expenses and Other Payables |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Accrued expenses | ​ | $ | 5,596 | ​ | $ | 8,627 |
| Warranty reserves (See Note 2) | ​ | 36,572 | ​ | 36,215 |
| Payables for overseas transportation and custom clearance | ​ | 4,548 | ​ | 3,278 |
| Dividends payable to holders of non-controlling interests | ​ | ​ | 471 | ​ | ​ | 460 |
| Current portion of other long-term payable (See Note 15) | ​ | 1,115 | ​ | 4,131 |
| Accrued interest | ​ | 507 | ​ | 646 |
| Other payables | ​ | ​ | 1,523 | ​ | ​ | 2,250 |
| Balance at end of year | ​ | $ | 50,332 | ​ | $ | 55,607 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Value-added tax payable | ​ | $ | 3,494 | ​ | $ | 5,078 |
| Tariffs payable | ​ | 5,202 | ​ | 3,870 |
| Long-term taxes payable - current portion (1) | ​ | ​ | 2,809 | ​ | ​ | 2,809 |
| Income tax payable | ​ | ​ | 311 | ​ | ​ | 133 |
| Other tax payable (1) | ​ | 510 | ​ | 1,259 |
| Short-term taxes payable | ​ | $ | 12,326 | ​ | $ | 13,149 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Long-term taxes payable | ​ | $ | 23,884 | ​ | $ | 26,693 |
| Less: Long-term taxes payable - current portion (1) | ​ | ( 2,809 ) | ​ | ( 2,809 ) |
| Long-term taxes payable (1) | ​ | $ | 21,075 | ​ | $ | 23,884 |
| (1) | A one-time transition tax of $ 35.6 million was recognized in the three months ended December 31, 2017 that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in April 2018. During the years ended December 31, 2021 and 2020, $ 2.8 million and $ 2.8 million, respectively, were paid by the Company. See Note 22 for more details about the U.S. Tax Reform . |
| 15. | Other Long-term Payable |

| 17. | Stock Options |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Issuance Date | Expected volatility | Risk-free rate | Expected term (years) | Dividend yield |
| February 3, 2021 | 76.91 | % | 0.46 | % | 5 | 0.00 | % |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted-Average |
| ​ | ​ | ​ | ​ | Weighted-Average | ​ | Contractual |
| ​ | Shares | Exercise Price | Term (years) |
| Outstanding - January 1, 2020 | 30,000 | ​ | $ | 4.99 | 5 |
| Expired | ( 7,500 ) | ​ | 4.58 | 5 |
| Outstanding - December 31, 2020 | 22,500 | ​ | $ | 4.79 | 5 |
| Expired | ( 7,500 ) | ​ | 6.95 | 5 |
| Granted | ​ | 22,500 | ​ | ​ | 6.26 | ​ | 5 |
| Outstanding - December 31, 2021 | 37,500 | ​ | $ | 5.24 | 5 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | Outstanding Stock | Weighted Average | Weighted Average | Number of Stock |
| Range of Exercise Prices | ​ | Options | ​ | Remaining Life | ​ | Exercise Price | ​ | Options Exercisable |
| $ 2.37 - $ 6.26 | 37,500 | 2.97 | ​ | $ | 5.24 | 37,500 |

| 18. | Retained Earnings |
| 19. | Treasury Stock |
| 20. | Other Income, Net |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Government subsidy | $ | 4,928 | $ | 2,820 |
| Penalties income | ​ | 70 | ​ | 140 |
| Charity donation | ​ | — | ​ | ( 1,136 ) |
| Investment income | ​ | 1,670 | ​ | 614 |
| Total other income, net | ​ | $ | 6,668 | ​ | $ | 2,438 |
| 21. | Financial Expense, net |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Interest income | ​ | $ | ( 1,242 ) | ​ | $ | ( 1,662 ) |
| Foreign exchange loss, net | ​ | 3,204 | ​ | 6,284 |
| Bank fees | ​ | 388 | ​ | 275 |
| Total financial expense, net | ​ | $ | 2,350 | ​ | $ | 4,897 |

| 22. | Income Taxes |

Brazil Corporate Income TaxBased on Brazilian income tax laws, Brazil Henglong is subject to income tax at a uniform rate of 15 %, and a resident legal person is subject to additional tax at a rate of 10 % for the part of taxable income over BRL 0.24 million, equivalent to approximately $ 0.05 million. The Company recognized income tax expenses of $ 0.5 million in Brazil for the year ended December 31, 2021 and had no assessable income in Brazil for the year ended December 31, 2020.Hong Kong Corporate Income TaxThe profits tax rate of Hong Kong is 16.5 %. No provision for Hong Kong tax is made as Genesis is an investment holding company, and had no assessable income in Hong Kong for the years ended December 31, 2021 and 2020.U.S. Corporate Income TaxThe Company is a Delaware corporation that is subject to U.S. corporate income tax on its taxable income at a rate of up to 21 % for taxable years beginning after December 31, 2017 and U.S. corporate income tax on its taxable income of up to 35 % for prior tax years. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35 % to 21 % for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump sum.The U.S. Tax Reform also includes provisions for a new tax on GILTI effective for tax years of foreign corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations. To the extent that portions of the Company’s U.S. taxable income, such as Subpart F income or GILTI, are determined to be from sources outside of the U.S., subject to certain limitations, the Company may be able to claim foreign tax credits to offset its U.S. income tax liabilities. If dividends that the Company receives from its subsidiaries are determined to be from sources outside of the U.S., subject to certain limitations, the Company will generally not be required to pay U.S. corporate income tax on those dividends. Any liabilities for U.S. corporate income tax will be accrued in the Company’s consolidated statements of comprehensive income and estimated tax payments will be made when required by U.S. law.One-Time Transition Tax Related to U.S. Tax Reform In 2017, the Company recognized a one-time transition tax of $ 35.6 million that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in April 2018. According to the 2017 U.S. federal income tax return of the Company filed in October 2018, the one-time transition tax was updated to $ 35.1 million. The Company made a true-up adjustment of $ 0.5 million in 2018. 83 |Page
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Tax rate | ​ | 21 | % | ​ | 21 | % |
| Income before income taxes | ​ | $ | 8,399 | ​ | $ | ( 12,200 ) | ​ |
| Income tax at federal statutory tax rate | ​ | 1,764 | ​ | ( 2,562 ) | ​ |
| Tax benefit of super deduction of R&D expense (1) | ​ | ( 5,212 ) | ​ | ( 3,605 ) | ​ |
| Effect of differences in foreign tax rate | ​ | 504 | ​ | 555 | ​ |
| Change in provision on valuation allowance for deferred income tax - U.S. | ​ | ( 34 ) | ​ | ( 133 ) | ​ |
| Change in provision on valuation allowance for deferred income tax - Non-U.S. | ​ | 4,667 | ​ | 7,659 | ​ |
| Effect of changes in tax rate | ​ | 2,081 | ​ | — | ​ |
| Other differences | ​ | 234 | ​ | 249 | ​ |
| Total income tax expense | ​ | $ | 4,004 | ​ | $ | 2,163 | ​ |
| (1) | According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in research and development activities are entitled to claim an additional tax deduction amounting to 50% of their research and development expenses in determining their taxable income for the year. The additional tax deduction amount of the research and development expenses has been increased from 50% to 75%, effective from 2018 to 2020, and it was further increased to 100%, effective from 2021, according to a new tax incentives policy promulgated by the State Tax Bureau of the PRC in March 2021. |
| 23. | Income/(Loss) Per Share |
| ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Numerator: | ​ |
| Net income/(loss) attributable to the parent company’s common shareholders - Basic and Diluted | ​ | $ | 11,050 | ( 4,980 ) |
| Denominator: | ​ | ​ | ​ |
| Weighted average ordinary shares outstanding - Basic | ​ | 30,851,776 | 31,077,196 |
| Dilutive effects of stock options | ​ | 3,655 | — |
| Denominator for dilutive income per share - Diluted | ​ | 30,855,431 | 31,077,196 |
| Net income/(loss)per share attributable to the parent company’s common shareholders | ​ | ​ | ​ |
| Basic | ​ | 0.36 | ( 0.16 ) |
| Diluted | ​ | 0.36 | ( 0.16 ) |

| 24. | Significant Concentrations |

| 25. | Related Party Transactions |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Hubei Hongrun | ​ | $ | 25,229 | ​ | $ | 24,792 |
| Beijing Henglong | ​ | ​ | 24,604 | ​ | ​ | 24,672 |
| Jingzhou Yude | ​ | 10,784 | ​ | — |
| Xiamen Automotive Parts | ​ | 3,864 | ​ | 3,274 |
| Other related parties | ​ | 650 | ​ | 484 |
| Total | ​ | $ | 65,131 | ​ | $ | 53,222 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Wuhan Tongkai | ​ | $ | 180 | ​ | $ | 193 |
| Jingzhou Tongying | ​ | ​ | 170 | ​ | ​ | 101 |
| Hubei Hongrun | ​ | ​ | 112 | ​ | ​ | 100 |
| Hubei ASTA | ​ | ​ | 23 | ​ | ​ | 21 |
| Other related parties | ​ | ​ | 8 | ​ | ​ | 8 |
| Total | ​ | $ | 493 | ​ | $ | 423 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Honghu Changrun | ​ | $ | 1,000 | ​ | $ | 362 |
| Jingzhou Yude | ​ | 278 | ​ | 306 |
| Jiangling Tongchuang | ​ | 626 | ​ | 483 |
| Jingzhou Tongying | ​ | 580 | ​ | 426 |
| Beijing Henglong | ​ | ​ | 32 | ​ | ​ | 1 |
| Hubei Hongrun | ​ | 12 | ​ | 180 |
| Other related parties | ​ | 25 | ​ | 5 |
| Total | ​ | $ | 2,553 | ​ | $ | 1,763 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Jingzhou Tongying | ​ | $ | 10,702 | ​ | $ | 8,677 |
| Wuhan Tongkai | ​ | 9,718 | ​ | 5,791 |
| Jiangling Tongchuang | ​ | 7,009 | ​ | 6,943 |
| Honghu Changrun | ​ | 2,358 | ​ | 1,868 |
| Henglong Tianyu | ​ | ​ | 1,014 | ​ | ​ | 274 |
| Hubei Wiselink | ​ | ​ | 481 | ​ | ​ | 326 |
| Hubei Yiling | ​ | 286 | ​ | — |
| Other related parties | ​ | 12 | ​ | — |
| Total | ​ | $ | 31,580 | ​ | $ | 23,879 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Sentient AB | ​ | $ | 935 | ​ | $ | — |
| Jingzhou Derun | ​ | — | ​ | 26 |
| Total | ​ | $ | 935 | ​ | $ | 26 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Hubei Wiselink | ​ | $ | 1,200 | ​ | $ | 1,371 |
| Ewinlink | ​ | ​ | — | ​ | ​ | 499 |
| Honghu Changrun | ​ | — | ​ | 59 |
| Total | ​ | $ | 1,200 | ​ | $ | 1,929 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 |
| Related party loan | ​ | $ | — | ​ | $ | 151 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Hubei Hongrun | ​ | $ | 6,918 | ​ | $ | 4,054 |
| Jingzhou Yude | ​ | ​ | 5,740 | ​ | ​ | 1,283 |
| Xiamen Automotive Parts | ​ | 1,533 | ​ | 1,565 |
| Beijing Henglong | ​ | — | ​ | 9,630 |
| Xiamen Joylon | ​ | 890 | ​ | 870 |
| Other related parties | ​ | ​ | 424 | ​ | 220 |
| Total accounts and notes receivable - related parties | ​ | 15,505 | ​ | 17,622 |
| Less: allowance for doubtful accounts - related parties | ​ | ​ | ( 898 ) | ​ | ​ | ( 1 ) |
| Accounts and notes receivable, net - related parties | ​ | $ | 14,607 | ​ | $ | 17,621 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Wuhan Tongkai | ​ | $ | 4,812 | ​ | $ | 4,523 |
| Hubei Wiselink | ​ | 2,984 | ​ | 2,779 |
| Jingzhou Tongying | ​ | ​ | 3,195 | ​ | ​ | 2,628 |
| Henglong Tianyu | ​ | ​ | 1,602 | ​ | ​ | 1,673 |
| Honghu Changrun | ​ | ​ | 484 | ​ | ​ | 609 |
| Jiangling Tongchuang | ​ | 240 | ​ | 506 |
| Other related parties | ​ | ​ | 147 | ​ | ​ | 12 |
| Total | ​ | $ | 13,464 | ​ | $ | 12,730 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Hubei Wiselink | ​ | $ | 565 | ​ | $ | 2,187 |
| Henglong Real Estate | ​ | 245 | ​ | 1,097 |
| Total | ​ | $ | 810 | ​ | $ | 3,284 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Jiangling Tongchuang | ​ | $ | 324 | ​ | $ | — |
| Honghu Changrun | ​ | — | ​ | 238 |
| Hongxi | ​ | — | ​ | 153 |
| Other related parties | ​ | 276 | ​ | 131 |
| Total | ​ | $ | 600 | ​ | $ | 522 |
| 26. | Commitments and Contingencies |
| a. | Legal proceedings |

| b. | Commitments |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Payment Obligations by Period |
| ​ | 2022 | 2023 | 2024 | Thereafter | Total |
| Obligations for investment contracts (1) | ​ | $ | 10,858 | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 10,858 |
| Obligations for purchasing and services | ​ | 21,930 | ​ | ​ | 1,960 | ​ | — | ​ | — | ​ | 23,890 |
| Total | ​ | $ | 32,788 | ​ | $ | 1,960 | ​ | $ | — | ​ | $ | — | ​ | $ | 37,195 |
| (1) | In June 2021, Hubei Henglong entered into an agreement with other parties and committed to purchase 40 % of the shares of Sentient AB for total consideration of RMB 155.2 million, equivalent to approximately $ 24.3 million. As of December 31, 2021, Hubei Henglong has paid RMB 86.0 million, equivalent to approximately $ 13.5 million, which was reported in other non-current assets as the transaction had not been consummated. According to the agreement, the remaining consideration RMB 69.2 million, equivalent to approximately $ 10.9 million, will be paid in 2022. |
| 27. | Segment Reporting |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Net Sales | ​ | Net Income (Loss) |
| ​ | ​ | Year Ended December 31, | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 | 2021 | 2020 |
| Henglong | ​ | $ | 202,612 | ​ | $ | 157,715 | ​ | $ | ( 526 ) | ​ | $ | ( 576 ) |
| Jiulong | ​ | 94,510 | ​ | 100,120 | ​ | 971 | ​ | 995 |
| Shenyang | ​ | 16,510 | ​ | 14,091 | ​ | 560 | ​ | ( 6,985 ) |
| Wuhu | ​ | 27,227 | ​ | 14,280 | ​ | ( 385 ) | ​ | ( 800 ) |
| Hubei Henglong | ​ | 128,142 | ​ | 115,991 | ​ | 11,162 | ​ | 9,836 |
| Henglong KYB | ​ | 80,683 | ​ | 52,659 | ​ | 248 | ​ | ( 6,668 ) |
| Other Entities | ​ | 96,397 | ​ | 61,202 | ​ | 508 | ​ | ( 1,928 ) |
| Total Segments | ​ | 646,081 | ​ | 516,058 | ​ | 12,538 | ​ | ( 6,126 ) |
| Corporate | ​ | — | ​ | — | ​ | ( 1,628 ) | ​ | ( 2,693 ) |
| Eliminations | ​ | ( 148,088 ) | ​ | ( 98,422 ) | ​ | ( 184 ) | ​ | ( 1,452 ) |
| Total consolidated | ​ | $ | 497,993 | ​ | 417,636 | ​ | $ | 10,726 | ​ | $ | ( 10,271 ) |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Depreciation and Amortization | ​ | Capital Expenditures |
| ​ | ​ | Year Ended December 31, | ​ | Year Ended December 31, |
| ​ | 2021 | 2020 | 2021 | 2020 |
| Henglong | ​ | $ | 6,691 | ​ | $ | 3,814 | ​ | $ | 1,613 | ​ | $ | 3,019 |
| Jiulong | ​ | 2,742 | ​ | 2,980 | ​ | 1,863 | ​ | 1,898 |
| Shenyang | ​ | 649 | ​ | 652 | ​ | 267 | ​ | 188 |
| Wuhu | ​ | 943 | ​ | 556 | ​ | 48 | ​ | 87 |
| Hubei Henglong | ​ | 11,237 | ​ | 10,067 | ​ | 2,515 | ​ | 2,412 |
| Henglong KYB | ​ | 1,427 | ​ | 1,368 | ​ | 4,804 | ​ | 4,017 |
| Other Entities | ​ | 3,377 | ​ | 2,578 | ​ | 546 | ​ | 6,872 |
| Total Segments | ​ | 27,066 | ​ | 22,015 | ​ | 11,656 | ​ | 18,493 |
| Corporate | ​ | 47 | ​ | 42 | ​ | — | ​ | — |
| Eliminations | ​ | — | ​ | — | ​ | ( 1,754 ) | ​ | ( 1,927 ) |
| Total consolidated | ​ | $ | 27,113 | ​ | $ | 22,057 | ​ | $ | 9,902 | ​ | $ | 16,566 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Total Assets |
| ​ | ​ | December 31, |
| ​ | 2021 | 2020 |
| Henglong | ​ | $ | 241,958 | ​ | $ | 265,982 |
| Jiulong | ​ | 74,816 | ​ | 90,161 |
| Shenyang | ​ | 24,141 | ​ | 25,827 |
| Wuhu | ​ | 26,314 | ​ | 20,055 |
| Hubei Henglong | ​ | 431,529 | ​ | 415,296 |
| Henglong KYB | ​ | 77,598 | ​ | 63,871 |
| Other Entities | ​ | 116,749 | ​ | 91,999 |
| Total Segments | ​ | 993,105 | ​ | 973,191 |
| Corporate | ​ | 69,705 | ​ | 71,880 |
| Eliminations | ​ | ( 346,048 ) | ​ | ( 337,511 ) |
| Total consolidated | ​ | $ | 716,762 | ​ | $ | 707,560 |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| ​ | ​ | Net Sales (1) | ​ | Long-term assets |
| ​ | ​ | Year Ended December 31, | ​ | December 31, |
| ​ | 2021 | 2020 | 2021 | 2020 |
| Geographic region: | ​ | ​ | ​ | ​ | ​ | ​ |
| China | ​ | $ | 324,979 | ​ | $ | 294,739 | ​ | $ | 165,264 | ​ | $ | 165,043 | ​ |
| United States | ​ | 134,662 | ​ | 114,889 | ​ | 755 | ​ | 771 | ​ |
| Other foreign countries | ​ | 38,352 | ​ | 8,008 | ​ | 471 | ​ | 746 | ​ |
| Total consolidated | ​ | $ | 497,993 | ​ | $ | 417,636 | ​ | $ | 166,490 | (2) | $ | 166,560 | (2) |
| (1) | Revenue is attributed to each country based on location of customers. |
| (2) | Pursuant to ASC 280-10-50-41, the deferred tax assets of $ 10.1 million and $13.7 million and the intangible assets, net of $ 1.8 million and $ 1.7 million were excluded from long-term assets as of December 31, 2021 and 2020, respectively. |

| ExhibitNumber | Description |
| ​ | ​ | ​ |
| 3.1(i) | ​ | Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Form 10-SB filed on August 27, 2001) |
| ​ | ​ | ​ |
| 3.1.1(i) | ​ | Certificate of Amendment of Certificate of Incorporation, filed May 19, 2003 (incorporated by reference to Exhibit 4.1.1 to the Company’s Registration Statement on Form S-3 (File No. 333-133331) filed on April 17, 2006) |
| ​ | ​ | ​ |
| 3.1(ii) | ​ | Bylaws (incorporated by reference to Exhibit 3(ii) to the Company’s Form 10-SB filed on August 27, 2001) |
| ​ | ​ | ​ |
| 4.1 | ​ | Description of the Company’s Securities* |
| ​ | ​ | ​ |
| 10.1 | ​ | Joint-venture Agreement, dated March 31, 2006, as amended on May 2, 2006, between Great Genesis Holdings Limited and Wuhu Chery Technology Co., Ltd. (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q Quarterly Report filed on May 10, 2006) |
| ​ | ​ | ​ |
| 10.2 | ​ | Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on April 2, 2008) |
| ​ | ​ | ​ |
| 10.3 | ​ | English Translation of the Sino-Foreign Equity Joint Venture Contract dated January 24, 2010 between Great Genesis Holdings Limited and Beijing Hainachuan Auto Parts Co., Ltd. (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-K for the year ended December 31, 2009 filed on March 25, 2010) |
| 10.4 | Stock Exchange Agreement dated August 11, 2014 by and among Jingzhou City Jiulong Machinery Electricity Manufacturing Co., Ltd., China Automotive Systems, Inc. and Hubei Henglong Automotive System Group Co., Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q Quarterly Report filed on August 13, 2014) |
| ​ | ​ | ​ |
| 10.5 | ​ | English translation of Joint Venture Contract, dated as of April 27, 2018, by and between Hubei Henglong Automotive System Group Co., Ltd. and KYB (China) Investment Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2018) |
| ​ | ​ | ​ |
| 23.1 | ​ | Consent of PricewaterhouseCoopers Zhong Tian LLP* |
| ​ | ​ | ​ |
| 31.1 | ​ | Rule 13a-14(a) Certification* |
| ​ | ​ | ​ |
| 31.2 | ​ | Rule 13a-14(a) Certification* |
| ​ | ​ | ​ |
| 32.1 | ​ | Section 1350 Certification* |
| ​ | ​ | ​ |
| 32.2 | ​ | Section 1350 Certification* |
| ​ | ​ | ​ |
| 101* | ​ | The following materials from the China Automotive Systems, Inc. Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 30, 2022, formatted in Extensible Business Reporting Language (XBRL): |
| ​ | ​ | ​ |
| 104 | ​ | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| (i) | Consolidated Balance Sheets; |
| (ii) | Consolidated Statements of Income or Loss; |
| (iii) | Consolidated Statements of Comprehensive Income or Loss; |
| (iv) | Consolidated Statements of Changes in Stockholders’ Equity; |
| (v) | Consolidated Statements of Cash Flows; and |

| (vi) | Related Notes. |
| * | Filed herewith. |


Question: If the profit margin from production in China and the United States is the same, and the profit margin from the production in China in the year 2021 is $10 million, what is the estimated profit margin in the USA if the company produced 65.3% in China and 27% in the USA (in millions of dollars)?

Solution:
def solution():
    #Define variables name and value
    china_production_percentage = 65.3
    usa_production_percentage = 27.0
    china_profit_margin = 10  # in millions of dollars

    #Do math calculation to get the answer
    usa_profit_margin = (usa_production_percentage / china_production_percentage) * china_profit_margin 
    return usa_profit_margin


Answer: 4.134762633996937