Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 20

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 20
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 may severely and negatively impact our results of operations.

In addition, customer and end-consumer recognition
is critical for us to remain competitive. Our ability to maintain and enhance customer and end-consumer recognition and reputation depends
primarily on the quality of the products and services we offer to them. If we are unable to maintain and further enhance our customer
and end-consumer recognition and reputation and promote awareness of our product offerings and services, we may not be able to maintain
or continue to expand our customer base, and our results of operations may be materially and adversely affected.

We also collaborate with various external referral
sources to expedite our market penetration and broaden our end consumer base. Our external referral sources are our suppliers in the
insurance agency business. Failure to establish and maintain stable relationships with our external referral sources may materially and
adversely affect our ability to expand our business scale and geographical coverage, which in turn could adversely affect our results
of operations and business prospects.

In addition, our cooperative agreements with
our customers and suppliers are typically on a non-exclusive basis, and they may choose to cooperate with our competitors or offer competing
services themselves. In any event, there is no assurance that we will be able to continuously maintain a mutually beneficial relationship
with our business partners, or continue to cooperate with them on terms favorable to us, or at all. If any of the foregoing occurs, our
business growth, results of operations and financial condition will be adversely affected.

Because the commission revenue we earn on the sale of insurance
products is based on premium and commission rates set by insurance companies, any decrease in these premiums or commission rates, or
increase in the referral fees we pay to our external referral sources, may have an adverse effect on our results of operation.

We derive our revenue from our insurance agency
business by earning commissions from insurance companies we cooperate with. The commissions we receive from insurance companies on the
insurance policies sold are generally calculated as a percentage of the insurance premiums paid by the insured. Our revenue and results
of operations are thus directly affected by the size of insurance premiums and the commission rates for such policies. Insurance premiums
and commission rates can change based on the prevailing economic, regulatory, taxation-related and competitive factors that affect insurance
companies and end customers.

We also engage external referral sources in different
geographical areas to promote insurance products, and pay referral fees to them for referring end customers to us. We may adjust the
rates of referral fees at our discretion, depending on the competitive landscape and market