Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 52

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 52
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 dollar
and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and
by China’s foreign exchange policies. With the development of the foreign exchange market and progress towards interest rate liberalization
and Renminbi internationalization, the PRC government may announce further changes to the exchange rate system, and the Renminbi may
appreciate or depreciate significantly against the U. S. dollar. It is difficult to predict how market forces or PRC or U. S. government
policy may impact the exchange rate between the Renminbi and the U. S. dollar.

Significant revaluation of the Renminbi may materially
adversely affect your investment. For example, to the extent that we need to convert U. S. dollars received from offshore financing activities
into Renminbi for the operations of the PRC subsidiaries, appreciation of the Renminbi against the U. S. dollar would decrease the Renminbi
amount that we would have received from the conversion. Conversely, if we, the PRC subsidiaries convert Renminbi into U. S. dollars for
the purpose of making payments for dividends on the Class A Ordinary Shares or for other business purposes, appreciation of the U. S.
dollar against the Renminbi would reduce the U. S. dollar amount available to us, the PRC subsidiaries.

Limited hedging options are available in China
to reduce our exposure to exchange rate fluctuations. As of the date of this annual report, we have not entered into any material hedging
transactions to reduce our exposure to foreign currency exchange risk. While we may enter into hedging transactions in the future, the
availability and effectiveness of these hedges may be limited, and we may not be able to adequately hedge our exposure. In addition,
currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign
currency.

The enforcement of the PRC Labor Contract Law and other labor-related
regulations in the PRC may adversely affect our business and results of operations.

The Standing Committee of the National People’s
Congress enacted the Labor Contract Law in 2008, and amended it on December 28, 2012. The Labor Contract Law introduced specific provisions
related to fixed-term employment contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies,
employment without a written contract, dismissal of employees, severance, and collective bargaining to enhance