Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 21

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 21
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 conditions in the respective geographical
markets. Accordingly, any increase in such rates would reduce our profit margin.

Because we do not determine, and cannot predict,
the timing or extent of premium or commission rate changes, we cannot predict the effect any of these changes may have on our operations.
Any decrease in premiums or commission rates we receive, and/or any increase in the rates of referral fees we pay to our external referral
sources, could significantly affect our profitability. In addition, our capital expenditures and other expenditures may be disrupted
by unexpected decreases in revenue caused by decreases in premiums or commission rates, thereby adversely affecting our operations and
business plans.

We face intense competition in the markets we operate in, and
some of our competitors may have greater resources or brand recognition than us.

The insurance agency market and the integrated
after-sales service market in China are highly fragmented, and we expect competition to persist and intensify. In our insurance agency
business, we face competition from other insurance agency companies and insurance companies that use their in-house sales force, their
own direct online-sales platforms, exclusive sales agents, telemarketing, and internet or mobile channels to distribute their insurance
products, and from business entities that distribute insurance products on an ancillary basis, such as commercial banks, postal offices
and automobile dealerships for automobile insurance, as well as from other professional insurance intermediaries.

Some of our competitors have greater financial
and marketing resources than we do, and may be able to offer products and services that we do not currently offer and may not offer in
the future. The disruption of business cooperation with major banks and insurance companies we cooperate with may cause us to lose our
competitive advantages in certain areas. If we are unable to compete effectively against and stay ahead of our competitors, we may lose
customers and our financial results may be negatively affected.

We may not be able to provide diversified insurance products
and services to effectively address our end customers’ needs, which could have a material adverse effect on our business, results
of operations and financial condition.

We attract, procure and retain end customers
by offering a variety of insurance product choices from various insurance companies. To continue to grow our end consumer base, we seek
to collaborate with more insurance companies located in our existing and new geographical markets, while maintaining full spectrum insurance
product choices. If we fail to respond to the changing and emerging needs and preferences of our customers and end customers and offer
new products and services that are favored by them, we may lose out on our business