Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 175

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 11
Chunk 175
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Item 11. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to interest rate
risk primarily relates to the interest income generated by excess cash, which is mostly held in interest bearing bank deposits. We have
not used derivative financial instruments to manage our interest risk exposure. Interest earning instruments carry a degree of interest
rate risk. We have not been exposed to nor do we anticipate that we will be exposed to, material risks due to changes in market interest
rates.

Credit Risk

Financial instruments that potentially subject us to significant concentrations
of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables included in prepaid expenses, other
current assets, and amounts due from related parties. As of December 31, 2023 and 2024, RMB78.7 million and RMB60.1 million
(US$8.4 million), respectively, were deposited with financial institutions located in the Chinese mainland, Hong Kong and U. S..
Management believes that these financial institutions are of high credit quality and continually monitor the credit worthiness of these
financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors’ interests.

For the credit risk related
to accounts receivable, we perform ongoing credit evaluations of customers. we establish an allowance for doubtful accounts based upon
estimates, factors surrounding the credit risk of specific customers and other information. The allowance amounts were immaterial for
all periods presented.

Foreign Exchange Risk

Substantially all of our businesses
are transacted in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished
the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China. However, the unification
of the exchange rates does not imply the convertibility of RMB into USD or other foreign currencies. All foreign exchange transactions
continue to take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at
the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China
or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed
contracts.

Item 12. Description of Securities Other than Equity Securities