Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 41

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 41
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 lose the ability to use and enjoy assets held by the Current VIEs. We and
the PRC subsidiaries conduct operations in China through contractual arrangements with the Current VIEs and its shareholders and subsidiaries.
As part of these arrangements, the Current VIEs hold substantially all of the assets that are important to the operation of our business.

If any of these entities goes bankrupt and all
or part of their assets become subject to liens or rights of third-party creditors, they may be unable to continue some or all of their
business activities, which could in turn materially adversely affect our business, results of operations and financial condition. If
the Current VIEs undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may
claim rights to some or all of these assets, which would hinder their ability to operate their business, and could in turn materially
adversely affect our business and results of operations.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions
or government policies could have a material adverse effect on our business, results of operations, financial condition, and the value
of our securities.

We conduct our business in China and substantially
all of our assets are located in China. Accordingly, our business, results of operations and financial condition may be influenced to
a significant degree by the PRC political, economic and social conditions. The Chinese government has significant oversight and discretion
over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory,
political and societal goals. The Chinese government has recently published new policies that significantly affected certain industries
such as the insurance agency business, and we cannot rule out the possibility that it will in the future release regulations or policies
regarding our industries that could require us to seek permission from Chinese authorities to continue to operate our business, which
may adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the Chinese
government have indicated an intent to increase the government’s oversight and control over offerings of companies with significant
operations in mainland China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers like us.
Any such action, if taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue
to offer our securities to our investors and could cause the value of our securities to significantly decline or become worthless.

The economic, political and social conditions
in China differ from those