Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 18

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 3
Chunk 18
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We rely in part on third-party distributors
to place our products into the market and we may not be able to control our distributors.

We rely in part on third-party
distributors to sell our products. Similarly, our recent U. S. acquisitions rely almost entirely on offline distributors. Purchases by
distributors account for the substantial majority of our sales. For the year ended December 31, 2023, 2022 and 2021, our offline consumer
product sales accounted for 84.6%, 60.9% and 20.9% of our revenue respectively. As we sell and distribute our products through distributors,
any one of the following events could cause fluctuations or declines in our revenue and could have an adverse effect on our financial
condition and results of operations:

  reduction, delay or cancelation of orders from one or more of our distributors;  

  selection or increased sales by our distributors of our competitors’ products;  
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  failure to renew distribution agreements and maintain relationships with our existing distributors;  

  failure to establish relationships with new distributors on favorable terms; and  

We may not be able to compete
successfully against larger and better-funded sales and marketing campaigns of some of our current or future competitors, especially if
these competitors provide their distributors with more favorable arrangements. We cannot assure you that we will not lose any of our distributors
to our competitors, which could cause us to lose some or all of our favorable arrangements with such distributors and may result in the
termination of our relationships with other distributors. In addition, we may not be able to successfully manage our distributors and
the cost of any consolidation or further expansion of our distribution and sales network may exceed the revenue generated from these efforts.
There can be no assurance that we will be successful in detecting any non-compliance by our distributors with the provisions of their
distribution agreements. Non-compliance by our distributors could, among other things, negatively affect our brand, demand for our products
and our relationships with other distributors. Furthermore, if the sales volumes of our products to consumers are not maintained at a
satisfactory level or if distributor orders fail to track consumers demand, our distributors may not place orders for new products from
us, or decrease the quantity of their usual orders. The occurrence of any of these factors could result in a significant decrease in the
sales volume of our products and therefore adversely affect our financial condition and results of operations.

Adverse publicity