Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 77

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 77
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As a result, comparing our operating results on a period-to-period basis may not be meaningful, and our results of operations could be
affected by such seasonality in the future.

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Raw Materials

The Company purchases various manufactured components
and raw materials for use in its manufacturing processes. The principal components and raw materials the Company purchases include castings,
finished sub-components, aluminum, steel, fabricated metal electronic parts and molded plastic parts. The most important raw material
is steel. The Company enters into purchase agreements with local suppliers. The annual purchase plans are determined at the beginning
of the calendar year but are subject to revision every three months as a result of customers’ orders. A purchase order
is made according to monthly production plans. This protects the Company from building up inventory when the orders from customers
change.

All components and raw materials are available
from numerous sources. The price of principal raw materials are relatively volatile during the past three years. The Company has not,
in recent years, experienced any significant shortages of manufactured components or raw materials and normally does not carry inventories
of these items in excess of what is reasonably required to meet its production and shipping schedules.

Regulation

This section sets forth a summary of the most
significant rules and regulations that affect our business activities in China.

Regulations on Production

In February 1993, the Standing Committee
of the National People’s Congress, or the SCNPC, passed the Product Quality Law of the People’s Republic of China, which
was newly amended in December 2018. The law stipulates that enterprises are prohibited from producing and selling industrial products
that do not meet the standards and requirements for safeguarding human health and personal or property safety. Producers and sellers
shall establish and improve internal product quality management systems and assume responsibility for product quality in accordance with
the law. The product quality shall meet the following requirements: (i) there is no unreasonable danger endangering personal and
property safety, and if there are national and industrial standards for safeguarding human health and personal and property safety, such
standards shall be met; (ii) it has the usable performance that the product should have, unless a description of the defect of the
product’s usable performance is provided; (iii) it conforms to the product standards indicated on the product or its packaging,
and conforms to the quality status indicated by product descriptions, physical samples, etc.

In June 2002, the SCNPC passed the Production
Safety Law of