Company: DDC
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043916
Chunk: 103

Company: DDC Enterprise Ltd
Filing Date: 2025-05-15
Form: 20-F
Item: Item 5
Chunk 103
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 We compete with different competitors in each of our business lines. Our
current and potential competitors can be divided into different categories: (i) traditional RTH, emerging RTC, and RTC food companies
(domestic and international) in China, (ii) major plant-based food companies in China, (iii) major content providers in China
focused on food, and (iv) other major internet companies in China that may enter the food-related content distribution or e-commerce
business area. There are certain barriers to entry that have limited the number and success of foreign entrants, emerging, and traditional-cum-emerging
brands, including our (i) brand awareness, (ii) E2E supply-chain visibility, (iii) strategic and preferred service agreements
with product and distribution partners, (iv) product R& D and go-to-market capabilities, and (v) board of directors and advisory
network.

Regulatory Environment - As
we are an (i) omni-channel B2B and B2C and (ii) food distribution business, we are subject to various customer data, food safety
and quality control, and employer-employee related regulations and policy frameworks. We work with the Cyberspace Administration of China
(CAC), the State Administration for Market Regulation (SAMR), the Ministry of Commerce (the “ MOFCOM”), the State Internet
Information Office, the General Administration of Customs, All-China Federation of Trade Unions (ACFTU) and other governmental authorities
in charge of the relevant services provided by us to ensure we are compliant with evolving laws, regulations, and standards.

Operating Costs - Our
operating costs include packaged product costs, direct labor, other wages and related benefits, selling, distribution, and other general
and administrative expenses. We proactively manage and look for opportunities to reduce our operating expenses as a percentage (%) of
revenues by negotiating preferred or renegotiating existing purchasing agreements with one or more vendors/service providers.

Sales and Marketing
Costs - Costs associated with sales and marketing was RMB20.9 million (US$2.9 million) in 2024, increased by 19.9%
compared with RMB17.4 million in 2023. The increase was in line with the increase of revenue and we expect such cost will increase in
future to support our revenue growth continually. However, we expect to be more efficient in utilizing our sales and marketing budget
to generate better customer conversion rates through (i) stronger brand awareness, (ii