Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 105

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 5
Chunk 105
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 million (US$2.5 million) in 2023, decreased by 16.3%
compared with RMB20.8 million in 2022. 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) our plan to leverage more content and social media marketing providers and platforms to drive repeat purchases,
an increase in Average Order Value (“ AOV”), and attract net-new users to our platform, and (iii) improvements in referral
rates.

Debt Obligations - our
debt obligations primarily consist of shareholder loans and convertible loans used to finance our ongoing working capital requirements.
As of December 31, 2023 and December 31, 2022, the outstanding balance on the shareholder loan was RMB83.1 million (US$11.7 million)
and RMB95.6 million respectively. The outstanding balances of convertible loans as of December 31, 2023 and December 31, 2022
were RMB21.4 million (US$3.0 million) and RMB37.8 million, respectively.

Mergers and Acquisitions
(“ M& A”) - M& A is a key growth strategy going forward. We will evaluate and opportunistically execute
strategic joint ventures (JV), potential investments, and acquisition opportunities with a focus on supplementing and/or complementing
our existing products, sales channels, customer-base and/or allow us to optimise our existing supply-chain management capabilities. The
M& A strategy will continue to evolve with our changing needs and requirements. M& A is an important part of our strategy to establish
our footprint and sales channel internationally. We are actively looking at potential targets with revenues in the US, Europe, Australia,
SE Asia, and Middle East. As a group, we are targeting to have international sales to account for 20 - 30% of total revenue
in 2024 and around 50% in 2025. However, historically, virtually all of our sales have been in China. For example, our international (meaning
outside of China) sales were zero in 2022 and accounted for 2.0% of our total revenue for the year ended December 31, 2023. There can
be no assurances that we will be successful in generating revenues internationally. For example,