Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 28

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 28
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  competition risks: there may be intense                                                            
  competition in the markets of our new businesses, and our returns may be lower than expected; and  
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  strategic and operational risks: our                                                                                                       
  experience, expertise and/or skills in developing new businesses may not be sufficient, and new products and services may need time        
  to gain market recognition; we may also encounter difficulties in recruiting sufficient qualified personnel, strengthening our management  
  capabilities and improving information technology systems.                                                                                 
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The Cybersecurity and data privacy law may also affect our business,
financial condition, results of operations and financial condition.

In providing our services, a challenge we face
is the secured collection, storage and transmission of confidential information. We acquire certain private information about end consumers,
such as name, personal identification number, address and telephone number during the course of our business. We also obtained certain
personal data from our insurance customers pursuant to the collaboration agreements with them, such as the vehicle registration number
and registration date, the engine number, the make and model of the automobile and information about the current insured status of the
automobile of a potential insurance purchaser. Any failure or perceived failure to maintain the security of personal and other data that
are provided to or collected by us could harm our reputation and brand and may expose us to legal proceedings and potential liabilities,
any of which could adversely affect our business and results of operations. Cybersecurity and data privacy and security issues are subject
to increasing legislative and regulatory focus in China. Practices regarding the collection, use, storage, transmission and security
of personal information by companies operating over the internet and mobile platforms have come under increased public scrutiny.

On September 14, 2022, the CAC, issued the Decision
on Amending the Cyber Security Law of the PRC (Draft for Comments), increased the penalty cap, so after the amendment comes into effect,
it could have an increased impact on our financial condition if we breach the Cybersecurity Law of the PRC. In addition, the Data Security
Law of the PRC, which took effect on September 1, 2021, applies to data processing activities, including the collection, storage, use,
processing, transmission, availability and disclosure of data, and security supervision of such activities within the territory