Company: ZKH
Filing Date: 2025-04-17
Form Type: 20-F
Source: 0001410578-25-000779
Chunk: 1

Company: ZKH Group Ltd
Filing Date: 2025-04-17
Form: 20-F
Item: Item 11
Chunk 1
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign exchange risk

The conversion of Renminbi into other currencies, including U. S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against other currencies, at times significantly and unpredictably. The value of Renminbi against other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. It is difficult to predict how market forces or government policies may impact the exchange rate between Renminbi and other currencies in the future.

Substantially all of our net revenues and expenses are denominated in Renminbi. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U. S. dollars. For example, to the extent that we need to convert U. S. dollars we receive into Renminbi to pay our operating expenses, appreciation of Renminbi against the U. S. dollars would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of Renminbi against the U. S. dollars may significantly reduce the U. S. dollars equivalent of our earnings, which in turn could adversely affect the price of our ADSs. We had foreign exchange loss of RMB12.2 million (US$1.7 million) in 2024.

As of December 31, 2024, we had Renminbi-denominated cash and cash equivalents and restricted cash of RMB832.3 million (US$114.0 million). If Renminbi had appreciated by 10% against the U. S. dollars, we would have had an increase of approximately US$12.7 million of cash and cash equivalent and restricted cash. If Renminbi had depreciated by 10% against the U. S. dollars, we would have had a decrease of approximately US$10.4 million of cash and cash equivalent and restricted cash.

Credit risk

Majority of our cash and cash equivalent and restricted cash are held by major financial institutions located in China, which we believe are of high credit quality. We expect that there is no significant credit risk associated with these assets.

We accept bank acceptance notes from customers for products sold or services performed in the ordinary course of business. Bank acceptance notes are