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United States securities and exchange commission logo
June 22, 2021
Larry Wu
Chairman and Chief Executive Officer
GigaCloud Technology Inc
8F, House 9, Creative Industry Park
No. 328 Xinghu Street, Industry Park
Suzhou, Jiangsu Province, People s Republic of China
Re: GigaCloud
Technology Inc
Draft Registration
Statement on Form F-1
Submitted May 24,
2021
CIK No. 0001857816
Dear Mr. Wu:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1 Submitted May 24, 2021
Prospectus Summary
Overview, page 2
1. Please balance your
disclosure in the prospectus summary about your significant growth
over the last two years
by disclosing the positive impact that COVID-19 has had on your
growth. In this regard,
we only note a brief mention of how COVID-19 has accelerated
the trend of consumers
purchasing products online "in the core large parcel categories
including furniture and
home appliance." Refer to CF Disclosure Guidance: Topic No. 9
and 9A for additional
guidance.
Larry Wu
GigaCloud Technology Inc
June 22, 2021
Page 2
Corporate History and Structure, page 7
2. Please revise your disclosure here and in your Corporate History and
Structure section to
clarify the reason or reasons for using the VIE structure for your
business, including
whether there was any reason why the VIE structure was required to
accommodate your
current business model. As a related matter, we note that in July 2018
and February 2021
you obtained 100% of the equity interests in DAIKENUNSOH Co., Ltd. and
Suzhou
Dajianyun Transport Co., Ltd. ("Suzhou Giga Cloud"), respectively.
Please explain to
us the facts and circumstances that lead to the termination of these
VIE structures,
including any changes in PRC or Japanese regulations that may have
prompted these
changes.
3. Please revise your diagram on pages 8 and 81 to ensure it is
consistent with the disclosure
throughout your registration statement. In this regard, we note your
disclosure on page 80
that you "conduct [y]our business operations across 11 subsidiaries
and seven
consolidated VIEs." We also note your references to "VIEs in the PRC"
throughout your
registration statement. However, the diagram illustrating your
corporate structure appears
to suggest that you conduct your operations across eight subsidiaries
and four VIEs and
the lines depicting contractual relationships are not used with the
PRC entities identified
in your diagram, suggesting you have no VIEs in the PRC. We also note
your disclosure
on page 82 that in July 2018 you acquired the equity interests in
DAIKENUNSOH Co.,
Ltd., which then became a wholly-owned subsidiary of your company.
However, it does
not appear that DAIKENUNSOH Co., Ltd. is included in your corporate
structure
diagram.
As a related matter, we note your disclosure on page 82 that seven of
your control
agreements are still effective. Please revise to disclose what VIEs
these control
agreements are related to. Also, to the extent applicable, revise the
diagram to identify the
WFOEs.
4. We note your disclosure that you have contractual arrangements with
[y]our consolidated
VIEs and their shareholders. Please expand your disclosure here,
and in the Business
section, to identify these shareholders.
Risk Factors
Risks Related to Doing Business in China, page 42
5. Please consider the addition of risk factor disclosure relating to the
regulatory
environment in China, including disclosure on (i) how intellectual
property rights and
protections may be insufficient for your material intellectual property
in China and (ii)
FirstName LastNameLarry Wu
how the increased global focus on environmental and social issues and
China s potential
Comapany NameGigaCloud
adoption Technology
of more stringent standardsIncin these areas may adversely
impact your
operations.
June 22, 2021 PageRefer
2 to CF Disclosure Guidance: Topic No. 10 for additional
guidance.
FirstName LastName
Larry Wu
FirstName
GigaCloud LastNameLarry
Technology Inc Wu
Comapany
June NameGigaCloud Technology Inc
22, 2021
June 22,
Page 3 2021 Page 3
FirstName LastName
We could be adversely affected by political tensions..., page 42
6. We note your disclosure that you do not currently export any of
[y]our product
candidates to the U.S. Please reconcile this statement with your
disclosure that a
substantial part of [y]our revenues is derived from the U.S and
that you sell [y]our own
inventory, or 1P, through the GigaCloud Marketplace and to and through
third-party
ecommerce websites, such as Rakuten in Japan, Amazon and Walmart in
the U.S.
Risks Related to the ADSs and this Offering
ADS holders may not be entitled to a jury trial with respect to claims arising
under the deposit
agreement..., page 65
7. We note your disclosure that "[n]o condition, stipulation or provision
of the deposit
agreement or ADSs serves as a waiver by any holder or beneficial owner
of ADSs or by
us or the depositary of compliance with any substantive provision of
the U.S. federal
securities laws and the rules and regulations promulgated thereunder"
(emphasis added).
Please revise your registration statement to remove the limiting
language underlined
above, so your disclosure conveys that the jury waiver provision in
your deposit
agreement does not serve as a waiver of compliance with any and all
U.S. federal
securities laws, rules, and regulations.
Your rights to pursue claims against the depositary..., page 65
8. Your risk factor disclosure on page 65 indicates that your deposit
agreement will contain
an exclusive forum provision designating state or federal courts in
New York, New York
as the exclusive forum to hear and determine claims arising under the
deposit agreement.
Please disclose whether this provision applies to actions arising
under the Securities Act
or Exchange Act. In that regard, we note that Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability created
by the Exchange Act or the rules and regulations thereunder, and
Section 22 of the
Securities Act creates concurrent jurisdiction for federal and state
courts over all suits
brought to enforce any duty or liability created by the Securities Act
or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
your prospectus to state that there is uncertainty as to whether a
court would enforce such
provision. If this provision does not apply to actions arising under
the Securities Act or
Exchange Act, please also ensure that the exclusive forum provision in
the governing
document states this clearly, or tell us how you will inform investors
in future filings that
the provision does not apply to any actions arising under the
Securities Act or Exchange
Act.
Our dual-class voting structure will limit your ability..., page 69
9. Please describe here, or elsewhere as appropriate, the dilutive effect
on the Class A
holders that will occur as the result of future conversion of Class B
ordinary shares.
Larry Wu
FirstName
GigaCloud LastNameLarry
Technology Inc Wu
Comapany
June NameGigaCloud Technology Inc
22, 2021
June 22,
Page 4 2021 Page 4
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
96
10. We note your disclosure that "[i]n 2021, [you] launched a remorse
protection program that
covers up to 60% of the buyers' logistics costs of returns from end
customers." To
provide additional context for investors, please further discuss the
terms of this program
and the expected impact it will have on your financial condition,
results of operations and
cash flows, if material. In this regard, we note your disclosure that
this is "an attractive
service offering to [y]our buyers and a program unavailable on most
other platforms."
Key Components of Results of Operations
Cost of Revenues, page 96
11. We note in regard to your off-platform ecommerce revenue that you use
third party
websites. Please tell us whether you incur any expenses for the use of
these websites, and
if so, where they are reported in the statement of comprehensive
income.
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Gross Profit and Gross Margin, page 101
12. Please explain to us with a view to disclosing how your gross margin
increased from
18.1% in 2019 to 27.3% in 2020 due to the increase in your revenues as
your GigaCloud
Marketplace grew that you cite.
Liquidity and Capital Resources
Operating Activities, page 103
13. Your disclosure appears to focus on how the amount for cash of
operating activities was
derived in each period rather than a period to period comparative
analysis of material
changes therein. The analysis should address and quantify the
significant drivers
underlying the change and how they impact operating cash. Refer to the
lead
in paragraphs of Item 5 of Form 20-F, section III.D of Release No.
33-6835, section
IV.B.1 of Release No. 33-8350 and section 501.04 of the staff s
Codification of Financial
Reporting Releases for guidance. Please revise your disclosure as
appropriate.
Business, page 112
14. Please include a description of the general terms of your agreements
with third-party
merchants, including the general fee structure, duration and
termination provisions of such
agreements. In this regard, we note your disclosure on page 21
regarding the importance
of third-party merchants on your business.
15. We note your disclosure on page 119 that "[i]n September 2020, we
launched our supply
chain financing services to select qualified sellers. Please
discuss here or elsewhere in
your filing, the financing services you are providing. For example,
discuss the terms of
the financing provided and address the expected effect on your
financial condition.
Larry Wu
FirstName
GigaCloud LastNameLarry
Technology Inc Wu
Comapany
June NameGigaCloud Technology Inc
22, 2021
June 22,
Page 5 2021 Page 5
FirstName LastName
Business Overview, page 112
16. Please clarify whether you have entered into any agreements with the
shipping, trucking,
and freight service providers you reference on page 112. In this
regard, we note your
disclosure that you "maintain partnerships with several major
shipping, trucking and
freight service providers." Please indicate the general terms of such
agreements.
Regulation, page 127
17. We note that your discussion of government regulations in this section
does not extend
beyond China and Japan. Please include a discussion of the regulatory
environment for
any foreign market you deem to be material or otherwise advise.
18. We note your disclosure of PRC regulations that restrict or prohibit
foreign ownership in
China. Please revise to disclose which parts of the company's business
fall within these
restrictions and prohibitions, if any. For example, discuss whether
Oriental Standard
Network Technology (Suzhou) Co., Ltd. would be able to have any
foreign ownership.
Principal Shareholders, page 149
19. Please revise the footnotes to your beneficial ownership table on
pages 149-50 to identify
the natural person(s) with voting and/or investment control over HUA
YUAN
INTERNATIONAL LIMITED and Hong Kong Red Star Macalline Universal Home
Furnishings Limited. For guidance, refer to Item 403 of Regulation S-
K.
Description of Share Capital
Ordinary Shares, page 153
20. We note your disclosure that your Class A ordinary shares and Class B
ordinary
shares will rank pari passu with one another. Please clarify how your
Class A and Class
B ordinary shares will have different voting and conversion rights
while still ranking pari
passu with one another.
Consolidated Statements of Comprehensive Income, page F-6
21. Please present separately revenues, and associated cost of revenues,
of tangible products,
rental of space and services as required by Rule 5-03(b)(1) and (2) of
Regulation S-X.
General
22. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials,
if any, to us for our
review.
Larry Wu
GigaCloud Technology Inc
June 22, 2021
Page 6
23. Please revise your prospectus cover page to disclose that your officers
and directors and
certain affiliated shareholders will own a substantial majority of your
ordinary shares
following the offering. As a related matter, please disclose whether you
will be deemed a
"controlled company" as defined by the market on which you intend to list
your
shares and, if so, whether you intend to rely on any exemptions as a
controlled company.
If applicable, please disclose on the prospectus cover page and in the
prospectus summary
that you are a controlled company, and include a risk factor that
discusses the effect, risks
and uncertainties of being designated a controlled company.
24. Please file each of your VIE Agreements as an exhibit to your
registration statement
pursuant to Item 601(b)(10) of Regulation S-K.
You may contact Keira Nakada at 202-551-3659 or Doug Jones at
202-551-3309 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Nicholas Lamparski at 202-551-4695 or Jennifer L pez at 202-551-3792
with any other
questions.
Sincerely,
FirstName LastNameLarry Wu
Division of
Corporation Finance
Comapany NameGigaCloud Technology Inc
Office of Trade &
Services
June 22, 2021 Page 6
cc: Benjamin Su
FirstName LastName