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United States securities and exchange commission logo
October 6, 2021
Larry Wu
Chairman and Chief Executive Officer
GigaCloud Technology Inc
Unit A, 12/F, Shun Ho Tower
24-30 Ice House Street
Central
Hong Kong
Re: GigaCloud
Technology Inc
Amendment No. 2 to
Draft Registration Statement on Form F-1
Submitted September
14, 2021
CIK No. 0001857816
Dear Mr. Wu:
We have reviewed your amended 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.
Amendment No. 2 to Draft Registration Statement on Form F-1 Submitted
September 14, 2021
Cover Page
1. We note the disclosure
on your cover page indicating that you are a holding company
incorporated in the
Cayman Islands and conduct a significant portion of your operations
through your
subsidiaries that are incorporated in the PRC and Hong Kong. Please revise
to disclose prominently
on the prospectus cover page that this structure involves unique
risks to investors.
Your disclosure should acknowledge, if true, that Chinese regulatory
authorities could
disallow your operating structure, which would likely result in a material
change in your
operations and/or the value of your ADSs, including that it could cause the
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value of such securities to significantly decline or become worthless.
Provide a cross-
reference to your detailed discussion of risks facing the company and
the offering as a
result of your operating structure.
2. Provide prominent disclosure about the legal and operational risks
associated with being
based in or having the majority of the company s operations in Hong
Kong and China.
Your disclosure should make clear whether these risks could result in
a material change in
your operations and/or the value of your ADSs or could significantly
limit or completely
hinder your ability to offer or continue to offer securities to
investors and cause the value
of such securities to significantly decline or be worthless. Your
disclosure should address
how recent statements and regulatory actions by China s government,
such as those
related to data security, anti-monopoly concerns, and China's
extension of authority into
Hong Kong, has or may impact the company s ability to conduct its
business, accept
foreign investments, or list on an U.S. or other foreign exchange.
Your prospectus
summary should address, but not necessarily be limited to, the risks
highlighted on the
prospectus cover page.
Prospectus Summary, page 1
3. We note your summary discussion of the risks related to doing business
in China. Please
enhance your discussion of these risks to specifically discuss the
risks that your corporate
structure and being based in Hong Kong and having a significant amount
of your
operations in China and Hong Kong poses to investors. In particular,
describe the
significant regulatory, liquidity, and enforcement risks related to
your operations in China
and in light of China's extension of authority into Hong Kong, with
cross-references to the
more detailed discussion of these risks in the prospectus. For
example, specifically
discuss risks arising from the legal system in China, including risks
and uncertainties
regarding the enforcement of China s laws in Hong Kong and that
rules and regulations in
China can change quickly with little advance notice; and the risk that
the Chinese
government may intervene or influence your operations in Hong Kong or
China at any
time, or may exert more control over offerings conducted overseas
and/or foreign
investment in China-based and Hong Kong-based issuers, which could
result in a material
change in your operations and/or the value of your ADSs. Acknowledge
any risks that
any actions by the Chinese government to exert more oversight and
control over offerings
that are conducted overseas and/or foreign investment in China-based
and Hong Kong-
based issuers could significantly limit or completely hinder your
ability to offer or
continue to offer securities to investors and cause the value of such
securities to
significantly decline or be worthless.
4. We note your disclosure on page 9 that "[t]he approval or other
administration
requirements of the China Securities Regulatory Commission, or the
CSRC, or other PRC
governmental authorities, may be required in connection with this
offering under a PRC
regulation or any new laws, rules or regulations to be enacted . . .
.." Please enhance your
disclosure in this section to disclose each permission that you or
your subsidiaries are
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GigaCloud Technology Inc
October 6, 2021
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required to obtain from Chinese authorities to operate and issue these
securities to foreign
investors. State whether you or your subsidiaries are covered by
permissions
requirements from the CSRC, CAC or any other entity that is required
to approve your
operations, and state affirmatively whether you have received all
requisite permissions
and whether any permissions have been denied.
5. In your prospectus summary, provide a clear description of how cash is
transferred
through your organization. Quantify any cash flows and transfers of
other assets by type
that have occurred between the holding company, its subsidiaries, and
direction of
transfer. Quantify any dividends or distributions that a subsidiary
has made to the holding
company and which entity made such transfer, and their tax
consequences. Similarly
quantify dividends or distributions made to U.S. investors, the
source, and their tax
consequences. Describe any restrictions on foreign exchange and your
ability to transfer
cash between entities, across borders, and to U.S. investors. Describe
any restrictions and
limitations on your ability to distribute earnings from your
businesses, including
subsidiaries, to the parent company and U.S. investors.
6. Please revise this section to disclose that trading in your securities
may be prohibited
under the Holding Foreign Companies Accountable Act if the PCAOB
determines that it
cannot inspect or fully investigate your auditor, and that as a result
an exchange may
determine to delist your securities. Please also revise to disclose
that the PCAOB has
been and is currently unable to inspect your auditor, as you have in
your risk factor
disclosure on page 67.
Risk Factors, page 20
7. Please revise your risk factor on page 59 regarding the limitations on
the ability of U.S.
regulators, such as the Department of Justice, the SEC, and other
authorities, to conduct
investigations and inspections in the PRC to also discuss the
applicability of these
limitations within Hong Kong.
8. We note your disclosure that the "PRC government had imposed foreign
ownership
restriction[s] and the licensing and permit requirements for companies
in the industry of
telecommunications services, and [you] had a consolidated VIE set up
initially in the PRC
from 2018 to 2020." Your disclosure also indicates that you "launched
[y]our GigaCloud
Marketplace under [y]our Hong Kong subsidiary, GigaCloud Technology
(HongKong)
Limited (formerly known as Giga Cloud Logistics (Hong Kong) Limited), in
2019" and
that "[a]s of this date hereof, none of the business operated by [y]our
PRC subsidiaries is
subject to PRC regulations that restrict or prohibit foreign ownership
in China." In light
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of China's extension of authority into Hong Kong, please address the
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October 6, 2021 Page 3 restricting or prohibiting foreign ownership, if
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Larry Wu
FirstName
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Technology Inc Wu
Comapany
October NameGigaCloud Technology Inc
6, 2021
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Risks Related to Our Business and Industry
"We have recorded negative cash flows . . .", page 33
9. The last sentence of the first paragraph included herein appears to
state that an increase in
accounts receivables is a decrease in working capital, but an increase
in accounts
receivables should be an increase in working capital. Please clarify
and revise as
appropriate.
Risks Related to Doing Business in China, page 48
10. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to separately highlight the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of your ADSs. Also, given
recent statements
by the Chinese government indicating an intent to exert more oversight
and control over
offerings that are conducted overseas and/or foreign investment in
China or Hong Kong-
based issuers, acknowledge the risk that any such action could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
Enforceability of Civil Liabilities, page 86
11. Please amend your disclosure in this section to describe the
difficulties in bringing legal
claims against your Hong Kong-based subsidiaries.
Regulation, page 141
12. Please revise to discuss the effects of the various regulations that
you describe here on
your business, so that investors can understand how the regulations
are applicable to you,
as well as the nature and degree of impact of such regulations on your
business. By way
of example only, we note that your disclosure on page 143 indicates
that the PRC Data
Security Law has taken effect on September 1, 2021. Yet you do not
discuss how the
PRC Data Security Law impacts your business and/or your offering, or
to what extent you
believe that you are compliant with such law. Please revise your
disclosure to clarify as
much. Please also make conforming changes to similar disclosures in
this section.
Financial Statements for Fiscal 2021 Interim Periods
Summary of Significant Accounting Policies, page F-55
13. Refer to your response to prior comment 9. It appears you undertake a
risk of loss in
regard to the remorse protection program you offer. Please disclose
how you determine
the amount of the loss and account for the associated liability.
Larry Wu
FirstName
GigaCloud LastNameLarry
Technology Inc Wu
Comapany
October NameGigaCloud Technology Inc
6, 2021
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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,
Division of
Corporation Finance
Office of Trade &
Services
cc: Benjamin Su